Is Bitcoin Safe?
As everyone watches in horror as the world’s stock markets fall, people are looking for ways to protect their money. One of the options that people see right now is Bitcoin, which is the most popular cryptocurrency that is available now.
What Is Cryptocurrency
Cryptocurrency is a medium of exchange that is internet-based. It relies on cryptographical functions for running financial transactions.
Sounds technical? It can be. To put it simply, with cryptocurrency, including Bitcoin, there is no physical money or coins. The main feature of cryptocurrency is that there is no central authority that controls it.
The decentralized nature of blockchain technology, on which Bitcoin and other cryptocurrencies rely, means that it cannot be controlled by the government in the same way that traditional currency is controlled. People also believe that cryptocurrencies are not affected by the changes affecting the normal market, making them a safe investment.
A Safe Investment?
When the first indications that there would be some economic troubles brought about by the pandemic caused by the coronavirus, most people were hoping that cryptocurrencies would offer a safe haven for investors.
Unfortunately, the safety offered by Bitcoin has turned out to be a myth. The value of Bitcoin has gone down by as much as 50% within two days. On the 13th of March, Bitcoin tumbled 32% which added to its previous losses. Other cryptocurrencies also lost value.
The drop in value is causing some to question the supposed ability of cryptocurrencies to stay safe when other forms of investment are in trouble. Experts believe that investors now are selling off assets like Bitcoin and gold to pay off their obligations and also to increase their cash reserves, which might be needed during the difficult times ahead.
A Falling Market
For some people, the fall of cryptocurrency comes as no surprise since it coincided with the general market reeling with the pandemic. The S&P 500 lost 10% in the worst day since the crash that happened in 1987. All US indexes are now within bear-market territory. Even gold, which normally gains in value when stocks fail, saw a decline too.
President Donal Trump’s comment regarding the coronavirus outbreak has only made things worse. There was no clear indication regarding any stimulus measures which can help the market. The ban on travellers from Europe also contributed to the route since it sent the stocks of airline companies stumbling.
There is uncertainty now regarding the whole economy and it’s not clear how worse things can get. The rising number of people affected by the virus is raising concerns that it more serious measures like those taken in China will have to be adopted to curb the spread of the disease.
Is Bitcoin Safe?
The crisis has now shown that Bitcoin is not as safe as it was supposed to be. Unfortunately, there is no safe form of investment right now as everything is being affected by the pandemic. Things could get a lot worse before they get better.