Cryptocurrencies: Which are the leading ones for 2021 and their effect on the banking landscape

A cryptocurrency is a monetary unit that has no physical form. Instead, it’s stored electronically in the blockchain. Encryption methods are used to control and verify the transfer of funds and, unlike other currencies, the supply isn’t determined by a bank. The most well-known example would be the original cryptocurrency, Bitcoin.

As Chris Skinner, author of Value Web, explains, “People who could not access trade and finance ten years ago can do so today. This will lift many out of poverty.” It’s giving those that may not previously have been considered by traditional banks another financing option. And with cryptocurrencies, not only will people not need to interact with banks the same way they do now, but they’ll also be able to avoid bank fees.

Between April 2015 and April 2016, over 600 bank branches in the UK were closed. And in 2016, HSBC reported that they’d seen over a 40% reduction in the number of people visiting their branches. When you consider all of this, it’s understandable that some banks are concerned about the impact cryptocurrencies could have on the banking landscape. If they continue to rise in popularity, physical banks may eventually become obsolete.

With cryptocurrencies giving people a new method of financing, many believe that banks are feeling threatened. Johann Palychata, a Research Analyst at BNP Paribas, has suggested that banks will need to consider how to utilize the technology behind cryptocurrencies. If they don’t, there’s a possibility they will become outdated and redundant. Following are some of the trending cryptocurrencies of 2021.

Stellar (XLM)

Next up, Stellar is a blockchain-based distributor ledger network that uses its currency, XLM coins for transactions between financial institutions and people. At its heart, the Stellar Lumens network aims to make cross-border payments frictionless. It has received a fair amount of attention as of late.
Stellar stands out due to its incredible payment network speed. For traditional international transactions, it typically takes a few days to complete the transaction but Stellar can complete it in a matter of seconds. This has improved the efficiency of supply chain payments significantly which makes it a very attractive platform to work with.

Early 2021 January, Stellar announced it is working with the Ukrainian government in creating a central bank digital currency. While there is no guarantee that Stellar will be responsible for developing the currency, it is most likely that Stellar will play a critical role in the decision-making process. Given the developments that are taking place in Stellar, would you be adding this cryptocurrency to your watch list?

Cardano (ADA)

First, on the list, we have cryptocurrency Cardano (ADA). Cardano is a proof-of-stake blockchain where it requires validation for transactions and the validators are required to “stake” some of their ADA coins. The cryptocurrency has grown in popularity and is becoming one of the largest cryptocurrencies right now, right on the heels of Ethereum.

There are few reasons why Cardano rose exponentially and gained strong momentum as of late. First, there was an announcement this week stating that Cardano will hit Coinbase Pro, a leading crypto exchange. Recall that in late July 2020, Cardano launched Shelly, which is an upgrade of its network. This upgrade is designed to increase the number of nodes which translates to more decentralization thus improving security on the Cardano network.

The reveal that Cardano is supporting non-fungible tokens (NFTs) on its platform is also worth the mention. For the uninitiated, NFTs allow users to prove ownership of digital media like art, files, and so on. NFTs have become increasingly relevant in the market. So this news is great for boosting Cardano’s popularity. If you want to strike while the iron is hot, now may be a time for you to consider Cardano coin in your portfolio.

Avalanche (AVAX)

Avalanche is a Decentralized Finance (Defi) platform that allows interoperability between third-party tokens. Simply put, Avalanche is a blockchain-based platform where issuers can process more transactions than Ethereum at a much faster rate but a lower cost. Thus, the AVAX network has greatly improved the Defi environment with a permissionless system where users can create their customized blockchains, both private and public.

One reason why we have seen strong price action on Avalanche in recent months can be attributed to Pangolin, the community-driven decentralized exchange. Pangolin showcases the capabilities of Avalanche and is also an important piece of Avalanche’s Defi ecosystem. This attracts a plethora of Defi users that are overwhelmed by high fees and network congestion.

Avalanche may be a fairly new cryptocurrency in the market. But the potential it has is very exciting for the blockchain world. With all the optimistic plans being set in motion, will you be adding this cryptocurrency to your portfolio?

Dogecoin (DOGE)

Dogecoin initially started in late 2013 as a digital joke which is a combination of cryptocurrency and a popular Shiba Inu dog meme. It was created in a few hours by two programmers, Jackson Palmer and Billy Markus. Dogecoin holders can use Dogecoin to buy goods and services or trade them for other currencies. Holders also use Dogecoin to “tip” fellow internet-goers who create or share great content.

Dogecoin recently gained a huge boost in popularity after being constantly tweeted by Tesla CEO, Elon Musk. Musk also mentioned that he wants Coinbase to add Dogecoin to its list of supported cryptocurrencies. And it wasn’t just Musk who voiced his support for Dogecoin. Popular rapper Snoop Dogg has also rebranded himself as Snoop Doge. This came shortly after Kiss rock star Gene Simmons tweeted about Dogecoin. Ridiculous as it may sound, the price of Dogecoin soared more than 55% after the publicity.

Dogecoin can be fickle and investors have been saying repeatedly of its high volatility. With the current state of momentum, dogecoin prices may continue to soar if more celebrities join in on the hype train but that is speculative at best. Like any hype train, there is a time and season for it. This may or may not be the moment for you to get your hands on some Dogecoin before the train moves on, but would you be willing to bet on it?

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