2020 has been a tough year for everyone — firms, entrepreneurs, investors, contributors, and many more. The pandemic year has brought in various trends and took us to innovations. In the case of the cryptocurrency and blockchain landscape — they were at their wits’ end trying to push their boundaries in possible ways. But, what has it been like? Was it like the start of a vicious cycle? Or are they still holding their thrones firmly?. Let’s talk about the upcoming trends in Blockchain, Decentralized Finance (DeFi), and Digital Transformation.
Unexpected Blockchain Transition
The whole world wasn’t expecting to experience real blockchain technology in 2020. But it happened. Businesses adopted blockchain technology and have grown exponentially during this pandemic. The COVID-19 plunged us into the digitalization backed by blockchain technology via the usage of distributed ledger technology. We might find most of the businesses laying foundations utilizing blockchain technology. So the global blockchain market is mostly expected to grow in the years to come.
Tough Times for New Ventures
Uncertainty spread by COVID-19 led to a historically tough year for the new ventures. Long-term projects were pulled back as the investments went for a toss. Experimental and research & development projects were kept aside and face challenges as they require regulatory changes based on the market structure. And this situation might end up holding these projects for the upcoming year too.
A digital transformation is no longer an option. It has become a necessity to survive in the business world. The COVID-19 effect made it mandatory for businesses to switch to the digital space. Corporates accelerated and emerged stronger in using blockchain technology. Similarly, other industries are intensively looking at the massive blockchain technology to fit in the virtual space.
The Trend: DeFi
While we all got into the digital space, the one that is particularly grabbing everyone’s attention is DeFi, short for decentralized finance. DeFi clearly shows how blockchain could stand as a potential technology in the finance industry. DeFi elucidates the successful process of smart contracts in the financial sector. During this pandemic, the DeFi services witnessed impressive growth with various alternatives and undoubtedly speeding up the next years.
The Cryptocurrency Market
The cryptocurrency market is all high and reached new heights in 2020. The wave seems to be in motion as the investors are constantly in search of new digital assets. Although there was a lot of uncertainty in the market during this pandemic, Bitcoin and other cryptos are not affected by structured government policies and their decentralized nature. As we are already in a cashless society, most businesses will have to deal with digital currency. And for sure, 2021 has already set its stage for the cryptocurrency market. However, due to the constant fluctuations in the crypto market, it is tough to predict the future.
Alongside Crypto Fraud
While we said crypto marketing is drastically growing, the other side of the crypto market is prone to fraudulent activities. Initially, 2020 had been a good year for cryptocurrency investments. But the downside of it was the businesses went to a toss with cyber attacks and risk hacks. More than 20% of the total theft took place in the DeFi companies. We might also witness similar fraud activities in 2021, including fake crypto investment platforms, fake crypto wallet scams, malware attacks to lesser-known cryptocurrencies, and crypto-jacking. Thus, it is better to keep an eye on and beware of such activities.
The CBDC Projects
To those who are not familiar with the term CBDC, it is short for Central Bank Digital Currency. A recent BIS report says, “80% of central banks worldwide are researching the pros and cons of such a currency. And this will see an increase in diminishing use of cash, economic digitization, new private currency launches like Libra, etc.” So the central banks are exploring various ways to launch their own CBDC, and the Chinese government is well in advance in this process. They have got dozens of experiments to implement, even across the world. Also, the ECB is working to take a clear decision on their Digital euro project in mid-2021.
Governments to Intensify the Regulations Related to FinTech
The final trend or prediction related to the fintech industry is that governments will intensify the regulations and make them strict and rigid. Over the next few years, we will notice governments implementing strict regulations due to the COVID-19 digitalization period. The digitalization of the economy that took place during the pandemic is under monitor by regulators worldwide. Digital banking, cryptocurrency, and blockchain will likely be the greatest concerns worldwide.