As the year comes to a close, I wanted to share some thoughts with you. This past year has been a trying year and everyone has been tested in more ways than one. I may have never lived through war, but I think that 2020 ranks right up there. We are at war against the coronavirus. Thousands of people have died and more are still dying every day, killed by an invisible enemy. Local and global economies are heading into a deep recession. Governments are asking from their citizens to make sacrifices for the collective good. With the new vaccines already released and people getting vaccinated, 2021 already looks brighter. The world will get vaccinated. Governments will support their citizens and businesses to get back on their feet. Just like before, once again we will demonstrate our resilience and move past the challenges of Covid-19. The human race is the most resilient species in the history of our world. Despite the lows we have faced throughout human history, we have always demonstrated an incredible resolve. This year, Bitcoin proved it’s resolve and demonstrated that it may be the most resilient asset. In a note to clients circulated in June by JPMorgan Chase & Co., analysts described how bitcoin’s market structure turned out to be more resilient than those of currencies, equities, treasuries and gold. The fact that bitcoin has survived the stress-test of Covid-19 has been undeniable. Not only did it recover much faster when compared to the other asset classes, but it was also the best performing asset class year-to-date.
Ilias Louis Hatzis is the founder and CEO at Kryptonio, a “keyless” non-custodial bitcoin and cryptocurrency wallet, that lets users manage bitcoin and crypto, without private keys or passwords.
Again this week bitcoin hit a new high. On Sunday morning the price of bitcoin briefly shot past $28,000, only after passing $27k a few hours earlier. Bitcoin’s meteoric rise continues, as the market cap now exceeds $500 billion.
Bitcoin and other cryptocurrencies have emerged as a new asset class that has seen extraordinary returns over the past decade. After reaching nearly $20,000 in early 2018, bitcoin fell to just around $3,000. Both 2019 and 2020 have proven to be years of recovery and new developments like increased institutional interest, pending ETF approval, and the popularity of stablecoins, suggest a continued positive trend. But, investors are asking: How high can bitcoin fly?
But just because bitcoin had a phenomenal year in 2020, and showed us that it was immune to Covid-19, next year will not be an easy one for bitcoin. We still face many challenges and I am certain there will be many difficult moments, especially when we start seeing CBDCs being released and regulation getting tighter.
Bitcoin and the entire cryptocurrency market has made some incredible strides this year. Looking at 2020, some numbers come to mind:
Bitcoin ATMs doubled
The number of Bitcoin ATMs more than doubled during 2020 to over 13,500.
Crypto exchanges still get hacked
in 2020 we had 16 exchange hacks with KuCoin being the largest. The KuCoin hack occurred in late September and roughly $150 million in cryptocurrency was stolen by a cyberattacker after being stored in hot wallets.
Bitcoin is being tokenized
Tokenization is going to turn creative economics upside down. Over $3B worth of BTC was tokenized on Ethereum this year. It’s important to note that practically all of this bitcoin is held by custodians.
For 2021, I would keep my eye on three things:
#1 Cryptocurrency wallets will be pre-installed on every mobile phone
Apple Pay and Google Pay can be found in just about every modern mobile device, so it’s safe to say that digital currency wallets are next. With the adoption of virtual currencies by big players like Facebook, PayPal, Square and Visa we will see digital currency payments in retail. We will see a lot of development making it easier to manage keys and new features that will change how we think of our wallets.
#2 DeFi will top $100 billion and will create a tipping point for the world’s 1.7 billion unbanked
This year governance tokens for Compound, Balancer, Yearn.Finance and many more launched and exploded in value. In January, a grand total of $1 billion was locked into DeFi platforms collectively. In August, it peaked at US$15 billion. As CBDCs and stablecoins grow more, foreign exchange will be the most under-discussed yet the most contested battleground In DeFi. in 2020, DEX volume grew over 25 times, to over $25 billion. If it continues at this pace, we can expect to see it reach $1 trillion by next year this time.
#3 The daily number of bitcoin transactions will reach at least one million
At the end of the third quarter of 2020, there were 351,417 Bitcoin transactions recorded daily worldwide. PayPal is now allowing its 325 million customers to buy and sell cryptocurrency, while Square’s Cash App saw a 1,000% increase, over $1.63 billion in Bitcoin revenue for Q3 of 2020, over the same period in 2019.
Having said all of the above, I want to talk about this period, as we prepare for next year. I always felt that the holidays are a time to reflect. You look at the year that passed and you think about the future. Crypto prices will go up. Crypto prices will go down. New protocols and technologies will appear and create new opportunities.
I have but one piece of advice. We only have one life. If nothing else, this past year has made this fact very clear. So enjoy the company of your loved ones, be happy and focus on what really matters.
Happy Holidays, and we will catch up again in the New Year.
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