2020 has been a very good year for the field of cryptocurrencies. Despite the numerous financial, economic and political upheavals that have taken place over the last 12 months, the blockchain industry has made tremendous progress. The outgoing year saw the long-awaited launch of Ethereum 2.0, a real boom in the decentralisation finance industry, and the price of Bitcoin set a new historical high that greatly exceeded the 2017 indicators.
Today we’re going to talk about how bitcoin, decentralised finance and blockchain technology can grow in the coming year. And we’re going to try to decide what we’re going to plan for in the near future.
Blockchain Capital, a major investment firm, has compiled a list of 10 things that will happen in the world of cryptocurrency in 2021. The report includes predictions for Coinbase, the stablecoin market, DeFi governance tokens and loans, decentralised exchanges, central bank digital currencies, and more.
While last year’s projections of Blockchain Capital came true only partially, you can track the key idea of analysts that is to spread crypto adoption around the world. 2020 has shown considerable interest in cryptocurrencies and decentralised technology, both among private companies and governments in many countries. It is rational to conclude that this pattern will not only continue but will also increase next year.
Based on a variety of predictions from credible analytical firms, here is my study of what to expect from the cryptocurrency environment in 2021 in three key areas: the growth of blockchain technology, Bitcoin, and decentralised finance (DeFi).
Market analysis firm Forrester recently released its blockchain forecast for 2021. The report notes that blockchain and distributed ledger technologies have gained substantial traction in the corporate sector over the past year.
Forrester Chief Analyst Martha Bennett said that the company’s predictions are focused not on the continuity of patterns, but on shifts. The study estimates that 30% of global blockchain projects will be launched in the coming year. Analysts of the organisation agree that the emergence of new initiatives, including in the blockchain sector, is related to developments in business and economic conditions. Of instance, this is also affected by the Covid-19 pandemic.
In addition, most of the projects expected to enter the development process in 2021 will use enterprise blockchain platforms. The use of cloud technologies (in blockchain development) supported by Alibaba, Huawei, IBM, Microsoft, OneConnect and Oracle will also increase.
In total, Bennett made three predictions for blockchain technology in 2021.
- 30% of projects globally will implement blockchain into production.
- China will make the fastest progress in adopting blockchain technology in its new digital infrastructure.
- Permissioned blockchains remain predominant in the long run.
Over the course of 2020, developers have made considerable strides in the development of blockchain projects. Next year may be the beginning of the widespread adoption of blockchain at enterprise level for privacy and protection. To date, these are the main benefits of the decentralised technologies that major corporations have discovered. The most expected would be the advancement of the blockchain in these areas: privacy, security and data protection.
Bitcoin and crypto market
2020 has been a real gift to the cryptocurrency industry, amid all the challenges and new crises. Against the backdrop of the declining economic stability in the world induced by the Covid-19 pandemic, cryptocurrencies were in quite high demand. Big businesses, private investors and foundations have shown great interest in Bitcoin as a capital store. Such interest culminated in Bitcoin setting an absolute valuation record at the end of this year, hitting $24,000, and continuing to rise.
Not only has Bitcoin risen, but all other cryptocurrencies have also grown. There are excellent opportunities for sustained growth even now. It’s about government policies that literally print money as part of the fight against the economic effects of Covid-19. This devalues fiat currency, of course. For example, the DXY dollar index has fallen 8 per cent to 93.5 points since May. Bitcoin and many other cryptocurrencies appear very enticing against this backdrop because they have minimal pollution. The less free sales there are, the higher the price.
The CEO of Strategic Wealth Partners, Mark Tepper, predicts that, at most, the price of Bitcoin will hit $100,000 by the end of next year. But the analyst is more likely to call the $40,000 mark, comparing the cryptocurrency to the shares of Elon Musk.
“You can kind of compare this to Tesla. Tesla’s up over 500% this year. In my opinion … I think Bitcoin could potentially be the Tesla of 2021. It could, in my most bullish case possible, get to 100,000 by the end of next year. That’d be my bull case. I think my base case is a little closer to it doubling up to about 40,000 by the end of 2021.”
