The crypto space is always reinventing itself at an unprecedented pace, which renders yearly projections a futile endeavor. Remember how 2017 ended on a strong note and spurred experts to project an even more successful run in 2018? Although 2018 never really matched the successes of 2017, especially in terms of market movements, it, nevertheless, led experts to have a complete rethink of the global status of crypto and the challenges that would question its push for mainstream dominance. And so, this realization came to play in many of the 2019 crypto predictions published late last year, as pundits pinned most of their arguments on the capacity of developers to find a way around some of the technical roadblocks limiting crypto adoption.
However, it is that time of the year again when experts rely on their perception of the crypto space and piece current trends together to predict the prevailing narratives of the coming crypto year. That said, this article looks to do the same, as I would explore all of the events that disrupted the crypto world in 2019 and develop a template that would determine how the crypto space would unfold in 2020.
A Review of Crypto In 2019
At the beginning of the year, many were still reeling from the effects of the bear market that had kicked off in 2018. Crypto firms were dropping like flies, and the mainstream media was littered with reports that screamed: “I told you so.” In a desperate move to get the crypto train back on track, developers went back to the drawing boards to concoct more of those technological ingenuities that had brought cryptocurrency and blockchain thus far.
Developers pushed hard for crypto innovations that could swing the discussion back in favor of crypto. At this point, any project that tended to boost crypto adoption was sure to capture the attention of crypto participants. And before long, technologies that promised to improve scalability, or showed the tendency of eliminating the siloed culture of the crypto market, found their way to the heart of the crypto discussion.
Nonetheless, in an unexpected turn of events, the price of cryptocurrencies started showing signs of recovery. And to this day, no one has given a viable explanation as to why crypto suddenly embarked on that spectacular run that saw the price of bitcoin reach the $12,000 mark. Although the crypto market has since tumbled, there is no doubt that the current state of the crypto market is way better than last year’s dire straits.
It is important to mention here that the improved state of the crypto market came to be even without any meaningful impact from the developments or events, which experts had projected as game-changers. Recall that the hype surrounding the establishment of an SEC-approved Bitcoin ETF and how it had led many to believe that institutional crypto investment was on the verge of taking the crypto narrative to greater heights. However, crypto ETF is still nothing but wishful thinking. And judging by SEC’s stance on cryptocurrency, the chances of welcoming an approved Bitcoin ETF in 2020 is looking bleaker.
While this is a given, there is little or no evidence to suggest that a Bitcoin ETF would have brought about a bull run. This assertion stems from the performance of Bakkt Bitcoin Futures, which gained wide acclaim as a viable alternative to a non-existing Crypto ETF. The inability of Bakkt to usher in the big guns has begun to generate views that the crypto market might not need institutional investors after all. As such, this newfound revelation has completely numbed the crypto market to SEC’s Bitcoin ETF application rejections that once influenced price movements in 2018. No one is pinning crypto’s mainstream success to the emergence of a Crypto ETF anymore. In what seems like a show of defiance, it is clear that the crypto community has moved on.
Likewise, developments within the crypto space have been few and far between. Innovations that had peaked earlier in the year, as new frontiers for the crypto narrative, did not come any close to what people had envisioned. For one, blockchain interoperability and cross-chain transaction are nowhere near becoming the new poster tech for the next phase of cryptocurrency. The same is true for protocols designed to improve scalability.
Although developments within the crypto space have slowed down, it, however, seems that traditional enterprises are not relenting in their quest to capitalize on crypto technology. In perhaps the most surprising turn of events in the year 2019, social networks and banks are the ones pushing the crypto narrative. JP Morgan Chase expressed its interest in creating a centralized coin earlier this year, only to be accompanied by the report that Facebook is looking to introduce a native coin for its ecosystem. The latter got everyone talking about the implications of having an entity as scandalous as Facebook controlling what could become the de facto cryptocurrency for the global market.
Following Facebook’s announcement, other influential enterprises, and regulators, are finally grasping the sought of possibilities and risks that come with cryptocurrency. And this is evident in the number of backlashes that the Libra project has endured since its introduction. Regulators are not a fan of the project, and they might set up various regulatory embargoes that would frustrate the project. Nonetheless, regardless of this show of hostility, Facebook has stuck to its 2020 launch date.
Notably, the outcry against Libra is just one of the many instances of how regulators have intensified their scrutiny of the burgeoning technology. You will agree that the regulatory uncertainties, brewing in the United States, set the tone for the global stance of crypto as a viable asset class. While regulators in the US are yet to reach a cohesive standpoint on rules that should govern the activities of crypto firms in the country, regulators in India, on the other hand, reached a verdict that was rather devastating for the buzzing crypto community within its borders.
All in all, you could say that crypto had a mixed year, which I believe would dictate the proceedings of the crypto market in 2020. Without any further ado, here are the events that would define the crypto space in 2020.
