Name: Rosann G.

Cabante

Course and Section: Bachelor Of Arts in Foreign Service (FS201)

Full name of Course: Political Geography and Economy (PEGN03F)

Professor: Prof. JUMEL G. ESTRAÑERO

The Decentralized Digital Currency: The Sudden Drop of Bitcoin During Covid-19
Pandemic

Introduction:

Imagine if we have just one currency that can be used all around the world, that is a
cryptocurrency is trying to be. A cryptocurrency is a form of visual currency that is protected by
encryption, making counterfeiting and double spending practically unfeasible. Most of
cryptocurrency today are built in a technology type that is distributed via network of computers.
Cryptocurrency as well is a very secured system for online payments and a very good form of
investment. This could be a form of payment that can be use for buy goods and services.
According to Voigt, K. & Royal, J. (2021), Many businesses have created their own currencies,
known as tokens, that can be exchanged for the goods or services that the business offers.
Consider them to be arcade tokens or casino chips. To use the good or service, you'll need to
convert actual money for cryptocurrency. Blockchain is the technology that enables
cryptocurrency to function. Blockchain is a decentralized technology that handles and records
transactions across numerous computers. The security of this technology is part of its
attractiveness. According to CoinMarketCap.com, a market research website, more than 6,700
distinct cryptocurrencies are traded publicly. And cryptocurrencies continue to grow in
popularity, with initial coin offerings, or ICOs, being used to raise funds. According to
CoinMarketCap, the overall value of all cryptocurrencies was more than $2.2 trillion on April 13,
2021, and the entire value of all bitcoins, the most popular digital currency, was estimated to be
around $1.2 trillion. Next let us get to know more about Bitcoin and its investments. Bitcoin
wants to be money. We might heard questions regarding which one is good to buy and which
one are worth investing? Because aside from Bitcoin, there are still other types of
cryptocurrency like Ethereum, Ripple, Litecoin etc. Bitcoin allows you to spend money without
having to deal with banks and transact complicated procedures before you can purchase using
bank accounts.
Floyd, D. (2020) states that Bitcoin is a decentralized digital currency that keeps track of
transactions in a distributed ledger known as a blockchain. Bitcoin miners use elaborate
computer rigs to solve difficult problems in order to confirm groups of transactions known as
blocks, if these blocks are confirmed, they are added to the blockchain record, and the miners
are rewarded with a tiny amount of bitcoins. Bitcoin also the most successful of hundreds of
attempts to employ cryptography, the science of creating and breaking codes, to generate
virtual money. Hundreds of imitators have followed in Bitcoin's footsteps, but it remains the
largest cryptocurrency by market capitalization, a position it has held for more than a decade.

Bitcoin and Fiat Money are different because Bitcoin is decentralized without a need of a third
party, while Fiat Money is a physical money that can be only issued by central bank or
governments. According to Kulkarni, S. (2021) The term "fiat currency" refers to money issued
by the government of a country. It is not an actual thing or commodity, but rather a legal tender
backed by the government that issues it. Cryptocurrency is a digital form of payment that is
completely secure thanks to encryption technology. Traditional fiat currencies are vastly
different from cryptocurrencies. They can however, be bought and sold like any other
commodity.

Body:

Elon Musk, was the richest man in the world is also the biggest supporter and investor of
Bitcoin. He even told social media that Bitcoin is “a good thing”. When the well known man in
the world supported this type of Decentralized, you know it’s a good investment. It is considered
as cryptocurrency and I can tell that there was a lot of investors there, example for this is Erik
Finman who became a millionaire after investing in bitcoin with a starting of $1,000. For today
we see Bitcoin as a new currency to be exchange for goods and services, but later on these
type of cryptocurrency will be integrated into business or infrastructure and by that point you
might not able to sell your bitcoin or exchange it for anything else. We can just simply buy things
with it. In fact Milton Friedman, an American economist and statistician that he even predicted
the cryptocurrency that was going on today and he stated this “The one thing that is missing but
will soon be developed is a reliable e-cash, a method whereby on the Internet you can transfer
funds from A to B without them knowing each other.” And that’s how Bitcoin is trying to say
nowadays, a medium of exchange with A to B without A knowing B and vice versa. When we
decided to go abroad, we have still in this type of process wherein you must exchange your
currency to be able to buy goods in that particular country. More hassle at the same time it
takes a process. That’s why we are aiming for one currency that can be used world wide. Less
cash, less Printing. However, no civilization has yet gone completely cashless. Aside from
practical obstacles, various societal issues must be solved before society can completely
abandon cash. Pritchard, J. (2021) states that , a cashless society may sound like something
out of a science fiction novel, but it is already becoming a reality. Several powerful forces,
including some governments and huge financial services businesses, are driving the transition
to a cashless future.

