The beginning of 2020 was marked by the onset of a real "crypto winter". The coronavirus pandemic that has become the reason for the fall in foreign exchange, commodity, stockand the cryptocurrency markets, should have buried all hopes of the crypto community for a quick recovery of the sector and the economy as a whole. But Bitcoin not only recovered in price ahead of the May halving, but also broke its own price record, breaking the $ 25,000 mark (at the time of publication of the article on 12/26/2020). What else did the outgoing year 2020 remember? We recall together with the analysts of the crypto processing company CoinSpaid.
Bitcoin has become a defensive asset
For a long time, traditional investors and opponentscryptocurrencies have questioned Bitcoin's ability to hedge risks and protect funds from inflation during stressful periods. However, cryptocurrency has proven that it can rightfully be called a defensive asset. Over the past 9 months, the price of bitcoin has increased by more than 170%, and experts from the Wells Fargo Investment Institute named bitcoin as the best investment asset.
Watching the success of Bitcoin, manyskeptical investors began to regard it as a profitable investment that can not only protect assets from inflation, but also significantly increase them. Robert Kiyosaki, Paul Tudor Jones, Jim Kramer and many others joined the ranks of crypto investors.
“The activity of large retail investors has becomeone of the main triggers of the rise in the value of bitcoin. They began to talk about cryptocurrencies as a full-fledged investment tool, and not as a surrogate currency. This is a huge step towards the adoption of cryptocurrencies by the world community, ”Tatiana Maksimenko, a representative of the Garantex cryptocurrency exchange, commented on the situation.
Institutional investors entering the market
The second important event on the market ismassive influx of institutional investment. In the past year, several large investment companies at once transferred part of their capital to cryptocurrencies. The most notable transactions in the market were the purchase of bitcoins by MicroStrategy for over $ 833 million ($ 183 million in September 2020 and $ 650 million in December this year), Square bought bitcoins for $ 50 million, Grayscale acquired BTC for $ 4 billion.
“In 2018–2019, crypto companies were engaged indevelopment of the necessary infrastructure for large capital to enter the market. And so, in 2020 we have already witnessed the effectiveness of these decisions. Undoubtedly, this was facilitated by the difficult situation in world markets caused by the "black swan" named COVID-19. However, it is thanks to her that institutions have more confidence in digital assets such as bitcoin, considering it as a store of value and insurance against growing inflation, ”says Yulia Rit, editor-in-chief of Media SIGEN.pro.
According to experts, this trend will continue in 2021.
“In the coming 2021, large andinstitutional investors will continue to actively invest in cryptocurrencies, thereby protecting their money from currency inflation, which we will fully experience in the near future. Bitcoin, on the contrary, is not subject to inflation, therefore it can be considered a full-fledged defensive asset, ”commented Tatiana Maksimenko, official representative of the Garantex exchange.
Cryptocurrencies as a means of payment
Also in 2020, bitcoin was used not onlyas a tool for investment, but also as a means of payment. Large trading companies have begun to gradually introduce cryptocurrencies into their payment systems.
“One of the leading crypto growth drivers in 2020year was the fact that giants-retailers - Amazon, Overstock, Rakuten - began to accept bitcoin for payment, ”says CoinsPaid CEO Max Krupyshev. “The payments industry is not keeping pace with the current growth rates of the payments market. In this sense, cryptocurrencies have a lot of advantages over traditional payment systems - they are both speed and low cost of transactions. So crypto processing will only evolve. Relatively soon, payments with cryptocurrency will become commonplace ”.
In addition, the news that the PayPal payment service is adding support for cryptocurrencies pushed the price of bitcoin up several points.
Note that today you can use Bitcoin to pay for the purchase of real estate, diamonds and gold, luxury cars, yachts, your own plane or helicopter.
Billion dollar DeFi boom
The main event of summer 2020 was the DeFi boom.In a matter of days, dozens of decentralized finance tokens appeared on the largest cryptocurrency exchanges, which rose in price by 100%, 300% and even 1000% in a few hours, collecting millions of dollars. This trend caused a mixed reaction in the market. Some experts believed that DeFi would replace the traditional banking system, while others called decentralized finance a new scam, comparing them to ICO hyips, due to which hundreds of investors around the world lost their finances.
