There are many blockchain stories worth following for the new year and the new decade. At the Last Futurist we discuss business, AI and tech trends that can impact the future of society as a whole. This includes blockchain and digital assets too.
With Bitcoin’s price now at $10,400 with a Bitcoin halving event and Covid-19 on the lurk, it could boost Bitcoin’s price, thus stimulating the cryptocurrency innovation sector once again. There are many trends worth noting before this occurs.
1. Bakkt Adoption Will Grow
2020 will likely be a significant year for Bakkt that increases cryptocurrency trading in general. Bakkt will reportedly launch a crypto consumer app in the first half of 2020.
Bakkt is one of the most exciting platforms that could attract mainstream institutional investment money. Seen as the manifestation of the new holy grail of cryptocurrency: Wall street coming to town.
Why Bakkt? It’s the scale of its potential that’s most impressive. What sets Bakkt apart from the pack according to many analysts is its backers and its founding company. Bakkt is a product of the same company that spawned the vaunted New York Stock Exchange, and it plans to enter the market with the support of a self-described “marquee” of big names — including BCG, Microsoft, and Starbucks.
2. Bitcoin Halving Will Increase Crypto-Trading Demand
Bitcoin bulls believe Bitcoin’s scarcity will increase the demand for the entire cryptocurrency market. So what is it? Some see the Spring of 2020 as a possible breakout period for Bitcoin to watch. Here’s essentially why:
The Bitcoin halving is a recurring event in which the number of Bitcoins rewarded to miners are cut by half. They are programmed to take place once every 210,000 blocks, roughly every four years, until the year 2140 when it’s estimated that all 21 million Bitcoin will have been mined. These four years are now almost up, with the next halving set to take place in May 2020.
3. Libra’s Regulation and Potential Launch
It’s not entirely clear how Facebook’s blockchain experiment Libra will launch without greater regulation.
The Libra project has attracted a good deal of attention from governments across the world, with regulators lining up to grill Facebook CEO Mark Zuckerberg and Libra CEO David Marcus. Suffice it to say that Facebook could be moving fast and breaking things and might try to bulldoze this new product to launch as quickly as possible.
It would, after all, facilitate the monetization of WhatsApp that has over one billion global users. In October, 21 organizations officially signed the Libra Association charter at the project’s inaugural meeting in Geneva. However significantly the payments partners have dropped out. This leaves the Libra Association and its Calibra app in quasi-limbo in 2020.
Still, that’s not stopping Facebook’s blockchain ambitions as Libra in terms of code, is developing rapidly. Forty wallets, tools and block explorers, plus 1,700 GitHub commits have now been built on its blockchain testnet.
4. Cryptocurrency Regulation Reaches New Clarity in 2020
One of the main barriers to mainstream adoption of a crypto product has been crypto Ad bans, insufficient regulation and a lack of clarity about the future of crypto in the highly regulated financial sectors.
The blockchain and crypto community is ringing in the new year to a level of legislative and regulatory attention that would have been hard to predict a year ago. At a time when Bitcoin’s price has fallen to $8,000, well down from its $12,000 highs of 2019, crypto regulation and further clarity would be a boon for the crypto market and blockchain startups.
Smaller countries are well-positioned to make forward-looking regulatory and legislative headway for crypto interactions that could stimulate the prospects of blockchain startups in those areas — Singapore, Taiwan, Malta, Estonia, South Korea and Japan among them.
Think about it, a lot is in the works that forces the world to regulate new forms of digital assets and currencies better. Facebook launched the Libra project which attracted the attention of politicians and central bankers the world over. Fidelity Investments announced a series of new crypto initiatives.
The US Federal Reserve Board revealed that it is working on a crypto-like project known as “central bank digital currency.” China’s launch of its own digital RMB should also force the world to change in a hurry as other countries are likely months or years behind China’s own initiative. All to say that this progress will change the regulatory and legal framework of digital money in general and that should benefit the crypto markets in particular.
