Your Cryptocurrency Newsletter for December 30, 2020

If you are interested in cryptocurrencies, this newsletter is for you. [img]  [Learn more about RevenueStripe...](   [Learn more about RevenueStripe...]( [img]( [FeedBinary Newsletter]( [Looking Ahead: 5 Predictions for Crypto and Blockchain in 2021]( What will be hot in blockchain next year, and what are the curveballs? Forkast. News consults top industry leaders and thinkers to bring you a crystal ball. Coming to the end of a tumultuous year that few ever saw coming, we now want to see the future through a good crystal ball. What hot blockchain and cryptocurrency trends of 2020 will continue shining brightly, and what might be the curveballs? Forkast.News consulted a number of top leaders, thinkers and other oracles of the blockchain world for their predictions. 1. DeFi: bubble or sustainable growth? If there’s one big takeaway from 2020, it’s that decentralized finance (DeFi) is — as Buster Poindexter would declare — “hot hot hot.” But it wasn’t always this way for DeFi as an industry. Stefan Rust, founder and CEO of Sonic Capital, told Forkast.News: “it’s been in the making for four years.” This summer, as DeFi grew exponentially, yield farming and decentralized exchanges (DEXes) also exploded in popularity. Uniswap, one of the most prominent DEXes, underwent a meteoric rise, starting off the year with a total value locked (TVL) of not quite US$12 million and peaking at over US$3 billion in November. While not quite as dramatic, the DeFi space as a whole has also followed an upward trend. On Jan. 1, total value locked in DeFi clocked in at US$675 million. Not quite a year later, as of the third week of December, the number had risen past US$16 billion — for a growth rate of over 2,300%. Another sizzling area in DeFi is crypto loans, which comprise three of the top 10 largest DeFi platforms by TVL (to DEXes’ four). The current top DeFi platform as of time of writing also belongs to the lending category: MakerDAO. A decentralized credit platform hosted, like most DeFi projects, on Ethereum, Maker had a TVL of US$2.843 billion on December 1st — 19% of global TVL. What does this mean for DeFi in the year ahead? According to Piers Ridyard, CEO of Radix, the first layer 1 protocol for DeFi, “[2021] may not feel like as big a year as this one did for DeFi, and the hype may die down a bit, but the actual progress being made will make it DeFi’s biggest year yet.” The flurry of development and the resulting congestion on Ethereum exposed the blockchain network’s shortcomings, opening the doors to new rivals and platform development wars — setting the stage for more efficient and effective protocols in the future.An improved ecosystem would lead to DeFi apps becoming “easier and cheaper to build, secure, and scale,” Ridyard told Forkast.News. Beyond progress in DApp development, DeFi’s popularity can mean greater financial inclusion, improved financial privacy, and the democratization of finance, DeFi proponents say. All this suggests that this boom that we’ve been seeing in DeFi is not just a bubble about to pop. But others say the divide between institutional investors and others who are skeptical of this new financial technology must be bridged if DeFi is to sustain its momentum and continued growth. Ridyard predicts: “We won’t get there in 2021, but it won’t be long before established traditional finance players will have to make a decision about how they might co-opt DeFi without getting co-opted, like media and music publishers did before them in the age of the internet.” 2. Time is ripe for more regulations Growth cannot continue forever. As Rust of Sonic Capital puts it, “DeFi [will] become defy.” The community has taken considerable care to establish frameworks to accommodate growing demand. Regulators and governance will have to reckon with these “incumbents” as they try to come to grips with the nascent space, likely resulting in “a big sort of defiance” between the two groups of actors. Regulatory clarity is a state of mind that has long eluded much of the crypto world. But in 2021, the industry will likely see government agencies and other regulatory bodies take action. As Sheila Warren, Head of Blockchain and Data Policy and Member of the Executive Committee for the World Economic Forum, told Forkast.News, apply “a little more rationality [] to the DeFi space.” Regulations can cut either way. Countries such as India with a recent history of ambivalent stances towards cryptocurrency could take actions that impede the industry’s growth, and crypto companies have reason to be wary of a tightening regulatory environment that could put a halt to their work overnight. Consider the U.S. crackdown on BitMEX and what China recently did to OKEx as cautionary tales for crypto exchanges. Even in crypto-friendlier nations, “some of the areas that have been… really gray for a long time. I think we’re going to concretize some of that and I think that’s going to be really dramatic for the industry in terms of having a final answer to some of the questions that we all have,” Warren said. Increased regulatory scrutiny and oversight could constitute problems for other crypto areas as well. Anton Mozgovoy, co-founder and CEO of Holyheld, a DeFi financial service, identifies stablecoins as a