Tag: 2020

Regulatory sandbox and DeFi boom: How Spain pushed crypto adoption despite the pandemic

by Cointelegraph

The year 2020 will go down in history for how the COVID-19 pandemic affected the Spanish economy. Beyond that, however, there have been important events from a governmental and regulatory point of view, as well as those related to private companies and the adoption of cryptocurrencies. 

Cointelegraph en Español is presenting you a summary of the events that marked last year as well as highlights from various representatives of the local crypto ecosystem and opinions on what the industry can expect in 2021.

January

  • Eurocoinpay asks the Spanish Minister of Economic Affairs to regulate cryptocurrency.

February

  • In an interview on Feb. 14, the general secretary of AEChain states that the financial sector is where blockchain is being developed the most in Spain.

  • The FinTech & InsurTech Spanish Association presents a WealthTech white paper.

  • The Council of Ministers approves a draft law called The Digital Transformation of the Financial Sector, which includes the creation of a sandbox.

March

  • DASI, Crypto Plaza and Quum launch a guide of crypto companies in Spain.

  • In an interview on March 16, Bitcobie’s CEO states that the adoption of Bitcoin in Spain is lower than in Latin America.

  • Bitnovo affirms on March 20 that cryptocurrencies have recovered more than the traditional markets have amid the coronavirus crisis.

April

May

  • Amid the COVID-19 crisis, Spaniards are relying more and more on cryptocurrencies.

  • The Bitcoin halving occurs on May 12.

  • Former chief operating officer of Bitnovo is appointed as director of Binance in Spain.

  • Bitcobie holds a virtual party on May 26 to celebrate its second anniversary.

June

  • Bitpanda launches its platform in Spain.

  • A new version of the Crypto Business Guide to Spain 2020 is presented.

  • A draft project establishes that cryptocurrency providers must comply with Anti-Money Laundering regulation.

  • It is reported that a Bitcoin trademark and logo are registered at the Spanish Patent and Trademark Office.

July

  • Following the Wirecard bankruptcy case, pressure mounts for the approval of a fintech sandbox in Spain.

  • Spain becomes the country with the sixth-most Bitcoin ATMs in the world.

  • On Friday, July 31, the 2gether platform suffers a hack that affects crypto investment accounts.

August

September

  • Crypto.com launches the Spanish version of its APP and exchange.

  • Germany, France, Italy, Spain and the Netherlands call for strict rules on cryptocurrencies from the European Commission.

  • The Economic Affairs and Digital Transformation Commission of the Spanish Congress unanimously approves the bill for The Digital Transformation of the Financial System.

  • On Sept. 23, a real estate debt tokenization operation is carried out.

October

November

December

Government and regulations

On Nov. 4, after much insistence from the Spanish fintech sector, the senate’s Committee on Economic Affairs and Digital Transformation definitively approved a law for The Digital Transformation of the Financial Sector which included the creation of a sandbox.

The Spanish Association of Fintech and Insurtech highlighted the importance of the sandbox: “Its immediate implementation will allow the generation of new initiatives in the Fintech ecosystem, facilitate access to financing, promote greater competition and reduce entry barriers.”

Ismael Santiago, professor at the University of Seville and CEO of OlivaChain I+D+I believes that these regulatory developments will favor “the creation of new value-added jobs, technological development and economic competitiveness.”

“Since its appearance in the crypto scene of our country, the doors of many international companies have been opened to the potential of the crypto world; being a very important step, in order to allow a greater arrival of crypto actives to the general public. There is still a long way to go, but of course, with the foundations established in 2020 with all these milestones, it is tremendously promising for the sector,” commented Álvaro Alcañiz, chief marketing officer and co-founder of Onyze, which offers custody and infrastructure services for digital assets.

Raúl López, country manager of Spain at Coinmotion argued:

“If this sandbox is carried out, it could make Spain a reference point in Europe, which could attract high investment in the sector, which would be a great stimulus for the crypto ecosystem and would also help to retain and attract national and international talent.”

However, as Spain is part of the European Union, it is also important to bear in mind that a proposal for regulation from the European Commission, related to crypto markets, has been made public. This is how the acronym MiCA came to be known, which refers to markets in crypto assets. Another important document is the Fifth EU Anti-Money Laundering Directive.

