What lies ahead for crypto and blockchain in 2021? Experts answer

It would be fair to admit that after 2020 and all it has put us through, making any predictions for the upcoming year is most likely to be a game of blindfold. Meanwhile, I am certain that humanity has much to learn from its past transgressions, and will move forward by correcting our mistakes and weaknesses. That’s what we always do. Undoubtedly, the major driver of our development this year was the COVID-19 outbreak. The effects of the ongoing global pandemic on every aspect of our lives will form our future, and there are some tendencies we started last year that will most likely continue in 2021.

COVID-19 has revealed the dire need for solutions in economic efficiency and transparency, and most urgently within the healthcare sector. Further deployments of blockchain solutions will strengthen healthcare systems, if not revolutionize them, by helping both medical practitioners and patients globally. Despite promises to preserve citizens’ private data during the global pandemic in the name of public health, the blockchain-based solutions storing COVID-19 data have raised serious concerns, as they don’t seem to be private at all. While the potential of such emerging technologies is promising, to balance privacy with the appropriate solutions should be a priority for those engaged in this industry.

Related: How has the COVID-19 pandemic affected the crypto space? Experts answer

By driving our technological development into the future, the pandemic has also had a significant and ambitious impact on the financial sector. On one hand, governments all over the world have made great strides in the development of central bank digital currencies this year. With CBDC implementations coming closer, serious privacy concerns have been rightfully raised within the crypto community, as the technology represents another step toward a more centralized financial system.

Related: Did CBDCs affect the crypto space in 2020, and what’s next in 2021? Experts answer

On the other hand, people have been seeking alternative — and decentralized — solutions, which led to the unprecedented rise of the decentralized finance sector witnessed this year. Both trends will certainly remain central to the upcoming year.

Related: Was 2020 a ‘DeFi year,’ and what is expected from the sector in 2021? Experts answer

Amid the novel coronavirus pandemic, global governments began printing money, generating new concerns about the health of the financial sector and turning people toward alternative assets — cryptocurrencies. As a result, Bitcoin (BTC) proved itself as a hedge against inflation while its position as a store of value was strengthened, unlike in 2017.

Related: Did Bitcoin prove itself to be a reliable store of value in 2020? Experts answer

Serious institutional investors, hedge funds and other sophisticated financial players — such as Grayscale Bitcoin Trust, MicroStrategy, Square and PayPal, among others — entered the crypto space, and this tendency will most likely remain in the upcoming year. With more mainstream investors and service providers joining the industry, the real utility of digital assets will further drive cryptocurrency’s mass adoption worldwide, which in turn will drive crypto charity and philanthropy.

Related: Will PayPal’s crypto integration bring crypto to the masses? Experts answer

With cheap and scalable, trustless systems, blockchain tech is improving supply chain efficiencies across many industries from blood donations to food enterprises, and there will most certainly be more DLT-backed use cases implemented across the globe. Some even argue that enterprise blockchain is the next step in economic architecture evolution, and that not taking this step alongside everyone else will be a grave mistake for large companies in 2021.

Related: Unforgettable: How blockchain will fundamentally change the human experience

Last but not least is blockchain’s potential in our efforts to combat climate change and global warming. Blockchain technology stewarding the environment will be crucial for the future, from sustainable digital finance and carbon emissions to eco-friendly crypto mining and transparent fuel use. As we enter the third decade of the 21st century, achieving the United Nations’ Sustainable Development Goals without blockchain seems an impossible undertaking.

Blockchain and crypto are not a panacea and won’t solve all our problems, but their potential to improve the world would be unwise to ignore. Cointelegraph reached out to industry leaders and asked for their personal expectations for 2021 to gain some insight on the upcoming year in crypto and blockchain.

What will 2021 bring for the development of the crypto and blockchain space?

Brian Behlendorf, executive director at Hyperledger:

“I have no magic 8-ball when it comes to predictions in the cryptocurrency space, though I suspect volatility will continue to be its defining feature. The use of blockchain, distributed ledger and smart contract tools will continue to grow as they have in 2020.

Tighter economic times that are likely to continue in 2021 mean little room for proof-of-concept projects, but those conditions also often drive small and large enterprises towards greater cooperation rather than zero-sum marketshare battles — meaning more consortia efforts, more realistic expectations on returns from such efforts, and less hype and noise. We’ve already seen some networks, like Food Trust, reliably achieve increasing value through network effects.

If your industry doesn’t yet have a DLT transaction network at the heart of its core business processes, it will by the end of 2021. And where there’s competition, those blockchain consortia whose governance is most open and networks easiest to join will have the advantage.”