Today the most trendy news is that no matter how popular the Bitcoin is, before Pandemic the
Bitcoin was very popular in terms of good investment. And today's news the collapse of
cryptocurrency markets crashed by 50%. We all have same questions, and that is What just
happened? According to Kolhatkar, S. (2021) Elon Musk has been vocally against Bitcoin on his
Twitter account over the past few days, which is one of the main reasons for the recent drop in
Bitcoin prices. Looking over his tweets regarding Bitcoin, it's evident that he's not a fan of the
original cryptocurrency that got it all started. Elon Musk, on the other hand, sees Dogecoin as a
possible Bitcoin substitute. Here's what Elon Musk twitted recently; "Tesla has suspended
vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels
for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.
Cryptocurrency is a good idea on many levels and we believe it has a promising future, but we
cannot come at great cost to the environment. Tesla will not be selling any Bitcoin and we
intend to use it for transactions as soon as mining transitions to more sustainable energy. We
are also looking at cryptocurrency that use 1% of Bitcoin's energy/transactions.” Many investors
are enraged at Tesla's CEO because they have lost millions of dollars in Bitcoin investments as
a result of his Tweets. Elon Musk declared on May 13,2021 that Tesla will no longer accept
Bitcoin payments. Bitcoin's price has dropped since then, from $55,000 to around $45,000 at
the time of writing this post. The price of Bitcoin continues to decline as a result of Elon Musk's
harsh statements regarding it. Many ordinary people who invested in Bitcoin have lost a
significant portion of their money and have been labeled as scammers including Filipinos who
are into Bitcoin. That is why these crypto are already been introduced around the world and
made you want to invest. In fact we do have investors here in Philippines too. According to
Helms K. (2020), There are many places in the Philippines where you can buy bitcoin. Not only
has the Bangko Sentral ng Pilipinas granted licenses to some cryptocurrency exchanges, but
there are also peer-to-peer marketplaces, bitcoin ATMs, and other services available to assist
you. This guide will show you where to buy bitcoin in the Philippines and how to do so using
these methods.
Analysis:

(Data Image by England, J. 2021).

Given on the premises above, the Philippines has embraced cryptocurrency, with data
indicating that it has the world's third-highest cryptocurrency adoption rate Internationally, given
the point that we have lots of Filipino investors in Bitcoin. According to England, J. (2021) the
Philippines is one of the world's fastest adopters of cryptocurrency. The pandemic, according to
data, has fueled the trend, with Filipinos realizing the value of cryptocurrency as an investment
and income-generating currency. Bitcoin first gained traction in the Philippines in 2017, when its
price soared from $1,000 to over $19,000 in a matter of months. Since then, BSP has built a
dependable platform that protects cryptocurrency customers while also encouraging bitcoin
adoption, which is still in its infancy. Bangko Sentral ng Pilipinas (BSP) has also established
channels with 17 virtual currency exchanges that are industry compliant as of December 2020.
“Between December 2020 and today, something happened to put bitcoin and crypto into a sace
where even traditional portfolio managers need to consider them,” Nichel Gaba, CEO and
founder of Philippine Assets and Digital Exchange, said of the rapid adoption of cryptocurrency.
In crypto, we are living in exciting times,” he added. Due to the rapidly evolving technological
landscape, which has seen PDAX experience a 70-fold increase in transactions and a 15-fold
increase in customers in less than a year, cryptocurrency was on the verge of becoming
mainstream in the Philippines.