particular area of interest that will surely see “regulatory pushback.” It took five years for the stablecoin supply to reach 6 billion. It took only four months after that for the supply to double to 12 billion, in the wake of the March crypto crash earlier this year. Hard on the heels of the stablecoin boom, the Financial Action Task Force (FATF) issued a cautionary statement. One can expect that given the continued growth of stablecoins — from a total market capitalization of little over US$5 billion at the start of 2020 to US$26 billion at time of writing — regulatory agencies will likely be paying more attention than ever. 3. Everything gets tokenized Where there used to be only bitcoin, there are now countless tokens ranging from governance to utility to security tokens and more — what Rust calls a latter-day “Cambrian Explosion” that will result in the “tokenization of the world.” Mance Harmon, a co-founder of Hedera Hashgraph, predicts that this proliferation of tokens, in combination with DeFi and “componentized” finance, will “set up the market for enterprise adoption in 2021.” Should this prove true, the market would be wise to prepare to participate in the token economy. A report by Deloitte concludes, “tokenization is already a reality… Only institutions that engage with the technology, plan for the future and adapt to the realities will thrive.” Certainly there have already been inroads into the idea in many markets. Gold, for example, has been tokenized in an effort to reduce the kind of systematic accrual of risk that contributed to the 2008 financial crisis. Tokenization has extended to illiquid assets as well, lowering the barrier to entry for assets such as real estate.Non-fungible tokens, which make a digital item unique, are already being used in video games, collectible virtual pets and even fine art, including a Picasso. 2021 should expect to see even wider applications of NFTs and tokenization. “If Covid has taught us anything, it’s that markets can function without so much human intervention,” Alan Silbert, Executive Managing Director of digital assets trading platform INX Limited, told Forkast.News. “Tokenization takes this to another level. While the first half of 2021 will be one of education, the second half will see a swelling of companies taking the digital jump.” 4. Increased momentum for CBDCs Reports on China’s latest trials of its new digital currency, the Digital Currency Electronic Payment (DCEP), continue to flow out of the country. The country’s massive population and near-total control of its economy give the People’s Bank of China ample opportunity for use cases such as distributing 20 million digital yuan to 100,000 lucky residents of Suzhou in the latest phase of its testing process; doubling the size its last test involving 10 million digital yuan and 50,000 people in Shenzhen. Harmon of Hedera Hashgraph notes: “I think that what China is doing with the BSN, the Blockchain Services Network and the CBDC efforts, that they are literally a step or two or maybe three ahead of most of the rest of the world in terms of their DLT focus and efforts, and that is being noticed.”The momentum of other CBDCs around the world is thus being spurred by China’s developments and the geopolitical implications. Central banks around the world are now in a race to develop their own digital currencies. “China’s CBDC was really kind of creating some peer pressure here in the region,” Charles D’Haussy, a director of Consensys in Hong Kong, told Forkast.News. “And we’ve seen as in HK, they’re working even harder on their CBDC. The Bank of Thailand is also. There is also great work in Singapore with the MAS. Consensys is involved with the project in Australia as well. So CBDCs are really pushing forward and it’s a big shift in the industry.”  As more central banks look into developing their own CBDC, it’s worth contemplating the implications for financial service providers. John Deacon, financial services lead for Dragon Infosec, a cybersecurity and cryptography company, asserts that “central banks will be looking for ways to prevent the disintermediation of private sector banks — for example, by restricting access to the CBDC itself to interbank clearing, but permitting banks to create their own retail-level stablecoin backed by the CBDC. This would finally create a digital payment leg for digital transactions, and drive banks to up their game in digital offerings.” The coronavirus pandemic has already accelerated the digitization of all things this year. Expect even more of it — especially in finance — in 2021. Douglas Borthwick, chief marketing officer of INX, predicts: “For 2021 we see the beginning of a digital migration[:] equity listings on current legacy exchanges beginning to migrate to digital exchanges, where the costs of being a public company are significantly less than current, and the benefits are extraordinary: 24/7 trading, and cap table management in real time. 2021 is the year that legacy migrates to digital.” 