Six Cryptocurrency Trends to Watch in 2020
2019 was a remarkable year for the global crypto market. The year involved great trading solutions, new groupings, and many blockchain protocols emerging and maturing. In short, the crypto and blockchain market was far from slowing down as the momentum was gradually picking up.
2020 promises to deliver some significant developments which will help new digital assets mature and provide a sense of how they will likely become core features in the future of finance.
1. Nation-States Will Launch Their Own Digital Currencies
There were indications and announcements across 2019 of many countries have started developing their own digital currencies. In 2020, it looks like things are going to gain higher momentum. The likes of France, Russia, Sweden, Japan, Estonia, and the UAE have all announced intentions to unveil their own national digital currencies.
While France is looking forward to beginning developing the foundations by the early part of 2020, China seems to be much further ahead. Many countries have become more interested in cryptocurrencies because they believe that there are various efficiency gains from implementing cryptocurrencies within the state’s apparatus.
Though governments across the globe remain centralized, there still is a chance to integrate decentralization into some aspects. Many governments intend to incorporate blockchain technology to process huge amounts of data between services, administrative bodies, and agencies.
2. Corporations Will Also Get into The Act
No one wants to be left behind. Corporations are also contemplating to unveil their own decentralized ledgers and blockchains. Big business organizations like Walmart, Tencent, AirAsia, J.P. Morgan, and Mitsubishi are all in the process of exploring digital assets.
Other notable companies include Rabobank, Credit Agricole Group, BNP Paribas, ABN AMRO, Citi, Shell, and ING are all building enterprise solutions on the Ethereum blockchain.
2020 will see many organizations and firms continue adopting blockchain technology to leverage their enterprise productions.
3. Regulators Will Enforce Their Act
Regulation is coming not just within the US, but across the world.
For example, Wyoming (the least populous state of the US) has enacted about 13 laws around cryptocurrencies and blockchain over the past two years. Wyoming has become a global hotbed for cryptocurrency firms. This is because such regulations are digital-banking friendly and classify digital assets into three different categories. Surprisingly, other US states and regulatory bodies have also followed suit.
It can, therefore, be expected that other regulators across the globe will also do the same in 2020. Unless appropriate legislation is implemented to regulate crypto trading ventures and exchanges, terrorists could still fund their activities through digital means and eventually go unnoticed.
4. The Bitcoin Halving
The most significant event that will occur in 2020 is the Bitcoin halving in the month of May. The dramatic event will decrease the amounts of Bitcoins rewarded for mining a block successfully in the distributed ledger by half from 12.5 to 6.25 BTC.
Although it sounds dramatic, it has occurred twice before, and every event experienced some interesting price action. For example, the months surrounding halving in 2012 saw the Bitcoin price increase from less than $10 to more than $100. In 2016, the Bitcoin price also increased from $400 before the halving to $800 by the end of the year.
Halving creates new scarcity within the crypto market, and therefore Bitcoin traders already are anticipating similar kind of supply-side increase, just the same as the previous two halvings.
5. The Shift Towards Decentralized Finance
DeFi (decentralized finance) is the way to go forward because of its wide-ranging advantages. This is said because DeFi is turning to be a breeding ground for innovation. DeFi’s secure and trust-less provisions of financial services have now introduced margin trading and fresh lending facilities.
One of the main areas of growth for DeFi is anticipated to be around the sophistication and variety of financial tools. For example, the Nasdaq anticipates that CDPs (collateralized debt positions) – financial apparatus – will allow digital assets to be utilized as collateral to get loans. This will be a big business in 2020.
Furthermore, DeFi projects are expected to create better user interfaces, accessible services and products, and stablecoins, which would make it easier for people who don’t know much about cryptocurrency to purchase digital assets easily and engage in decentralized financial services.
6. Ethereum 2.0
While Bitcoin is expected to cut in half, Ethereum is moving to phase 2 of its Mega Roadmap. Ethereum’s next iteration has two broad aims: ending the network’s use of energy-intensive proof-of-work, introducing a proof-of-stake consensus mechanism, and bringing in the long-awaited sharding to assist in combating the network’s throughput and speed.
Ethereum 2.0 will be deployed and tested in seven different phases over the course of many years. While ETH 2.0 is still in its early stages, Phase 0 (identified as Beacon Chain) will be released in the first quarter of 2020.
The deployment of phase 0 will give developers an opportunity to prod and stress test the network, without messing up the increasingly complex variety of features and functions currently living in the blockchain mainnet. Phase 0 aims to develop strong technical foundations that are essential to the success of a network (chain). If all things go well in this phase, then it will open the door for phase 1 that would utilize an original version of sharding.
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