The CoronaVirus' Impact On World Economies: The Good and The Bad

In the context of the coronavirus pandemic, governments are taking measures that, together with a general panic, weaken industry and financial markets. As in other areas, the largest conferences in the crypto industry are cancelled and projects are frozen. Bitcoin as the first and foremost cryptocurrency has also suffered from economic shocks, but what will happen next?  

How the virus affects the population?

Detected at the end of December 2019 in Wuhan in central China, the virus spread throughout the planet. The has officially announced a pandemic, a global epidemic. The risks of such a development of events were the first to be seen not only by specialists but also by technology. The BlueDot AI made the first warning about coronavirus on December 31, 6 days earlier than the US Centers for Disease Control and Prevention.  

According to , on March 26, more than 474,900 cases and 21,353 deaths associated with the COVID-19 virus were recorded. Until the end of February, China remained the epicentre of coronavirus with more than 80,000 cases, but now the virus has spread to all continents, spanning Europe, the USA, Africa, Australia .. HealthMap now updates its map of the distribution of coronavirus in real-time using artificial intelligence. 

Countries are taking emergency and preventive measures. Schools and universities are closed, cultural and sports events are cancelled, the question of cancelling the Olympics, scheduled for July and August 2020 in Japan, is being discussed. Following Israel, the European Union decided to close the borders and let in only citizens and residents. The combination of these measures and the panic on the part of investors are some of the causes of global economic shocks. 

What are the global implications?

13 years ago, in his book The Black Swan, Nassim Nicholas Taleb predicted “a very strange virus spreading all over the planet”, the active progress of which was associated with the number of people travelling. The outdated design of the aircraft, which allows the spread of infections in the cabin, combined with the airport infrastructure unprepared for the epidemic, allowed travel to accelerate the spread of the dangerous virus.

Data analysts from Russia concluded that coronavirus is more dangerous than seasonal flu, but only for people at the epicentre of the virus. But even if actual mortality rates are not so serious compared to other diseases, it is expected that panic will only increase.  

Government measures to combat the spread of the virus include closing borders, limiting working hours and the so-called “social distance”, which implies a decrease in the social activity of each individual and groups of people. Each business related to tourism and travel, events, retail, training or transportation is expected to incur significant losses. 

When restrictive measures are applied in regions where small and medium-sized enterprises are heavily dependent on tourism, as, for example, in Italy, the plight of the economy of such regions is awaiting.  Of course, when some doors close, others open, and enterprises can flourish in the digital world, as the video game and video streaming industry in China has demonstrated this winter.

According to Sensor Tower research company, the total number of game downloads in the Apple Store in China this year increased by 27.5% compared to last year, and the revenue of these applications rose by 12.1%.

Nevertheless, global economic shocks rarely remain without consequences for the financial infrastructure, on which even fast-growing enterprises are highly dependent.  

And the financial industry is already showing signs of a deep crisis. According to the New York Times on March 8, Wall Street experienced a greater shock than after the 2008 financial crisis, when important indicators like the S & P500 and Dow Jones plummeted. On March 20, US exchanges closed at a three-year low. During one trading session, the Dow Jones and S&P500 lost 4% each, and at the end of the week, the S&P500 fell 15%. This is a major failure since October 2008.   

How coronavirus affected blockchain industry?

Major cryptocurrency events are being cancelled or postponed due to the spread of the virus and new restrictive measures. And this is true not only for the most affected countries. For example, London Blockchain Week, although it managed to take place before the ban on crowded events was introduced, ran into low attendance.

Some conferences, such as WeWork Blockchain Labs, switched to online formats, which means that partnerships that could be concluded during the event did not take place. The cancellation and rescheduling of international conferences and forums mean for the blockchain and crypto industry that there will be less collaboration and transactions.

Mining was also negatively affected by one of the key infrastructure areas of the crypto world. Two-thirds of mining capacity is still concentrated in China, the epicentre of the virus outbreak. While the hash rate of bitcoins, apparently, does not depend on the crisis and continues to grow, in the worst-case scenario, mining farms are still expected to close and, as a result, the hash rate will decrease. On the other hand, this month the epidemic in China is slowing down, which gives some hope to miners who were previously paralyzed by the lack of internal logistics. If the situation improves, ASIC miner manufacturers will again be able to deliver their products to customers. 

 In general, the introduction of a blockchain is possible is not of primary importance in the face of devastating consequences for public health and economic downturn. One can expect a reduction in blockchain transactions, especially in the sectors most affected by the crisis, such as tourism and entertainment. When the whole world is paused, this is reflected in large innovative projects, for example, the project of the Chinese government to launch the digital renminbi. 

What are the main indicators of the cryptocurrency market now?

On March 10 of last year, Bitcoin was trading for less than $ 4,000, at the beginning of March of this year, it overcame the $ 9,000 mark, but could not hold its position and returned to $ 6,000.

The cryptocurrency market has long been accustomed to such volatility. But in early March, news of coronavirus outbreaks was also accompanied by a collapse in the oil market. Futures on Brent Crude Oil fell to a record $ 25.98 per barrel. Moreover, the sharp decline that began on March 5 accelerated in a matter of days, forcing experts to forecast $ 20 per barrel, calling it the largest collapse in 30 years. 

Although it is expected that short-term volatility will continue, the medium-term outlook for Bitcoin looks good. Halving is approaching, hashing speed is growing steadily, reaching record heights.

Positive actions of regulators are also observed on the horizon: France and Germany are on the way to recognizing bitcoin as a financial asset, South Korea fully legalizes cryptocurrencies, and even the long-standing position of rejection of cryptocurrencies in India begins to change. Some experts argue that in the long run, the current economic crisis may reveal the true value of cryptocurrencies. 

Where does blockchain come into play?

Technological solutions are critical during any major epidemic event. Flash COVID-19 is no exception. DeepMind, a division of Google’s artificial intelligence, has openly published coronavirus structural forecasts created by artificial intelligence. Insilico Medicine, a Hong Kong-based artificial insemination startup, has also opened its database of artificial intelligence-based drug research components to other companies around the world to accelerate the development of an anti-coronavirus drug.  

In February, Chinese health authorities proposed improving the existing system using AI and robotics, with the support of the business to combat the outbreak of the virus. As a result, robots have been launched in China to disinfect and deliver drugs to combat the outbreak of coronavirus, and engineers continue to develop robots that can help doctors working on an advanced epidemiological front.