High 10 Crypto and Blockchain Tales of 2020
The COVID-19 pandemic ruled the news in 2020, affecting myriad sectors – health, business, social justice, politics and commerce, and the cryptocurrency and blockchain industries. As country by country lockdown to stop the virus from spreading, governments seized stimulus payments to keep economic activity going.
These measures, while necessary, have sparked the specter of global inflation. This in turn prompted many traditional investors and institutions to re-consider cryptocurrencies as an alternative store of value, particularly Bitcoin (BTC), the top crypto. After a slump on March 11, BTC cracked and hit record levels by the end of the year. With this in mind, here are the ten most important stories of the crypto and blockchain world for 2020.
Bitcoin rises to capture highs
The oldest and most widely used cryptocurrency in the world has shattered price records, and some in 2020. At year-end, Bitcoin's market capitalization is around $ 500 billion – above that of Visa and Berkshire Hathaway – and the price in the spot markets is holding up Inches toward $ 30,000.
The pre-rally record high of $ 19,850 was set in December 2017 by retailers in Asia (many of whom only spotted cryptocurrencies) driving the price. That year, however, mature investors continued to buy Bitcoin increments, and often withheld them. Chain as a long-term investment, the New York Times noted.
"At this point in time, we're seeing new stories of institutional crypto adoption almost every day," Bitcoin Depot CEO Brandon Mintz told Cointelegraph in mid-December. MicroStrategy, Square, Paul Tudor Jones, Guggenheim Investors and even the venerable insurance company MassMutual bought BTC in 2020. "We are now being driven by corporations and billionaires, not just retailers," Minerd said.
Decentralized financing breaks out
"2020 was clearly the year of decentralized funding," Da Hongfe, co-founder of the smart economy network, told a Cointelegraph. It said the amount locked in DeFi had risen to nearly $ 15 billion on December 30, compared to just $ 658 million at the beginning of the year, according to DeFi Pulse.
Indeed, a new term, "yield farming", has been added to the crypto-lexicon. In return for staking out BTC or Ether (ETH) as collateral for a DeFi company, a user may receive a governance token that the owner can use to "debate, propose and vote on any changes to the (platform) protocol".
Owning these governance tokens became quite lucrative in 2020. Compounds COMP, which was first released in June, rose from $ 61 on June 18 to $ 382 on June 21 following its launch on the Coinbase Pro US exchange. The year ends December 31, 2020 at $ 148.
DeFi is a game changer, Giuseppe Ateniese, professor at the Stevens Institute of Technology, told Cointelegraph earlier. “With decentralized financing, nobody is up to date, no server, no organization. There are no prejudices.” It's not like a conventional car loan, where the bank goes after the car for the loan if the borrower defaults Requesting withdrawal, he explained. “With DeFi, assets are digital and locked / tied through smart contracts. If I can't repay the loan, the digital asset I used as collateral will be taken and there is nothing I can do about it. "
PayPal trades in crypto
It took Bitcoin 12 years to attract 100 million users. In a single month, the network gained an additional 300 million potential users as payment giant PayPal announced that users could buy, sell, and hold Bitcoin, Ether, Bitcoin Cash (BCH), and Litecoin (LTC).
"It's already having a big impact," said Pantera Capital in November. "Within four weeks of launch, PayPal is already buying almost 70% of the new Bitcoin offering." In the following month, Pantera updated: "Within two months of going live, PayPal is already buying more than 100% of the new Bitcoin offering."
Bitcoin survives the four-year halving
Bitcoin halving, which aims to cap the rate of emissions of BTC, capped at 21 million units, occurs roughly every four years and is usually marked by some concern. They are analogous to a company that tells its employees to expect a 50% wage cut. Here, the block reward for the Bitcoin network validators known as miners is split in half.
The halving in May 2020 reduced the miners' block reward from 12.5 BTC to 6.25 BTC and came and went without misfortune – no exodus of miners or a breakdown in the network's computing power (hash rate) as some feared. Seven months later, Bitcoin is selling roughly three times its previous half value ($ 8,566 on May 11).
China is testing, but the Bahamas launch the world's first CBDC
The race to issue the first digital central bank currency (CBDC) in the order of magnitude moved closer to resolution in 2020. China announced in August a trial run of its digital yuan in four hubs – Shanghai, Beijing, Guangzhou and Hong Kong – a test area of 400 million people, or about 29% of the country's population.
Many expected China's Digital Currency Electronic Payment (DCEP) project to reach full rollout soon, but disagreements arose as to its importance. Would a digital yuan challenge the US dollar as the world's reserve currency, as the Financial Times fears? The publication wrote in August: "China's rapid development of a central bank digital currency has the potential to disrupt the global monetary order."
Or are CBDCs still so plagued by unsolved problems like fraud prevention and cyberattacks that it would be irresponsible to launch one on a large scale now, as Jerome Powell, chief executive of the US Federal Reserve, suggested in October?
In any case, China won't have the world's first CBDC. This award belongs to the Bahamas, an island nation in the West Indies, which made history on October 20th with the official introduction of its digital central bank currency, the so-called sand dollar, which is based on a blockchain platform.
MicroStrategy relies on BTC
2020 was the year public corporations and institutional investors began moving the crypto needle, and no publicly traded company endorsed crypto with the passion of MicroStrategy, a Nasdaq-listed business intelligence company. By August, the company had not only amassed $ 250 million in Bitcoin, it had also made BTC its primary reserve for corporate reserves.
