What Happens If Crypto Hits A Coronavirus Recession?br>
Everyone is talking about the coronavirus. What will it mean for global health? For global political stability? For Americans without healthcare? For trade shows, for conferences, for moviegoing, and for sporting events? And, of course, everyone’s wondering what effect it will have on the economy. Already we’ve seen the stock market take their worst weekly hit since 2008; the Fed has just made a major cut to interest rates. Given past experience and how violently the markets have reacted over the past few weeks, we have a good sense of how traditional assets will fare in the event coronavirus continues to run rampant. But what, the crypto community demands, might an extended outbreak mean for crypto? The answer, unfortunately, isn’t entirely clear-cut.
Bitcoin and cryptocurrency have seen many things in their decade of existence, but they haven’t yet weathered the beginning stages of a major economic downturn. The Bitcoin Genesis Block, after all, includes a link to a London Times article about the 2008 Great Recession. Because the last major financial catastrophe inspired Bitcoin’s creation, no one’s quite sure what might happen to the asset class when the next macroeconomic crisis materializes. It’s possible that a worldwide outbreak will move more people into crypto, as coins and tokens may be perceived as gold-like “safe” assets. This might spur further success for decentralized finance, since many DeFi products can be used to create leveraged long positions. Another advantage for DeFi in the midst of a crisis is that it is, by definition, accessible anywhere with an internet connection. In the (hopefully unlikely!) event of quarantine, it could prove useful for investors looking to generate revenue in hard-hit areas.
What of day-to-day operations? The cryptocurrency and decentralized finance worlds might see fewer immediate difficulties than more traditional industries. It’s true that some conferences have been canceled, but crypto and DeFi don’t rely on face-to-face meetings to function. Many companies are already “decentralized,” with all their employees and contributors working remotely. Plus, the communities are tech-savvy; it’s not hard to imagine them coming up with digital “conferences” and other workarounds to make up for the loss of in-person interaction.
In a worst-case scenario — remember that Japan has already canceled school for a month — cryptocurrency, blockchain, DeFi, and other decentralized tech communities could provide a new model for work. Traditional companies may have over-stringent and excessively formal work from home policies, for example. The flexibility that DeFi and crypto display could inspire others to adopt their twenty-first-century way of working.
Coronavirus is a disaster; it has sickened people around the world and has killed over 3,000 people in China, with mortalities rising in Italy, South Korea, Iran, and the United States as of this writing. Whatever its potential effects on cryptocurrency, blockchain, DeFi, and modern work culture, we should hope that the epidemic ends soon. While the positive side effects may be encouraging, we should remember that they are not the main story.