Bankless Times has received commentary from several industry executive across fintech sectors on their highlights from 2020. Some also shared their thoughts on what could happen over the next 12 months.
Fraudsters will target new account openings
With a record number of individuals banking online for the first time, new account openings are skyrocketing. Account opening is a unique animal in the world of fraud prevention. Because banks don’t have a transaction history with the person opening the account to rely on, it’s much more difficult to detect fraud.
As the shift to online banking is likely to continue well into 2021, banks and many other organizations will need to rethink the way they verify identities, relying more on evaluating the dynamic data across identity elements (such as name, phone, email, address, IP) and their usage patterns, to determine fraud risk. – Arjun Kakkar, vice president of strategy and operations for Ekata, a provider of global identity data for confident risk analysis
2020 was the Year for DeFi
2020 was a boom year for both Bitcoin and the blockchain space as a whole, with DeFi, in particular, expanding from a mere experiment into a multi-billion dollar sector. The growth of Bitcoin drew in capital and attention which subsequently trickled down to the rest of the ecosystem and helped fuel the rise of DeFi. At the same time, the enthusiasm generated by DeFi has fed back into Bitcoin, thus creating a virtuous feedback loop between Bitcoin and the rest of the blockchain ecosystem. – Beni Hakak, CEO of LiquidApps, a technology company focused on optimizing decentralized development
DeFi will create a tipping point for the world’s 1.7 billion unbanked
Decentralized finance (DeFi) is open-access finance native to the internet. Powered by smart-contract blockchains like Ethereum, DeFi allows transparent peer-to-peer financial systems that don’t need a bank or other third-party service company. Now anyone with internet access and a digital wallet can get lending, borrowing, and other financial services.There have been many new DeFi projects built over the past few years, and others that were in development are coming to fruition with finished products. The permissionless nature of this open world of finance is the same driver that spurred the growth of the internet. Expect a similar result for finance in 2021 and beyond. – Chris McAlary, CEO of Coin Cloud, a provider of cryptocurrency ATMs
And that will attract talent
One of the positive externalities of boom times is the amount of talent that gets drawn into the blockchain space. As Bitcoin and blockchain continue to rise, more developers and users could be drawn into creating and building decentralized technologies. – Beni Hakak
Challenges to Overcome
While DeFi has seen tremendous growth in activity and volume, it has not been without its challenges. The name ‘degenerate finance’ began to stick to the applications operating in the wild west of DeFi, where the lure of extremely high returns often trumps caution and common sense. As 2021 unfolds, we could see a natural evolution from ‘degen finance’ towards sustainable decentralized Fintech, including applications for options, insurance, savings and investing. – Beni Hakak
Stablecoin and CBDC growth will impact the world’s relationship with digital currency
As digital currency goes mainstream, people want to get involved, but on a less volatile level than what they perceive as possible from cryptocurrencies like Bitcoin. Two types of virtual currencies have arisen to fill this need. We have seen hockey stick growth in their adoption, and expect the momentum to continue in 2021:1. Stablecoins: This is like the old gold standard, except instead of every dollar being backed by gold, every stablecoin is backed by a dollar in a bank account. Think of how email supercharged mail. Stablecoins do this for the dollar. Now dollars are programmable, compatible across platforms and can be sent to any device in the world instantly and for free.2. Central Bank Digital Currencies (CBDCs): CBDCs are the centralized banking system’s answer to virtual currency — a lot like stablecoins, but issued and controlled by governments and traditional banking systems. China has already launched a pilot of the digital Yuan and every other major central bank has a pilot in development. – Chris McAlary
Virtual currency wallets will be pre-installed on every mobile device by the end of 2021
Mobile wallets — Apple Pay, Google Pay and/or Samsung Pay — have been found natively on nearly every modern mobile device for years, so it’s safe to say that digital currency wallets are next. This will be made possible through the adoption of virtual currencies by big players like Facebook, PayPal, Venmo, Square’s Cash App and Visa partnerships to enable digital currency payments at retail. You might already have a bitcoin wallet on your device without even knowing it. – Chris McAlary
Widespread consumer adoption of digital currency will double, reaching at least 700,000 Bitcoin transactions per day
Consumers are adopting digital currency at record rates, both as a medium of exchange and a store of value. They are looking to integrate digital currency into their everyday lives, including being able to pay for goods and services, in stores as well as online. At the end of 2020, there were over 350,000 daily Bitcoin transactions recorded worldwide.
I predict that will double in 2021. Nearly every major government and some of the world’s largest corporations are using blockchain technology to create their own currencies. Facebook is releasing its Diem digital currency (previously known as Libra), and will be launching its Novi digital wallet, making it available to its 2.7 billion users as well as 2 billion WhatsApp users. PayPal is now allowing its 325 million customers to buy and sell cryptocurrency, while Square’s Cash App saw a 1,000 per cent increase (over $1.63 billion) in Bitcoin revenue for Q3 of 2020 over the same period in 2019. As more consumers demand digital currency services, Coin Cloud DCMs will continue to provide the tangible on-ramp for entering the digital currency-based economy. – Chris McAlary
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