Bitcoin’s Price Rise
Bitcoin’s price rose above $8,000 for the first time since March. Bitcoin’s price surged 11% on Wednesday 29th April and has crossed the $8,000 mark. Already on Thursday it has passed the $9,000 mark heading for $9,500. The last time the price was anywhere near this level was in March when the impact of the Coronavirus began to spread and stock markets began to crash. Major central banks have unveiled huge stimulus packages to cushion the economic fallout due to the Coronavirus pandemic. This is the factor behind the recent rise in stock markets, which has filtered through Bitcoin and other Cryptocurrencies. It has been predicted that Bitcoin is likely to pass the $10,000 mark before the Bitcoin halving around the 11th of May. Since its interception Bitcoin has maintained its leadership in terms of capitalization due to many positive aspects that occur with cryptocurrency.
China’s Digital Currency Vs U.S Dollar
The People’s Bank of China (PBOC) has extensively researched digital currency and Blockchain since 2014. Now China’s Central Bank is preparing to test a digital currency and some observers say that this could be an economic arms race challenging the supremacy of the U.S Dollar. Already millions of consumers in China are used to paying for purchases without cash, using popular apps such as Alipay and WeChat. You basically only need these two apps to do just about anything in China. Everything is extremely convenient, all payments are automatic its quite extraordinary. With the increasing multi polar financial system, the digitization of currency could perhaps be the most important factor in the economy’s success. But as of now China is winning the digital currency battle and if the U.S doesn’t catch up soon, it may test the confidence in the Dollar’s role as the global reserve currency.
The developmental power of a central managed Chinese digital currency named the Digital Currency Electronic Payment (DCEP). DCEP is a decentralized cryptocurrency. Like Bitcoin, Stablecoins, Facebook’s Libra and other cryptocurrencies, DCEP is a digital bearer instrument. If China wins the digital currency race, it can have multiple effects for the U.S and Western capitalism. If foreign businesses bypass America’s gate keeping banks, Washington may lose its power to impose sanctions on other countries. If foreign banks no longer face exchange rate risks, they won’t need to backstop their currencies with dollar reserves. This means that there will be a drop in demand for U.S, government bonds would result in higher interest rates which includes business loans, credit cards, mortgages and every other form of U.S borrowing.
However American congressional lawmakers included a digital dollar solution for distributing federal handouts in initial versions of Covid-19 support legislation. Although it might not make it to the end coronavirus economic stimulus and support package, but some legislators are pushing to give the Federal Reserve a new tool that could reshape how it conducts monetary policy.
The Libra Association has released a new white paper for the Libra project with a number of significant changes. A number of key areas have been designed. The first is enhancing the safety of Libras payment system. They are also offering single-currency stablecoins in addition to the multi currency coin. They are forgoing future transition to a permissionless system while maintaining its economic properties and also building strong protections into the design of the Libra Reserve.
Libras Licenses and New Launch Date
The Libra Association announced that it has initiated the formal payment system licensing process with Switzerland’s financial regulator. The association is also planning to register with the U.S Treasury’s Financial Crimes Enforcement Network as a money service business.
Libras planned launch date was originally set for the end of June 2020. However, Dante Disparte, Libra Associations head of communications and policy announced the project will be launched between mid November and end of year.
Pandemic Changing the Digital World
The coronavirus has been creating challenges to every aspect of the world as we know it. With businesses closing their doors and governments announcing that all citizens should stay at home, the coronavirus has had a profound global impact. However, it has also led to new opportunities. The global crisis brought on by the pandemic has pushed us further into the digital world. According to professionals, the coronavirus crisis has accelerated the uptake of digital solutions, services and tools, speeding up the global transition towards a digital economy.
With the lock down being put in place in many countries around the world, there has been a leap in teleworking and online conferencing. Many people are turning toward virtual events. Microsoft decided to turn it’s biggest even of the year (Build Developer Conference) into a virtual event. Many companies are also having video conferences and one to one conversations. The demand for online conferencing software such as Microsoft Teams, Skype etc, has risen drastically. According to Microsoft, the number of people using it has climbed over 40% a week.
Online learning has become central in people’s lives all over the world. The pandemic has forced universities, schools and companies to remote working and this booms the usage of online learning. It is also generating more data on the expansion of the virus and helping information exchange for research. Online shopping has grown rapidly. As more consumers continue avoiding crowded public places, they’ll increasingly turn to online shopping to get their essentials. Even the banking industry is turning to digital. An example of this is South Africa’s Nedbank. Nedbank is planning to reduce face to face banking by accelerating the roll out of its digital strategy across Africa. During dark times like these it is essential that organizations adopt quickly and seek out new growth opportunities. It is key to acknowledge the potential threats while exploring the possibilities.
While the coronavirus pandemic presents business risks in some areas, it also offers opportunities in others. Due to the inflation of fiat currency and government spending that is expected to occur in the coming years, it is a possibility that Bitcoin’s fate could be decided this decade. As the world fights back against the coronavirus, Bitcoins value and acceptance could grow from routine payment to a much more sophisticated financial canvas.
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