FinTech Flashback: The Blockchain and Crypto Hype of 2018
FINTECH FLASHBACK is a series on FinTechtris that takes a look back at topics first discussed over a year ago and provides updates, dialogue, and further developments of what’s going today in the industry.
Two years ago, I posted one of our first articles here about blockchain (“Is Blockchain for you?”). It was the summer of 2018 and the world was recovering from Bitcoin mania, which saw the price fall from $19K (in Dec. 2017) to about $6K in six months. It seemed like every company at the time was building something off this latest trend in financial services and launching an ICO (Initial Coin Offering) based off a 10+ page whitepaper. Many of these ICOs would turn out to be fraudulent scams in which expectations and projects were never fulfilled. Regulatory oversight kicked in on the amount of private funding and ICO events, dropping the volume raised drastically from 2018 to 2019.
The concept of FOMO (Fear of Missing Out) was very real at the time — for both individual retail investors and institutions. Banks and large payment processors were frantically trying to build domain knowledge about blockchain technology. The concern was about how this would disrupt financial services and their business models. Venture capital firms had piles of cash on hand and were ready to place bets on early stage companies in the sector.
Fast forward to today in 2020, and our concept of blockchain and cryptocurrency has been somewhat desensitized and void of the hype.
Bitcoin has remained within a $5K - $11K range over the last two years. There are still arguments from both supporters and pundits on its true long-term value beyond speculative investing. Additionally, there’s no real traction on cryptocurrency replacing fiat currency (USD, EUR, etc.) in the near future. As the usage of cash decreases globally and a blockchain-friendly regulatory environment increases, this can start to change quickly.
What has changed is a new development taking place with tech giants (such as Facebook) and large banks (such as JPMorgan Chase) launching public projects to create and utilize a native, digital token for transacting.
The continued focus for blockchain as a whole is on real-world use cases and applications that extend deeper into financial services. InsurTech has been a sector of FinTech in which blockchain and smart contracts have had an immediate impact on improving processes and cost efficiency. Similarly, the reliance on compliance reporting and monitoring in RegTech has also received major benefits from blockchain.
Branching out from financial services, the healthcare, logistics, government, and manufacturing industries are all actively engaging in new frameworks based on blockchain. As long as there exists a need to replace manual processes efficiently, decrease error rates and costs, and increase real-time access to records and funds— there continues to be a huge demand for this innovation.
Bringing the discussion back to financial services in 2020, individuals and institutions now have an abundance of options to invest through cryptocurrency exchanges, indexes, and approved securities offerings. The household names of Coinbase and Robinhood have both branched out with specialized products for hedge funds, family offices, and large corporate clients. Other platforms, such as Kraken and Gemini, have also increased their popularity in the sector. Given the current economic conditions of the pandemic and low interest rate environment on bank deposits, many anticipate a surge in crypto investments over the next 2-3 years.
In the decade of the 2020s, the question of “Is blockchain for You” will be automatically answered for us. Based on trends from the last few years, the disruptive technology will slowly become embedded in our daily life — so much so that we won’t feel the change. Financial services will see a deeper impact through funds transfers and remittances becoming faster and cheaper through blockchain. Some institutions have already replaced costly international wire transfers with providers such as Wyre. With increasing government support and adoption, other industries will quickly follow and adapt their business models with blockchain by the end of the decade.
Let’s plan to meet here in 2 years (June 2022) and see how far we’ve come. - William M. (FinTechtris)
Thanks for reading — feel free to comment or share this article below!
. . . . . . . . . . . . . . . . . . .
Be a part of our FinTech community at FinTechtris —>
For more industry content and discussions (including trends, deep dives on unicorns, and sector analysis) — signup for our newsletter and Slack channel access today!
