2020 will be remembered as one of the most difficult years for today’s societies: countries and entire populations have faced blockades and economic crises, financial markets are still suffering from the severe effects of the economic recession, and COVID has cost the lives of more than 2 million people -19.
Even so, other sectors were impacted in different ways during the severe global health crisis – which does not seem to be over yet, despite the fact that vaccines are beginning to spread in rich countries. The economies have become radically digitized, hedge assets have aroused suspicion, and the crypto market has had one of its most important years since 2009, the year Bitcoin (BTC) was introduced.
In fact, the crypto and blockchain markets have excelled in the face of a crisis that has spared almost no sector. Cryptocurrency funds are among the most profitable of the year. Bitcoin and the largest altcoins hit new historical highs. Large institutions and investors in the financial markets have made investments in Bitcoin, and blockchain technology has broken down barriers in the financial sector and in the production chains of various industries.
Given a year of profound changes, what can we expect in the future? Cointelegraph Brazil invited some of the best crypto and blockchain experts in the country to outline the next steps for the market.
Institutional investments were highlighted in 2020 and eventually hit the cryptosphere. They promise another year of growth in 2021.
According to Rodrigo Borges, founding member of the Oxford Blockchain Foundation, the large bitcoin contributions from institutional investors who bought even more BTC than miners’ production capacity will intensify in 2021: “With regard to Bitcoin, I imagine an increase in demand institutional investors, which enables the creation of new products with exposure to Bitcoin ”, analyzed Borges. He sees “2021 as a year of consolidation and strong development in the industry”.
Tatiana Revoredo, MIT blockchain expert and Cointelegraph Brazil Columnist, the custody of cryptocurrencies by traditional financial institutions and the introduction of stable coins will be central in the new year:
“In the financial sector in Brazil, applications are being made for custody of crypto assets with the possible participation of the traditional market. And if regulators allow, stablecoins will play an expressive role in the Brazilian market as sales can quadruple. “
The crypto markets saw a year of extreme optimism – or greed, as the Crypto Fear & Greed Index shows. Bitcoin hit a dramatic low in March at $ 3,800 and topped its historic high of 2017 of $ 20,000 on December 16. In Brazil, the currency set a new historic record in November when it hit $ 106,000 in Brazilian reals.
Cointelegraph Markets reporter Marcel Pechman highlighted the behavior of the market despite the setbacks suffered over the year. He recalled: “The Bitcoin and Ethereum markets developed like never before in 2020, both in terms of trading volume, price and the contribution of renowned investors such as Paul Tudor Jones and Stanley Druckermiller.”
Pechman said that despite the setbacks in the crypto market, the impact of those setbacks on market performance was not as significant: “For example, we had the US Department of Justice, BitMEX – the largest futures exchange at the time – and KuCoins sued $ 280 million hack, and none of them affected the market. “
Pechman also recalled that the 2020 DeFi race resulted in expensive transaction costs on the Ethereum network but did not affect market sentiment.
Edilson Osório, CEO of OriginalMy, agreed on the bright future of the DeFi sector but warned of fraud:
“This is an experimental and promising market, but it needs special attention due to malicious groups using scams and scams in general. Since this is a very new market, platforms can have problems with hacks. Due to the great centralization (even if many platforms present themselves as decentralized) there is still the risk of exit fraud. “
Regarding the innovations of 2020 and the digitization caused by the COVID-19 crisis, Pechman also said that they will go even deeper in 2021:
“Successive innovations that include Taproot, Schnorr and Lightning Network in Bitcoin, as well as the launch of Ethereum 2.0, Phase 0, pave the way for the next wave of ever larger, scalable applications that are tied to traditional finance. The final proof? Fidelity offers loans in cryptocurrencies. “
On the domestic markets, Osório is betting on the tokenization market in Brazil, which is already used by Mercado Bitcoin, the country’s largest crypto exchange. According to him, 2021 will be a year for “the maturation of the security token market”.
“Existing protocols are becoming increasingly popular with regulators as most of them allow for greater involvement and visibility from the regulator itself and allow various risks inherent in this market to be mitigated. There is a great chance that Brazil will grow in this race as the local regulator has set up a regulatory sandbox and the first projects are already being mobilized so that their applications can run in a legally more secure environment, ”said Osório.