Anthony Pompliano, co-founder of Morgan Creek Digital, one of the world’s most successful investment firms, is also optimistic that Bitcoin will be a huge success next year. Pompliano’s forecasts are based on the fact that Bitcoin is gaining enormous popularity among institutional investors and billionaires, which means that a lot of money is entering the cryptocurrency sector.
The latest news on this issue concerns MicroStrategy. The business invested $650 million from investors in BTC 29,646, an average of $21,925 per coin. MicroStrategy currently owns 70,470 bitcoin, paying $1,125 billion to buy at an average price of $15,964 per bitcoin.
Ethereum, the second most common coin, will become much more important to investors in the near future. The Ethereum 2.0 network has recently been launched, where a consensus is reached by sketching. This will offer passive income to the holders of the tokens, and considering the reputation of Ethereum and its founder, Vitalik Buterin, we can expect a large influx of funds into the new blockchain over the next year.
Decentralized finance became a business phenomenon in 2020. The capitalisation of the industry has increased hundreds of times, and several financial market giants have started to apply ideas and technologies. However, as many cryptocurrency community members have already seen, DeFi still does not look mature enough and needs a lot of work on technology, reputation and security.
Forrester has already published a study that addresses the negative effect of the decentralised finance sector on the growth of enterprise blockchains. The growth of DeFi in 2020 has led to questionable behaviour on public networks such as Ethereum, and some businesses are still very sceptical about the effect of blockchain on the financial sector.
The Forrester report says,
“This phenomenon has reassociated public blockchains and cryptocurrencies with the Wild West and will therefore continue to alienate decisionmakers about compliance and other risks.”
Based on this, we should expect a leap forwards from large finance and blockchain companies that can bring expertise, knowledge and budgets to young, emerging technologies. Indeed, despite some scepticism, most companies see tremendous potential in this industry and will strive to introduce high-quality DeFi goods.
Kyle Thomas, CEO of Provide – an enterprise blockchain provider partnering with SAP and Coke One North America – begs to differ, telling Cointelegraph that companies will soon see public blockchains in the same way as they do on the Internet.
“A lot of mindshare is up for grabs as ‘Enterprise DeFi’ becomes more of a reality with each passing day.”
Agreeing with Thomas, Kevin Fen, PwC cybersecurity expert and former COO of enterprise blockchain company VeChain, said that while the DeFi space may resemble the 2017 ICO boom, it is different in that DeFi proves the great potential of blockchain in the world of finance.
“If we look at DeFi from the other side, it shows how blockchain can be used in the financial sector, and this is not enough among enterprise blockchain implementation cases.”
The outlook for the development of the DeFi industry by big business is confirmed by recent news. A large public company, xSigma, has already announced the launch of its first decentralized finance products. xSigma Defi is a blockchain R&D lab project that was created by ZK International, a publicly-traded company (NASDAQ: ZKIN). Over the next year their team plans to launch a DEX (decentralized exchange) for trading stablecoins. And by 2022, xSigma will launch a dollar stablecoin.
Blockchain is already used by Amazon, BNP Paribas, Anheuser-Busch Inbev, Citigroup, CVS Health, Facebook, Google, Hewlett Packard, IBM, JPMorgan Chase and hundreds of other large public companies. Now is the time for decentralized finance, which is getting the attention of corporations.
Such news clearly shows the growth of interest from large capital not only to decentralised finance, but also to the entire cryptocurrency industry, including blockchain technologies. Whereas Bitcoin used to be something for enthusiasts, criminals or countries with poor economies, now the focus has moved to businesses. Large businesses have valued the advantages of decentralised technology not only in terms of funding, but also as instruments with tremendous potential for growth. Thus, the global adoption of crypto is becoming not only the most awaited occurrence of 2021, but also the only plausible outcome that has already become evident.
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