Trading Trends To Look Out For In 2020
Interesting times are ahead in 2020 as the year is expected to be anything but predictable. The following are some breakthroughs that could redefine the cryptocurrency landscape next year.
DeFi-ing The Odds
The decentralised version of components in the conventional financial system will soon be upon us and it’s getting many dizzy with excitement. Known as Decentralised Finance or DeFi, it leverages on the smart contract technology – powered by Ethereum – which essentially replaces intermediaries such as financial institutions.
You will soon be able to lend, borrow, collateralise, insure, trade, hedge and perform all the other stuff that you are used to with regular financial services. Lending platforms like MakerDAO and Compound, as well as Ethereum’s decentralised token exchange protocol Uniswap are platforms that are gaining real traction, creating a buzz in the crypto community.
The regulatory noose is tightening. Reports suggest that an international cryptocurrency taxation guideline by G20 countries will be in place in 2020. This and the commitment to implement the Financial Action Task Force (FATF) standards for virtual assets are examples of more stringent regulations that are expected to come into effect soon.
Security Token Offerings
At the height of the Initial Coin Offerings (ICOs) in 2017, many investors were scammed with tokens without any value or that were non-compliant to existing security laws. Some projects did not deliver what was promised, and investors were left in the lurch.
Now recognised as the new ICO, Security Token Offerings (STOs) are also being used to raise funds, giving investors tokens in exchange for their financial backing. These tokens aren’t just tied to real assets such as equities or commodities, they’re also regulated, giving investors peace of mind.
With a number of STOs in the works and economic giant China preparing to develop a legal framework for STOs, the market sees the fundraising exercises as the future substitute of conventional Initial Public Offerings (IPOs).
No Stopping Bitcoin
Bitcoin is expected to remain on top of the pile for at least the next five years. It’s like the Rambo of cryptocurrencies – a survivor. Through the years, Bitcoin has endured much negative press and impressively survived a variety of market turbulence to become the most valued digital currency today.
Countless statistics prove that demand for Bitcoin will always be on the rise and there are several major developments with Bitcoin which will further boost its price. The following are expected to contribute to its continued buoyancy in the coming years:
- More institutional investors will enter the crypto market by 2020 and many more will join once regulatory frameworks are put in place
- The crypto market is estimated to be worth $3 trillion – $5 trillion by 2025
- Bitcoin halving will take effect in May 2020, with the supply released for each block mined during the mining process cut by half, while demand from individuals, companies and institutional investors will grow
Bitcoin will also be able to process payments much faster and cheaper with the Lightning Network payment protocol going mainstream in 2020. With this protocol, retails outlets will be able to accept Bitcoin for daily transactions.
What About Other Cryptocurrencies?
With countless other cryptocurrencies other than Bitcoin in the market, the next question ,what will 2020 and beyond hold for cryptocurrencies?
One of the biggest headlines in the crypto world in 2019 was Facebook’s announcement of Libra – which the social media giant refers to as a “global currency and financial infrastructure” – that is slated to go live in mid-2020. The announcement, though, received mixed reactions.
On the one hand, Facebook claims that with Libra, it wants to reach people around the world who do not have bank accounts. On the other hand, sceptics say Libra will face similar issues that previously stung other cryptocurrencies – privacy and security.
To Libra Or Not To Libra?
Whether we agree or disagree with the sceptics, something is not right in the Libra kitchen. In recent weeks, Facebook’s grand cryptocurrency project suffered blow after blow, potentially threatening the future of Libra.
The Libra Association established to manage the cryptocurrency that began with almost 30 companies backing the project, is starting to dwindle. In October 2019, payment giants PayPal, Visa, Mastercard, eBay and Stripe, pulled out of the project ahead of its first ever Libra Council meeting, as doubts remained over its ability to meet regulatory requirements. Although Facebook is putting up a brave front in the face of it all, the waning support doesn’t suggest a rosy outlook.
Adding salt to the wound, Delaware-based Finco Services has filed a lawsuit against Facebook for trademark infringement concerning the design of Libra’s logo.
Transactions at lightning speed
All cryptocurrencies have a common headache – scalability. Scalability is the ability to cope with a large number of transactions at a time. For Bitcoin, the Lightning Network protocol is the best bet to address this problem. Ethereum is not spared this issue either and SKALE is the latest attempt at boosting scalability of the Ethereum blockchain. While these solutions are still new and teething problems are bound to occur, the industry is expected to continue searching for the best answer to its scalability problem, giving users faster transactions to look forward to.