Blockchain Trends to Expect in 2021 – Expect the Unexpected
2020 has been, in history, a challenging year for many people. It was also a year of reckoning for disturbed ledger technology. Numerous events happened that were not included nor expected. Especially COVID-19 pandemic that not only intensified trends that were already underway but generated new trends.
Budgets for purely experimental and speculative projects were cut in 2020. Long-term strategic projects, specifically those requiring changes to the market structure or regulatory changes, are mostly working to extend timetables.
The blockchain and cryptocurrency were as dynamic as ever in 2020. However, projects with evident benefits are not only continuing but also doing so at a faster pace. Numerous organizations are interested in participating in networks that help address the supply chain issues that the pandemic threw into sharp relief.
This article will look at the top blockchain trends in 2021 that we expect for the cryptocurrency and blockchain landscape to watch out for.
COVID-19 Will Accelerate Blockchain Transition
In 2021, it is predicted that we will see the reorientation of multiple blockchain projects. Experts predict that 90% of blockchain solutions will require replacement within a year because of most of the ignoring vital features, including smart contracts, decentralized consensus, and tokenization.
After that, a pandemic has caused more pragmatic and realistic approaches to blockchain initiatives, mainly focused on the day-to-day business ‘to continue their growth path.’ Blockchain projects with clear benefits expect the unexpected this year.
Permissioned Blockchains Will Persist the Order of The Day
While many enterprise technology leaders have become open to exploring the order that public blockchains could have in an enterprise context in the long run. Headlines generated by decentralized finance (DeFi) during summer have put the lid back on the discussion.
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The reassociation of public blockchains with Wild West aspects of crypto assets are scaring away compliance and risk-aware business experts, making it challenging for even the most passionate supporters on the tech side to sustain or pick up the topic.
Global Blockchain Market Size Will Grow
What was not predicted is that blockchain technology will explode in popularity this year. Businesses from many industries showed a growing interest in adopting innovative blockchain technology to enhance their business processes. COVID-19 pandemic enhanced the digital transformation drive in many areas, primarily via blockchain or distributed ledger technology.
As a result, the global blockchain market proportion is expected to increase from 3.0 billion USD in 2020 to 39.7 billion by 2025, at an effective Compound Annual Growth Rate (CAGR) of 67.3% during 2020-2025.
It is estimated that in 2021, at least 25 percent of the Forbes Global 2000 will utilize blockchain as a foundation for digital trust at scale.
Long-Term Strategic Projects Will Get on Hold
Volatility and uncertainty sparked by COVID-19 have led many corporates to pull back from some of their long-term DLT-related projects for the time being. These long-term strategic projects mainly require changes to the market structure or regulatory changes, mostly working to extend timetables.
Budgets for experimental and R&D projects run in isolation from the businesses have become harder to obtain and cut this year of 2020. This will cause a larger number of these projects to get on hold.
The Banking and Financial Sector Will Dominate the Market
Among all the industries affected by the COVID-19 pandemic, the financial sector is one area that has explicitly hit hard. Falling profits and tightening margins have forced banks to adapt and increasingly meet their customers’ needs in the growing digital world.
The acceptance of fintech and blockchain technology allows them to streamline their operations and modernize their operations. It leads to firm growth in contactless transactions and redesigned financial services.
The banking and financial sectors are expected to showcase exponential growth in blockchain adoption in the coming years. This sector will hold a larger market size in the global blockchain market during the coming years.
DEFI – The Fast-Upcoming Trends
Next to a substantial acceleration expected in acceptance of tokenization, i.e., the digital storage of assets on the blockchain, an interesting upcoming trend in 2021 and further on will be DEFI or decentralized financial services. DEFI shows how blockchain could be used for economical use cases, which has been ‘the missing point’ for enterprise blockchain offerings.
DEFI illustrates the successful process of smart contacts for financial services. This alternative form of financing fits into the fintechisation of the economy.
2020 has already seen a firm raise of DEFI services. The total value of full-time decentralized financial services (based on cryptocurrencies) witnessed impressive growth and even surpassed 10 billion USD. It is expected to be speeding up in 2021 and beyond.
China Will Make Fastest Progress
China is leading the global blockchain game from a regional perspective and will continue its role in 2021. Blockchain is taking China to the next level, beyond the present reach of other global market players. China’s ‘new infrastructure’ national initiative, its state-backed Blockchain-Based Service Network, intends to make blockchain a fundamental part of its digital infrastructure.
China’s ambition is to provide a global public infrastructure via this Network. Other countries and regions like Europe are thinking of launching their Digital currency. China is almost ready to show its Crypto yuan.
CBDC Projects Will Accelerate
The proliferation of central banks worldwide explores the possible launch of their own Central Bank Digital Currency (CBDC). As per a recent BIS report, 80% of central banks worldwide research the pros and cons of such a currency. This is the process that is expected to intensify in 2021, driven by the lessening use of cash, the digitalization of the economy, the upcoming of private digital currencies like Libra, etc.
The Chinese government is in advance, recently indicating to accelerate its process generated by COVID-19. They have executed numerous experiments amongst citizens and corporates and ready for global roll-out. The ECB will decide on their Digital euro project in the mid of 2021.
Government Will Constrict Regulations Related to FinTech
Regulators will intensify their search for strict and tight regulations in 2021 and beyond. A long time being absent, government worldwide can implement many fintech regulations over the next few years. The growing digitalization of the economy triggered by COVID-pandemic is an issue that is now only just monitored by regulators globally. Cryptocurrency, blockchain, and digital banking will likely be the supreme topics of concern.
As a growing number of financial transactions occur outside of traditional institutions and mechanisms, issues like DEFI can’t be ignored anymore by regulators. In the meantime, European Union legislators are pursuing an EU-wide regulatory system for crypto assets markets, including a proliferation of token investments as a sophisticated investing vehicle.
Private (Permissioned) Blockchains Will Dominate
The final trend will observe that private blockchains will become the main contributor to the blockchain market growth and are assumed to hold the largest market size in 2021. Enterprise Blockchain Solutions are developed customized as per the needs of corporate business.
Private blockchain allows more opportunities for corporates to utilize the blockchain technology for business-to-business use cases. They deliver higher privacy, transparency, efficiency, and reliability, while security is provided to a private blockchain using private keys known only to authorized persons in the organization.
Ada4pt the Changes!
Several things have changed due to the pandemic. People and businesses are looking for alternatives and trying to find solutions. Blockchain and tokenization have been welcomed in Asia too, companies are rapidly accepting the changes and signing smart contracts to stay ahead.
The natural next step for other businesses and Cubix Chain is to adapt changes and use blockchain technology to allow for companies’ fractional ownership to increase sales.