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Has COVID-19 made cryptocurrency more attractive for digital payment and investment?

Toronto.com | Veronica Appia | Feb 25, 2021

bitcoin payments - Has COVID-19 made cryptocurrency more attractive for digital payment and investment?

As countries continue to devalue their currency amid COVID-19, cryptocurrency is becoming more appealing to investors. - Pexels photo

Experts weigh in on Bitcoin, crypto resiliency

In an economy deeply impacted by the COVID-19 pandemic, citizens and businesses have been experiencing financial hardship for months and governments have been using stimulus money to create supports and aid in economic recovery.

Prime Minister Justin Trudeau announced $100 billion to be spent over three years, beginning this year, in an effort to bolster the current state of the economy.

But giving away stimulus money in such large amounts devalues a country's currency, said Henry M. Kim, an associate professor of operations management and information systems and co-director of the BlockchainLab at Schulich School of Business.

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This, in turn, creates a case for certain types of cryptocurrency, such as Bitcoin, to become more attractive.

"Bitcoin doesn’t act like money. What’s winning out is the notion that Bitcoin is digital gold," Kim said. "And Bitcoin, as volatile as it is, is not a currency that central banks are devaluing."

For this reason, he said, Bitcoin is great to speculate on at the moment.

Earlier this month, Tesla CEO Elon Musk purchased $1.5 billion worth of Bitcoin and announced plans to start accepting Bitcoin as payment for certain Tesla products, causing Bitcoin prices to surge. One Bitcoin is currently worth just under $50,000 U.S.

"I think it makes Bitcoin seem attractive, even more than it was before, and seem much more long-lasting," Kim said.

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Jason Butcher, CEO at CoinPayments, a platform that allows merchants to accept cryptocurrency payments, said crypto payments are becoming increasingly more appealing to those with speculative interest and those who perform transactions.

"Those looking for cryptocurrencies as a means to acquire (and sell) goods and services are really the driving force behind this new and flourishing crypto economy," Butcher said. "Crypto payments provide a secure, quick and low-cost way to send and spend value online. It is cheaper and more seamless than traditional providers, and that is why people are starting to notice."

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His merchants use crypto payments for a wide variety of products, including electronics, groceries, luxury items, vacations and more.

Kim said while there is not a lot of people who can currently buy with crypto, as many merchants have not made the switch yet, some businesses and municipalities are starting to get more innovative.

"As of about a year ago, Richmond Hill and Innisfil actually began to accept property tax in Bitcoins," he added.

Regarding the effect COVID-19 has had on cryptocurrency's appeal, Kim said that looking back to SARS 2003 can provide some insight.

"In China (at the time of SARS) people were very afraid to pay for things in cash and hand out things that give up possible germs. That, in part, (paved the way) for the development of WePay and Alipay in China," he said. "There was a whole bunch of other factors, but certainly SARS then was a factor and if you think about it, those are not exactly digital currencies, but they are similar."

Butcher agreed.

"Today, people are looking at more efficient and effective ways of sending value around the world while limiting the possibility of spreading infection through the use of physical currency or devices," he said "So, it’s pretty clear that the opportunity to view cryptocurrencies as a possible solution has helped."

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