Brian Brooks, Acting Comptroller of the Currency of the United States Treasury’s Office of the Comptroller of the Currency:

“Cryptocurrency is to banking what the internet was to libraries. Just as the internet existed for a decade before 1995, its rapid adoption became possible only after it became accessible to everyone, not just programmers.

In 2021, I expect to see the beginning of that same transition for cryptocurrency. I think we are approaching critical mass for much more ubiquitous acceptance of cryptocurrency as a tool for everyone to use, not just Silicon-Valley types. That acceptance is, of course, not guaranteed. Crypto developers, exchange operators and others need to stay focused on addressing concerns about Anti-Money Laundering compliance, fraud detection and prevention, and a host of other things that must be put to rest if the industry is to operate at scale.”

Charles Hoskinson, founder and CEO of IOHK:

“Blockchain is at a critical juncture. In order to fulfill the lofty promises of the technology and achieve widespread adoption, the industry needs to learn to work together. This isn’t a new concept — in mainstream technology businesses rarely work in silos. We wouldn’t, for example, expect a Samsung phone to only work with Samsung wireless routers, and we shouldn’t expect this in crypto. If we keep taking the attitude that one platform needs to ‘win,’ then we risk shooting ourselves in the foot.

2021 will be a crucial test of this. If companies can prioritise finding ways to interoperate, recognising that the industry will benefit from a rich ecosystem of partners, all working seamlessly together for the end user, then there is nothing stopping us from having our ‘bluetooth moment’ and replacing the global operating systems with solutions that are better and fairer for all participants.

We could see blockchain adoption at an unprecedented scale in the developing world in 2021. For developing countries, the pace at which they can grow is often held back by a lack of foundational infrastructure. However, this could start to work in their favour. The agile capabilities of blockchain mean that it could scale to cater for entire populations, without the need for existing infrastructure. After a bumper year for blockchain development, the technology is finally mature enough to get them there.

This could not only allow developing nations to grow at a much faster pace, but also means that they aren’t encumbered with the challenges that developed countries face with overhauling existing legacy systems.”

Da Hongfei, founder of Neo, founder and CEO of Onchain:

“Moving forward, I believe 2021 could be the year that blockchain truly goes mainstream. Bitcoin already proved its value to mainstream investors in 2020 while DeFi projects affirmed blockchain’s transformational power. Moreover, the COVID-19 pandemic revealed the various cracks in today’s global system and the pressing need for more blockchain-powered solutions to overcome current limitations.

Going into 2021, I do not see any of these aforementioned trends slowing down — if anything, they will only continue to accelerate as mainstream institutions increasingly embrace blockchain technology.”

Denelle Dixon, CEO and executive director of the Stellar Development Foundation:

“While 2020 was far from the year most of us expected, I think it was an important year for blockchain and digital currencies. It demonstrated the positive impact blockchain can have to deliver payments faster and more efficiently. It set a strong foundation for the year ahead.

In 2021, I believe we’ll see more adoption of blockchain technology as we work to create consumer-friendly and connected products. For us at the Stellar Development Foundation, we’re doing that by working to expand our base of anchors — organizations that issue fiat tokens and provide financial on-and-off ramps — to make it so that blockchain technology is seen as useful, versatile and scalable. These anchors will better support the most common use cases we see for next year, B2B cross-border payments and C2C cross-border remittances, and encourage additional applications to come to the market.”

Elissa Shevinsky, former head of product at Brave, former editor of Lean Out:

“I think the well-funded players will continue to execute and keep up crypto business. Bitcoin will continue to be newsworthy. I think we’ll see more corporate and less independent things, due to the way funding is being distributed right now.

I believe that 2021 will be an extension of 2020 in many ways, as opposed to a year where we see a dramatic change. 2021 will see a lot of optimism, as people get the vaccine and life starts to feel more ‘normal.’

I’m seeing increasing distrust in governments and lack of trust in how countries are handling financial policies and basic functions. Did you know that the recent cyberattack (using SolarWinds, Microsoft, etc.) included a breach into the U.S. Treasury? Would you invest in the U.S. dollar? That’s what you are doing when you keep dollars in your savings account. All of this makes me bullish on crypto.”

Emin Gün Sirer, CEO of AvaLabs, professor at Cornell University, co-director of IC3:

“In 2021, DeFi will become a cross-chain ecosystem, with users finding and pursuing yield opportunities with the same assets across multiple chains via bridges. We’ll also see many use cases launching for the first time, as developers explore networks capable of sub-second finality and much more economical fees than what they currently work with.