Crypto adoption and a hack

The adoption of cryptocurrencies in Spain has continued to grow in 2020. Besides, as far as Bitcoin ATMs are concerned, Spain ranks in the top 10 countries with the most units in the world, with a total of 119 at the time of writing.

Raúl López, country manager of Spain at Coinmotion, also offered his perspective: “The year 2020 will undoubtedly be remembered mainly for the appearance of COVID-19, which affected all sectors and industries worldwide. The stock markets collapsed, and market mechanisms did not work properly because even the traditional gold value refuge suffered a sharp fall. It is possible that investors were looking for liquidity, and the collapse in traditional markets may have forced crypto investors to liquidate high-risk investments to compensate for losses elsewhere or just to have liquidity in euros.”

He gave an example of his company to illustrate the increase in the total volume of operations: in February it increased by +53%, in March, the same trend was maintained, with an increase of +27% with respect to the previous month, where 65% came from purchase operations. “And in the following months, for example, in April, the volume reached in March was almost multiplied by four. And the same happened in May with respect to the volume achieved in April,” he remarked.

Another story that impacted the Spanish crypto world this year was the attack on the 2gether platform at the end of July. On Aug. 31, Cointelegraph en Español reported that the hack had resulted in the theft of a significant amount of Bitcoin and Ether (ETH). It should be noted that, after the attack, the company took a number of measures to overcome this situation and to compensate the users who were affected. In an interview, Ramón Ferraz, CEO of 2gether, explained in further detail.

Increase of crypto culture

Jorge Soriano, co-founder of a crypto platform Criptan, preferred not to highlight any Spanish development in particular, and considered that it does not have to happen either because “the crypto world is designed to be something global,” continuing:

“Its objective is precisely that in this ecosystem there are no borders or barriers throughout the world. What we can observe in Spain is that the consequences of what happened on a global level have been experienced. And in this sense, we have seen that in 2020, adoption has grown a lot. The number of users, purchases and sales has been increasing at a very high rate.”

He also said that a certain crypto culture has been increasing: “We are checking how users have more and more exposure to cryptomarkets. From our experience in Criptan, we have observed that users, instead of trading, buy crypto to sell and take out in euros. What they want is to be with part of their capital in Bitcoin.”

Álex Fernández, CEO of BitBase, highlighted the significant concern raised by many people who want to be informed and understand all the disruptive changes that are coming in relation to Bitcoin and blockchain. “We have established a closer relationship with the people, and many of them come to our points of sale to be advised on the matter. They inform us that the economic uncertainty we are going through has generated a lot of distrust with the politicians who lead and manage our country, as well as with the financial institutions, which have largely caused the economic situation we are currently experiencing, and which is unsustainable,” he said.

“They see in Bitcoin and blockchain an alternative when they know it gives them security and confidence.”

According to Ramón Ferraz, the rise of the BTC “shows the reality of a new currency based on the new decentralized economy, a refuge of value that is increasingly attractive to society.”

In a Sept. 21 interview to Cointelegraph en Español, Mariana Gospodinova, general manager of Crypto.com’s European division, stated that in Spain, the interest in cryptocurrencies has grown significantly.

Pandemic changes the narrative

Javier Pastor Moreno, sales director at Bit2Me, crypto services provider, put the focus on the pandemic, saying it “has changed everything.” He went on to say:

“The need to have a more modern, open and free monetary system, while sheltering from the massive fiat money printing by central banks, has caused the adoption to accelerate and put Bitcoin and crypto on the map. We are in the early stages of a process that will probably last a few years, but undoubtedly, the catalyst by luck or misfortune has been this crisis.”

Antonio Sánchez, CEO of Inforbyt and Cardano’s ambassador to Spain, commented: “We have seen a considerable increase in people asking the big question of: ‘What is Bitcoin, and what is it for?’ We are living in a historic moment: We are going through a global pandemic in which banks and big companies are reeling as Bitcoin goes up without a break.”

“The crypto market has been growing considerably in recent days, and adoption is taking place much more, perhaps out of fear of what might happen to fiat money, or perhaps out of boredom of seeing all the banks start charging even for holding large sums of money.”

DeFi boom

The DeFi phenomenon was also present in Spain. Various activities were carried out, such as talks and virtual events, as well as some hackathons. The movement of decentralized finance, as it did on a global level, also aroused interest in the Iberian territory.

