On June 24, the IMF published its quarterly World Economic Outlook report, describing the COVID-19 induced lockdown as the worst economic downturn in 90 years and predicting a total of nine trillion dollars of losses by 2022. Global growth is projected at –4.9 percent in 2020, and the world economy is expected to face a year-over-year recession of 3% as economic activity retraces in more than 170 nations.
The International Monetary Fund (IMF) has also issued a grim forecast that the ongoing global economic recession caused by ‘the big lockout’ will get even worse, before things turn for the better. Meanwhile, the imminent global recession will likely be the impetus for widespread acceptance of decentralized finance, the technology behind blockchain and other digital payments and finance innovation.
The previous global economic recession has spurred forward fintech innovations. The financial crisis in 2008 taught people that financial intermediaries are not always trustworthy. This led to the development of the bitcoin network. Now, the world faces another financial crisis, and there is no doubt that Bitcoin will thrive in these economic conditions, presenting solutions to real-world problems.
As the global economy deteriorates, Bitcoin is likely to become a safe haven asset and an alternative hedge option for both retail and institutional investors, as evident by the renewed interest in cryptocurrencies this year, coupled with the halving event. Nonetheless, before you consider buying Bitcoin or other cryptocurrencies, it is good to firstly understand the underpinning technology behind the cryptocurrency.