Potts, J. (2021) said that Bitcoin is still trading near its all-time high set earlier this month. Its
current price is roughly $34,000, up 77 percent in the last month and 305 percent in the last
year. Bitcoin, which was first launched in 2009 as a digital currency, was briefly utilized as a
form of digital money on the outskirts of the economy. It has since gained popularity. It's now
almost entirely used as a form of "digital gold." That is, a digital asset that is in short supply. In
reaction to the threat of COVID-related economic collapse, governments throughout the world
have flooded global markets with money issued by central banks in attempt to promote
spending and save the economy. In reaction to the threat of COVID-related economic collapse,
governments throughout the world have flooded global markets with money issued by central
banks in attempt to promote spending and save the economy. Added by Li, Y. (2021) The last
time bitcoin had such a drop was in March 2020, during the height of the covid epidemic. Even
back then, the trade wasn't quite as shocking. According to analysts, increased regulatory
pressure as well as the technical picture indicate to more erratic trading in the future. Last
Wednesday, the world's largest digital currency fell 30% in a single day, to almost $30,000 a
unit. Bitcoin reached a new high of $64,829 in mid-April. Even by crypto's standards, the
turbulence was intense. The last time bitcoin had such a drop was in March 2020, during the

height of the Covid epidemic. Even back then, the trade wasn't quite as shocking.

Recommendations:

This study recommends to those investors and to the future investors as well of Bitcoin and
other types of Cryptocurrency, knowing the sudden drop down in today’s Pandemic that a lot is
losing their investments, the following are the recommendations; First although Bitcoin and
cryptocurrencies have made people to be millionaires, many have lost money due to a lack of
competence, which is why it is best to let a professional handle your deal. Second, Don’t ever
waste gains. Everyday is the best way to invest, but any day can be a losing. Instead, after you
gain something via investing consider how you could put that money to better use. Lastly,
Starting early is the best way to generate wealth, and investing is still a top priority. With the
correct abilities and a thorough understanding of how the stock market operates, there are
several opportunities to profit handsomely.

Conclusion:

As a conclusion, Tesla, Musk's electric car manufacturer stated in February that they had
invested in Bitcoin amounting $1.5 Billion. And then they decided to make Bitcoin as a payment
in March. These activities aided the rise of Bitcoin that even its price and worth goes higher as
well. However, Elon Musk suddenly change his mind and quickly reversed and announcing last
week through his twitter account and in this time of Pandemic that Tesla will no long take Bitcoin
as payment due to harm of environment that Bitcoin mining could do. Bitcoin drop its price
below $50,000 as a result of the statement creates a huge massive sell-off in most
cryptocurrency like Ethereum, Ripple etc. Bitcoins investors was more concerned that Tesla
would eventually pull out their investments but Musk's twitted that Tesla will remain its
investment. The Bitcoin supporters questions the statement of Musk. Gold mining according to
fellow billionaire Mark Cuban is far more harmful to the environment than Bitcoin mining. Raj, S.
(2021) stated that the crash was caused by two key factors. The first was Tesla's surprise
decision to cease accepting Bitcoin for automobile purchases, which they revealed a few
months ago. Another factor contributing to the sell-off is China's nationwide crackdown on
mining equipment.

Way Ahead:

Event though in today’s Bitcoin market had a huge drop down, we can still see the future that
these Cryptocurrency is the way of having a cashless society, that all of our currency will be
decentralized. It is already happening, we have these apps wherein you can now pay online
without handling any form of cash to buy your needs. Here in Philippines we are currently using
Gcash, PayMaya and more. In fact in 2023, Sweden will be the first country in the world to
become the cashless Nation world wide. 80% of them today are now using a cards as a form of
payment. Creating a cashless society is not impossible. And having these Cryptocurrency is the
first step to achieve that, we are moving forward to get there. We have now the Bitcoin, this is
not the future, this is the present.
References:

England, J. (2021) Cryptocurrency to become mainstream in the Philippines.

Retrieved From: https://fintechmagazine.com/digital-payments/cryptocurrency-become-

mainstream-philippines

Floyd, D. (2020) How Bitcoin Works.

Retrieved from: https://www.investopedia.com/news/how-bitcoin-works/

Helms, K. (2020) How to Buy Bitcoin in the Philippines.

Retrieved from: https://news.bitcoin.com/buy-bitcoin-philippines

Kolhatkar, S. (2021) Why Is Bitcoin Going Down? Elon Musk Is At The Center Of The Bitcoin
Controversy

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bitcoin-going-down-elon-musk-is-at-the-center-of-the-bitcoin-controversy.html

Li, Y. (2021) Bitcoin’s trading action lately is wild even by crypto’s standards and the drama is
not over yet.

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Retrieved From: https://www.thebalance.com/pros-and-cons-of-moving-to-a-cashless-society

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Raj, S. (2021) Investors lost a whopping $830 billion in crypto crash last week.

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Voigt, K. & Royal, J. (2021), What Is Cryptocurrency? Here’s What You Should Know.

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