Cryptocurrency is a type of virtual currency, secured by cryptography. It is known to be a digital asset to work as a medium for exchange, just like old times.
For instance, Initially, the Bitcoin was traded for nearly next to nothing. The first rise occurred in July 2010 when the value went from 0.0008 US dollars to 0.08 US dollars. After that, Bitcoin saw the rise and falls but the most evident rise was in 2017 in which it increased 400% in worth.
The following 4 are ways by which COVID-19 will bring banks and regulators to crypto.
Increasing Policy Influence
We have been using the typical banking system for ages now and there are still people that are unfamiliar with the operations and facilities the bank provides. The older generation has it tougher than the new generation. Most people do not know how banking works and they are still in doubt whether their money is safe with the bank or not.
On the other hand, with the pandemic we are facing, we are totally dependent on the services provided by the banks for our survival. Be it the funds given to the general public or international funding, everything is channeled through the bank.
Other than the need to understand and adapt banking, there is a demand for moving towards the digital side of banking leaving the paper money behind. The generation gap between the people currently using the banking system and the people who formed the banking system is too much to overcome within days, months, or even years.
Humans have always been known to resist change, but more and more people are going towards the digitized side of banking. This policy influence is making the regulators and banks think about the future need and public demand that is a crypto currency and it is slowly pushing them towards the cryptocurrency.
COVID-19 Affecting Traditional Markets
Due to the pandemic, the traditional markets have been severely affected. The markets have been closed, shifting all the business online allowing only the stores to provide essentials to open in this current situation. Still, Customers do not like going out to the physical markets even for essentials and prefer ordering everything online. Also, the physical currency is unsafe to keep at hand because they may carry the virus.
Even if it does not, still people are very skeptical about the virus. This provides a window for the regulators and banks to move to the cryptocurrency because most of the transactions are already online.
It creates a perfect opportunity for the banks to make a permanent shift to cryptocurrency. With the paper currency failing right now due to the pandemic, we can opt for the cryptocurrency. They can succeed with the concept without facing any backlash or implementation problems as the stakeholders are already searching for something similar to implement and the general public is more than happy to avoid social contact in any form.
The Digital Side Effect
No one can deny that COVID-19 is a calamitous situation and is miserable for everyone that has to go through it. Its effects will always remain in society as long as we live but on the other hand, it has a rather positive side effect that is the digital side effect.
Everything like shopping, healthcare, jobs, and even education, is moving towards digitalization forcing the banking system to tend towards the concept of digitalization in even third-world countries. This is, for the most part, because everyone is stuck in their houses and the outer world is totally shut down.
Digital banking applications are now widely used for everyday transactions by laymen in every department of life. Banks are marketing the digital banking applications by new, innovative, heart touching advertisements to promote the use of these applications to keep the money moving and circulating between the banks.
As it is impossible to move around openly in banks due to the situation to withdraw and deposit cash or pay utility bills, the banks are forced to digitize every single transaction resulting in a canceling paper money trend. This creates a more brisk need of cryptocurrency in the banking system all over the world.
Banks Fear Going Bankrupt
Organization for Economic Co-operation and Development (OECD) banks will eventually launch digital currencies. As mentioned above the cryptocurrency already being used is free of banking costs. So, if all the major customers currently using the brick and mortar banks, depending on paper money, move to cryptocurrency it is difficult to predict how the banking system will stand and function.
There will always be a fear of going bankrupt within the banks making it near impossible to regulate the functionality of the organization. The employees as well as the customers of the bank will gradually become unsure about the future of the bank which will take matters into the directions not very suitable for the bank.
So as to keep the organization moving and functioning, the banking system has to adapt to the current situation and proceed forward towards it. By including the cryptocurrency together with the old conventional paper money to keep the customer and the money safe within their banks. The banks and regulators will either go for the cryptocurrency that is already in place and used by the public or they will introduce their own digital currency to the customers. This will provide the banks with the innovation they need to keep their businesses working and not to fail as an organization in a challenging and changing world.
The banking system is ruling the general public’s money since its origin without any accountability. A layman can never understand how the bank taxes the customer or on what bases or percentage it charges services fee. Still, the banking system never collapsed due to the continuous circulation of money within the banks. The pandemic we are facing nowadays has caused so many businesses to collapse, especially those which were rigid and were lacking the ability to modify its structure according to the current situation. The same goes for banking on organizations. If they keep on being rigid about the norms and functioning of the bank, they might not stand the ramifications of COVID-19.