5. Asia rising China’s new DCEP digital currency is just one of many projects that make Asia a space to watch in when it comes to blockchain and related areas, such as digital ledger technology. Aside from the DCEP digital yuan, China’s blockchain innovations in supply chains stand to both disrupt and secure the industry globally. India’s demand for regulatory clarity may come sooner rather than later as parliamentary sessions resume. Its crypto industry has already seen massive growth in the wake of the overturning of the Supreme Court’s crypto banking ban earlier this year. Then there’s the industry’s move towards proof of stake. “Asia is the center of mining when it comes to bitcoin or proof-of-work with Ethereum, and I think that the switch of the technology from proof-of-work to proof-of-stake will keep a strong leadership position with Asia,” D’Haussy said. “I think the staking capital of the world will definitely be in Asia, should it be China, Japan or somewhere else. But with Ethereum 2.0, Filecoin, Tezos and that — staking loves Asia.” Tokenization, too has been welcomed in Asia. The Covid pandemic has led to many galleries and exhibits turning to online shows, including in Hong Kong and New York. A natural next step is using blockchain technology to allow for fractional ownership of artwork, an idea that could be a boon for artists and galleries to increase sales. D’Haussy predicts that “25% of Asian banks [would] offer digital asset custody (as a start) in 2021.” This prospect, in combination with “major Asian exchange acquisition in 2021,” will lead to Asia further leading the world in blockchain adoption. [Read Full News]( The post [Looking Ahead: 5 Predictions for Crypto and Blockchain in 2021]( first appeared on [Feed Binary](. [Read Full Story]( ------------------ You Might Like     [Learn more about RevenueStripe...]( ------------------ [Can the Crypto Industry Ever be Regulated in the Era of Decentralised Finance?]( The system – known as DeFi – allows people to engage in financial services such as borrowing, lending and investing without intermediaries such as banks.As stock markets around the world struggle through the pandemic, Bitcoin has seen a steady rise in its price. The cryptocurrency is steadily climbing back towards its all-time high of $20,000 in 2017.While this growth can be partially explained by investors being spooked by stock markets during the pandemic and looking for better investments, it is also influenced by the new, but evolving, decentralised finance market, also known as DeFi. DeFi allows people to engage in financial services such as borrowing, lending and investing but without intermediaries such as banks using blockchains and cryptocurrencies. Blockchains store digital records of transactions. Individual records, called “blocks”, are linked together in a single list, which creates the “blockchain”. Blockchains are used in DeFi to create “smart contracts”, which are automated, enforceable agreements that don’t need intermediaries, such as banks. The DeFi market is one to watch. It has grown to become worth $14.61 billion – an increase of almost 700% since the beginning of 2020. DeFi has enormous potential in international trade by making payments more efficient. It could do away with the need to use intermediaries such as correspondent banks, which are financial institutions that offer services to a customer on behalf of another bank, usually in a foreign country. DeFi could also potentially help with the availability and equality of opportunities to access financial services. No accountability There is, however, a difficulty holding any particular person or entity accountable for any technological failure in this market. This can be anything from security failures, when the system is hacked and digital assets are stolen, to the collapse of the entire system. Unlike traditional banks, which can be sanctioned or shut down, there is nobody who can be held accountable or take responsibility when something goes wrong. This is because the applications in DeFi are built on decentralised systems, which distribute functions and power away from a central location or authority. Every node (computer, IP, server) connected to the system makes its own decision, and the final behaviour of the system is a collection of the decisions of these individual nodes. This is further complicated by the fact that DeFi transactions typically operate globally, and when regulatory standards are created for this sector in one country, platforms may gravitate to countries with less strict ones.There is also the challenge of global coordination, especially as countries are at varying stages of financial regulatory development. While advanced economies such as the UK and US have stronger regulatory frameworks, most in developing economies do not. DeFi platforms are also subject to hacks and cyberattacks and are growing platforms for money laundering. Is it even possible to regulate DeFi? These factors raise the question of whether decentralised platforms can ever be regulated, or if the rules for the crypto industry set by the Financial Actions Task Force, the global anti-money laundering watchdog, is robust enough. FATF only covers centralised systems or virtual assets service providers such as cryptocurrency exchanges. These are licensed businesses that allow customers to trade crypto or digital currencies for other assets, such as fiat currencies like the pound sterling, US dollars and euros. Such exchanges must adhere to FATF’s “know your customer” requirements, where the platforms are expected to know the