With the coronavirus causing unprecedented impacts on economies across the world, many have debated whether Bitcoin could serve as a hedge against currency volatility. However, while many continue to explain either side of the argument, one restaurant in Canada decided to put the top cryptocurrency to the test.
“Worthless” Fiat Made the Restaurant Switch Reserves
Yesterday, Tahini’s, a Middle-Eastern restaurant based out of Canada, published a Twitter thread explaining why it moved its entire reserves into Bitcoin. The restaurant, which dubs itself the “best Middle-Eastern restaurant in the world,” operates four corporate locations and three upcoming locations in Ontario. In its tweet, the firm explained that it moved its asset base to Bitcoin at the beginning of the coronavirus pandemic in March after the government began providing economic relief packages to companies.
Like the United States, Canada’s government acted swiftly to help people and companies out during the pandemic. On March 25, the Department of Finance announced an economic relief package that would provide $2,000 a month for up to four months for workers who lost their jobs due to the pandemic.
In June, Prime Minister Justin Trudeau announced that the government would extend relief from 16 weeks to 24 weeks for some eligible groups of people. With governments rushing to provide billions in aid to individuals and companies, Tahini’s owner Omar Hamam explained that he saw that the time was right to move. As he saw it, the relief wouldn’t last forever, and some entities would get left out.
Hamam also pointed out that the excess relief threatened to make fiat currency worthless. He added:
“As time went on I was constantly trying to learn and grow my knowledge about finance. I heard people in the Bitcoin community saying you have to hear about Bitcoin at least 7 times before you get into it. 100% accurate.”
A Testament to Bitcoin’s Hedge Value
The business owner decided to switch to Bitcoin. So far, the move has been profitable. Data from CoinMarketCap shows that Bitcoin rose from $6,720 on March 25 to $11,500 on the day Tahini’s tweet came out.
Assuming the restaurant made the reserve switch on the day the government announced the relief plan and didn’t make any additions, it would have increased the value pf its asset base by 71 percent.
Tahini’s has confirmed that it plans to continue with Bitcoin hopefully forever. Tahini’s experiment further shows that Bitcoin can serve as a hedge against financial uncertainty. A similar sentiment was raised recently by George Ball, the former chief executive of insurance and financial services giant Prudential Securities.
Speaking with Reuters, Ball explained that he had seen Bitcoin’s short and long-term value as a hedge asset. Like Hamam, he explained that the relief packages could only go on for so long.
“If you look now, the government can’t stimulate the markets forever. The liquidity flood will end and sooner or later the government’s got to start paying for some of this stimulus, for some of the deficits.”
The investment expert added that the government could print more money, but it risks a currency debasement. So, cryptocurrencies provide a smart way to protect investors against this.
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