Since 2016, every year I have made predictions about the development of the industry in the next year. If you pay attention to incremental changes year after year, you realize that everything is connected, and you can foresee some exciting results. There is no doubt that 2021 will be the year when blockchain and cryptocurrency will occupy the center of the economic stage, and this is the future I see.
1) In 2020, the world begins to understand the intrinsic value of Bitcoin as “digital gold”. In 2021, we will witness that Ethereum is also understood as “digital oil”. In the next year, Ethereum will consolidate its position as the cornerstone of the global digital economy through the guarantee of global contracts. Contracts are the connecting link of this world. Sales contracts, university admission notices, employment notices, insurance policies, medical prescriptions, confidentiality agreements, ISDA agreements, etc. are all contracts. Yes, the earth is operated by contract (not Dunkin’). Ethereum makes the contract truly digitized, and the digitization of the contract is equivalent to the digitization of the global economy. At present, the valuation of the global economy has reached 270 trillion US dollars (by comparison, Bitcoin will occupy 18 trillion US dollars of gold market). Ethereum has the opportunity to upgrade the entire economic system, not just an asset class.
2) The first phase of Ethereum 2.0 will be successfully implemented. On December 1, the Ethereum community successfully launched Phase 0 of Ethereum 2.0. The network upgrade from Proof-of-Work to Proof-of-Stake will enable Ethereum to expand and run with less computing power. In 2021, we will see the first phase of Ethereum 2.0 go live and greatly improve scalability.
3) Bitcoin will reach $50,000. Bitcoin has a single purpose, but its supply is limited. As more and more institutional investors continue to buy Bitcoin, the price of Bitcoin will soar to $50,000.
4) Ethereum will reach $2,000. The upgrade of Ethereum 2.0 will enhance network capabilities and gain the attention of more corporate and institutional investors, thereby pushing the price of ETH to new heights.
5) The TVL of DeFi will exceed US$150 billion, and 2021 will be the year of DeFi cross-chain. It is undeniable that Ethereum is the birthplace of most decentralized financial activities. But other networks will enter the field in a more substantial way and put other native tokens into Ethereum’s DeFi ecosystem. As various tokenized bitcoins (tBTC, ren, wBTC) become more and more popular, we will see that the market value of $430 billion in bitcoin is collateralized in DeFi. This will also double the TVL in DeFi.
6) With the development of Web 3.0, its value will be accumulated at the protocol layer, not the application layer. In Web 2.0, most of the value lies in the application layer of the stack. The world’s largest Internet company is not a company that maintains the HTTP protocol, but a company that provides end users with the most valuable and deep-rooted experience. However, in Web 3.0, the scope of the application layer will shrink, and we will see the protocol infrastructure provide the greatest value.
7) The 2-tier solution will explode in 2021, and Ethereum will continue to consolidate its leading position as the first-tier blockchain. As with any technology stack, an application consists of many layers. With Ethereum as the base layer, we will see the explosion of 2-layer solutions that will enhance the scalability, privacy, and interoperability of the Ethereum mainnet with unique features. DeFi has grown exponentially on Ethereum, causing gas costs to soar and transaction speeds to slow down. The advancement of Tier 2 technology will provide extended solutions for all microtransactions that do not need to occur on the mainnet. Therefore, 2021 will be a breakthrough year for projects such as ZK-Rollups and Optimism, as more and more dapps will turn to 2-layer solutions such as state channels, and transaction throughput will increase to 100 to 2000 transactions/sec. (TPS).
8) IPFS and Filecoin will become the global focus. In 2016, IBM stated that 90% of the world’s data was created in the first two years. Four years ago, the world generated 2.5 trillion bytes of data. Every connected device (smartphone, smart TV, computer, car) on the planet is generating data. As the amount of data generated doubles year by year, the need for cheap, accessible, and unlicensed storage will also increase. However, today our choice of data storage has formed a sharp contrast with future needs, and enterprises and consumers will begin to realize the limitations of existing solutions. Enter the era of IPFS and Filecoin. IPFS and Filecoin are complementary layer-1 protocols that work together to provide decentralized storage. Since the launch of the mainnet in October, Filecoin’s storage capacity has exceeded 1 exbibyte. The bridge between Ethereum, IFPS and Filecoin is already under construction. In 2021, we will see the entire workflow, that is, decentralized protocols are used from protocols and transactions to data storage and sharing.