As CEO Michael Saylor stated, unprecedented government stimulus measures to combat the COVID-19 crisis were expected to have "a significant devaluation effect on the long-term real value of fiat currencies and many other conventional asset types, including those traditionally held as part of corporate treasury Operations. "In this new world, Bitcoin is a reliable store of value" with more long-term appreciation potential than cash ".
MicroStrategy kept buying BTC year-round, raising $ 650 million by selling convertible bonds in late 2020 to buy even more Bitcoin. As of December 21, the company held a total of 70,470 BTC, which was purchased at an average price of $ 15,964 per bitcoin. The Wall Street Journal marveled at the company's transformation and asked, "Is this a public company or a hedge fund?"
Coinbase is reviewing IPO waters
In December, the Coinbase exchange announced an offer to become the first crypto-native company to be listed on a major US exchange. The company, with 35 million customers, could be worth $ 28 billion if its IPO takes effect, according to research firm Messari.
"It's a huge event," Vladimir Vishnevskiy, director and co-founder of the Swiss asset management company St. Gotthard Fund Management AG, told Cointelegraph, not only in the US but also in Europe, because "the IPO will be a sign. " in terms of how the markets are prepared to value such companies. "
The IPO is a "milestone for the crypto industry," according to Fortune magazine. "However, it is far from clear whether the US Securities and Exchange Commission would sign such an agreement." Coinbase caused some controversy in 2020 because it discouraged employees from engaging in political activism in the workplace. In November, the New York Times reported that some of Coinbase's black employees had raised concerns about discriminatory treatment. Others noted that during times of high price volatility, the exchange was still plagued by premature service outages.
Even so, the IPO announcement is an important event, said University of Texas finance professor John Griffin, "which shows that Coinbase's path to operating within the regulatory process is economically viable."
The Telegram Group gives up the TON project
Telegram Group Inc. had tried to build a decentralized blockchain platform based on the model of Bitcoin and Ethereum – only better, that is, "far superior in speed and scalability," said Pavel Durov, founder and CEO of open source encrypted courier company with around 300 million users worldwide. But Telegram could not overcome the resistance of the SEC and pulled the plug from its TON project (Telegram Open Network) in May.
The Dubai-based company had already raised $ 1.7 billion to bring the project's "Grams" token to market. However, the SEC considered the coins to be unregistered securities and stopped distributing them – not just in the United States but around the world. A federal court gave the agency preliminary support.
"We still rely on the US for finance and technology," Durov wrote on a blog, adding, "This may change in the future. But today we are in a vicious circle: you cannot have an overly centralized world bring it more into balance, precisely because it is so centralized. " Telegram has been involved in a number of prominent investors, including blue-chip venture capital firms Kleiner Perkins and Sequoia Capital.
Investor Paul Tudor Jones supports BTC
COVID-related government stimulus has had many investors worried about inflation in 2020, and some have been willing to give a fresh take on cryptocurrencies as a new store of value. Prominent among them was Paul Tudor Jones, a hedge fund investor who reported in May that part of his fortune was now invested in Bitcoin.
The endorsement of a celebrated investor like Jones, who predicted the 1987 stock market crash, paved the way for mainstream investors and others to delve into crypto. "The case for Bitcoin as his preferred hedge against what he (Jones) calls" big money inflation "has significantly reduced the" career risk "for many of his colleagues considering an allocation to Bitcoin," said David Lawant of Bitwise Asset Management previously to Cointelegraph. The Wall Street Journal also commented:
“The (Bitcoin) rally has attracted a wide range of characters, from Wall Street billionaires Paul Tudor Jones and Stanley Druckermiller to momentum investors aiming to make higher profits and lower markets to lose. In turn, their participation has resulted in more purchases. "
SEC declares XRP as security and sued Ripple
The XRP token was the third largest cryptocurrency by market value – only behind Bitcoin and Ether – when the San Francisco-based company came across a saw in the form of the SEC in late December.
Led by outgoing chairman Jay Clayton, the commission filed legal action against Ripple and its two top executives. She claimed the XRP coin created by Ripple was actually a collateral and the company raised over $ 1.3 billion through an unregistered, ongoing digitization offering of assets. In the three days following the announcement, XRP's price fell 41% and it became unclear whether the company would survive in its current form.
On December 27, Coinbase, the largest U.S. exchange, announced it was suspending XRP trading, and as others delist the token, the climate around the coin has become increasingly unstable. On December 29th, Grayscale Investments, the world's largest digital asset manager, reportedly liquidated more than 9.18 million XRPs.
Ripple denounced the SEC's action as an "attack on the entire crypto industry here in the US" when the company's CEO, Brad Garlinghouse, said he would continue to support his customers in the US and around the world.
More clarity in 2021?
Overall, companies and institutional investors looking for an alternative store of value in the face of the ongoing COVID-19 crisis brought crypto to a record level in 2020. Elsewhere, blockchain innovations have continued on multiple fronts, including decentralized funding and CBDC development.
In the US, a cautious SEC prevented the expansion of digital tokens and initiated lawsuits against XRP and Telegrams TON. However, a change of administration in Washington, including a new leadership at the SEC, could lead to more clarity on regulation in 2021.