What is the future for cryptocurrency in 2021? Crypto has surged in popularity and adoption in 2020, but experts predict even more exciting developments this coming year and beyond. From state-sponsored crypto projects to an expanding host of financial tools moving to the blockchain, here’s what to expect in 2021.
Cryptocurrencies have come a long way since 10,000 BTC was used to buy two Papa John’s pizzas back in 2010. Cashing those coins out today would net you somewhere in the ballpark of $239,687,000. And that’s not all…
Today, China is in the final stages of creating its own digital currency, blockchain is spreading out to applications outside the digital currency space, major companies are buying, government agencies are scrambling to figure out how to regulate the market, and much much more.
With all these developments, one can’t help but wonder, “Will the future of cryptocurrency be bright in 2021?”
Here’s what the experts are thinking today.
Expert predictions on the future of cryptocurrency for 2021
While 2020 has been rough for most people, it has been a rather exciting year for the fintech and crypto space. Here are five key predictions on the future for cryptocurrency in 2021.
1. Bitcoin will continue to see strong demand
In an interview with CNBC, the Winkelvoss twins, Tyler and Cameron Winklevoss, early Bitcoin investors and founders of crypto-exchange Gemini, predicted that Bitcoin would gain more than 25 times its current value as more investors adopt the cryptocurrency as a hedge against inflation.
“We think it will be the best performing asset of the current decade,” said Tyler Winklevoss, even going as far as saying that Bitcoin is “gold 2.0” and that the price could one day be at $500,000 a Bitcoin.
Peter Smith, the co-founder of the crypto wallet and exchange Blockchain.com, and Jeremy Liew, owner of Snapchat, have also made similar predictions.
Historically, gold has been the classic choice as a hedge against inflation. But while gold is hardware and hard to transport, the exchange of Bitcoin is much much easier. All you need is an online wallet and an address to send your coins to and you can move your funds anywhere in minutes.
Other signs of growing corporate and institutional interest in Bitcoin (despite its historical volatility):
- Payment company, Square, bought about $50 million in BTC.
- Business intelligence platform, MicroStrategy, also just recently spent another $650 million on Bitcoin. So did Massachusetts Mutual Life Insurance Co., purchasing $100 million worth of BTC for its investment fund.
- PayPal had also recently entered the crypto market and has announced that its customers can now buy and sell Bitcoin (and other cryptos) using their PayPal accounts.
2. A wave of adoption from institutional investors
In an article for Yahoo! Finance, PwC Global Crypto Leader, best-selling author, and University professor, Henri Arslanian, predicted that banks and other traditional financial institutions will continue to “fall in love” with cryptos like Bitcoin.
While crypto continues to have its skeptics, mainstream investors have begun to warm up to the world of crypto. In a report by Bloomberg, it was noted that the Grayscale Bitcoin Trust, “has seen inflows of almost $2 billion since October, compared with outflows of $7 billion for exchange-traded funds backed by gold.”
What does this mean for the future of cryptocurrencies for 2021? Here’s what experts think:
- Continued growth in emerging global markets in Southeast Asia, South America, and Africa.
- An exponential increase in developer activity, not only in Bitcoin but also for higher-performing altcoins.
- More fiat onramps into crypto.
3. More disruption in the banking and finance industries
Besides Bitcoin investments, banks are getting involved with other aspects of crypto too. Having once disregarded crypto as a serious asset, now banks like JPMorgan Chase have revealed their proprietary digital currency (the JPM coin) recently.
What’s going on with cryptocurrency around the world is just as promising. Central banks have been experimenting with CBDCs — Central Bank Digital Currencies — which are also blockchain-powered.
China is aggressively pushing forward with its digital renminbi (called the DC/EP), which has already seen 4 million transactions (worth about $300 million) in its last pilot phase.
Besides China; Canada, Hong Kong, South Africa, and Thailand have been first movers into the CBDC space, and now countries like the Bahamas, Cambodia, and the UK are getting in on the action as well.
Lex Sokolin, co-head of fintech at blockchain firm ConsenSys, pointed out in an article for CNBC.com that, “Payment systems don’t tend to replace each other entirely, but rather build on top of the rails incrementally.”
Some likely innovations we’ll be seeing more of in 2021:
- People will start opening Cryptocurrency Bank Accounts.
- Cryptocurrency Debit cards will become an everyday thing.
- Crypto ATMs will become more widespread.
- Crypto loans will start to be offered by institutional banks.
4. The continued rise of stablecoins
In Chainalysis’s “2020 Geography of Cryptocurrency Report”, stablecoins have gained significant ground, especially in places such as Latin America and Southeast Asia. Local merchants are using stablecoins to settle transactions, completely bypassing the traditional banking rails in the process, and this trend will only continue throughout 2021 and beyond.
With the aid of DeFi, 2020 was a record year for stablecoins, with assets in the coins growing from less than $5 billion in January to over $25 billion by the end of the year.
Meanwhile, countries like Venezuela have reached one of the highest rates of crypto usage globally, owing to the hyperinflation of their local currency. Other countries with high crypto adoption include Ukraine, Russia, Nigeria, Kenya, Colombia, and the U.S.
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Without a doubt, 2020 has been an exciting year, not just for Bitcoin but for the crypto space in general. Cryptocurrencies have exhibited incredible resilience in uncertain times, even rising to the occasion as the new sweetheart among investors and traders of all kinds.
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