5. What Will Be the Impact of Ethereum 2.0?
The long-awaited Ethereum 2.0, code named Berlin, drops next year. Ethereum 2.0 is intended to be Ethereum’s final network upgrade and is poised to shift its current Proof of Work consensus algorithm to Proof of Stake.
Sure, we want Ethereum to reach Serenity, but how significant will the shift be? Ethereum 2.0 will launch by the end of 2020, estimates Andrew Keys, a managing partner at investment firm Darma Capital. Following Ethereum 2.0 for the layperson is like trying to decipher crypto hieroglyphics of crypto main-net speak.
After the activation of Ethereum 2.0, phase 0, the security of Eth 1.0 will be increased due to the Finality Gadget feature. Ethereum has a lot of pet terms, but it hasn’t transformed the future of digital assets, as once predicted, yet. It’s stuck in a kind of blockchain purgatory of not being able to achieve scale or speed of transactions as once anticipated.
Ethereum’s major network upgrade, Ethereum 2.0 (a.k.a. Serenity), should be rolled out in phases and will bring with it sharding, proof of stake (PoS), and a new virtual machine, among other things. I think it’s safe to say there’s a general consensus that 2020 will be another transition year for Ethereum.
6. Retail Adoption of Crypto Transactions Will Continue to Grow
One thing we know about the slowly moving crypto markets is that opportunities for retail integration abound, whether in loyalty programs or tipping on live-streaming platforms in Asia or actual channels like the Lightning Network.
Coinbase could be acquired, Binance could find new partnerships, anything in 2020 is really possible. For a big retailer to want to integrate in 2020 won’t be so crazy. Increasingly, there is a diverse array of retailers, both big and small, willing to integrate their services. In 2019, we saw Whole Foods Market, Office Depot and Nordstrom, to name just a few. Japan, as usual, is the pioneer in this area.
Retail adoption of crypto is a murky area, but in 2020 the chances of seeing a breakthrough in the retail sector’s adoption of Bitcoin or crypto becomes significantly more likely as Bakkt and related areas continue to evolve and bigger players put more skin in the game.
Bitcoin bulls often cite the most typical of examples. Starbucks, for one, has announced that they’ll be integrating Bakkt’s crypto payment service in the first half of 2020. Starbucks owns almost 30,000 outlets across the world.
7. Banks and Traditional Finance Follow FinTech’s Lead to Crypto Integration
From Robinhood to Revolut that are millennial-friendly apps, crypto adoption makes sense on all levels. This might force bigger financial institutions to slowly follow suit. The new wave of mobile finance reaching greater maturity could actually help cryptocurrency integrations in the future.
Banking today moves faster than ever before and the need to innovate and differentiate yourself from the competition is vital. Eventually, this will mean integrating digital assets and crypto options of various kinds. Fidelity Digital Assets in 2019 was such an example. Who else will make a move in 2020?
As Millennials inherit so much baby boomer money, it will pressure banks to embrace what their Millennial customers want. It makes sense that we will begin to see more traditional banks and other more traditional financial players offering crypto as an investment opportunity to their customers. It’s possible Millennials would be more interested in a portfolio that includes crypto and digital assets rather than just traditional stock portfolios.
8. The Privacy Coin Matures
I think in 2020 we’ll also see consolidation in the privacy coin space, as there is a legit demand for them. Part of the appeal of crypto interactions is being anonymous but the regulatory implications are also important.
Some crypto analysts believe that where “stable coins” were the main bugbear/target for regulators in 2019, their gaze is likely to shift towards privacy coins in 2020.
Privacy coins still feature prominently on the top cryptos of 2020. If crypto has been regulated and ICOs have been suppressed, privacy coins could easily become over-regulated as well. Privacy coins are a bit black hat for traditional finance and government to accept.
Privacy coins are a particularly tricky concept for governments to reconcile with, offering a level of anonymity that many are reticent to accept.
I’m not sure how security is achieved without some degree of anonymity in a transaction. So much of the freedom, decentralization and empowerment of crypto was based on greater privacy so this will be an interesting space to watch in 2020.
