Will 2020 Be the Year Cryptocurrencies Go Mainstream?
To say that 2020 has been full of unexpected changes would be an understatement. Disruption has been a theme across nearly all industries, but this hasn’t been negative for every sector. As traditional institutions continue to crack under pressure, cryptocurrency adoption could be on the verge of taking off.
Tumultuous times often provide fertile ground for widespread change, and the turn toward crypto could be one such shift. The first half of 2020 has been promising for cryptocurrency, and the second could be even more so. If current trends continue, this year could be the one where crypto breaks into the mainstream.
COVID-19 Is Spurring Digital Innovation
The world has been experiencing a digital transformation for years, but COVID-19 has sped things up. As face-to-face business has become a less viable option, companies have rushed to adopt new digital processes. Some estimates hold that five years’ worth of digital adoption occurred in just a couple of months.
This trend toward digitization is good news for crypto, which is as digital as it gets. Crypto exchanges happen online, and these currencies don’t represent any physical assets. They’re an innately digital technology, making them ideal for a digital world.
As more transactions are happening online, crypto stands as a more tempting option. Since cryptocurrencies rely on blockchains, they offer more security than digital credit card transactions. With more online exchanges come more cyberthreats, so this increase in security is essential.
Growing Distrust in Traditional Financial Structures
Another trend that the coronavirus pandemic has spurred is a distrust in older systems. Under the stresses of COVID-19, some institutions have started to crumble, causing trouble for businesses. With traditional financial systems like the U.S. Mint and the stock market floundering, crypto becomes more appealing.
Due to the pandemic, the Mint has had to slow operations, leading to a nationwide coin shortage, affecting business. Many retailers have shifted away from accepting cash in response, favoring electronic payments. With more stores having to accept digital currency, taking the next step toward crypto comes easier.
Cryptocurrency adoption could also rise as investors grow suspicious of the stock market. The pandemic has caused a global recession, which affected Bitcoin too, as its price fell to $3,000 in March. Unlike most of the stock market, though, Bitcoin’s value recovered and is now back to more than $9,000.
Crypto may not be immune to substantial market changes, but it’s less affected than traditional investments. Since crypto is decentralized and not tied to fiat currencies, these shifts don’t affect it directly. As a result, disillusioned investors may turn to it during and after the COVID recession.
Blockchain Adoption Is Already Rising
Blockchain adoption has seen steady growth in recent years, and 2020’s unique needs could accelerate this trend. In April of last year, the retail giant Amazon launched a blockchain management service to the general public. Earlier this year, Google partnered with a blockchain company, Theta Labs, bringing it one step closer to the technology.
This trend is happening on a national scale, too, not just with individual corporations. Nations like Sweden and China are interested in applying blockchains to their sovereign currencies. Blockchain application on a country-wide scale would bring international attention to the potential of related technologies like crypto.
Blockchain is not the same as cryptocurrency, but it is the underlying technology that enables crypto. The association between the two is strong enough that a rise in blockchain adoption could easily lead to a similar trend in cryptocurrency adoption. If companies and nations gained experience in working with blockchains, adopting crypto wouldn’t come with a steep learning curve.
Recent Trends in the Crypto Market
Perhaps the best indicator of cryptocurrency’s potential is the performance of the crypto sphere itself. While 2020 has proved harsh for many exchanges, that’s not true of cryptocurrency. Monthly crypto trading volume lept by $400 billion between January and February and has remained high since.
Of the 15% of Americans who own cryptocurrency, more than half of them invested in it this year. Another 11% of surveyed Americans plan to invest in cryptocurrency within the next 12 months. If that happens, then more than a quarter of American adults would have crypto investments, making it reasonably mainstream.
As more individuals take an interest in cryptocurrencies, businesses follow suit, further legitimizing the concept. Financial services are increasingly looking into cryptocurrency valuation, equating it to traditional assets in terms of legitimacy. With more people investing in crypto, companies may be missing out on a market demographic if they don’t recognize it.
Cryptocurrency Is on Its Way to Legitimacy
With record investments and growing social trends, cryptocurrency adoption could skyrocket in 2020. It may not replace traditional currency anytime soon, but the idea of it becoming mainstream is not unfounded.
These trends suggest 2020 could be the year of cryptocurrency. Of course, if there’s any lesson to be learned this year, it’s that the future is always uncertain. Cryptocurrency’s future certainly looks positive, but nothing is guaranteed.