How Will Cryptocurrency Affect Debt Collection in the Future?

 Posted on March 05, 2021 in Debt Collection

As someone from a credit union, bank, or other financial institution, among other organizations, who deal with debt collection activities every day, sooner or later, you will have to deal with Bitcoin and other cryptocurrencies, if you have not already and whether you want to or not. This is because, over the last several years, cryptocurrency has made tremendous strides in the following ways:

• Multibillion-dollar investors from leading companies have been investing in cryptocurrencies like Bitcoin to get ahead of the trend, increasing its value and popularity amongst investors.

• Cryptocurrency infrastructure is finally safe and easy relative to its possible “dark web” roots and other suspicions of illegitimacy.

• Inflation and the large stimulus being approved by the federal government during the pandemic are making people purchase cryptocurrencies like Bitcoin because they are strong store-of-value assets that are often better bets as investments during volatile times on the market such as this, even for commercial businesses.

• Major banks and other financial institutions have been adopting it as an investment and service, making it more common.

As such, it is no wonder that you and your fellow representatives will be seeing much more of it in the upcoming years. Here are some potentialities that you might face in your industry if crypto becomes even more commonplace.

4 Ways Cryptocurrency Will Continue to Change the Financial Industry

Be on the lookout for these changes to your industry over the next 5-10 years:

1. Inching closer to displacing or replacing other currency methods—With billionaire heads of companies and huge banking businesses being more active with their investments into cryptocurrencies during the pandemic, look for digital currencies like Bitcoin to move forward with a gradual displacement or replacement of more traditional currencies. While you will not see cash and credit disappear entirely, you will see less reliance on both as crypto becomes more popular.

2. More diverse payment methods—With some major banks, and even some major debt collection agencies, already embracing the idea of offering payments and transactions through cryptocurrencies like Bitcoin, debtors of all types, including consumers and commercial companies, will have more options as to how they can pay for their purchases and debts.

3. Bitcoin ATMs everywhere—As the underbanked and unbanked, both consumers and small businesses continue to struggle to receive traditional financial products, they will look for solutions that help them avoid expensive alternatives like payday loans and high-interest credit. The alternative? Transactions through crypto. Look for more and more Bitcoin and other crypto ATMs popping up across the country and globe, giving equal access to this newer currency.

4. Automated, widescale debt collection through self-enforcement and smart contracts—Possibly the most significant of the changes for you specifically to expect involves debt collection itself. Advancements like cryptocurrency, especially when used as a primary transaction method, will encourage a much more automated debt collection process. This means “bots” will collect on debts and force consumers and companies alike to be more self-conscious about their debts with artificial intelligence constantly pestering them through the self-enforcement and smart contracts to which they agreed. This does not necessarily mean you will be out of a job entirely, but it does mean you will need to adapt to new processes.

Contact an Illinois Commercial Debt Collection Attorney

With all the hype surrounding cryptocurrencies like Bitcoin, especially during these last several months when its value has skyrocketed, you need to put your trust in a Chicago bank collection lawyer who understands how the financial industry is constantly evolving, and you need the right lawyer to help you navigate the latest trends in finance should you require legal assistance recovering debt. Contact the skilled professionals at Dimand Walinski Law Offices, P.C., by calling us today at 312-704-0771.

Sources:
https://www.nasdaq.com/articles/debt-collection-firm-cis-now-accepts-bitcoin-for-b2b-repayments-2021-02-02
https://medium.com/cryptolawreview/crypto-debt-collection-c3825a8588ca
https://www.investopedia.com/why-does-bitcoin-keep-going-up-5092683