Meaningful decentralization — as measured by the number of full nodes participating in consensus — and on-chain governance will move closer to the forefront, as users and newer entrants into crypto become more aware of how centralized many blockchains are, and the risk that introduces.

Finally, we’re going to see institutions and enterprises begin to move beyond just buying cryptocurrencies as an investment, to also building real applications and infrastructure on platforms that can meet their performance requirements and be customized to their data and compliance mandates.”

Heath Tarbert, Chairman and chief executive of the United States Commodity Futures Trading Commission:

“Digitization of markets is a macro trend. Of course, digital assets are part of that. Digital assets and their underlying technology are pushing conventional boundaries. I am going to make a relatively safe prediction, which is that this is going to continue to be a vibrant and active space.

Digital assets, and in particular the underlying blockchain technology, have great promise for our economy and for global markets overall.

Innovation in this space must continue to thrive. The financial services industry from my parents’ generation — or even from when I was growing up — is not what it is today. And I do not expect today’s to be the same as for my grandkids. Markets must continue to evolve. We have seen firsthand how these markets — and especially these technologies — do not have geographic borders. It is important for regulators to develop coordinated principle-based approaches to this ever-changing industry.”

Irene Gao, Antminer sales director of the NCSA region at Bitmain:

“The current bull run is different from 2017. Unlike previous years, we’re shifting from retail speculation to mainstream market integration. We’ve already seen increased interest from financial institutions and regulators alike, and this will only continue in 2021.

Planned mining deployments delayed by the COVID-19 pandemic are likely to resume, particularly in the U.S. As such, next year, we will likely see greater diversity in Bitcoin mining as U.S. miners expand their operations. We have enhanced the efficiency of our Malaysia factory to cater to more of our overseas customers and have improved cooperation with our clients to further assist with the continuous expansion of their mining operations.

We are confident of moving towards 2021. We are improving our services to our clients. Recently, we extended the warranty of our Antminer 19 Series from six to 12 months and have begun cooperating with more local partners from different regions to offer better support globally.”

Jean-Marie Mognetti, CEO at CoinShares:

“During 2020, Bitcoin exhibited similar patterns to the ones seen in 2013 and 2017. The price movements and trade volumes also demonstrate that trading, especially Bitcoin trading, has a type of kinetic energy. If this trend were to continue, it is possible that we will see Bitcoin following a parabolic move in 2021.

We will likely see a continued increase in the number of institutional investors and corporates adding Bitcoin and digital asset investment vehicles to their portfolios. This will result in some Bitcoin investment vehicles, like CoinShares’ ETP and Grayscale’s Bitcoin Trust, continuing to acquire more Bitcoin than can be mined on a daily basis — a pace that is likely to accelerate in the new year. I believe we are about to see a repeat of 2017 or 2013’s trends in 2021, albeit in a much more structured, less emotional way, unless a six sigma event occurs that interrupts the market’s kinetic momentum.”

Jimmy Song, instructor at Programming Blockchain:

“Huge bull market and a lot more institutional investors. I don't think anything from the blockchain space will have any impact whatsoever, much like the past six years. Crypto will be largely for new investors who will learn that anything other than Bitcoin is really a scam.”

Joseph Lubin, co-founder of Ethereum, founder of ConsenSys:

“I think that DeFi will become more relevant to normal people and the tech used to interact with it will be even more user friendly.

I’m also still predicting the parts of the Web 3.0 — decentralized storage, bandwidth and value — to be further integrated with each other. We spent a year collaborating on a bridge between Filecoin and Ethereum through Codefi DeFi Bridge, and Infura’s IPFS service transferred more than 300 TB of data this year alone. Web 3.0 is showing potential to provide more open content creation, the ability to publish, participate, create, run e-commerce, communication, video, etc.

We’ll also closely be participating in the scaling of Ethereum, both with our research contributions to Eth2, our client team Teku, Codefi Staking, and Infura’s Beacon Chain API. Merging Eth1 and Eth2 may happen in 2021, and we look forward to a more flexible and scalable settlement layer for the planet.

In the early 1990s, you couldn’t buy anything legally on the internet — we are now seeing the same democratization in the financial industry. We’ve replaced bank books and calls to stockbrokers with online interfaces. The distribution of financial services that are accessible to anyone itself is a major achievement, and we think this will continue to take off in 2021. I feel that the 21st century is just about to start in 2021.”

