The corona virus hit Spain very hard. There were many infections, as were the dead. Of course, the Spaniards did their part. We cannot say that no great effort is being made to contain the virus. In fact, Spanish detention was one of the most difficult. Quarantine measures have recently eased due to the success of phasing out the virus. However, the economic damage data is terrifying. The Spanish economy is very bad. The European Commission is forecasting a collapse of 9.4% of Spanish GDP this year. And it could be higher in the case of regrowth. The recovery will be very difficult, but inevitable. Spain is saved from this. But what are the costs? Is the digital economy currently an alternative for Spaniards? What will happen to Bitcoin in Spain?
Unfortunately, the worst part in this entire history of the 2020 pandemic will be taken over by Spain and Italy. Both countries will be most affected. In terms of health, of course. But here I am specifically referring to the economic sphere. According to calculations by the European Commission in Brussels, the GDP of the European zone will decrease by 7.7% this year. A significant number, but not in all countries, will be the same. Some are more affected than others. Italy (9.5%) and Spain (9.4%) will be at the top of the decline in Europe.
And we owe this not only to the number of infections or the severity of the containment measures. The configuration of these economies is also responsible. The proportion of agency workers and self-employed is very high in these countries. As well as the dependence of both countries on tourism, hotels and transportation. And we know that these sectors have been destroyed by the restriction.
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This leads to the destruction of employment. Brussels predicts that Spain’s unemployment rate will be the second highest in Europe, at 18.9%, after Greece. Sure, it’s possible to see a slight improvement by the end of the year, but frankly, it won’t be a big deal. The advantage for the Spaniards is that the government has promised to help with their unemployment programs that always help with something. It is not much, but it can reduce the unemployment burden a little.
The cost of all of this will be a huge deficit. Spain is economically dependent on Brussels in many ways. It doesn’t have the flexibility of other countries that control their own currency. The legal tender in Spain is the euro and the euro is the responsibility of the European Central Bank. There Spain is one voice among many. This system is very useful because it enforces discipline, especially in good times. In times of crisis, however, it can be a nightmare. It’s like our house is on fire and need to request a meeting with the entire neighborhood to discuss the possibility of using the water hose or not.
It is no secret to anyone that the European Union has internal problems. The organization may have grown too quickly in size and complexity. That means they married in love and made too many commitments with just a few dates. Sure, the bureaucracy of life weighs now. But I dare say that in Europe the difference in characters weighs the most. In other words, the different temperaments between north and south. Yes, on the one hand the cold and methodical Northern Europeans. And the warm and happy southern Europeans on the other. Somehow, some always achieve economic prosperity, while others always fall into the well.
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These differences between the two temperaments are a constant source of voltage. Especially in times of crisis. However, that’s what we least need now. At this point we need Europe-wide solutions. More specifically. Colossal capital injections are required. Rescue plans are taboo for some, but necessary. So we could face a very interesting picture. The crisis itself could be extremely deep, but the recovery could be amazing. If we insert this into a diagram, we see a U.
So what does this mean for the fintech and blockchain sector in Spain? Well, it is true that these sectors did not suffer as badly during childbirth as, for example, the tourism sector, because basically everything is already digital and teleworking is possible. However, we cannot delude ourselves. The economic crisis will hit the sector. It is not the same thing, ever or ever, to build an emerging company in a crisis than in a time of prosperity. There are exceptions. But in general, crises slow growth.
Can we go forward with a brake? Yes, but not at the same speed. It is true that the price of Bitcoin can go higher. It is true that a company may have very good numbers. But it would be very deceptive for us to think that having millions of unemployed on the streets is the same for the sector as none.
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What is interesting for the industry is the process that will lead us to a recovery. The markets have fallen, but the deconfusion plans have pushed prices up. The economy is in very bad shape, but capital injections will put a lot of money on the streets and that will open the way to many things. It is true that the crisis can last 2 years or more. But it won’t be a free fall. I will have its valleys and hills. The unprecedented pressure of money that is taking place, a move that has been criticized by many crypto enthusiasts, will ironically work wonders for the ecosystem. Now the price of Bitcoin can easily rise to the moon, as there is enough liquidity for it.
So not everything is bad. The scenario of a U-shaped crisis presents us with many challenges, but at the same time shows us great opportunities.
You don’t have to be an expert in Spain to know that the country will emerge from it. Of course it won’t be easy. Very difficult times are coming. There is no doubt about that. However, there is no evil that lasts a hundred years. There are also many opportunities in times of crisis. The digital economy, fintech, bitcoin and blockchain in Spain will perform better after this litmus test. Nobody says it will be easy. The time has come to eat some green fruits today, but sooner or later it will all go away. Recovery will come. There we will eat the ripe fruit.