Is Bitcoin just a crisis currency or what?

Since the inception of the cryptocurrency Bitcoin over a decade ago, the decentralized ecosystem has seen a significant rise in value and backers. The market capitalization of Bitcoin exceeded $1.2 trillion in late March 2022, while the cryptocurrency industry as a whole reached $3 trillion.

Is this currency just a suitable currency for the crisis or what? The answer is provided by the trusted cryptocurrency trading platform from Evest.

Bitcoin is still small:

The original cryptocurrency is still very young, having been created in 2009 by the pseudonym Satoshi Nakamoto, whose true identity is still unknown.

Despite its remarkable growth and popularity since its inception, Bitcoin is quite different from traditional securities in a number of respects, the most important of which is that it has a high degree of volatility. In the world of stock trading, the markets are generally calm. However, with Bitcoin, price drops of 30% have been known to occur in 24-hour intervals - or less.

Another common problem with Bitcoin is the lack of familiarity, understanding and confidence in its working mechanism, which is partly new and under a pseudonym.

Angela Fontes, a financial researcher and managing director at Fontes Research, believes that much less information is available when it comes to trading digital assets. On the other hand, "there is a whole world of information about the stock market," Fontes told CNBC's MakeIt.

Due to this lack of familiarity with an emerging asset, many investors tend to shy away from Bitcoin even though there are many crypto signal services available to help traders trade. However, recent events have sparked a different direction.

Is BTC just a crisis currency?

Cryptocurrencies have proven to be a valuable asset in times of crisis. For example, in the aftermath of the Russian invasion of Ukraine, more than $60 million in cryptocurrency was donated to help humanitarian causes. Of this number, 31.2% of funds are in Bitcoin, which is denoted by the symbol BTC.

 Moreover, the use of digital currencies to help Ukraine fund its humanitarian and military aspects has led to several crypto-friendly laws in the country, allowing residents to use and trade cryptocurrency legally.

In addition to direct donations of cryptocurrency to Ukrainian NGOs and the government, Bitcoin portability has helped the refugee take 40% of his savings to Poland.

Meanwhile, Russia is also studying cryptocurrencies as international sanctions tighten their grip on the country's economy.

Besides the Central Bank's experimental digital currency (CBDC), the digital ruble, Russia is also considering bitcoin as an option for the country's gas and oil exports.

Pavel Zavalny, head of Russia's State Duma, has revealed that Russia's "friendly countries" may soon be allowed to buy natural gas and oil with bitcoin or their local currencies. On the other hand, President Vladimir Putin has singled out "unfriendly" countries for the Russian national currency, the ruble. "We are  proposing China for a long time to switch to a settlements in the national currencies of the ruble and the yuan," Zavalny said.

One of the reasons Bitcoin was created was to give backward countries and societies the ability to engage in international business. Bitcoin's Peer-to-Peer (P2P) protocol allows transactions to be completed without going through a third-party intermediary.

An estimated 1.2 billion people worldwide are underbanked, which means they lack access to basic bank accounts or traditional financial services.

In much of the industrially "developed" world, customers are often paid to use bank accounts. However, there are many regions in the world that simply lack the infrastructure to provide banking services. With the arrival of the Internet and mobile cellular networks in these countries, Bitcoin becomes a legitimate opportunity for the underprivileged.

Using BTC as a Treasury Backup:

Despite its ability to help the underprivileged, Bitcoin has developed use cases in other areas as well. Many companies have added BTC to their balance sheets, making BTC a reserve asset for the treasury.

MicroStrategy is one of the biggest converters to Bitcoin. The reason, according to CEO Michael Saylor, was that the value of the US dollar was a "quick-melting ice cube" after the rate of cash supply in the middle of the pandemic was growing rapidly. MicroStrategy now owns 125,051 BTC, worth over $5.5 billion at the time of writing.

Our strategy with Bitcoin to buy and hold, so as often as we have excess cash flow or find other ways to make money, we continue to put it into Bitcoin,” said Fong Lu, Chief Financial Officer of Microstrategy.

Other big names with big Bitcoin wallets are Tesla (4,2902 BTC), Galaxy Digital Holdings (16,400 BTC), and Voyager Digital LTD (12,260 BTC). Moreover, a decentralized blockchain platform called Terra (LUNA) plans to acquire $10 billion in Bitcoin reserves, according to Do Kwon, founder of Terraform Labs.

Bitcoin as legal currency:

Governments are starting to use bitcoin as well. In September 2021, El Salvador took a big step in the cryptocurrency space by declaring Bitcoin as legal tender. The country previously used the US dollar and nearly 70% of Salvadorans did not have access to modern financial services.

"We must break with the models of the past," said President Nep Bukele. "El Salvador has the right to advance into the first world."Countries moves to Bitcoin brought more opportunities for people, according to a survey by the University of Central America (UCA), 67.9% of people  were not happy with the El Salvador’s economic move.

On the other hand, Salvadori shared his first experience of buying food with Bitcoin at McDonald's, while "fully expecting to be told no".

It is still too early to conclude whether Bitcoin can become a global reserve currency in the future, but as more companies and governments enter the industry, the possibility is only increasing.

With the many recent developments around Bitcoin and other digital currencies and the communities that support them, we can see that they were not created just in order to evade sanctions or save the day from global crises. Instead, there can be a sense that there is something more important in the long run.