João Paulo Mayall, Head of Operations at QR Asset Management, is also optimistic about the tokenization market in 2021. He stressed the role of regulators in expanding the sector in the South American country: “I believe that the future is asset tokenization , Bonds, court bonds, and government debt. Brazil is very advanced in its banking system and we will have many surprises in this sector so I am very optimistic. Tokenization is a billion dollar market, but it lacks the infrastructure. Innovation came before regulators, but I think they are open to listening and working on it. In my opinion [the regulation] will take place before March 2021 next year. “
Finally, blockchain expert Tatiana Revoredo argued that the adoption of crypto in Brazil, whose currency melted in 2020, will pick up, with Bitcoin once again asserting itself as an economic protection agent. She believes that in the crypto markets “the interest of Brazilians will increase, which will lead to an increase in the Brazilian market, with Bitcoin playing a prominent role as a protected asset”.
CBDCs and national governments
The digitization of economies has put the discussion of central bank digital currencies (CBDCs) at the center of debates in financial authorities around the world. One of the countries that have definitely participated in this race is China, which is already doing real tests of the digital yuan in the country. Its main geopolitical rival, the US, has announced that it does not intend to digitize the dollar for the time being, but it is already seeing internal pressure not to follow Chinese leadership in the sector.
The Brazilian central bank has also commented on converting the Brazilian real into a digital currency a few times, although there are no concrete plans to do so in the short term.
Osório believes the European Union will soon join the hype and further accelerate the global race for CBDCs: “Although China appears to be leading the CBDC race, other countries are also starting to move in this direction. Among others, Estonia, which recently launched an internal consultation on the introduction of its currency in the digital version. In particular, I believe that, given the incentives promoted by the European Union, there should be a broader and better organized movement along these lines. “
Many experts are trying to predict the impact of CBDCs on economies – one of the main concerns of economic regulators. Governments that are largely concerned with introducing blockchain into their public processes should also join the debate on data protection and the digitization of money.
Tatiana Revoredo: “In the government sector, growth is forecast for [blockchain] Requests for document registration and health claims, as well as increased citizen concern about the relationship between data protection and the CBDC. “She also urges payment processors to closely monitor this innovation:
“The ones that should be paying more attention to these movements are payment systems like PayPal and their peers. They will need to dig deep into their business models once governments begin to digitally issue their currencies. “
Governments have also looked at blockchain technology through a positive lens. In Brazil and Latin America, several government agencies are already using the technology to certify documents, including customs and notary offices. Large companies also use blockchain to certify production. Use cases that are only expected to grow in the future.
Borges said that accelerating blockchain adoption by large corporations and governments can have a positive impact on crypto assets:
“In the context of blockchain technology, I see interesting solutions developing with the increasing involvement of traditional players, particularly in the financial and agribusiness sectors, which can lead to increased liquidity for certain assets.”
Revoredo agreed, highlighting technological advances in the agricultural sector: “Significant advances have been made in the agribusiness as devices (e.g. drones) have been identified, integrated into the Internet of Things, and artificial intelligence integrated for greater reliability and quality certification to ensure agricultural production. “
Osório defended the growth of the blockchain market in 2020 and its prospects for the near future: “When we look at the advances in blockchain with applications beyond digital currency, we see a growing market in the field of decentralized digital identity, including the approach of governments. We have seen movements in governments in the US and Japan keen to modernize their digital governance models. And the pandemic has certainly helped accelerate and fuel the discussions on this issue around the world as it understands that digitizing both analog and traditional services is a necessity. “
The end of 2020 marked a milestone that closed one of the most dramatic years in the history of today’s societies, but also revealed ways to combat the global economic and health crisis.
Blockchain technology has helped societies fight corruption, introduce more transparent processes, and even help certify drugs and vaccines during the worst health crisis in 100 years. She has also helped companies improve processes, products and services.
Meanwhile, Bitcoin has established itself as an economic protection and investment product, attracting institutional investment giants and – along with other crypto technologies – even laying the foundation for central banks around the world to begin implementing their own digital currencies.
We still do not know the depth of the revolution that we are experiencing with the digitization of societies and the weakening of national currencies around the world, but by the end of 2021 we will certainly have many answers to the questions that still plague us at the beginning of this new year.