The rise of the chaos amidst the pandemic proved that traditional finance isn’t prepared for situations like these. The rise of the COVID-19 pandemic left national economies and businesses taking huge jabs, as governments struggled with lockdown measures to control the spread of the virus.
The chaos insinuated by the pandemic left big shifts in the stock market. The FTSE, Dow Jones Industrial Average, Nikkei and others saw catastrophic falls as COVID-19 started gaining a strong hold on international economies. It wasn’t until November of 2020, when the first vaccine was announced, that major Asian and US stock markets started to recover from their trauma.
People around the world lost their jobs, Unemployment rates surged, the remittance market took a huge hit, Immigrant workers were sent back home, and most countries were left in recession following the pandemic. According to estimates from the IMF the global economy was reduced by almost 4% in 2020, which is by comparison among the worst declines since the Great Depression.
However, on the hindsight the pandemic could certainly be credited for catalyzing the acceptance for digital currencies like Bitcoin and blockchain. The chaos in the stock markets, the failure of governments, and the downfall of international economies led millions of people to realize that they need an asset that will serve as a safe haven amid the turmoil. And there was no better option than a decentralized digital currency, or in other words, Cryptocurrencies.
Over the last year, the crypto economy has seen significant milestones, driving the record surge of these digital assets. The crypto sector received around $12.4 billion in venture capital into U.S. based companies since 2017 with over $19.4 billion invested globally.
Over the last decade, the cryptocurrency market has come a long way. There has been a record growth in the user base, and markets perform well even in bearish trends with the ecosystem growing rapidly. The Covid-19 pandemic allowed the Crypto and blockchain sector to pose a practical risk to conventional financial institutions. In terms of market capitalization, the crypto sector is valued around $1.2 trillion with $61 billion of trade activity on a daily basis.
In 2021 cryptocurrencies are leading the finance sector with digital currency heavy weights like Bitcoin and Ethereum leading the front. Investors, traders, and users are all charmed by cryptocurrencies over the years. However, today a lot of its success is attributed to its ability to hold its value, its decentralized nature, the influx of promising projects, and the acceptance from businesses and organizations.
Despite Cryptocurrencies being relatively nascent compared to traditional assets, they have a lot of room to grow and develop. The recent success and surge of the Crypto market makes one wonder if Cryptocurrencies will become the widely accepted currency in the world and what 2021 means for cryptocurrencies?
The current status of the Cryptocurrency industry in 2021
Bitcoin, since last year, has experienced a gradual rise to reach record highs, breaking through the $60,000 mark per Bitcoin and later falling down to $30,000 per Bitcoin. Similarly, Ethereum and other cryptocurrencies have experienced steady rises and have proven themselves resilient as they garner investor interest from retail and institutional investors.
Heading into 2021, Cryptocurrencies are driving the finance world, with digital currencies such as Bitcoin and Ethereum leading the narrative, and DeFi becoming an asset class on its own. 2021 helped catalyze the myriad of use-cases of blockchain technology.
Today, there’s barely any headlines without some mention of Cryptocurrencies’ emerging popularity from fans and skeptics alike. Cryptocurrencies have dominated the media, the financial world, and businesses.
In terms of access cryptocurrencies have become increasingly accessible than ever to retail investors, this has been fueled by acceptance from popular payment giants like PayPal, Visa, MasterCard, enabling their customers purchase and hold crypto assets on their platforms.
While Cryptocurrencies’ volatility has been well-publicized, many investors have gone out of their way to criticize the assets as “risky,” and “worthless.” Despite this there has been no negative effect on payment giants to move away from accepting cryptocurrencies on their platforms.
In 2021, we saw electric car maker Tesla accepting Bitcoin as a payment method for its electric cars in the U.S. The company has also acquired close to $1.5 Billion worth of Bitcoin on its balance sheet. Many other notable companies also followed suit with open acceptance towards digital currencies as a payment method.
The Food Industry
The food industry also showed a lot of interest in crypto assets. Amidst the national currency devaluation in Venezuela the largest food holding company behind famous food chains like Burger King, Popeyes and Tim Hortons announced that it will accept Bitcoin and other cryptocurrencies as a form of payment at their food chains in Venezuela.
