2020 was an exciting year for crypto, but 2021 will reshape the Fintech landscape by incorporating financial transactions of different virtual currencies.
The Fintech-crypto duo is reshaping the landscape of technological advancements in this modern era of digitization and more enhanced cyberspace is likely to take us towards an unpredictable future.
More than $23,000 virtual currency trades in December 2020 depicts that the blend of Fintech and cryptocurrency will continue to grow with the speed of light and will take over the world in the forthcoming years.
Fintech and blockchain technology are merging rapidly as crypto are the assets that can be traded in the financial market globally. Still, this technology has many more things to offer to cryptocurrencies. Numerous automated escrows are enabled by blockchain-based smart contracts in the financial sectors. Even plenty of fintech blockchain startups are expanding, promoting various blockchain financial use-cases, from PayPal allowing its customers to buy and sell bitcoins to the $50 million investment of Square in Bitcoin.
Does Crypto Fit in Fintech?
It was the most common question that came across many people especially in 2020. Crypto is philosophy, science, and a community of course. Financial technology, also known as fintech is a sector that regroups some businesses, applications, and startups. Not all crypto is Fintech.
Fintech is a subset of crypto, a Venn diagram with huge overlap, but neither is full inside the other. Some of it is non-financial crypto and some of it is non-crypto Fintech. However, the blend of crypto and Fintech has proven to be reshaping the technological era especially during the pandemic of COVID-19.
5 Bitcoin Predictions from Fintech Experts
Cryptocurrency is evolving with the speed of light recently and regulatory authorities are convinced to not ignore it. The word fintech has proven to be very impactful that social upheaval is predictable by many Fintech experts in the upcoming years. Capital raising, digital lending, mobile payments, remittance, RegTech, InsureTech, and Wealthtech are combating traditional sectors.
Traditional Financial Infrastructures Are Falling in Love with Bitcoin
A drastic change was experienced in the crypto space especially in 2020. Some well-known financial infrastructures such as Standard Chartered and JPMorgan are seen to discourage their traditional payment methods and encourage the incorporation of Fintech technology to promote the usage of virtual currencies frictionlessly. Keeping in view that incorporation, acceleration in merge of Fintech and cryptocurrency trends can be predicted in 2021. This prediction should further accelerate the entry of traditional buy-side ventures for more comfortable trading with regulated mediators, which is obligatory by many investor restrictions and regulatory authorities. Numerous private sectors have disregarded the investment of virtual currency such as bitcoin but in the future investment in bitcoin is predictable in a wide-range of private financial sectors.
Competition from Central Banks
According to the report from the Bank of International Settlements, globally 80% of the central banks are working on some sort of virtual currency. Digital currency experimentation is facing social upheaval and leading us towards an unpredictable future especially in China as compared to other nations. Recently in Suzhou, an eastern Chinese city, situated in the west of Shanghai, a lottery was held in which 100,000 residents, each won 200 renminbi i.e. $30 via an e-wallet. Also, those residents were motivated to link their digital cash with financial technology, and if they didn’t spend their virtual currency within a week, it will disappear which was a great technique for the advancement of the experiment.
Stablecoins Play a Vital Role in Cross-Frontier Transactions
Indeed 2020 was a record year for stablecoins and also it’s playing a crucial role in cross-border transactions, with the crypto assets growing drastically from $5 billion to $25 billion over a year. The momentum is expected to rise the tides of the crypto-fintech duo in 2021. Organizations such as Diem are aiming to make transactions as effortless as sending a message on WhatsApp. The purpose of this aim is to reduce cross-border retail transactions and which are, unfortunately still up to 7%, a huge embracement of 2020. Usage of Stablecoins is significantly increasing such as in the regions of Southeast Asia and Latin America. Merchants are completely bypassing traditional banking methods and using Stablecoins to settle transactions. It would be compelling to see if the trend continues in 2021.
Competition From Bigtech
It is predicted that if numerous tech offerings that are not into bitcoin currently such as Facebook’s Diem will catch up in 2021, then it will play a crucial role in the growing economy of bitcoin. No matter how much cryptocurrencies especially bitcoin have evolved from the last couple of decades, they still have some potential to make some big global entities think about virtual currency offerings. Undoubtedly, financial stability infrastructures that involve digital payment methods involving different currency markets are potentially pacing up to take over the world. The reason for this predictable evolution is currently transaction processes involving different virtual currencies are tedious, and also involve high fees.
New Regulations Are Driving Traffic to Decentralized Finance(DeFi)
Decentralized Finance(DeFi), also known as Defi exploded rapidly in 2020 fulfilling the previous predictions, with the total value locked (TLV) growing from $1 billion to more than $15 billion from January till today. A large number of trading volumes of DeFi exchanges occur as compared to traditional exchanges and in 2021, DeFi is likely to go further. A dedicated group of people from the cryptocurrency economy are continuously working for the enhancement of the sector which will likely take us towards unpredictable breakthroughs and social upheaval. Also, FATF regulations towards the potential ban of crypto trading in certain retail markets will drive huge traffic towards the DeFi offerings.
Currently, technological barriers are very much low as compared to the last few years. No doubt 2020 was an exciting year for crypto, but 2021 will reshape the Fintech landscape by incorporating financial transactions of different virtual currencies. Cryptocurrencies have been around for a while and dedicated communities are progressing by leaps and bounds to take over the world in this era of technological advancements. Even if there are general flaws in the main idea, active and continuous experimentations are pacing up to tackle problems and provide efficient solutions to the financial market of various different virtual currencies. Blockchain is actively used in many financial infrastructures to ensure the availability of long-term solutions but still, anything can happen in the future. Hence, betterment and advancements in the blend of cryptocurrency and fintech are envisioned in upcoming years.
Ryan's passion is to write technical material. He has a wide variety of writing experience in the technology and fintech sector. When he was in college, he began writing at the age of sixteen. Now he's also writing as an independent influencer for participation pages. Ryan has written a number of media articles and many of them are published in different publications.