Predictions are powerful. They provide a fertile ground for discussions and interactions. We, social animals, love them!
Before jumping in 2021, let’s have a brief review of 2020.
As 2020 is ending, the Chicago Mercantile Exchange (CME) is now one of the largest Bitcoin futures exchanges by number of open contracts. Symbol that 2020 has converted institutional interest into institutional investments in the ecosystem. No doubt. Although you read and heard the names hundred times, repetition is the best pedagogy. Paypal, MicroStrategy, Grayscale, and Square are in, to name few of them. More will come in 2021.
Another macro observation of 2020 leads to the actions taken by public bodies in the industry. The US charged BitMEX founders with failing to prevent money laundering. Okex is under investigation by Chinese authorities. UK crypto firms, that conduct business with clients, won’t be able to operate in the UK after January 10 if they aren’t registered with the Financial Conduct Authority (FCA). The US Financial Crimes Enforcement Network (FinCEN) has assessed a $60 million penalty against the founder of Helix and Coin Ninja (Bitcoin “mixer”) for violation of the Bank Secrety Act. FinCEN has also recently proposed new KYC rules for self-hosted wallets. The icing on the cake, the US Securities and Exchange Commission (SEC) has recently charged Ripple and two executives with selling $1.3 Billion in unregistered securities.
Along with the institutional growth, regulators are taking measures to protect investors’ money and clear the horizon for existing players and new entrants.
What will 2021 have in its bag? Here are 5 specific guesses. Not financial advice, blablabla.
1. The Rise of The Lightning Network
What do Bitcoin and Viagra have in common? Today, both serve a different purpose than originally intended. Bitcoin was designed to be electronic cash, not a safe haven or asset to hedge the portfolios of the wealthiest against uncertain times. Victim of its own success, the network became more congested and expensive, wiping out any possibilities to transact micro amount. Even small transactions are more expensive than what your bank would offer. No value proposition, no use case.
The Lightning Network (LN), often called layer 2, is a response to address Bitcoin’s scalability issues as a mean of exchange. And it’s growing fast.
As the liquidity problems among lightening channels are being solved (i.e. https://lightning.engineering/posts/2020-11-02-lightning-pool/), developers will spend more time on UX, making it a great experience to spend your Bitcoins. And the cost will be near 0.
In 2021, Bitcoin will be more and more used as a mean of exchange.
Finally, Viagra was originally developed by Pfizer for the treatment of hypertension (high blood pressure) and angina pectoris (chest pain due to heart disease).
2. The case for privacy-focused protocols
Under governments’ scrutiny, privacy protocols and cryptos such as Monero, ZEC, DASH, or Litecoin, are facing many regulatory challenges ahead.
The pandemic fuels the narrative for an effective surveillance system. We are living, as described by Yuval Noah Harari, a transition phase from “over the skin” to “under the skin” surveillance.
Privacy tools (encrypted web browsers, VPNs, encrypted messaging systems, etc) will be more valued by users. Are privacy-focused tools undervalued today? Probably.
Monero, the flagship crypto for private transactions, has seen a steady growth in the number of transactions on its network over the year.
In 2021, more individuals will value privacy when transacting on the Internet. They will use the appropriate tools and Monero will easily double its number of transactions.
3. Near the moon
The third wave of smart contract platforms has arrived. QTUM, NEO, Cardano, or Cosmos are already old stories now. While many eyes are staring at Polkadot and the performance of its native token (DOT), +60% in the last week, few eyes are looking at the NEAR protocol.
Sharding (dividing the entire blockchain into individual fragments, so-called shards) is a way to solve the high scalability problem for blockchains. Victim of its own success, the ETH network is the best representation of that scalability problem at the moment.
In addition to sharding, NEAR technology requires only simple, low-power hardware.
In 2021, NEAR will attract many developers, fostered by their dev-centric and user friendly approach. The price of its native token will increase by 100%+!
4. Investing is (not yet) cool
The funds of tomorrow, as mentioned and explained by the Financier 2.0 (https://financier20.substack.com/p/other-peoples-money), will be more transparent. Seeing in live the portfolio, performance and last trading events will be the new “normal”. Blockchain as a tech leverage to achieve this goal is already a reality. TokenSet and Melon are good examples.
Although the execution and post investment management will be eased and automated, the decision-making process of investing is still painful.
Should I invest in this product? What’s the risk? Do people believe in that? And so on.
Yet, it’s the best and coolest part of the investment process. Discussing and interacting with friends and people, sharing ideas, playing the devil’s advocate, or in a nutshell, educating ourselves is the positive-sum of the game, whatever the outcome of the investment itself.
With the pandemic, it’s difficult to go to meetups or dedicated events, individuals are sharing and debating over the Internet. Content is king, but where it happens is certainly ugly. Look at the interface of the Bitcoin forum. The trading discussion encompasses 839,294 posts on 34,004 different topics!
In 2021, new-community driven platforms will emerge. Members will share content and make the investment decision process more lively, interactive and fruitful. Maybe we will see the “renaissance” of the old investment club!
5. Satoshi and 1,000x
In 2021, Satoshi will reveal his real identity and Arthur Hayes will come back stronger with the 1,000x leverage! Aaaaaaand it’s gone!
Happy new year!
By Didier Pironi
About us
Suiteki develops and runs crypto algorithmic solutions.
Disclaimer
Suiteki does not endorse or promote any of the projects or cryptocurrencies mentioned in this blogpost. Any descriptions of functionality and services provided are for information only. Suiteki is not responsible for any loss of funds or other damages caused as a result of using the projects described above.
