[ad_1]
Bitcoin – arguably the most iconic name in cryptocurrencies – is proving not immune to the coronavirus crisis. But it could end up benefiting from a delayed side effect of the outbreak if inflation and monitoring measures, particularly in China, turn people into cryptocurrencies.
Right now, the problem for Bitcoin is that China, the second largest economy in the world, is a large participant in Bitcoin mining. As the nation is deeply involved in one of the worst pandemics in recent history, Bitcoin is putting a strain on it as major mining equipment manufacturers have had to delay production due to government-imposed quarantines and mining companies have been shut down. This has undoubtedly affected the level of behavior of the cryptocurrency developers, as Chinese mining pools control most of the Bitcoin network due to the country’s extremely cheap electricity.
Furthermore, a slight decline in user activity can be attributed to the fact that Bitcoin remains a highly speculative cryptocurrency, where current investors are easily frightened by an expected drop in price. The fact that the search term “bitcoin coronavirus” recently surpassed “bitcoin halving” on Google Trends is telling the volatility that many people expect to see with the spread of contamination.
Created in 2008, Bitcoin (BTC) is considered the first cryptocurrency to be mined and traded on a decentralized peer-to-peer network. Rather than relying on a central authority to transact money, a decentralized network of nodes verifies all transactions. The process of adding verified transactions to the public ledger and unlocking new bitcoins as rewards is called “mining” and involves using computer power to solve complex mathematical puzzles or hash functions.
But the Bitcoin blockchain suffers from major design limitations that make mining very expensive; slow down transaction throughput; and cause high price volatility. Since the release of bitcoin, over 6,000 “altcoins” – or alternative variants of bitcoin and other cryptocurrencies – have been created to improve the platform’s scalability, security, and speed.
Losing currency
Bitcoin’s FCAS has fallen 11 points (-1.23%) since mid-February, led by an 18-point (-2.13%) drop in developer behavior and a 6-point drop (-0, 62%) in user activity. Market maturity also fell by 14 points (-1.68%) over the same time frame.
The street
Our heat
While current investors may move away from Bitcoin, it seems likely that new buyers will start using the token as a safe haven. Right now in China, people are being quarantined on the basis of monitoring their spending and punished for spreading news about the contamination. In this environment, and considering the widespread use of Bitcoin in the country, we can expect the token to catch on as citizens aim to resist government scrutiny.
China’s central bank has also stepped up measures to sanitize old money and plans to inject about $ 173.8 billion to calm people and markets as coronavirus fears worsen. The inflationary pressure this will cause is likely to spur demand for crypto assets globally as other nations take similar steps to revive their economy. It will be interesting to see the level of demand Bitcoin will earn relative to other tokens.
FCAS Tracker offers institutional and sophisticated retail investors a top-down approach to tracking the fundamentals of over 500 cryptocurrencies. FCAS Tracker is currently free to a select group of new users as we continue to develop the product. Visit us here to get access to Flipside Analytics.
.[ad_2]Source link