“The DeFi market, in general, is still in its infancy.Therefore, many startups, in her opinion, are difficult to assess in terms of survival over a long period of time. The decentralized finance market, in her opinion, will definitely continue to develop. One of the main growth drivers will be the orientation towards reformatting the debt capital market towards its decentralization, ”said Tatyana Maksimenko, an official representative of the Garantex exchange.
“This year can be confidently called the yearDeFi, ”says Andrey Amris, UMI Blockchain and Coin Ambassador,“ The summer success of Uniswap and Yearn.finance has spawned a wave of clones, fakes, scams and really successful projects that have brought developers billions of dollars in revenue. Despite the fact that the crypto itself is considered decentralized finance, DeFi projects have become a breath of fresh air for IT. Of course, there is a lot of garbage among DeFi startups, but there are some really interesting coins that take staking to a new level of investment attractiveness. On the other hand, DeFi created a new bubble over the year, which negatively affected the entire industry: thousands of people who have invested in scam projects will now have a negative attitude towards everyone, even profitable and successful startups. "
The launch of the updated version of the Ethereum 2.0 platform will further contribute to the development of the DeFi sector and the adoption of cryptocurrencies as such.
“The same launch of the zero phase of Ethereum 2.0 was one step away from the transfer, as the validators of the new network were in no hurry to contribute 32 ETH to the deposit contract,” says Yulia.
“Nevertheless, the launch took place as it wasscheduled for December 1, and the amount of funds blocked in the contract, as a result, exceeded the required by 333%. I think this situation can serve as a clear example of how Ethereum, although not without difficulty, still copes and achieves its goals. In general, Ethereum, undoubtedly, is one of the main pillars on whose shoulders the entire crypto industry is built and developed. And the transition of this blockchain network to the PoS consensus algorithm instead of PoW will have a positive impact on both the ecosystem itself and the entire market. "
The main crypto failures of the outgoing year
Now let's remember the five major failures that 2020 brought us.
A ban on the use of cryptocurrency as a means of payment. The crypto community of Russia has long waited for adoptionthe bill "On digital financial assets", which was supposed to put an end to endless disputes whether cryptocurrency is a full-fledged means of payment or is it a "surrogate". After a long debate, the deputies decided to recognize the cryptocurrency as an investment instrument, but banned the use of it as a means of payment.
The digital ruble will remain banned. Having succumbed to the global trend, Russian officials again started talking about creating a CBDC, which should become the digital ruble. And here the problems began.
“As for the digital ruble, this is anothertype of national currency, only in a new format, ”says Tatiana Maksimenko, an official representative of Garantex. “At the same time, the very name“ crypto-ruble ”poorly describes the essence of this asset, because it will have little in common with traditional crypto-currencies. It is centralized, transactions with it and information about its holders are known to the issuer, and the digital ruble itself will be under the full control of the Central Bank. And if in the current interpretation of the law on CFA digital currencies are property, then the digital ruble is a full-fledged means of payment. Therefore, it will be closer to the fiat or electronic ruble, and its use cases will be the same ”.
In fact, Russian lawmakers have banneduse cryptocurrencies for payment, thereby driving yourself into a dead end, since the crypto-ruble will also fall under the ban. The year 2021 will show how this issue will be resolved.
Exchange hacks don't end there. How many times have the world been told that security istop priority, but no. Hacking of cryptocurrency platforms continues with noticeable regularity. In 2020, EXMO, BitFinex, KuCoin, Cryptopia, as well as several DeFi protocols became victims of hacker attacks.
Cold wallets do not protect users' funds. One of the safest storage mediacryptocurrencies until recently was considered a cold Ledger wallet. Until this August, a group of hackers hacked it. Malware allows criminals to create a transaction that looks like an altcoin payment (any other non-bitcoin coin), when in fact, bitcoin is being withdrawn from the wallet. As a result, hundreds of Ledger users have lost their coins.
The closure of TON and the SEC's fight against Ripple. One of the most anticipated projects was undoubtedlyTON blockchain developed by the Durov brothers. However, instead of launching the project, the project team faced a lawsuit from the US Securities Commission, which put an end to Durov's grandiose plans. The founder of Telegram was forced to return the funds to investors and admit his failure. A similar situation unfolds around the Ripple company. It became known that the SEC is preparing a lawsuit against Ripple for the alleged unauthorized sale of unlicensed securities, which, according to the SEC, are XRP tokens. If the SEC wins the court, then the project will most likely be closed, and the XRP token will disappear from all exchanges.</p>