Even as the COVID-19 outbreak has wreaked havoc on economic systems all over the world in 2020, the cryptocurrency sector, in particular, has performed significantly well. This much is clearly seen from the drastic change in Bitcoin’s price; back in March 2020, the price was about $7,000, but Bitcoin touched a record high recently as it traded for a price of around $20,600 for the first time ever on December 16, 2020.
Aside from that, 2020 has seen tech upgrades within the crypto space with Ethereum 2.0 going live, the development of many new blockchain applications, and more.
Moreover, in 2020, the cryptocurrency industry has taken a significant step closer to mainstream adoption as more people have begun to put their faith in crypto and utilize them for day-to-day transactions. In fact, according to Deutsche Bank’s predictions, there could be about 200 million cryptocurrency users by 2030.
As far as cryptocurrency has come in 2020, 2021 is gearing up to an even more consequential year for the sector. As we look forward to the launch of Facebook’s much-hyped, Bitcoin-inspired cryptocurrency, and the U.S. cryptocurrency regulations that could potentially impact the industry greatly, consumer behaviors will continue to evolve.
In this post, we round up five consumer trends that are very likely to drive crypto in 2021!
Top Consumer Trends For Crypto in 2021:
Top Consumer Trends For Crypto in 2021:
Cryptocurrency Banking
The big banking brands worldwide have already begun to show interest in cryptocurrencies, but it’s the mass media and consumer attention Bitcoin is drawing with its recent price spike that holds bigger potential in 2021. Traditional banks, other financial institutions, and tech companies such as PayPal, Square, Facebook, JP Morgan, and Samsung have already expressed quite a lot of enthusiasm with high-profile investments in crypto.
Stablecoins and CBDCs have compelled central banks across the globe – including in China, Sweden, and the UK – to consider adopting cryptocurrency as a conventional form of payment. The European Central Bank has already set up a task force to explore the prospects of a digital euro, and a series of pilot programs have already proven China’s digital yuan competent for mainstream use.
Cryptocurrency companies and exchanges aren’t far behind in introducing crypto banking to the masses, either. Very recently, BitPay has filed paperwork with the U.S. Office of the Comptroller of the Currency (OCC) to create a national bank. Paxos (PayPal’s crypto partner) and Figure Technologies have filed similar applications.
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A recent survey by Bit2buzz has shown that the Indian crypto banks and exchanges have also witnessed a lot of growth in the past few months alone. It’s quite safe to assume that cryptocurrency banking might go big in 2021.
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Crypto Staking
Crypto staking is the process of holding cryptocurrency in a crypto wallet for a fixed time, participating in transaction validation on a Proof of Stake (PoS) blockchain, and earning rewards in the form of crypto. In a nutshell, crypto staking is a strategy where the holder can earn more cryptocurrency with their existing crypto. The staking reward varies for holders based on factors such as number of crypto coins stacked, the time period of holding, inflation rate, kind of crypto held, etc.
Crypto staking has become a popular strategy among cryptocurrency investors to increase their holdings in recent times, and it remains one of the most promising crypto trends to be carried into 2021.
Before going for crypto staking, there are two aspects every cryptocurrency investor must consider; firstly, you must choose an exchange platform that provides your personal information and funds with the utmost security and minimizes counterparty risks.
Secondly, you should look for the crypto coin that would potentially offer the best yields.
The Convergence of IoT and Cryptocurrency
IoT, or the Internet of Things, is one of the newer technologies that has already sparked widespread interest and has growing adoption rates across multiple industries, including robotics, manufacturing, logistics, automotive, and more.
Consumers are quickly growing used to leveraging IoT even in household appliances such as refrigerators and smart bulbs, and as per the management consulting firm McKinsey, the potential economic impact of the IoT sector can be anywhere between $4 to $11.1 trillion by 2025.
In 2021, the tech behind crypto can merge with IoT to the benefit of both sectors. Here’s why IoT combined with crypto in 2021 is a trend to watch out for:
- Using crypto coins, IoT devices can perform their tasks seamlessly. For example, when your car needs fuel, your refrigerator runs out of milk, or your washing machine requires detergent, IoT systems can purchase oil, milk, or detergent with ease with cryptocurrency stored in a smart contract that will self-execute when certain conditions are met.
In other words, the process becomes safer and much more efficient than registering fiat payment gateways (like credit cards).
- Plus, IoT devices collect a massive volume of information – from the data regarding all financial transactions to communications and more. Blockchain – the tech behind cryptocurrency – is perfectly suited to store all this information, that too, in an easily accessible and distributed way. Therefore, a combination of IoT and cryptocurrency only makes sense.
DeFi and dApps
2020 witnessed a DeFi (decentralized finance) boom with the TVL (total value locked) going from less than $1 billion in January to more than $16 billion as of December 2020.
Additionally, dApp transaction volume has gone over $270 billion in 2020. According to a report by DappRadar, DeFi projects will continue to remain a massive part of the crypto economy in 2021 as well.
DeFi makes the financial markets a lot more transparent and accessible to the general populace, and dApps (decentralized applications) enable a bunch of operations like crypto lending and borrowing, insurance, trades on decentralized exchange platforms etc.
As the crypto community continues to incessantly champion decentralized finance, it’s a given that this particular area will spawn more and more applications.
Increase in the Popularity of Stablecoins:
Stablecoins are cryptocurrencies advocated by reserve assets; the value of a stablecoin can be pegged to that of a fiat currency, a valuable asset like gold, and even another cryptocurrency.
2020 has remained a good year for stablecoin adoption, as Tether (USDT) just might have become even more popular than Bitcoin. According to CoinMarketCap, the crypto with the highest daily and monthly trading volume is Tether, even though its market cap is significantly lower than that of Bitcoin. Since stablecoins offer price stability, as opposed to regular cryptocurrency, they will see growth in 2021 too.
Aside from crypto trading, another plausible, extensive use for stablecoins just might be in cross-border commercial transactions- a sector where it could replace traditional banking.
In conclusion, the possibilities for crypto in 2021 are endless, and these crypto trends hold the potential to take the lead within the cryptocurrency sector as we approach the new year. Blockchain tech has already had several use cases outside of the crypto industry – another factor that is likely to cause a broader utilization of cryptocurrency. So overall, as we stand at the outset of 2021, it does seem like a good time to start thinking about investing in cryptocurrency.
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