parties transacting on them. FATF requirements do not cover financial activities occurring on decentralised systems. The idea of regulating centralised platforms and cryptocurrency exchanges – where people purchase crypto to use to transact on DeFi platforms, but leaving DeFi platforms unregulated – limits the overall effectiveness of the regulation of the whole crypto industry. Unless it is built into the source code of a decentralised application, it is difficult to see how regulation can be achieved. This would require cooperation with blockchain software developers. However, this may be placing too much power in their hands as they could manipulate the code to circumvent regulatory oversight at any time they choose to. Regulators may not want to do this. They could try to ban such activities instead. In the European Union and the US, legislation has been proposed that could potentially ban the operation of DeFi. These include the Markets in Crypto-Assets Regulation proposed by the EU and the US Stable Bill proposed in December. Although it is not impossible to shut off a decentralised system, it is very difficult to achieve and it would require heavy reliance on government or regulatory authorities. It would also require getting access to IP addresses, cooperating with local internet service providers, identifying or tracing the physical location of people using the system and using the police to effectively shut down such platforms or activities. Locating and then prosecuting anyone within one jurisdiction would not be an easy task.Although this would potentially deter people from using these services and slow down the number of people using them for illegal means, it would be difficult to achieve on a global scale – which would threaten international standards. [Read Full News]( The post [Can the Crypto Industry Ever be Regulated in the Era of Decentralised Finance?]( first appeared on [Feed Binary](. [Read Full Story]( ------------------ You Might Like     [Learn more about RevenueStripe...]( ------------------ [Ethereum Surges Past $730: What Comes Next After the Massive Rally?]( Ether price has surged past $730 in a strong overnight rally, breaking out against Bitcoin.The price of Ether (ETH) has surged past $730 for the first time since May 2018. Following ETH’s breakout, traders are becoming more optimistic in its short-term trajectory.There are two major factors behind ETH’s strong rally: a strong technical market structure and the CME Ethereum futures listing in January 2021. Ethereum continues to see the “higher high” pattern In technical analysis, the higher high pattern often indicates strong momentum because it shows every new peak is higher than the previous top.Ether has continuously rallied over the past week, sustaining the higher high formation. Cryptocurrency trader Scott Melker said Endless series of higher highs and higher lows, with the most recent low confirmed by a fresh higher high. I deem this pattern the ‘Stairway To Heaven. On Dec. 28, Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, similarly said that $1,200 to $1,300 is likely for ETH if it stays above $470. He wrote:In general, Ethereum still has a very bullish outlook as it’s been making higher highs and higher lows consistently. This didn’t change. As long as $470 holds, the next run will bring the markets towards $1,200-1,300 or a new ATH in Q1 2021. Ever since Bitcoin broke past its previous all-time high at around $20,000, ETH has stagnated against Bitcoin. Hence, for Ether to see a renewed rally, a breakout against Bitcoin is critical.On the daily chart, ETH has started to demonstrate some gains against Bitcoin, which could fuel newfound demand for Ether.Analysts at Santiment said that ETH miner balances are at a two-year low and the supply on exchanges is also declining. The combination of the two data points indicates that the selling pressure on ETH is dropping. They explained:On what is normally the slowest trading day of the week, Ethereum cracked $700 on a great altcoin Sunday for the first time since May 19, 2018. $ETH miners balances are at a 2-year low & supply on exchanges at a 1.5-year low. Both great validators. What happens next? Meanwhile,  futures on the Chicago Mercantile Exchange (CME) are scheduled to launch in 43 days. According to data from Bybt.com, the CME is already the largest futures exchange for Bitcoin in terms of open interest.The term open interest refers to the total amount of capital that is being actively traded on the exchange. As of Dec. 28, the CME Bitcoin futures exchange’s open interest hovers above $1.67 billion. Some analysts expect the institutional demand for Bitcoin to eventually spill over into Ethereum in 2021.If this happens, the CME Ethereum futures exchange would likely see a substantial growth in daily volume and open interest. Ryan Watkins, a researcher at Messari, said: 2021 prediction: In 2021 we begin seeing institutions buy $ETH Once you accept that Bitcoin may be valuable, it opens your mind to the possibility that other cryptoassets may also be valuable. It’s a much easier jump from $BTC to $ETH from there. [Read Full News]( The post [Ethereum Surges Past 0: What Comes Next After the Massive Rally?]( first appeared on [Feed Binary](. 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