In cryptocurrency and blockchain, the past year has been significant. Cryptocurrency saw an uptick in litigation around fraud and misuse in 2019, with investors logging losses of more than $4 billion to malicious actors (a significant increase from the previous year). Meanwhile, blockchain enjoyed a rise in mainstream enterprise interest. And now, we’re seeing even more momentum around how cryptocurrency and blockchain can be applied to deal with some of the public crises emerging from the COVID-19 pandemic.
As a senior managing director at a company that offers blockchain advisory and cryptocurrency investigation services, I believe that in a year, we’ll look back on 2020 as a time of tremendous change. Adoption for cryptocurrency will likely grow as governments and financial institutions look to digital money as a way to distribute aid and other financial services. Medical supply, pharmaceutical and other industries may look more closely at how distributed ledger technology can fix some of the problems we’ve seen in supply chains and distribution of critical goods. Beyond the aftermath of the pandemic, industry watchers will likely continue to see an uptick in cryptocurrency investigations and litigation.
I’ve compiled a list of predictions and expectations for what will take shape in these arenas in the coming year and in a post-coronavirus world. These include:
1. Cryptocurrency legislative activity, but no new laws: Last year, I expected that we’d see the first formalized cryptocurrency regulation come to fruition in the new year. Right on time, the Cryptocurrency Act of 2020 was introduced to the House, which kicked off the new year with renewed energy and focus around cryptocurrency law and policy. Additional bills are in the works or have been passed, and this year should bring an increase in legislative activity around the space. This does not mean we’ll see new laws pass, though. Instead, I think cryptocurrency’s legislative champions will primarily focus on educating and informing their colleagues through draft bills. They could bring new discussions to the table to drive awareness.
2. Public banking enablement: In New York, a team of politicians and a law professor drafted a bill proposing what they called an Inclusive Value Ledger (IVL), which is designed to provide public banking for the millions of people who do not have access to bank accounts or have low incomes. This system would allow users to store money digitally and transfer money to other users for free. Under the plan, the state of New York would issue digital wallets to all individuals (and businesses) in the state and give everyone in New York the ability to transact using a statewide, public digital currency. We saw traction around this concept in the U.S. and globally in response to the coronavirus. Ultimately, it could become a way to level the banking field and potentially serve as a model for governments and businesses looking to protect people from exploitative lending and check cashing services.
3. Blockchain connecting nations: Blockchain is already being used in Asia as a way to track coronavirus-related financial aid and donations to businesses and individuals. For example, insurance companies are reportedly using it to fast track claims payouts. These use cases demonstrate the technology’s capabilities to track, log and securely share sensitive financial information. In a similar manner, I expect that we will see governments leverage blockchain systems to track other critical data regarding the global spread of the virus. It’s possible that in the coming year, a global distributed ledger database will be implemented to share research, ensure data accuracy and promote information transparency between foreign entities — perhaps with the aim of improving response for the coronavirus and future global crises.
4. Increased adoption in financial services: Cryptocurrency use may continue to rapidly mature, especially among traditional financial services institutions. This year, I think we’ll see digital currency become more widely used by the public, in retail, at ATMs and in mobile apps — particularly as people seek to transact without contact. (The World Health Organization is reportedly calling for people to use contactless payment methods as much as possible.) Banks and retailers could increasingly jump on the token bandwagon, and corporate cryptocurrency wallets may emerge to offer new functionality and protections to drive usage among businesses.
5. Fraud remaining “business as usual”: As mentioned above, 2019 was a milestone year for cryptocurrency-related crime. In November, two men in Massachusetts were arrested and charged for stealing cryptocurrency, using SIM swapping and computer hacking. While SIM swapping has been around a long time, its potential for use in mobile banking fraud appears to be on the rise. Business and consumer cryptocurrency users should expect to see (and protect themselves against) more of this tactic.
6. Enterprise blockchain demonstrating ROI: Beyond use cases to improve vital supply chains, enterprise blockchain could continue to make great progress and drive innovation and disruption in many business processes. This could include blockchain as a viable solution for smart city initiatives (paywall), consumer products and supply chain disruptions. More blockchain companies are probably going to enter the market, and early adopter pilot programs could begin to show ROI and other measurable benefits, which would drive more adoption and interest. For example, in the media space, one company is using a blockchain platform to “enable content producers to manage and distribute premium video to consumers and business partners without content delivery networks.” In insurance, a leading provider is reportedly using blockchain to allow “patients to securely access and share their medical data.”
Like with all other disruptive technologies, the leapfrog game of new challenges, new advancements and new laws will likely continue as the blockchain and cryptocurrency space matures. Despite certain challenges, such as a lack of familiarity with the technologies, I think it’s time for organizations in every industry to run toward innovation. They should think of ways do so in ways that prioritize optimizing processes, new business opportunities and, yes, creating a better world.