What’s Next for Digital Currencies Post Pandemic?
What’s Next for Digital Currencies Post Pandemic?
The COVID-19 pandemic has undoubtedly impacted the financial landscape, affecting the way people work and do business. At the height of the crisis, companies struggled to adapt to the new limitations on public life or risk shutting down. Bans on non-essential travel and austere public health and safety measures pushed the public into self-isolation and changed consumer habits.
Naturally, these developments have made their mark on digital currencies and their adoption, innovation, and various other aspects. Here are some of the ways digital currencies are evolving in 2020 and beyond.
- Accelerated move to cashless payments
With the rising fear of cash being a vector for COVID-19 transmission, merchants and consumers alike needed safer alternatives. The demand for easy, contactless modes of payments paved the way for e-wallets, contactless cards, and non-bank payment systems.
Following this logic, cryptocurrencies—with their decentralized value and always-online services—are poised to enter mainstream markets.
Unlike traditional financial systems, anyone with a computer or even a smartphone can begin transacting with digital currencies. Issues of security and transparency are also quickly addressed as most digital currencies are reliant on blockchain technology.
Due to the decentralized public ledger, it operates on, any threats to transaction security or fraudulent transactions are minimized. Bitcoin SV, in particular, is a digital currency that embraces the movement of crypto from the fringes of fintech to the fore of daily living.
Following its hard fork from the original Bitcoin, Bitcoin SV aims to bring to life the vision of Bitcoin’s founder Satoshi Nakamoto, as stated in the Bitcoin Whitepaper. This is most evident in the larger capacity of Bitcoin SV’s blocks—sitting at 32MB—that increases the capacity of transactions and keeps fees low.
Bitcoin SV performance in the market is on the rise today and has great potential as an investment for future fintech innovations.
- Increased adoption of blockchain technology
One of the most significant contributions Bitcoin has made to technology is the actualization of the blockchain. Bitcoin and other cryptos rely on this decentralized peer-to-peer network to store data and prevent them from being tampered with.
From there, innovations in blockchain technology have been made not only to improve cryptocurrencies as a whole but data storage and recording, as well. For example, WeatherSV is an app that uses Bitcoin SV’s blockchain to record large amounts of weather and climate data.
Broader applications for blockchain include providing reliable frameworks for IoT and AI in logistics use, according to Exasol global relations manager Helena Schwenk. Blocks in the blockchain are used by the IoT to track and authenticate actions.
Meanwhile, the blockchain facilitates better AI learning and even enable autonomous code execution for a better interaction ecosystem.
As blockchain technology continues to evolve and the community around it pushes more innovations, it’s worth anticipating that blockchain will begin to enter more aspects in day-to-day operations and living.
- Bigger players in the digital currency market
With Bitcoin becoming a household name like Coca-Cola and Apple, more businesses are exploring the possibilities of fintech.
For instance, social media giant Facebook announced Libra—its attempt at digital currency—last year. Other retailers like Alibaba and Amazon are speculated to be creating their own digital currency, with tokens set to be used on their respective retail platforms.
With these large corporations expanding to fringe fintech, more institutions—both government and private—will be creating more definitive policies on how to regulate digital currencies. Facebook’s Libra has already undergone major changes in response to regulatory concerns. Despite this, more attempts to foray into digital currencies can be expected in the future.
- Rise of central bank digital currencies (CBDCs)
Countries like China, Germany, and the United States are considering developing their own digital currencies. These central bank digital currencies (CBDCs) are digital versions of the nation’s fiat currency, with their value backed by full faith and credit of the government.
Opinions on CBDCs can be highly polarizing. On the one hand, others may argue that CBDCs run at odds with crypto’s aim to decentralize a currency’s value and base its security on its networks. On the other, CBDCs can help countries create a more seamless digital economic experience, moving towards a cashless society.
With the great possibility of CBDCs becoming a reality, a number of concerns arise, the most pressing one of which is that central banks will hold too much power over the flow of credit. Other problems include possible volatility in the experimental phase, state surveillance through monitored transactions, and questions on a central bank’s data security capabilities.
- Better accessibility through banks and fiat currencies
The rise of digital currencies is causing financial institutions to rethink their stances on accommodating crypto. US bank JPMorgan has not only made plans to accommodate the trading of digital currencies but for establishing its own—JPM Coin— that is tied to dollar value.
Additionally, Goldman Sachs has taken in a new digital assets leader to scale its crypto operations better.
Outside of the US, other financial institutions are exploring crypto integration. Swiss bank Maerki Baumann Bank launched its trading platform for cryptocurrencies, while Incore Bank created a dedicated Digital Services division authorized to offer and render certain crypto services.
These moves are crucial to building further adoption and accessibility of digital currencies. Aside from demystifying the process of participating in crypto trading, these institutions serve to bring them closer to practical use.
Fintech for the Future
At the end of the day, digital currencies remain on the edge of fintech. However, that may soon change. With the continuous innovation and adoption by major global players, digital currencies can soon hold their own as an alternative cashless payment option.
In addition, blockchain technology is becoming more viable as a solution for big, complex industries—even non-bank enterprises are seeing the potential in creating and maintaining their own digital currency systems.
On the downside, the increasing interest of governments in cryptocurrencies and blockchain opens up further concerns of data privacy, security, and economic control. Despite these developments, the future of digital currencies is nothing short of optimistic.
About the Author
Kimmy is an experienced content writer with a demonstrated history of working in the internet industry. When she is not writing, she spends time outdoors with her dogs or crochets.
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