Five trends that will pave the way for a prosperous decade

Embracing innovative technologies will increase access to and democratisation of capital markets.

It takes small steps to make a big impact. Not least when it comes to digital currencies. At SIX Digital Exchange we are taking small steps to create a next generation digital market infrastructure. If that is realised, it will have massive repercussions for how corporations, governments and individuals engage with capital markets. 2021 will see this realisation get closer as five trends come to the fore.

1: Continued adoption of CBDCs
Central banks continue to roll out pilots and test central bank digital currencies. Already, 86% of central banks are engaged in CBDC experiments, with 24% of these projects entering the development phase. These numbers will only increase.

2: Digital asset markets to keep growing
Digital asset markets have already risen to values over $1tn. Bitcoin investment and institutional adoption of cryptocurrency trade execution and custody services exploded in the early part of 2021. As this continues, cryptocurrencies will spearhead a breakthrough of liquidity into non-crypto based digital assets.

3: Blockchain used for identity verification
Blockchain technology will also be used more and more for dentity verification and citizen registration systems. These digital identity uses will begin to be tested with live groups and move toward being ready for enterprise use.

4: More chain agnostic solutions
Start-ups and institutions alike are designing non-specific DLT-based infrastructure and applications. This is crucial as if technology protocols are only for one specific use, widespread adoption and access will be limited. To build the systems of tomorrow, we must design them with the end goal in mind.

5: More integration with other technologies
Artificial intelligence, machine learning and the internet of things will have an impact on the future as well. DLT-based applications are already embracing these innovations. Within the SDX ecosystem, there are a multitude of start-ups integrating these technologies. Financial markets are ripe for new systems that are innovating in more than a single technology.

As we move further into the 21st century, new mindsets are needed. If we embrace the opportunities created by DLT and digital currencies, it will lead to a new roaring twenties.

Benjamin Nadareski is head of corporate development at SIX Digital Exchange. This is an excerpt from the February edition of the DMI journal.

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