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Cryptocurrency - The Biggest Trends in 2021

Cryptocurrencies have landed permanently in the investment debate. Many are familiar with Bitcoin and Ethereum, but what are the biggest crypto-related trends in 2021?

The English term crypto has become one of the most trendy Google searches in early 2021. Cryptocurrencies and cryptocurrency investing are interesting, but what are the latest developments and topics of interest in the cryptocurrency market right now?

Coinmotion's community manager Pessi Peura talks with Sortter about the expansion of the cryptocurrency market, cryptocurrencies, crypto-crypto trading, and scaling. In addition, Peura shares his views on how the involvement of banks in cryptographic investment activities would change the cryptocurrency market.

Crypto Interest Rises. So Does the Market 

Crypto attracted more interest than in previous years. The best-known cryptocurrency, Bitcoin, has dominated the debate as well as market shares. In the spring of 2021, however, the value of many non-Bitcoins has risen more.

"Many investors have set out in search of the next Bitcoin. In particular, higher appreciation attracts many investors to diversify their investments into different cryptocurrencies. I would see that market expansion is one of the big trends this year", Peura says.

"Various meme coins have also trended, such as the Dogecoin, which rose wildly in the spring. Dogecoin is a long-term cryptocurrency created in 2013. It was created with a sense of humor, which is also reflected in its name and logo."

Dogecoin has also been copied extensively, with meme coins marketed with various animal-themed logos and names. These include Shiba Inu, Hoge Finance and Dogelon Mars.

"However, from an investor's point of view, meme coins are wild west, so a beginner may not be the first to invest in them," Peura says.

Crypto Loans — One of the New Investment Products

Cryptocurrency loan is a new product developed to improve the return potential of cryptocurrencies. The cryptocurrency lending market is only a few years old, but according to Peura, it has grown and become more widespread.

A cryptographic loan means that investors make their cryptocurrencies available to traders, in which case the investor receives interest on the cryptics they borrow. Leveraged traders lend cryptocurrencies for trading. In this way, the investor can get a return on his crypto holdings like dividends.

"We at Coinmotion have created an interest account for cryptographic loans with a return of several percent," Peura says.

The cryptographic bond market has become more common in recent years. For example, the domestic lending service Aave is one of the cryptographic loan intermediaries that has expanded its operations in recent years.

Crypto to Crypto Trading

Trading from one crypto to another, or crypto to crypto trading, has increased in recent years. There is a lot of trade between different cryptocurrencies, with people buying Bitcoins and then exchanging them for other digital currencies.

"Not all cryptocurrencies can always be bought in euros, so the euro must first be exchanged for Bitcoins and then exchanged for another cryptocurrency. For example, the new cryptos are just like that," Peura says.

There is a lot of mutual exchange, especially from Bitcoin and Etherum to other cryptocurrencies and vice versa.

"The Coinmotion platform allows you to change cryptocurrencies. The costs are mainly paid for the exchange, which means a small commission. 

Many other platforms work the same way," Peura says.

Scaling - The Next Trend?

The biggest challenge for cryptocurrency is the high number of transfers and network power.

Bitcoins and Etherum are the most widely used of all. The large number of transfers will lead to overloading networks which, in turn, will mean higher fees. For example, moving an Ethereum from one place to another can cost up to tens of euros.

Many other cryptocurrencies scale better, with lower transfer costs and times. Right now, there is an ongoing scaling competition between cryptocurrencies. Peura says those who solve transmission problems and get users can be big winners in the cryptocurrency market.

"Bitcoin is a layer 1 system or layer 1 blockchain. A Lightning network, or layer 2 solutions, has been developed on top of Bitcoin. This allows blockchains to be transferred from one place to another really cheaply and quickly. Ethereum also has scaling solutions, such as Polygon, whose value increased a lot during 2021," Peura says.

Banks Involved in Crypto Investment

Banks have shown interest in cryptocurrency investing. Cryptocurrencies were originally developed to be institutionally free, so what would the entry of these new players mean for the cryptocurrency market?

According to Peura, the involvement of banks is an opportunity, as large economic actors bring reliability, visibility, and improved availability of crypto.

"Many Finns may have a large threshold to use new services, but if their bank offers the opportunity to invest in cryptocurrencies, it will bring more investors. Thus, cryptocurrencies will continue to increase in value," Peura says.

The crypto platform Coinmotion has been operating since 2012. Coinmotion is happy to welcome banks to the cryptocurrency market and does not see banks as a threat to their business.

"Banks are not a realistic threat, as Coinmotion has a great deal of experience in the industry and a lead in developing services compared to banks. Instead of competition, we should increase cooperation, which will improve the movement and availability of crypto with the entry of banks," Peura says.

Read more about cryptocurrencies in our beginner's guide.

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