Ted Cruz (R-TX) – a crypto-supportive Republican senator – believes a US Central Bank Digital Currency (CBDC) is likely to become a reality. The politician believes both the Federal Reserve and the White House currently want one, and that the Democratic party won’t vote against its issuance. In an interview published by What Bitcoin Did on Friday, Cruz discussed the current political climate surrounding crypto. In general, the senator believes Democrats are more opposed to the industry than Republicans, due…
The year 2020 is coming to an end, and it has been quite beneficial for the cryptocurrency industry. Despite ever-stricter regulations, Bitcoin (BTC) and altcoins have shown their strength in times of crisis, and new blockchain sectors have emerged. We take stock of upcoming trends for 2021.
DeFi will consolidate to offer viable financial alternatives
Decentralized finance (DeFi) has been the major story for the crypto industry in 2020. The explosion of the sector in the summer raised fears of an “ICO effect.” Some analysts predicted this sector’s fall, which is still largely driven by investors’ greed, willing to risk everything to cash in exponential gains.
Despite major falls in caps and volume from protocols, the DeFi sector continues to thrive. As 2021 approaches, we are beginning to see the start of consolidation in this sector. Today, the DeFi sector represents more than $14 billion locked in protocols, and there is an increased interest within the crypto community.
The best indicator of this interest is that most crypto projects are working on DeFi products. Altcoins like Dash (DASH) and Zcash (ZEC) have announced plans to release wrapped versions of their tokens on Ethereum. Cardano also revealed its intentions to release a DeFi platform as part of its mainnet launch. DeFi, therefore, remains the biggest sector to watch in 2021.
Upcoming inflation will be favorable to Bitcoin (BTC) and altcoins
The covid-19 pandemic took the world by storm in 2020, with world economies suffering the strain. As expected, major economies have taken on the responsibilities to support countries weakened by the health crisis. In the United States, the media have been critical of the dollar’s future (USD). Several analysts conclude that the coming economic crisis and inflation could be higher than what was experienced in 2008.
In the face of this, investors of all stripes have begun to seek refuge in alternative assets. Bitcoin has been a major beneficiary of this trend. After experiencing a historic crash in March, BTC broke its all-time high a few weeks ago.
Central bank digital currencies will take center stage
This year witnessed a surge in the quest for Central Bank Digital Currencies (CBDC) globally. The apex bank of major economies has started to develop their digital currencies in response to the growing adoption of crypto-assets.
China is the furthest among the major economies with its digital yuan project. This development by China has forced other countries to jump on the bandwagon. In Europe ECB chief, Christine Lagarde confirmed that a decision would be made on the digital Euro in January.
Overall, governments are still cautious and are talking about long tests ahead. However, if China’s digital currency spreads widely, expect more countries to fast track their CBDC development.
Non-fungible tokens (NFT) will explode in 2021
Initially mainly used for blockchain video games, non-fungible tokens are gradually finding wide use. They continue to break records in the digital real estate industry, where users buy virtual plots for potential rewards.
Also, new applications of NFT are propping up within traditional sectors. For example, digital works of art are booming, with art pieces selling for record prices. Last October, an artwork called ‘’ Block 21’’ was sold at Christie’s for $131,250. Expect this trend to continue in 2021.
Ethereum will continue to break records.
The big news for 2021 within the crypto space is the switch to Ethereum 2.0. After months of waiting, Ethereum has begun its transformation to a Proof-of-Stake consensus. Ethereum has, in any case, finally managed to become a multi-platform network that runs a great number of smart contracts. This has largely been due to the development of DeFi, with over 80% of DeFi protocols on its network.
As of today, the value transferred each year to Ethereum smart contracts exceeds that of PayPal. This is a remarkable feat and enough to suggest that 2021 will be a major year for the leading smart contract network.