9) The “Ethereum Killer” needs to find a niche market, otherwise it will be slaughtered. Over the years, various 1-layer blockchains have regarded themselves as “Ethereum killers”. Many of them promise to provide a faster and more complex smart contract platform, but in the end there is nothing to show off. In 2021, those “killers” who have raised millions of dollars on the basis of promising to seize the Ethereum market will need to open up a niche use case for their platform, otherwise they may become irrelevant before any code is released . Ethereum’s dominance is comparable to Google’s share in the search field, and other agreements are also promoting this hegemony by building cross-chain bridges as one of its first integrations. These 1-tier networks are likely to gain momentum due to specific use cases or technical preferences, such as NEAR games, or Dfinity will use WebAssembly instead of Solidity. Ethereum may lose a small part of the project, but even if a new open source ecosystem emerges around these other protocols, all roads will return to Ethereum as the basic settlement layer.
10) We will see the beginning of the crypto IPO frenzy. BlockFi, Celsius and Coinbase (which have already happened) will apply for an initial public offering (IPO). Within a year, Coinbase’s valuation will rise to more than $40 billion. These companies should certify certain aspects of the IPO and introduce a digital security mechanism, because many companies’ success is based on the promise of usurping the system they are about to join.
11) China will launch digital currency electronic payment (DCEP). Tens of thousands of people have tried this new digital currency, and will continue to promote it before the 2022 Olympics. International financial centers like Singapore, Switzerland or Hong Kong may become the second country to issue CBDC.
12) The United States will continue to postpone the progress of CBDC, while a dozen other countries are unswervingly pursuing digital currencies. The United States has been paralyzed by the raging COVID-19 and the turbulent presidential election, so it will spend most of 2021 on dealing with the economic impact of the epidemic. Stimulus measures will continue to be distributed in a slow, analog way, even as the use cases for government-issued digital currencies have become increasingly obvious.
13) We will witness the first major application areas adopted by enterprises on the public chain. Led by industry pioneers such as Microsoft’s Yorke Rhodes, EY’s Paul Brody, and ConsenSys’s John Wolpert, the open source Baseline protocol uses the public Ethereum mainnet and uses peer-to-peer messaging and zero-knowledge encryption technology to connect enterprise blockchains To the public network of Ethereum.
14) NFT will become the main consumer use case of Ethereum. In November, the record for the most valuable non-homogeneous token (NFT) was refreshed. The NFT is a painting about V God, valued at approximately $141,536.20. However, this record was broken again a few days later. For a long time, NFT has been touted as an effective solution to counterfeit goods. In 2021, we will see the popularity of NFT as a digital representation of unique products, which can be art, music or collectibles. Innovators such as SuperRare and Sorare will become market leaders in their respective industries. By then, children will trade the NFTs of UEFA stars in the same way that children used to trade baseball cards.
15) Crypto venture capital will explode. In the past five years, venture capital investment in Web 3.0 and crypto companies has grown steadily, but 2021 will be a breakthrough year and will be catalyzed by the next generation of crypto venture capital. Considering that some of the 100 Silicon Valley venture capital institutions specialize in blockchain technology, these people will leave the company and raise a $50 million fund, and firmly establish the next generation of crypto venture capital companies.
16) The world’s largest derivatives exchange. In February 2021, the Chicago Mercantile Exchange, the world’s largest derivatives exchange, will launch Ethereum futures, making Ethereum the second encrypted commodity registered with the Commodity Futures Trading Commission. This will clear the way for the Ethereum Exchange Traded Fund (ETF) (although Bitcoin’s development in this area has been difficult so far).
