“At a high level, there’s no question the pandemic has had an impact on the underlying technology of cryptocurrencies themselves, but that’s not the only factor,” Joseph Guagliardo, a cryptocurrency lawyer at Troutman Pepper, told FOX Business.
The pandemic has created “concern over U.S. inflation and global inflation,” making Bitcoin something of a “digital gold and a safe haven,” he said.
The other factor, according to Guagliardo, is that “the underlying technology” and infrastructure used to create cryptocurrencies like bitcoin “is starting to reach a level of security,” prompting investors to get more involved.
“It’s a perfect storm situation. … I can tell you that there are forces going on beyond the pandemic that are going on with cryptocurrency and technology,” he said.
Guagliardo mentioned Ethereum, a type of blockchain technology that “has been very widely adopted” and has matured significantly since the 2017-2018 time period when people first started showing more interest in blockchain and cryptocurrency.
Additionally, companies like Microsoft, AT&T, Overstock.com and Twitch have adopted bitcoin as a form of payment. PayPal announced in October that it had launched a new service for users to buy, hold and sell cryptocurrency on the platform.
“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” Dan Schulman, president and CEO of PayPal, said in an Oct. 21 statement.
There is, however, still room for caution, as Harvard economics professor Ken Rogoff told FOX Business’ “Mornings with Maria” on Thursday.
“I’m a bit of a bitcoin skeptic,” Rogoff said. “I think it’ll have some role on the outskirts of our financial ecosystem, but it surprised me how well it’s done.”
Guagliardo said potential investors should understand cryptocurrency and how it works before investing the same way investors should understand companies.
“My first advice to anyone who is looking to crypto as an investment is to first understand what it is — what the technology is,” he said. “If they’re going to buy bitcoin or Etheruem, first understand the technology … at the end of the day, they’re making an investment in a technology and they should understand that first like they would understand a company and what they do.”