Juan Pablo Mejía, trainer and content disseminator, also known as “John in Crypto,” shared:

“Besides the big rise in the price of Bitcoin, I think the explosion of DeFi protocols has been the most important thing in the crypto ecosystem in 2020.”

Along the same lines, Guillermo Abellán Berenguer, co-founder of DeFi Lab, shared his point of view, saying: “It has become very clear that smart finance contracts allow interaction with services and products that, until now, needed a trusted intermediary. Currently, borrowing, lending, managing an investment fund or providing liquidity in decentralized exchanges, among many others, is possible without trusted intermediaries.” In an interview to Cointelegaph en Español, DeFi Lab explained how it is working on boosting decentralized finance in the Spanish-speaking world.

It was Josh Goodbody, director of growth institutional business for Latin America and Europe at Binance, who managed to concisely summarize the past year:

“2020 has been the perfect storm for cryptocurrencies, where everything apparently started happening at the same time.”

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Top crypto mergers and acquisitions of 2020

by Cointelegraph

The blockchain industry shrugged off the craziness of the 2020 pandemic, with many companies thriving in the “remote” working environments brought about by COVID-19.

Almost $700 million in mergers and acquisitions took place in 2020 across 83 transactions. That’s the largest number ever and a sizeable increase from the previous record of 69 M&A transactions in 2018. The majority of activity last year was within the industry itself, consolidating the sector with minimal engagement from external companies.

More than 90% of the $691 million reported was comprised of the top three acquisitions by Binance ($400 million), FTX ($150 million) and Coinbase ($90 million).

Binance’s purchase of CoinMarketCap at the end of March 2020 for a reported $400 million equaled the largest blockchain acquisitions of all time, rivaled only by Circle’s purchase of Poloniex and NXMH’s purchase of Bitstamp, both for $400 million, in 2018.

The leading exchange by volume received sharp criticism over the purchase, as it appears to represent a conflict of interest given that CoinMarketCap is a data and analytics company that provides comparative data about crypto exchanges, including Binance.

Jack Purdy, an analyst for Messari, told Cointelegraph that the takeover sets a negative precedent for the industry, no matter how well either company behaves. “It does represent a fundamental conflict of interest that has negative externalities for the space,” he said. “It’s like if Joe’s Pizza came out with the top 10 pizza slices in New York and everyone that uses that list happens to be those least informed to make the decision on where to go.”

“Even though Binance/CMC can be completely well-intentioned, it’s impossible for ratings not to be influenced by the underlying bias of the creators. If there are objective weightings to a system that would hurt Binance’s standing, it’s more likely than not that it won’t be implemented.”

Binance has claimed that both companies are individual entities and there is no bias from CMC. Despite the early criticism, it appears that sentiment toward the acquisition has softened in more recent months. In October 2020, FTX CEO Sam Bankman-Fried voiced his opinion on Twitter that Binance was actually a lifesaver for CoinMarketCap:

“Pretty much the day Binance bought CMC, it started getting better — a lot better. It has a lot of catching up to do, but the product has gone from hopelessly f—ed to competitive.”

This wasn’t the only activity by the leading exchange, with Binance acquiring multiple other companies throughout 2019 and 2020, including crypto debit card provider Swipe for an undisclosed sum. Similar to CoinMarketCap, Swipe chief operating officer John Khenneth also stated that “The deal was structured where Swipe is able to run the company independently from Binance.”

Other Binance acquisitions include Korea-based stablecoin company BxB, decentralized app information platform DappReview and Indian crypto exchange WazirX.

In a recent press conference, Binance founder and CEO Changpeng Zhou hinted that the company will acquire between 20 to 30 other companies in 2021, further strengthening its position in the crypto sector.

Crypto exchange FTX, which only launched in 2019, was the only other company to conduct a nine-figure acquisition in 2020, with the purchase of portfolio management app Blockfolio for $150 million.

The purchase has the potential to bring its 6 million users to the exchange. Although Blockfolio does not have as many unique users as CoinMarketCap, the level of user engagement is considerably higher, with more than 150 million impressions per month.

Blockfolio co-founder and CEO Ed Moncada told Cointelegraph that the company will continue to function as an independent app.

United States crypto exchange Coinbase actually leads the pack with the largest number of acquisitions to date — six more than Binance. The company has completed at least 16 deals in its history, with the most recent one being the acquisition of prime brokerage platform Tagomi for $90 million.

