While the Italian people have been on lockdown, its digital businesses have been spared the brunt of the recession, as companies continue providing vital services to the quarantined. Just before the COVID-19 pandemic assailed the Mediterranean country, Italy’s Hype bank, a mobile-first challenger bank, sealed a deal with bitcoin startup Conio to add BTC support. The agreement means that Hype’s 1.2 million customers will be able to buy, sell, and store bitcoin directly within their banking app.
Even the most robust Italian companies have struggled to weather the coronavirus downturn, which has stricken Italy and now the US with a vengeance. Shares in Fiat Chrysler (NYSE:FCAU) are down 50% since the start of the year, while Telecom Italia (NYSE:TI) has lost around 30% of its value. The FTSE MIB index, which tracks 40 of Italy’s large-cap stocks, is down 16.5% for the year.
Transitioning from Physical to Digital Payments
Italy still has some way to go before the first wave of the COVID-19 pandemic subsides. There is evidence, however, that the number of confirmed cases and reported deaths has peaked. Although not yet out of the woods, the country’s citizens have begun plotting what post-coronavirus life will look like. One habit that’s unlikely to be resurrected in the short term is the use of cash; the outbreak has effectively killed off the handling of banknotes and coins.
Challenger banks such as Hype were already positioned to capitalize on the transition from physical to digital payments. The events of the past two months have merely accelerated this change. As such, the integration of bitcoin into Hype’s banking app couldn’t have arrived at a better time. Aversion to cash will not necessarily drive demand for bitcoin, but the rampant inflation as central bank printing presses go into overdrive may.
A bailout of up to €700 billion has been proposed to overcome the economic loss caused by the coronavirus crisis in Italy, and Prime Minister Giuseppe Conte is pressing the EU for the creation of a joint Eurozone debt instrument to finance the bloc’s response. Other countries affected by the pandemic have also announced hefty stimulus packages, with the U.S. Senate approving the largest economic stimulus package in recent memory. Such expansionary monetary measures have convinced many that bitcoin’s price will rise as a result.
Italians Love Bitcoin
Although Hype’s partnership with Conio is unprecedented, it’s fair to say that Italians have been enamored with the digital currency for some time. According to a report published last year, BTC is the third most popular payment method for online purchases in the country, surpassing even the likes of American Express. By making the purchase of bitcoin itself easier, faster and more cost-effective, the challenger bank will appeal to both long-term investors (hodlers) and those keen to spend bitcoin while online shopping (and thereby avoiding cash). With the Hype banking app, users can quickly send bitcoin to friends and family members, too.
An aversion to handling cash may have partly motivated a recent crypto fundraiser run by the Italian Red Cross, which managed to surpass its target in three days. At the time of writing, 77 bitcoin donations have been made for a grand total of 3.2131 BTC – just shy of €20,000. The fund will be used to finance an advanced medical post for pre-triaging COVID-19 cases. It is just one of many crypto initiatives aiding global efforts to fight the coronavirus, and such charitable endeavors may serve to heighten the reputation of virtual currencies in the eyes of a general public more accustomed to hearing about bitcoin as a “criminal’s currency.”
With Prime Minister Conte and other heads of states predicting a hard, severe recession to come, Hype is placing some of its eggs in the bitcoin basket. Perhaps it’s only logical to expect banks in other hard-hit countries to follow suit, and for citizens to seek a safer haven for their capital than devaluing fiat currencies.