5 Blockchain trends for 2021
In this remarkable year, we quickly noticed how addicted we have become to technology. The COVID-19 crisis has accelerated the technological transition in many areas, including the use of blockchain technology. What awaits us in the field of blockchain in 2021?
Trend 1: Integration of blockchain into government agencies
The integration of blockchain into government agencies has been considered a risky project and has been practiced by small states only. Now everything’s changed. Japan’s Finance Minister recently stated that blockchain technology could be essential in the continuing global fight against the COVID-19 pandemic. Thailand is going to launch a new juridical document storage system. Authorities of Columbia have promised to support cryptocurrency and blockchain payment systems. Talking about blockchain in government, Vietnam is already using akaChain — a special blockchain platform, which helps to accelerate the digital transformation of the country. South Korea has adapted over a million driver’s licenses to the blockchain system.
The Chinese government is at the forefront of this and recently hinted that it has accelerated the presentation due to the crown. The economic superpower has already conducted dozens of experiments with its electronic payment via digital currency (DCEP) among citizens and businesses. This is almost ready for global presentation. The European Central Bank will make a clear decision on the digital euro in January 2021.
Trend 2: DeFi Space
DeFi has become the center of attention throughout most of 2020. Decentralized Finance has undoubtedly disrupted the whole ecosystem of DLT-based financial services. From Yield Farming in trading to DAOs and stablecoins, to NFTs (non-fungible tokens) in asset tokenization and gamification, DeFi has shown interesting endless possibilities and applications which made it one of the hottest trends of the year.
DApps needs very little human intervention. Instead, these platforms integrate advanced smart contracts to simplify their business systems. Smart contracts are pre-programmed protocols that are launched upon receipt of crypto-data at their address. Smart contracts are most important for performing a large number of different tasks, from customer approval to payment. There are more DeFi applications today than ever before. These applications already save business and time and money for customers. DeFi platforms have started to appear in almost every financial sector. As in the classic financial controls in DeFi dApps can be used for KYC, AML but also other digital money flow management services.
Trend 3: Falling in love with bitcoin
Bitcoin increases its value to the “maximum of all time”. Governments and businesses stumble upon each other when announcing new blockchain innovations and applications. Next year promises to be another good year in the field of blockchain technology. Although a few years ago it was mostly described as a “solution to almost nothing” and a “revolution that has not yet started from the ground up”, the latter is now obsolete. This, together with all kinds of other technologies such as artificial intelligence and machine learning, will create great discoveries.
We should expect this trend to accelerate in 2021 as many banks begin to make their crypto plans public. This should further catalyze the entry of traditional buy-side firms that are not only more comfortable trading with such regulated intermediaries but, in many cases, are obliged by their own regulatory or investor restrictions.
Trend 4: Blockchain penetrates the real sector
The time of a really massive introduction of blockchain into the field of supplies and inventory is coming.
Experiments have borne fruit and the news came about the launch of new platforms not only by the pioneer of this practice. Blockchain in the real sector is more of a global phenomenon than the privilege of certain businessmen.
We shouldn’t also forget about the fact that major electricity companies and industry associations are launching a lot of new projects. In the nearest year blockchain technology will also be integrated into the gas and oil industry.
The enormous rise and subsequent crash of the cryptocurrency market at the beginning of 2018 and recovery through 2020 created waves that washed the entire blockchain landscape clean. Increasingly, companies looking to raise capital will no longer try to skirt institutional models, but instead, will flock to ones that are already accommodating of regulations. Considering its real-use cases and ability to denominate value, the security token could roil traditional financial markets in favor of the hybrid model available from blockchain and its accompanying benefits.
Trend 5: Digital banks transformation
Financial institutions will come under greater pressure to provide digital functionality that is both simple and fast. As opposed to new account opening or loan application processes that can be completed in 5–10 minutes (or longer), organizations will focus on internal processes, procedures, and flow of data to enable completion in less than a minute to meet rising customer demands set by big tech organizations.
Institutional interest is growing exponentially within crypto — in 2020 we saw major banks and financial institutions like Standard Chartered, Fidelity, and BBVA not just proclaim interest in holding digital assets, but also providing trading and custody services for their customers. In 2021, I expect this trend will grow significantly. The line between crypto and banking is blurring, and we may even see a notable crypto or fintech company acquiring a traditional financial institution rather than the other way around. The tides are turning.