According to reports, Tagomi had been struggling with revenue as low as $1 million from its $1 billion in annual trading volume after it slashed trading fees.

Publicly traded companies also got involved, with advanced software solutions company CleanSpark acquiring crypto mining firm ATL Data Centers for just under $20 million worth of the company’s stock.

Other notable acquisitions include Galaxy Digital’s purchase of digital-asset investment and borrowing platform DrawBridge Lending, as well as futures markets liquidity provider Blue Fire Capital. Although the figures were not disclosed, Galaxy Digital said that DrawBridge will end up with more than $150 million in third-party assets as a result.

In September 2020, New York-based CB Insights announced it would soon open an office in Amsterdam as part of its acquisition of blockchain data provider Blockdata for an undisclosed sum.

Smart contract provider TrustSwap also expanded its reach, acquiring one of its biggest competitors, Team.Finance.

The recent acquisition of second-layer Ethereum scaling solution OMG Network by Hong Kong-based over-the-counter trading firm Genesis Block is said to help accelerate the network’s development, with a specific focus on DeFi.

PayPal was also looking to join the mergers-and-acquisitions party after enabling crypto purchases for the first time; however, talks to acquire crypto custody provider BitGo appear to have now fallen through. Rumors suggest PayPal is in talks with other crypto companies.

With the dramatic surge in decentralized finance this year, burgeoning DeFi protocols have also started merging. In November, Yearn.finance went on including with market coverage provider Cover Protocol and lending protocol Cream Finance.

Although acquisitions are often a sign of a thriving industry, they have led to some critics raising concerns over increasing centralization. Acquisitions of rivals by leading companies strengthen their control of the market, potentially reducing competition.

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Bitcoin Price Hits Another All-Time High Over $29,000 and Quadrupled In Value in 2020

by Blockchain News

Bitcoin price has hit another record level of above $29,000 on the last day of the year 2020, indicating no signs of slowing down its wild December rally. The value of the leading cryptocurrency rose as high as $29,391 before slightly pulling back.

The digital asset has surged by almost 50% in December, on track for its biggest monthly gains since May 2019.  

Matt Long, head of distribution and prime products at OSL cryptocurrency brokerage in Hong Kong, said:

“Key to this rally is that it has been sustained over several weeks. If we do see a break to the downside, it will be instructive on the direction of first-quarter flows whether we see institutions continue to buy on a potential dip.”

While the wider Bloomberg Galaxy Crypto Index showing that the biggest crypto asset is up to about 280% as the rival coin, Ethereum, has also rallied, the price of Bitcoin has quadrupled during last year amid the global COVID-19 pandemic.

The latest price increase continued to divide opinions between individuals who see the crypto asset as a hedge against inflation risk and dollar weakness, and others who question Bitcoin’s validity as an asset class given its boom-and-bust cycles and speculative nature.

Vijay Ayyar, head of business development at Luno cryptocurrency exchange in Singapore, said:

“Lots of things are being validated in my view, including Bitcoin’s role in finance and as a store of value. Bitcoin is now a real alternative.”

The huge rise in Bitcoin price during December has also at least one technical indicator flashing red, signaling the largest cryptocurrency is “close to a top”, Ayyar, stated. According to the Relative Strength Index crypto indicator, Bitcoin is well into overbought territory. 

American Investors Flocking to Cryptocurrency

The massive Bitcoin price hit all-time in December has been majorly driven by U.S institutional investors and professionals who view it as a safe haven asset against a weakening dollar and a payment method gaining mainstream acceptance. Retail investment in the cryptocurrency has also been rapidly increasing.

A sudden influx of interest among North American institutional investors is driving shifts in Bitcoin trading. The shift in embracing the cryptocurrency is normally dominated by Asian investments – especially countries such as South Korea, Japan, and China.

Image source: https://www.business-standard.com/article/international/bitcoin-hits-another-high-at-29-000-value-quadruples-in-2020-121010100041_1.html

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Who did the most for real-world crypto and blockchain adoption in 2020?

by Cointelegraph

In future years, it’s possible that 2020 will be seen as a watershed moment for cryptocurrencies. When Black Thursday hit in March, it wiped billions off the markets in a matter of hours. Anyone would have been forgiven for thinking recovery would take years. 