9. The Impact of Emerging Markets on Crypto
Do not underestimate the potential of South-East Asia to impact the future of the token economy and crypto trading itself. Places such as Vietnam, Malaysia and Indonesia are having an increasingly relevant impact.
The Securities Commission in Malaysia has now approved three firms to establish and operate a digital asset exchange. Several projects established nodes in Vietnam, following a spike of activity there in 2019. The developing world is well positioned to invest in alternative trading and investments such as digital assets.
10. Are Crypto ICOs Dead?
The ICO boom of 2017 saw startups of all sizes hit the jackpot. However quite a few of them are no longer around and many didn’t have substantial active products at the time of their ICO.
Delay, dismay, fraud, and regulation continued in 2019. It’s like the “death and taxes” of crypto’s karma. The token economy, decentralization, digital assets and new ecosystems of financial trading, that new asset category, all took a major step backward in the famed “crypto winter”.
Arguably the most interesting project and certainly the most ambitious ICO project, Telegram, has hit a number of regulatory snags along the road and is currently under investigation by the SEC, but still expects to launch next year. So many blockchain startups are in some kind of digital limbo, and ICOs will be much more low profile as even crypto news outlets have been impacted.
Telegram, Filecoin, and Hdac, among others, do plan to launch in 2020. The startup life is hard enough, but Blockchain is still a nascent technology and to be a blockchain startup incurs a special kind of challenge to become viable. ICOs, STOs and even private coin sales don’t necessarily pan out and the future of ICOs seems especially precarious in 2020.
11. The Connotation of ‘Decentralization’ Declines
As the internet world becomes more centralized, it’s becoming increasingly clear that privacy and decentralization as a human right aren’t doing too well. Banks, governments and corporations are increasingly owning our internet and data interactions, to the detriment of the individual.
While companies like Apple and Facebook can use terms like “privacy”, we all know where it stands in the ecosystems of Google, Amazon, Microsoft, and others. China’s state data harvesting “social credit system” is pretty much the antithesis of the “decentralized” vision and governance that is sometimes associated with crypto and blockchain startups.
Real privacy and decentralization do not exist on the internet and the world of 2020 and the future of crypto is also related to ideologies, values and what future generations might consider our human rights online. Dozens if not hundreds of crypto startups used the term “decentralization” in their marketing, without an explicit product that provided a valid framework for its manifestation.
Given the tough regulatory position of the SEC on ICOs in North America as securities, and the non-compliance of former ICOs to those terms, it would seem the battle of crypto regulation could hit new levels in 2020. The future of decentralization and internet privacy does not appear very bright in the regulatory framework of the 2020s (at least for larger countries and nation-states).
12. Privacy Coins Could Gain Mainstream Adoption in 2020
Some of the key features of cryptocurrencies survive in the 2020s, even if particular projects might not make it. Recently Brian Armstrong, CEO of Coinbase said in a blog post that the next decade would be about a blockchain that would not only be scalable but would also have implemented privacy features.
Amid mounting concerns about data privacy, the world of cryptocurrencies is also becoming worried about threats to user privacy. Thus anonymity and privacy remain valuable contributions of cryptocurrencies to the rest of the world.
13. Bitcoin Has a Rough Start to 2020?
Bitcoin, as we all know, is a very volatile digital asset, an illiquid asset and prone to deep dives of value. After 11 years there are also various seasonal and historical trends related to its price point. Everything from Chinese buyers to CNBC can apparently make it fluctuate.
According to some analysts, however, the data sets have shown that Bitcoin’s price is somewhat predictable, at least from a longer-term perspective. Prominent cryptocurrency analyst and trader Ceteris Paribus recently noted on Twitter that according to his historical analysis of Bitcoin’s price trends, January has been the “worst month for BTC performance” in the asset’s history thus far.
14. Initial Coin Offerings Peaked in 2018
The bravado of crypto peaked in late 2017 when Bitcoin’s price skyrocketed. The following year ICOs raised $21 billion, according to CoinSchedule.com, a crypto market tracker. STOs were seen as a potential heir apparent of ICOs but didn’t quite live up to the hype.
