Coronavirus will become a driver for accepting bitcoin and cryptocurrencies

The COVID-19 pandemic has not only brought with it hundreds of thousands of infections around the world, but has also caused havoc in theglobal economy, the state of which was already on the verge of crisis.

Macro strategist at Deutsche Bank Marion Labour and hercolleagues at Harvard University believe that the financial system will face major changes. According to them, in the current realities, the transition from fiat money to digital currencies can take global proportions and happen much faster than anticipated.

What is the latest opinion of analysts, what role do they assign to bitcoin in the new financial system, and which countries already intend to issue their own digital money?

Cash is the source of infection

April 3, Deutsche Bank's largest German bankon his twitter account published a message stating that the coronavirus pandemic accelerates the process of creating central banks of their own digital money. The image is attached to the message: the symbol of bitcoin in the center of a digital network linking several fiat currencies, including the euro, the yen, the British pound and the US dollar.

The COVID-19 pandemic is accelerating the rise ofcentral bank #digitalcurrencies as many governments see the handling of cash as a potential risk factor. This will likely add to calls to move towards #digitalcash according to our #dbresearch colleague @MarionLaboure pic.twitter.com/TnotaTKouK

- Deutsche Bank (@DeutscheBank) April 3, 2020

COVID-19 Pandemic Accelerates Emergencedigital currencies of central banks, as many governments view cash as a potential risk factor for infection. And this, most likely, will be an additional appeal to move towards the transition to digital money.

Deutsche Bank also refers to its articlemacro strategist Marion Laboure entitled “COVID-19 and the Abolition of Cash,” which she wrote with colleagues at Harvard University. The article says that, in fact, the coronavirus may be the very catalyst that can turn digital payments into the main method of payments between people around the world. And it is not surprising that the digital money industry has already focused on the opportunities that the sudden crisis has opened up for it.

The authors of the publication justify their argumentsreal facts. One of them is the transfer of banknotes from hand to hand, which can contribute to the spread of coronavirus infection. According to the US National Center for Biotechnology Information (NCBI), the human influenza virus can remain active on paper bills for up to 17 days. Given this fact, governments all over the world are now forced to reconsider the process of using cash.

The Chinese authorities ordered themass disinfection of banknotes and even their partial destruction. Thus, the Hong Kong newspaper "South China Morning Post" reports that the branch of the People's Bank of China in Guangdong province is destroying banknotes that were in high-risk areas, including in hospitals and food markets. This is done in order to curb the spread of a dangerous virus that can be transmitted from person to person through paper banknotes. It is believed that this method should help at least in the short term.

Following the Chinese, precautions were takenand Americans. In March, the US Federal Reserve, in order to prevent the spread of infection, announced a quarantine for cash entering the country from the Asian region, a Fed official told Reuters.

The agency’s publication also states that back inIn 2014, researchers from New York University conducted a series of analyzes and identified 3,000 species of bacteria on dollar bills. The main reason for such a staggering multiplicity lies precisely in the too frequent transfer of money from hand to hand. It becomes even a little creepy, because you understand that far from one coronavirus lives on the notorious pieces of paper, and it is dangerous to use them not only now, but also in principle.

Transition to digital payments is inevitable

Marion Labour and her colleagues believe that the questioncash relations will be raised in many countries. However, regardless of whether the authorities decide to disinfect, destroy, and reprint banknotes, one of the consequences of the pandemic is obvious - the transition to digital payments will certainly accelerate.

Moreover, this acceleration is already felt, especiallyin Asian countries and mainly in China. The overwhelming majority of local youth welcomes this trend, which is confirmed by statistics. So, in 2008, about 18% of Internet users made online payments, and in 2018 their number increased to 73% - the dynamics are really significant.

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However, experts criticize Western countriesfor the slowness in making innovations. While China and South Korea are actively promoting online banking infrastructure, the United States and Europe continue to use well-established methods of financial settlements, and thus significantly lag behind Asia.

According to experts, one of the reasons for thisThe lag lies in the mentality - Europeans and Americans are so used to paying in cash that many of them simply do not imagine the disappearance of paper money. This is evidenced by a survey conducted by Deutsche Bank in January this year.

To change thoroughly rootedpeople's habits and not cause them to reject innovation, it will take time. Nevertheless, analysts still believe that this process will not be too long, since many realize the real convenience of digital payments. Crypto wallets are easy to use, help control costs and manage your budget. In addition, the lack of cash in your pocket or in a home safe significantly reduces the risk of suffering from street theft or robbery of an apartment.

At the end of the article, the experts write:

“A global pandemic requires global solutions. It’s clear that the transition to digital payments is inevitable and needs to be accelerated. ”

In doing so, they emphasize the particular importance of making such a decision.

Bitcoin in the middle of the action

Note that just a couple of months ago DeutscheBank had a slightly different opinion regarding changes in the financial system. Back then, it was said that cryptocurrencies would not displace fiat, that cash was here to stay, and that Bitcoin was too volatile for mass adoption. However, now the opinion of German analysts has changed - it’s not for nothing that they depicted BTC at the center of the digital network.

By the way, their current position echoesposition of the Bank for International Settlements (BIS). On the same day that Deutsche Bank posted the message on Twitter, BIS released another bulletin entitled “COVID-19, cash and the future of payments.”

The document states that in addition to the dangertransmission of the virus through cash, there is an even greater danger emanating from ATMs, POS terminals and other devices of mass use, one way or another related to monetary transactions. The need to switch to settlements through digital currencies, which central banks could begin to issue, is also emphasized.

“In the context of the current crisis, CBDC should bedesigned with access to non-contact technical interfaces suitable for the entire population. In this way, a pandemic could reinforce CBDC calls for emphasis. It should also be borne in mind that new means of payment must be presented in a wide range. ”

Thus we see that Deutsche Bank and BIScame to the same conclusion: the blockchain technology on which the first cryptocurrency is based is the most effective means of “healing” the existing financial system. BTC is the original, CBDC is its “derivatives,” that is, blockchain technology is the engine of progress. Therefore, the symbol of bitcoin is depicted in the center of a schematic digital network.

Which countries are ready to digitalize national currencies?

• China has stated that it has no doubt that it intendsuse digital yuan. According to a report from a recent national conference where the Central Bank's priorities for the coming year were determined, the issue of developing and launching a digital currency was raised much more strictly than before.
• South Korea's central bank accelerated significantlydigital currency developments and spoke about the launch of a new pilot program to test CBDC and his fears that other developed countries could “seize” the lead in this area.
• The French Central Bank published a document wheretalks about the start of an experimental program for the research and development of a digital currency for interbank settlements. The goal of the project is to “determine how innovative technologies can impact the efficiency of the financial system.”
• England's financial regulator acknowledges the possibilitythat private cryptocurrencies could become the money of the future. According to analyst Ben Dyson, while the central bank has previously said that Bitcoin and similar cryptocurrencies do not meet certain criteria to be considered money, “that doesn’t mean it’s impossible to improve the technology and create something more suitable for that role.”
• The United States has not yet come to a clear position onthe issue of digitalization, however, the coronavirus pandemic has caused increased interest in this topic. Despite the current uncertainty from the authorities, overall the launch of the US digital dollar is only a matter of time.

As we see, the tendency to adopt CBDCcontinues to grow around the world - many countries are considering this issue more seriously, which means that the blockchain really deserves attention. And while we are not talking about a complete rejection of cash, gradually it will take its time.

The adoption of digital currencies has already begun, andsomething is unlikely to stop him. Indeed, even nature itself, although in such an unpleasant way as the creation of a virus, but still “hints” —it is time to change or even improve the old financial system.

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