The Things to Look Out for in 2020
There is so much buzz surrounding the next halving of bitcoin that is expected to take place in May next year. If you are yet to fully grasp the concept of bitcoin halving, then here is a breakdown. The bitcoin economy still heavily relies on the codes and protocols that Satoshi Nakamoto implemented on the blockchain over a decade ago. To ensure that bitcoin, as a currency, is not susceptible to inflation that commonly plagues fiat currencies, Satoshi chose to halve the supply of crypto every four years until it reaches its total supply cap of 21 million mined BTC.
At the moment, successfully finding a block on the bitcoin blockchain comes with a reward of 12.5 BTC, and as of May 2020, the reward will drop to 6.25 BTC. From basic economics, once the supply reduces, and the demand increases or maintains its state, then the price of the commodity would increase. And from records, this fundamental economics has played out whenever the bitcoin protocol halves block reward.
While it is still unclear how much effect the next bitcoin halving will have on the price of bitcoin, experts have predicted that it would spur price volatility since it has generated unprecedented hype. According to a report on Reuter:
“Players in the know are preparing for the sharp price gains and volatility that have accompanied previous halvings, which happen roughly every four years and act to both ensure the scarcity of bitcoin and keep a cap on price inflation. There are likely to be winners and losers. So market participants, from bitcoin miners and traders, are trying to fathom how the next halving might play out to gain an edge.”
As such, bitcoin halving is one event you would want to monitor.
Crypto Regulation Will Again Rule the Crypto Conversation
I expect the legal battles between the SEC and some token issuers in the United States to generate interesting twists that will spur startups to rethink how they model their funding mechanisms. For one, SEC vs. Telegram, which might extend beyond 2020, would set a landmark as regards the distribution of token to US investors.
Furthermore, there is no way the intensified scrutiny of the legality of tokens would not come around to hurt crypto exchanges. To the SEC, these entities have enabled the distribution and trading of unregulated tokens for quite some time now, and there is no doubt that the SEC would have noted their contribution to the festering irregularities of the crypto market. Hence, crypto exchanges might start doing more to clarify the legal standings of tokens before listing them, and they might begin to delist altcoins that are in the bad books of regulators.
Also, nations would continue to mold regulatory frameworks for cryptocurrency. While some would adopt a harsher stance on crypto, others, on the other hand, would set up receptive frameworks that would get the crypto community jumping for joy. Hence, I believe that the global regulatory will reflect the “you win some, you lose some” narrative.
The Launch of Calibra
Facebook has not shown any sign that it is relenting on its push for a stablecoin, regardless of the several setbacks that had marred the project. The proposed June 2020 launch date still stands, and I am a bit curious about how the world is going to react to the unveiling of a potential disruptor of the global financial system. While this is a given, it is still uncertain that regulators would allow Facebook to go ahead with its plans. Better still, I envisage that several nations would ban the cryptocurrency. Notwithstanding, Facebook’s foray into the crypto scene is one of the things you should look out for in 2020.
The Crypto Discussion in The US Political Race
The United States’ 2020 election campaign is underway, and I bet that crypto would manage to squeeze into the conversation at one point. Although I don’t expect the political powerhouses of the United States to promise anything major, other than to push for more oversight, as regards the crypto industry, I am, however, anticipating an interesting debate to ensue between the two major factions.
The Adoption of Defi Technology
Decentralization is taken a new form in the global finance industry, and a few startups have started to push the adoption of the framework. Decentralized Finances, as it is being called, proposes a banking system without bankers. And it is the latest in an array of decentralized setup that had promised to disrupt traditional industries. However, no one would hold it against you if you were to remain skeptical of this technology, considering how decentralized exchanges failed to deliver in 2019.
Ethereum 2.0 And the Proof of Stake
Ethereum 2.0 will officially switch to the Proof of Stake consensus model and dump the Proof of Work mechanism it currently utilizes. While other blockchains have setup this consensus model in the past, Ethereum is by far the largest blockchain to undertake this design. According to the developers, the PoS model is faster and more scalable than the PoW design, and it would further help Ethereum establish its dominance in the increasingly competitive Web 3.0 terrain. That said, it is imperative to follow up on the events leading up to this upgrade.
Central Bank Cryptocurrencies
If you read through recent posts in Cryptolinks’ blog, you will see the different implications of government-backed cryptos on the future of bitcoin and decentralized cryptocurrencies as a whole. Although central bank-backed crypto is a possibility, as seen in the creation of the Petro in 2018, there is nonetheless, no saying when to expect the next one. And so, the courteous me would advise you to watch out for such possibilities, even as rumors of China’s crypto foray intensify.
Bitcoin Growing Importance as A Viable Alternative to Fiat Currencies
Bitcoin is increasingly functioning as an alternative currency for inflation-ravaged nations. While this is a given, I expect this narrative to unfold in the coming year, as economic uncertainties continue to develop in various regions of the world.
Having listed some of the crypto events and developments to anticipate in 2020, you will agree that the coming year is poised to be an eventful period for the crypto community. Hence, I advise that you fasten your seatbelt and enjoy the ride.