Mance Harmon, co-founder and CEO of Hedera Hashgraph and Swirlds Inc.:

“In 2021, the intersection of three trends — tokenization, DeFi and business logic moving to layer two — will pave the way for enterprise adoption of public DLT networks. These trends, combined with tough lessons learned from attempted private network deployments, have caused enterprises to be amenable to public DLT networks in ways they were not previously.

Today, digital tokens are being designed for economic activity within supply chains, not just as a way for startups to raise capital. The combination of tokenization, fiat-backed stablecoins, and DeFi — the underlying technology, not the short-term hype — will make traditional financing operations faster and less costly, fundamentally changing the existing processes for purchase order financing, obtaining loans for working capital, purchasing insurance, securing inventory financing and invoice factoring.

And enterprises are realizing that they can have their applications execute business logic in layer-two networks and simply use layer one for consensus and arbitration. This approach combines the benefits of public networks (distributed trust) with the benefits of private networks (low cost, scalability, privacy and regulatory compliance).

The intersection of these trends will provide the foundation for enterprises to use DLT in routine business transactions, driving significant acceleration in enterprise adoption in 2021.”

Mathew Yarger, head of mobility and automotive at the Iota Foundation:

“2021 is going to be a year of hybrid DLTs, interoperability and real-world integrations. We’re going to see it as a big transition year for the DLT space. Moving forward from the faulty mindset of “DLT is the cure” to the realistic understanding that DLT is a tool, just like artificial intelligence and cloud services.

We should see a growing understanding that some DLTs are good for some things, while others are good for other things, and they can be combined in interesting ways for interesting solutions. Other big themes to watch out for include: interoperability between permissioned and permissionless DLTs for business applications, connection of IoT focused DLTs to cloud-hosted DLT environments, verification of key insights using DLT for consumer-facing solutions, and testing of more secure architectures in real-world environments predominantly in healthcare, energy, mobility and supply chain solutions where the ecosystems are highly fragmented or highly regulated.

There are a lot of pragmatic and exciting things that are going to permeate through technology, affecting traditional tech companies with them showing strong commitments in the DLT space, and pushing their technologies in new and interesting ways.”

Mike Belshe, CEO at BitGo:

“We believe 2021 will be the year institutional investors accept and agree with the Bitcoin thesis: that scarcity of the asset is paramount to long-term value. As such, we expect 2021 to be a very strong year for BitGo and the industry as a whole. A combination of factors brought on by the global COVID-19 pandemic, the influx of institutional investment and the bull run of Bitcoin will continue to accelerate growth and attract new investors on both the retail and institutional side in the new year.

Longer term, we also see tremendous potential as the future of money depends on a transparent, cost-efficient way to conduct business across borders, as well as help people around the globe have greater access and freedom to build financial security. We feel strongly that we will continue to accelerate growth in 2021 and attract new investors on both the retail and institutional side.”

Paul Brody, principal and global innovation leader of blockchain technology at Ernst & Young:

“Adoption of the Ethereum mainnet by enterprise customers and early-stage adoption of privacy-enabled DeFi by enterprise users. Rapid maturing of DeFi security and audit tools. Early adoption of decentralized business applications beyond finance. A shift from DApps to ZApps — zero-knowledge applications that do the same work, but support user privacy. First regulatory frameworks that specifically cover fiat-currency-linked stablecoins and their use in consumer and business applications.”

Roger Ver, executive chairman at Bitcoin.com:

“Nearly every year has been better than the year before. I don’t think this is going to change for 2021.”

Samson Mow, chief strategy officer at Blockstream:

“In 2021 we’re going to see Bitcoin make incredible gains as more and more institutional players jump in. However, we’re also going to see a tidal wave of shitcoinery wash over the retail market as scammers try to ride on Bitcoin’s aura to enrich themselves.”

Scott Freeman, co-founder and partner at JST Capital:

“We think a lot of these existing trends around institutionalization will continue and expect to see a lot of growth, particularly within decentralized credit and decentralized derivative offerings over the next 12–18 months.

We think that investors will start looking at crypto a bit differently, as people view Bitcoin more as a store of value and start looking at the utility value of other coins. This could lead to a reduced correlation between traditional crypto assets and greater investment opportunities.”

Vinny Lingham, CEO at Civic:

“This year was a warm-up for next year. In 2021, we’ll see decentralized storage, decentralized finance and non-political currencies take off.

My picks for top performers are Bitcoin, Ether and Filecoin. However, Ethereum scaling issues need to be resolved next year if we expect to see continued success in 2022.”

These quotes have been edited and condensed.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.