2020 has been a wild year thus far and even as we approach a new year, things are still as unpredictable as ever. The COVID pandemic has ravaged the global economy and left millions of people dead in its wake.
Throughout all this, we’ve seen how cryptocurrencies like Bitcoin have taken center stage as investors search for new safe haven assets. Once regarded as a niche piece of technology, cryptocurrencies are now regarded by many to be a mainstream investment with serious potential.
Blockchain technologies have also exploded in popularity with businesses from a multitude of industries rushing to harness the power of the blockchain. Given how pioneers such as Tesla have made the move towards blockchain tech, it’s clear to see that blockchain is not just another fad.
With so much uncertainty on the horizon, we need to ask the question – what will the landscape be like for blockchain technologies in 2021?
1. Smaller blockchain tech companies will collapse
The COVID pandemic brought death and misery with it. Government mandated lockdowns forced millions of residents to remain at home and under quarantine whilst businesses were forced to close their doors and let employees go.
This has proven to be a deathblow for many businesses – both large and small. Budding blockchain startups are especially vulnerable to the global slowdown. Many will find themselves lacking the funding needed to continue their research and development as investors pull their cash out in search of greener pastures.
Only those with cash or a bright idea will be able to see themselves through the crisis. Thus, as we enter 2021, brace yourselves for a spate of failed startups and closures.
2. Greater breakthroughs with blockchain in the finance industry
Amongst all the industries affected by the COVID pandemic, the finance sector is one area that has been hit particularly hard. Central banks all over the world have been slashing interest rates in an effort to keep their respective economies afloat.
This has resulted in falling profits for banks and ever tightening margins. In some countries, central monetary authorities have introduced negative interest rates as a means of encouraging spending.
With unemployment on the rise and increased loan defaults, banks have been forced to adapt to the times. Contactless transactions and redesigned financial services are set to be the order of the day.
With fintech and blockchain technology, banks will be able to streamline their operations to reduce costs and modernize their operations.
For example, blockchain technology allows financial institutions to automate data verification thus eliminating human error and improving response times. All of which contributes to a significantly improved customer experience.
3. Cryptocurrencies may become a part of the mainstream
2020 has proven to be a good year for all cryptocurrencies, especially Bitcoin. With so much uncertainty in the market, investors have turned to stable assets as a means of hedging the value of their holdings.
Being largely unaffected by external factors like government policy thanks to its decentralized nature, Bitcoin has proven itself to be a valuable form of digital gold. Despite the economic upheaval, Bitcoin has steadily appreciated over time, having enjoyed a relatively uneventful halving.
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This has in turn spurred investor confidence and boosted interest in what was once a niche investment. As we enter 2021 and adopt to a new normal, social distancing and cashless transactions may set the stage for Bitcoin’s entry into the mainstream.
With Paypal taking the step towards integrating cryptocurrency onto their platform, we could very well be standing on the cusp of a new crypto revolution.
If we’ve learnt anything from 2020, it’s the fact that we should always expect the unexpected. Blockchain tech while relatively new holds plenty of promise for the times to come.