Trends in Blockchain to Become Mainstream In 2021
With the beginning of the new year 2021, blockchain fans are interested in the tendencies that the industry will follow this year. Let’s have a look at what to expect from the blockchain in the coming 12 months.
It’s no doubt that the blockchain industry will keep expanding its influence over the traditional financial systems as it has already been doing for years. Blockchain technology has been integrated into many spheres of human activity, broadening horizons and taking them to the next level. It’s safe to suppose that blockchain technology and cryptocurrencies are in the position of revolutionizing traditional financial transactions and the notion of money as a physical medium of exchange. Of course, these are long-term outlooks where the specific functions and contribution of blockchain can’t be established with precision for the time being, but it’s possible to try to outline the main trends that blockchain is likely to follow in 2021.
Financial entities of a new format
As more and more companies get interested in adopting blockchain-based transactions in cryptocurrencies, financial entities can develop in a new format complying with the new demands of the market. Money lending outside of a traditional banking system, banks using cryptocurrencies or working on a fully decentralized basis — all this can shape a new future for the financial sector in the years to come. While the coronavirus pandemic seems to be a threat to the economy as a whole, it can also become a trigger for the blockchain technology to boost as people tend to go online with transactions making and the rest of financial services.
Going into DeFi
Decentralized finance has been the topic of the year in 2020. DeFi has experienced an outstanding growth this year, and it’s sure to develop even further within the blockchain industry. DeFi Pulse, a leading statistical platform for DeFi, has stated that the sector of decentralized finance has crossed the mark of $10 billion in value. The figures of DeFi’s development speak for themselves, so it will be no wonder if DeFi progresses to the state of being adopted by any economic entity, large or small, private or public.
More use cases
For years, fintech professionals and experts have made much effort in developing the blockchain technology and adjusting it to various new use cases. Blockchain is a too brilliant technology to be used only within the monetary system. It has already demonstrated its abilities in numerous fields such as medicine, management, intellectual property, entertainment, etc. And this trend is to be continued.
For now, blockchain technology and crypto assets haven’t been fully accepted or supported by national governments. In many countries, cryptocurrency-related activities are prohibited, while in others they are limited to a small range of actions allowed by the state. Yet, some governmental bodies and institutions start showing interest in digital assets and blockchain, seeing the opportunities and profitability this sector may bring. The fintech industry is expected to be widely adopted by state authorities in 2021, and there are already examples of states providing support to the digital market. Thus, Thailand state authorities have elaborated a legal base for blockchain-related activities and the Colombian government agreed to enrich their payment systems with blockchain technology and cryptocurrencies. Another great example is China where state agencies work hard on developing their official crypto version of yuan. It is highly likely that in 2021 the list of countries embracing crypto and blockchain will expand.
The banking and financial services keep their leadership on the market
The coronavirus pandemic has damaged the global economy in all directions, but finance is one of the sectors that got hurt the most. Decreased earnings and toughening margins have caused adaptive measures that banks had to take to keep afloat and satisfy the needs of their customers, the needs being mostly focused on digitalization. The integration of fintech and blockchain allowed financial institutions to optimize and modernize their work. This can trigger a boom in the number of contactless transactions, alternative financial services, payments in cryptocurrency among them. Banks and financial entities are predicted to experience an astonishing growth in blockchain use cases in the nearest future. If it happens, the financial industry will have the largest piece of the global economic pie in the years to come.
Cryptocurrencies are to grow to new highs
The cryptocurrency market has enjoyed a good performance of most digital assets throughout 2020, which makes expectations for 2021 high enough. The growth in price for many cryptocurrencies fueled the interest of many investors that now see crypto as a wonderful investment opportunity. The COVID-19 pandemic that ruined the economies of most countries served as a perfect backstage demonstrating that the market of crypto isn’t affected by similar external factors, at least not to such extent, due to the principle of decentralization. Bitcoin has become “digital gold”, one of the firmest assets in crypto. As we move on to 2021 with the new COVID-19-driven reality based on social distancing, contactless transactions and cashless payments, cryptocurrencies fit in just perfectly to this new digital environment. Yet, however high the prices get, we should never forget how volatile they are.