Cryptocurrency in Canada: Here's Where Things Stand in 2021
Bitcoin made its debut in 2009 and has grown exponentially since. As of mid-September, Bitcoin was valued at a little over C$17,004.58 per coin.1 Cryptocurrency and blockchain technology have continued to gain popularity over the past decade, and investors are still turning to this alternative market in 2020. As we continue experiencing a year of financial uncertainty, here’s where the world stands when it comes to cryptocurrency.
Bitcoin and COVID-19
Between March 5 and March 12, Bitcoin dropped over C$4,728 in price - the biggest plunge this popular cryptocurrency has experienced in over seven years.1 Feeling some deja vu? As most investors remember, the S&P TSX Composite Index took a plunge right around the same time, beginning March 4.2
Similar to the traditional markets, cryptocurrency likely plummeted in response to investor uncertainty surrounding the coronavirus, as well as the decline and disparities over the price of oil in the Middle East, some experts believe.3
It’s important to note, however, that Bitcoin rebounded fairly quickly, reaching it’s pre-pandemic pricing by the beginning of May.1 Does this indicate that cryptocurrency may be a safer option for investors during times of financial turmoil? There is no certainty in the answer to that question, but many investors find it an appealing alternative (or addition) to portfolios based in traditional markets.
Blockchain: What Is It?
Blockchain is described as an incorruptible digital ledger of economic transactions. It can be used to record financial transactions or virtually anything with value. It works as a digital ledger keeping records of all transactions across a peer-to-peer network in real-time.
How Does Blockchain Work?
Imagine the blockchain as a book of records with countless pages. Each page in this book is referred to as a block that can be programmed to record virtually anything. The pages (blocks) are then created one after the other and chained together simultaneously, creating a chain of blocks referred to as the blockchain.
The various blockchain records are maintained on a large network of networks, meaning no single person or entity controls the records' history. Every time new information is accessed and updated, the changes made are verified and recorded before being encrypted and sealed off completely, unable to be edited again.
Blockchain Use During COVID-19
Blockchain technology has been around for more than a decade, but some experts believe it could be making its way into more mainstream uses in light of the recent pandemic. From testing the virus to tracing vaccine distribution, blockchain technology may be the answer the pharmaceutical industry needs to address safeguarding records and sharing information across multiple channels - as described in a recent article by Coin Journal.4
Beyond the healthcare industry, government agencies and nonprofits may begin turning toward blockchain technology because of its ability to offer data in a transparent and secure manner. Nonprofits, for instance, may be able to use it to give donors peace of mind in knowing their funds are being directed where they should, and not to a middle man or other shady location.
While cryptocurrency has been compared by experts to buying a brick of gold (due in part to its high price per unit), it’s important to still do your due diligence before making any investments. Speak to your financial advisor or investment broker to learn more about this market, and whether or not it could be well-aligned with your greater financial goals.
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