15. The Bitcoin Lightning Network Makes a Breakthrough
The Bitcoin Lightning Network started to gain traction again after noted crypto exchange Bitfinex added support for Bitcoin’s 2nd layer payments protocol.
While it appears that Bitcoin’s Lightning Network requires liquidity for better performance, some believe that in 2020 we’ll see that happen. In 2019, Blockstream’s Liquid Network and Bitrefill soon followed suit, implementing Lightning channels on their own platforms as well.
There’s a fair chance that in 2020 we’ll see greater adoption of the Lightning Network. Utilization by vendors, retailers and shops would help the growth of Bitcoin’s LN.
16. China’s Digital Yuan Could Change the Future of Digital Money
China’s own digital RMB currency could change the way we see digital money forever. That’s how big the potential is. In this light, digital assets and cryptocurrencies are no longer just for in-the-know techies, crypto fanatics and online traders.
These generations of digital cryptocurrencies represent new ways of thinking about online assets and digital money that have not only helped mint a crop of new millionaires and billionaires but have also inspired citizens across the globe to hold virtual currency as an investable asset and to dream of a future in which all transactions are carried out digitally, securely and anonymously by using decentralized virtual currencies.
Bitcoin started new ways of thinking about distributed ledger technology’s impact on global finance and the future of apps. China’s own version of digital money could in 2020 achieve some sort of mass adoption.
Central banks are keen to adopt digital fiat versions of their currency and China could be a leader. China’s process of developing and implementing a digital currency is a major event. The United Arab Emirates, Russia, Iran, Venezuela, Senegal, Ecuador, Japan and Sweden are among countries that have already rolled out or are contemplating instituting some version of a sovereign domestic digital currency administered by their national government. Central bank coins are coming in 2020.
17. Singapore Rises as a Top Cryptocurrency Innovation Hub
Considering the bearish regulatory stance across the world on crypto, ICOs and cryptocurrency and blockchain startups, it appears pockets of Asia are well positioned to become leading hubs for FinTech innovation where crypto products could emerge.
If in 2019 Malta impressed, many believe in 2020 it will be Singapore. Forward-looking countries such as Singapore have emerged as a top choice for fintech firms to access the fragmented Southeast Asia market of around 600 million people.
The Payment Services Act, which has been described as the world’s most comprehensive regulatory framework governing cryptocurrency and blockchain businesses to date, came into force on January 28, 2020.
18. Distributed Ledger Technology Frameworks Mature
The quest for dominance among the frameworks will continue to play out in 2020. We’ll continue to see the usual suspects of Hyperledger Fabric, Ethereum-based Quorum, R3’s Corda, and MultiChain, but there’s also a chance of a newcomer upsetting the existing balance. This means even as crypto markets are uncertain, blockchain technologies continue to mature and new products and partnerships continue to manifest.
19. Blockchain Continues to Merge with the Cloud
Blockchain in cloud computing will see significant uptake in 2020, especially in the area of interoperability, hybrid cloud and so forth, as Tech companies have already responded with enhanced offerings and will continue to build these out to meet enterprise demand.
This means a more pronounced emergence of the enterprise blockchain cloud in particular which can enhance security, efficiency and cost reduction for businesses.
20. Decentralized Finance (DeFi) Continues to Innovate
In 2019 we saw DeFi emerge as a winner of innovation. According to Coindesk, the total value of DeFi projects has nearly tripled this year to over $650 million. The Chinese government went from banning citizens from buying cryptocurrencies with renminbi to announcing in October that China fully endorsed blockchain technology and was developing its own state-backed digital currency. All it will take are a few winners for DeFi to go more mainstream in ways that are difficult to anticipate.
In the private sector, regulated platforms have built out market infrastructure to accommodate mainstream demand, Bakkt and CME to name a couple. CME, which first launched its BTC futures in December 2017, is planning to launch options in early 2020, following Bakkt. This suggests DeFi has momentum. A bitcoin ETF may not be in sight just yet, but could manifest in the early 2020s as better regulation takes shape.
This concludes our major crypto insights for 2020. Do you agree with our list?