The year 2019 ended up being a remarkable one for the worldwide crypto market. Despite a mainstream bear market, it included new groupings, novel trading solutions, and numerous blockchain protocols emerging and maturing. Global regulatory bodies are also becoming less apprehensive of cryptocurrencies and can be seen developing their own blockchain infrastructures. As a matter of fact, China has entered the global competition as well and is driving innovation with its deep pockets. In short, the blockchain and crypto market is far from slowing down as the momentum is gradually picking up.
While 2020 probably won’t calm the crypto market down, it promises to deliver some important developments that will enable the new asset mature and provide a sense of how it may become a core feature in the future of finance.
So, let us have a look at how the market is going to shape out in 2020 and what is the outlook for the new year.
- Decentralized Finance
Decentralized finance, also popularly known as DeFi, is the way to go forward given its wide-ranging advantages. At that point, it naturally comes across as the breeding ground for innovation. Projects of DeFi have now crossed the value of $650 million. Though it was beyond belief a few years ago, trust-less and secure provisions of financial services have now introduced fresh lending and margin trading facilities. It has helped traders to easily switch between different debt positions. Market operators such as Babel Finance are also helping big-time miners to avail large capital by keeping crypto as collateral.
- Increased Automation
As cryptocurrencies further penetrate the public consciousness, traditional accounting services will automate more of their work to keep up with the increased workload. Spreadsheets function well enough for fiat transactions, but in the volatile crypto environment, static tools can’t adequately serve anyone with a serious investment in alternative currencies.
Average consumers today can do their taxes online through services like TurboTax and H&R Block. Businesses and complex individual situations require personalized care, but standard programs can handle the load for most people. Tax programs don’t need to offer advanced functionality just yet — a few equations on the back end do a fine job.
But cryptocurrencies make things more complicated. Accountants need automated tools to track increased crypto complexity, like cost basis. Without smarter software, experts in the financial services industry won’t be able to keep up with higher sophistication at scale. Tax software providers will eventually offer new and exceptionally automated services for crypto investors, and consumers will pay for those services utilizing their crypto investments.
- AI Accountants
Accounting experts will utilize smarter tools to support their corporate clients and major investors make better decisions. But the public won’t require real accountants for their simple crypto investments, they’ll simply turn to artificial intelligence tools that minimize human interaction in most accounting scenarios.
The future will see consumers interact with intelligent AI, machine learning, and bots capable of natural language processing. Challenging concepts like crypto cost basis, which can confuse even the sharpest accountants, can pose little risk to intelligent software. Accountants will still have a place in the world, but their duties will evolve drastically as crypto demands bring widespread change in the financial industry.
Not everyone will feel comfortable doing taxes through AI. Accountants will need to lean on automated tools of their own to keep pace, but enterprise clients, heavy investors, and people suspicious of advanced tech will continue to prefer the human touch. With more money going toward nicer tools and less money going toward human intermediaries, accountants must specialize and adapt to stay relevant.
- Updated Regulations
Where crypto regulation used to be nonexistent, legislators have really made some limited progress. The SEC presently has more oversight to shut down illicit initial coin offerings (ICOs), and the IRS clarified that cryptocurrencies are property, not a currency at least for now.
But the more there is a change in crypto, the more will be the change in regulations. Every business that deals with cryptocurrency will encounter newer, more vigorous laws in the coming years. Soon every company and project that deals with crypto will need an accountant (or accounting service) with crypto experience to help navigate the unknown.
As new laws get passed, businesses will invest more heavily in smarter crypto accounting solutions. Artificial intelligence and machine learning will do the heavy lifting while human accountants interpret that data to help executives make smarter business decisions. More technology startups will develop to cater to this increasing audience. Before long, crypto accounting will turn into an industry unto itself.
These changes may appear like far-off concerns for another year, however, crypto accounting, like cryptocurrencies themselves, moves rapidly. Expectations and the tools to meet them become more complex and sophisticated each day. Accountants must stay vigilant to keep up with the times, or they risk losing ground to a new generation of crypto-savvy competitors.
- Crypto-Fintech hookup
The overarching theme of all of these trends is that cryptocurrency is growing up, becoming mainstream and finally finding actual use cases, rather than just hypothetical ones. With the introduction of libra, the issue is not about explaining why cryptocurrency will be valuable and necessary soon but making it valuable and necessary now, do or die.
There are obviously questions about how transactions will be implemented across an array of ledgers or how anonymized transactions can be regulated. Part of this will come in the consolidation of the industry and the continued struggle for interoperability between wallets and ledgers. However, most of these questions will likely be answered by whoever tries first, and financial technology companies are by far the most eager to fill that role.
This need for innovation has been an evident trend throughout major areas of the cryptocurrency market. Libra itself is (or was) stacked with individuals from various fintech organizations. Meanwhile, fintech unicorns like Plaid and Chime have reached their valuations largely from investments by companies in the finance industry like Visa and Goldman Sachs Group that are curious about digital assets, but terrified of the uncertainty that surrounds them.
Chandrima is a Content management executive with a flair for creating high quality content irrespective of genre. She believes in crafting stories irrespective of genre and bringing them to a creative form. Prior to working for Hrtech Cube she was a Business Analyst with Capgemini.