Tech billionaires and bitcoin: big winners in the pandemic
The combined wealth of the 100 richest people has also increased since the beginning of the year by $ 3.3 trillion, surpassing the UK’s GDP
The global pandemic caused by the new coronavirus has two big winners. On the one hand, the billionaire owners of tech emporiums in the United States, who now occupy seven places in the list of the 10 richest people in the world, according to Forbes. On the other, bitcoin, the cryptocurrency that has risen in value four times faster than the recovery of the Dow Jones since March.
Ahead of these billionaires will always be three families whose fortunes are incalculable: the Rothschilds, the Rockefellers and the Morgans. Each of them, and for generations, have established banks, universities, hospitals, transnational corporations, security companies, armies, and have even founded new nations. Diners magazine recently assured that if the fortunes of Bill Gates, Warren Buffett, Carlos Slim, Jeff Bezos, Mark Zuckerberg, Larry Ellison and Michael Bloomberg were put together, it would not reach even 3% of the wealth that these families possess.
As their wealth is incalculable, we will keep with those recorded by Forbes. For example, Apple CEO Tim Cook joined the billionaires’ club after the pandemic helped the tech giant’s share price hit record highs.
That status came to him just days after Mark Zuckerberg became the third member of the “Centibillionaire Club,” as his personal wealth rose to $ 100 billion.
In this way, the co-founder of Facebook follows the route of Jeff Bezos and Bill Gates, the only ones to reach a net worth of 12 figures. But, precisely, the founders of Amazon and Microsoft, respectively, have also seen their fortunes increase considerably in recent months.
Jeff Bezos in the stratosphere
In particular, Bezos’ wealth skyrockets at an unprecedented rate as quarantine measures around the world forced millions of people to turn to the online retailer for food and entertainment.
According to a report in the Independent, since the beginning of the year, Bezos has increased his wealth by more than $ 75 billion, more than the individual net worth of Google co-founders Sergey Brin and Larry Page.
Now, both Brin and Page — who are ranked eighth and 10th — also made sizable gains of about 10% of their total fortune, in the first half of the year.
To better understand the magnitude of those riches, the accumulative earnings of the 10 richest people in the world since the beginning of the year are equal to the combined Gross Domestic Product (GDP) of 90 countries.
With a combined wealth of $ 938 billion, the 10 richest people now rank among the top 20 countries in the world in terms of GDP, ahead of even Saudi Arabia.
Furthermore, the combined wealth of the 100 richest people has also increased since the beginning of the year by $ 3.3 trillion, surpassing the UK’s GDP. Only the United States, China, Japan, and Germany rank higher.
Even Bezos alone would rank as the 54th richest nation. Another example: Bezos’ fortune is, now, more than 400 times greater than the 458 million dollar fortune of the Queen of England.
The staggering disparity has led many to question whether such wealth accumulation should be allowed to continue, particularly as the economic fallout from the pandemic continues to affect millions of people around the world.
A recent report from Swiss bank UBS found that 77% of the wealthiest families had seen their fortunes increase during the pandemic. Meanwhile, another separate report from the Institute for Fiscal Studies found that the poorest families had seen their income decline.
“The households of the fifth part of the most poor, measured by their pre-crisis income, have been the most affected in these terms, with a drop in their average family income of around 15%”, indicates the report.
In the United States, Senator Bernie Sanders introduced the “Billionaires Pay Act” days ago in an attempt to address the wealth imbalance.
Although highly unlikely, if successful, the legislation would force billionaires to pay a 60% tax on profits made between the start of the pandemic and the end of the current year.
Under the proposal, the revenue generated by that law could be used to help pay the health care costs of struggling American families.
Bitcoin is the most desired asset
The pandemic has sparked global financial and economic turmoil on a scale not seen since World War II. Prolonged lockdowns, massive unemployment and disruption of international trade caused stock markets to crash and forecast a very terrible future.
A study published in the Independent concluded that it will take years for the full impact of COVID-19 to materialize. Even the United Nations Secretary General, Antonio Guterres, warned in April that it would trigger a recession “that is probably unparalleled in the recent past”.
Yet amid all the chaos, certain ‘safe haven assets’ have confronted market trends and have hit new yearly highs in recent days.
Since mid-March, when the first wave of containment measures began, the price of gold has risen by almost a third. In that same period, bitcoin increased its value considerably and, even today, it continues to rise.
In times of global economic certainty, investors often seek to insure their holdings in gold, silver, and other non-volatile assets. Although bitcoin may have been created in response to the financial crisis of 2007–2008, its price volatility has made it a notoriously risky investment.
But, its recent price increases have led many experts to suggest that bitcoin has shifted from a speculative asset to a safe-haven asset, or as some prefer to call it: “digital gold”.
Why did this happen?
The finite supply of the cryptocurrency (there will be no more than 21 million bitcoins) and the lack of links to any country or institution helps to strengthen these parallels with gold and may be the reason why investors see it more and more as a store of effective value.
Since it started the year trading at around $ 7,000, bitcoin has posted steady gains before it had a drop below $ 5,000 in global markets in March. However, in the next five months its earnings exceeded any other major asset and grew four times faster than the Dow Jones industrial average. Today it is above $ 12,000.
“Bitcoin is currently realizing its reputation as a form of digital gold”, said Nigel Green, CEO of financial firm deVere Group, to the Independent.
“Until now, gold has been known as the ultimate safe haven asset, but bitcoin, which shares its key characteristics of being a store of value and scarcity, could potentially push gold out of its long-standing position in the future”, said Green
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