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Has Bitcoin and The Pandemic Forced Us to Rethink Our Approach to Money?

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Introduction

Let me begin the article, by asking everyone reading this to conduct a simple exercise-

‘Ask your grandparents, parents, and your elder brother, younger sister, cousins, to define what is money?’

There are some very surprising answers, which you are likely to get. This is mainly because the meaning, utility, and definition of money have changed and evolved over the years.

What it meant to your grandparents will not necessarily apply to your younger sister. For every era, there has been a systemic evolution of money. In this article, we are going to look at two defining occurrences of our times and understand how they have affected money-

  • Bitcoins
  • COVID-19 Pandemic

Money: Meaning and Definition

There are three things, which you need to know about money when it comes to its meaning and definition-

  1. Money as a Daily Currency-

The traditional and historical definition of money is a facilitating medium to exchange products/services/goods and assets.

  1. Money as an Asset-

In addition to being a medium of exchange, money holds its own intrinsic asset base as a store of value. Assets like real estate, gold, and Bitcoins are valued in terms of money.

  1. Money as an Indicator of Global Finance-

The performance of the world’s global economy and financial systems is defined by how well a dominant and hegemonic global currency like the dollar is going.

While for some people money might be simply a medium of exchange, for others it carries an asset value. Both the pandemic and the rise of Bitcoins have redefined our notion of money drastically in 2020.

The Impact of the Coronavirus Pandemic on Money

The devastating effects of the COVID-19 Pandemic on the world’s global economy have been felt by all countries on the planet. Developed nations with far superior medical and economic might have been severely depleted at all levels.

People have realized that the value of money as a store of value has become far superior to its role as a medium of exchange, or currency. The pandemic has successfully led to the increasing adoption of digital payment systems.

Mobile banking apps, digital wallets, and Net Banking and payments gateways have seen tremendous adoption during the pandemic. The use of fiat currencies in paper form has seen a drastic change and movement from hand-to-hand usage to digital use.

With Millennials and Zillennials crowding the financial earning space, digital use of money is going to shoot up in double digits in the next few years.

The Effect of Bitcoins on Money Usage in 2020

The year 2020, was an eventful year for the cryptocurrency, Bitcoin. It not only proved its strength as the strongest asset class in the world, it also showed the world that you could gain economically at a time of economic despondency.

Many people who were out of jobs and had a lot of free time on their hands started researching about trading and investing in Bitcoins. Initial investments have returned results nearly 10x times over a ten-month period.

This goes to show that in terms of redefining money as a store of value, Bitcoin has overshot all expectations. The surge in growth was not lost on Wall Street investment firms who broke the bank and led to a surge in institutional investments in the space.

With Bitcoin shooting to nearly $30K on January 1st, 2020, the trust, faith, and maturity of the crypto have been lauded by some of its staunchest critics. The associated tech, Blockchain is also well on its way to being heralded as one of the most cutting-edge technologies the world has ever seen.

The Final Word

The next few years are going to be critical for the world’s economic and financial systems. While we still await the vaccine, the world hopes for the economy to bounce back and normalcy to be restored in the first half of 2021. If you wish to know more about how to trade and invest in Bitcoins, please visit- bmmagazine.co.uk

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