Other food chains followed suit as well, with KFC, Taco Bell, Habit Burger Grill and Pizza Hut accepting crypto as a form of payment in Venezuela. We could soon see these companies extend their roots to developed parts of the world and start accepting cryptocurrency sooner than later. There has been strides in the developed world as well, where KFC Canada, started accepting crypto for their Bitcoin Bucket product, through a collaboration with Bit Pay.
After a gap from cryptocurrencies as a valid payment option due to its volatility, Microsoft’s Xbox platform has also started accepting Bitcoin payments again for Xbox store credit. Payment giant Paypal, also allowed their users to buy, sell and hold select cryptocurrencies via their Cash or Cash plus accounts in 2021. The platform also offers a feature to allow users to track their cryptocurrencies within the app.
While Amazon the e-commerce giant currently does not directly accept Bitcoin, users have the option to purchase Amazon Vouchers and Gift Cards through various cryptocurrency companies that can authorize users to top-up subscription based services.
Recently, eBay Inc also shared their plans to accept cryptocurrencies as a valid form of payment in the coming future. The company said that they’re always on the look for the most relevant forms of payment options and the rise of cryptocurrencies may soon convince them to utilize the asset as a valid form of payment.
Yes, you got that right! Drinks! Coca-Cola Amatil is among the biggest bottlers and distributors of the carbonated drink in the Asia-Pacific Region. Recently, the company announced in a press letter that they’re collaborating with yet another cryptocurrency exchange to accept Bitcoin as a valid form of payment.
Following the announcement, over 2000 vending machines were installed in Australia and New Zealand that accept cryptocurrencies.
Even coffee-connoisseur Starbucks began testing and utilizing Cryptocurrency payments through food apps such as Bakkt where users can instantly convert their digital assets into USD and reload their Starbucks Card.
Heading into 2021, we saw the rise of the NFT sector and the emergence of the Art industry. NFTs took over the world as we saw the gaming industry, the entertainment industry, and especially the art industry tries their hand at creating NFTs.
Following the $69 million sale of Beeple’s First 5000 days, we saw an influx of beautiful and unique art from various artists around the world. While NFTs have been here since 2017, 2021 served as the monumental era for NFTs as we saw the emergence of digital fashion, digital art, and a unique way for artists, entertainers, and creators monetize their content and secure their intellectual property rights.
Besides NFTs, world-famous auction house Sotheby’s also started accepting Bitcoin or Ether as a valid payment option. The auction house initiated their cryptocurrency adoption via Banksy’s Artwork,” Love is in the Air.’
El Salvador made it to social media headlines after President Nayib Bukele crowned Bitcoin as its legal tender. With 62 votes out of 84 lawmakers, the Salvadoran President was successful in initiating Bitcoin as the country’s legal tender.
Although Bitcoins and cryptocurrencies expected the first-world countries to drive the mass adoption of cryptocurrencies, Central America has been moving quickly to accept cryptocurrencies into their economy.
El Salvador’s step towards financial inclusivity could soon be followed by other Latin American countries such as Paraguay, Panama, Brazil, and more. Currently, Paraguay is working on a proposal to introduce cryptocurrencies into the country’s economy.
Moreover, promising projects such as Cardano and Algo are also working in parts of Africa to introduce cryptocurrencies into their system. Similarly, heading into 2021, Bitcoin and other cryptocurrencies have seen mainstream adoption in Ukraine, Sweden, and other European countries.
Considering Ukraine and Sweden represent some of the best economies and governments in the world, cryptocurrency adoption from these two countries could lead to greater adoption in the continent.
With more and more businesses, companies, organizations, and economies accepting and utilizing cryptocurrencies for international trades, especially for underdeveloped countries, we could soon see Cryptocurrencies replace fiat currencies in the near future.
With the introduction of promising DeFi products such as Crypto ETFs, Tokenized Stocks, NFTs, among others, Cryptocurrencies are heading into a future where these assets will change our lives dramatically. Heading into 2021, investing in cryptocurrencies has become easier than ever and with time, Cryptocurrencies could finally be the future of finance, governments and global economies.