This issue of VeradiVerdict will be the last issue of 2020, and this year will finally pass! 2020 is an ill-fated year. The new crown virus epidemic has changed our way of life, changed the way people conduct business, changed the way of transactions, and changed the way of interacting with others. Of course, in the past year, the adoption of cryptocurrencies by institutional investors and retail investors has also accelerated. In addition to the themes of asset diversification/value storage and enhanced platform accessibility, we have also seen huge progress in blockchain scalability and encryption applications, especially the rapid development of decentralized finance.
Inspired by the annual forecast of Fred Wilson of Union Square Ventures, I reflected on my industry forecast for 2020, and now I decided to make another forecast for next year. This way, I can dig into the past. Whether the idea has been developed, on the other hand, it can also dig deeper into some areas of future interest. I previously published a prediction analysis of the crypto industry on Coindesk, but now I want to update it again-especially at this special moment, the price of Bitcoin has reached a new all-time high: $28,200!
For the cryptocurrency industry, 2020 is an exciting year, especially the value of Bitcoin and decentralized finance (DeFi) has increased significantly, and the central bank digital currency (CBDC) has also taken an important step to build decentralization. The technology of dapps is also much more advanced than in the past. In the cryptocurrency industry, I think there will be seven areas that will be further developed in 2021:
1. Bitcoin: Bitcoin has soared from approximately US$7,000 in January 2020 to nearly US$30,000 at the end of the year. You will see daily users and institutional investors becoming more and more interested in Bitcoin, so Bitcoin in 2021 Prices will continue to soar.
2. Central bank digital currency: We have seen important progress in central bank digital currency research in 2020. For example, China has launched many important pilot tests, and many European banks and the Federal Reserve have also begun to conduct in-depth research on central bank digital currencies. I hope to see more central bank digital currency pilot projects in 2021, and even hope that China or Japan can fully launch central bank digital currencies.
3. Decentralized finance: There is no doubt that 2020 is a year of decentralized finance. It seems that dozens of DeFi protocols can make hundreds of millions of dollars in profits overnight. People are getting huge returns from liquid mining and DeFi. We are likely to see more large-scale decentralized financial projects emerge in 2021. .
4. Cryptocurrency adoption: From a financial point of view, cryptocurrency is becoming more and more profitable, which will also “stimulate” more and more people to use cryptocurrency in retail applications. On the other hand, large projects such as the central bank’s digital currency and Facebook’s Diem stablecoin (formerly known as Libra) have also begun to attract public attention. Taking these factors into account, 2021 is likely to be a critical year for mainstream cryptocurrency adoption.
5. Regulatory regulations: As the function of cryptocurrency gradually expands to more retail and daily use cases, I hope to see more regulatory measures introduced by regulators, which can also guide the outline of cryptocurrency as a store of daily value. In 2020, the US Internal Revenue Service asked taxpayers for the first time about their financial records using virtual currencies. With the introduction of central bank digital currencies and more stable coins, governments will pay more attention to the use and supervision of cryptocurrencies in 2021.
6. Acquisitions and mergers: According to research data released by Pantera, the average transaction size of mergers and acquisitions in the cryptocurrency industry in 2020 will increase from US$19.2 million in 2019 to US$45.9 million in 2020. More and more cryptocurrency companies will join the “unicorn club”. Coinbase will conduct an initial public offering (IPO) in 2021. It is expected that more companies will begin to explore overseas backdoor (SPAC) as a way to go public . As more and more crypto projects emerge, corporate development and mergers and acquisitions will become a major trend in the cryptocurrency industry in 2021.
7. Digitalization of private assets: As financial institutions become increasingly interested in cryptocurrencies, they will begin to pay attention to how to use blockchain technology and cryptocurrencies to better support the existing economy. For example, the inefficiency and security of traditional securities registration are incredible. Supported by cryptographic signatures and automation, these problems will be effectively alleviated. In 2021, I look forward to seeing more institutions begin to explore the potential of asset digitization.
To say the least, a lot has happened in 2020. In terms of blockchain and cryptocurrency, we have also seen several key developments: Bitcoin block reward halving, the rise of liquid mining, and the explosive growth of some decentralized finance (DeFi) applications. Chain interoperability tools have also become more powerful, and so on.
With the advent of 2021, it is expected that tensions between countries will gradually ease, the new crown virus epidemic will also be eased, and the impact of related market fluctuations will gradually decrease. I look forward to seeing further innovation and widespread use of blockchain technology. Influence is expected to become more diverse. On the one hand, the blockchain and cryptocurrency industries are becoming more and more complex, but on the other hand they are more accessible. In terms of building a decentralized, user-oriented financial system, the vision of the crypto community will be greatly broadened.
