The cryptocurrency market has evolved and is continuing to change at a rapid pace. During 2019, we saw many developments in the crypto space, including the birth of new crypto trading products, new alliances as well as the maturity and expansion of blockchain protocols. In addition, Bitcoin and Ethereum have, so far, survived the bear market, while we are also seeing a major shift in the US Congress and foreign central banks who are now paying close attention to the benefits of blockchain and digital assets. We also have seen China step into this space more seriously, spending billions on innovation. To top it off, some of the biggest financial companies in the world are building on blockchain and this trend is not slowing down.
Despite all this growth, the biggest question is, will cryptocurrencies be the same in 2020? Let us look at what we can expect for the new year.
Facebook and Libra
To start, Facebook, the social media giant, is expected to launch its own cryptocurrency, Libra, even with limited functionality. When Facebook originally announced their intentions to release their own crypto, this was met with a lot of resistance from regulators both in the US and in Europe. As a result of this, it is expected that Libra will be launched initially in only one jurisdiction. In addition, it is expected to have limited functionality, scope and partners.
Cryptocurrencies in China
In 2020, it is expected that China will launch its Central Bank Digital Currency (CBDC). To put this into perspective, the largest mining power is based in this country as well as some of the largest cryptocurrency exchanges. While China has been active in the crypto space, the recent announcement by Chinese President Xi Jinping that blockchain is the future and that China would lead the way with this technology, immediately prompted massive investments and blockchain research work in China. So let us try and understand the enormity of this. Recently, the Bank of China completed an issuance equivalent to $2.8 billion worth of financial bonds for small companies linked with cryptocurrencies. The growth in China is expected to be huge.
The Growth of Bitcoin
Another development for 2020 is that most analysts do not believe that Bitcoin will be approved by the U.S. Securities and Exchange Commission (SEC). To date, the SEC has rejected all Bitcoin ETF filings stating that manipulation of the underlying markets as well as insufficient financial surveillance are the major roadblocks. It will be interesting to see if 2020 will be the year that Bitcoin starts to become more accepted by regulators, resulting in a much wider global adoption.
The year 2020 is also expected to show major growth in open finance and DeFi (decentralized finance). Presently, over $290 million is locked in the various applications, which are located on the DeFi ecosystem. While this large number is mainly as a result of the growth of Maker DAO and Dai stablecoin, decentralized exchanges are expanding together with lending and borrowing applications.
Expansion and Growth
Finally, 2020 will see an expansion of the use of privacy tools and oracles globally. An excellent example is Ernst & Young who have already heavily invested in the development of privacy tooling for the public Ethereum ecosystem. Their product, Nightfall, clearly reflects how one day, all the enterprises will be using the public mainnet for transactions, while still maintaining privacy and security.
It is clearly evident that 2020 is going to be an important year for digital asset ecosystems and blockchain technology. It is also clearly evident that next year will be the year that cryptocurrencies continue to grow in adoption rates, metrics and in usage.