But by December, Bitcoin (BTC) has gone on to achieve a new all-time high, breaking the $20,000 resistance and almost reaching $24,000 in the process. This has come at the end of the first year in Bitcoin’s history where it was tested against the backdrop of a global recession.

Indeed, 2020 has also seen active addresses approach 2017 levels, according to data from Glassnode. So, as much as speculation points to institutional investors as the reason for Bitcoin’s meteoric recovery, the data suggests that general adoption is on the rise.

This leads to a question: Which companies, governments and other entities have made the greatest contribution to cryptocurrency adoption in 2020? In no particular order, here are Cointelegraph’s top picks:

PayPal

When it emerged in late October that the payments industry behemoth was planning to integrate cryptocurrencies into its platform, the markets responded with gusto. PayPal’s news confirmed what many had been suspecting for some time, but the announcement came with a surprising cherry on top: PayPal also announced that from January, users would be able to spend cryptocurrency at any of its 26 million merchants.

It isn’t just Bitcoin that has benefitted from the news, which appears to be creating a positive reinforcement cycle for PayPal’s stock too. Shares in the company have risen by 17% over the months since its announcement. While users in the United States can already take advantage of the service, PayPal will launch crypto trading to all of its 300 million global user base starting from next year.

The Office of the Comptroller of the Currency

The relationship between cryptocurrencies and U.S. regulators has long been a tense one. However, in July, things took a sudden u-turn when the Office of the Comptroller of the Currency issued a memo providing the green light for banks to start offering cryptocurrency custodial services.

The move covers all national banks and federal savings associations, effectively removing a significant regulatory hurdle for cryptocurrency adoption in the country. Not only is this a critical development for retail holders of cryptocurrency, but it also paves the way for institutional adoption. Furthermore, banks no longer have a reason to refuse services to legitimate cryptocurrency service providers, assuming they’re prepared to comply with general Know Your Customer standards.

From a practical perspective, it will take some time for banks to install the necessary security policies and infrastructure for handling digital assets. Nevertheless, the actions of the OCC are a substantial leap in furthering crypto adoption in the United States.

Dow Jones S&P 500

Perhaps as a direct result of the OCC’s actions, and no doubt related to the ongoing bull market, it emerged in December that Wall Street was officially going in on digital assets. S&P Dow Jones Indices issued an announcement confirming it will debut cryptocurrency indices starting in 2021. The news comes thanks to a partnership with Lukka, a U.S.-based blockchain data provider.

It’s not yet clear which assets exactly will feature as part of the indices. However, with 550 cryptocurrencies in scope, it seems to be a fair bet that the vast majority of the top-ranking tokens will be included. The move could help to spur further institutional adoption of cryptocurrency, as more mainstream market infrastructure makes digital assets more accessible to Wall Street investors.

Mike Novogratz

The CEO of Galaxy Digital has perhaps done more than any other individual to advocate the adoption of Bitcoin this year. After his firm’s earnings showed a 75% year-on-year rise, he went on the record to state his belief that Bitcoin would go on to hit $65,000 after it exceeds its 2017 all-time high.

A few days later, he was back to recommend that everyone put 3% of their net worth into the asset and hold onto it until 2025. By early December, he upped the ante again, encouraging investors to put 5% of their portfolio into crypto.

Demonstrating he’s prepared to put his money where his mouth is, he also told CNN that he has 50% of his own net worth tied up in digital assets. A week or so later, Bitcoin soared through its previous all-time high.

Dave Portnoy

The founder of Barstool Sports has had an on-again-off-again relationship with cryptocurrencies for most of 2020. In August, Dave Portnoy, aka “Davey Day Trader,” invited the Winklevoss brothers to his house to teach him about Bitcoin. Following that, he started shilling alt coins, leading some members of crypto Twitter to start calling him out for his lack of experience. A day later, he claimed to be on the road to becoming a crypto millionaire.

After abandoning digital assets entirely, the capricious entrepreneur came back to Bitcoin a whole two weeks later, declaring this time that “my heart is crypto.”

Whether you were laughing or rolling your eyes, Portnoy’s antics undoubtedly helped to draw attention to cryptocurrencies. Therefore, his influence in adoption earns him a place on this list.

The Supreme Court of India

In 2018, the Reserve Bank of India dealt a death blow to cryptocurrency firms operating in the world’s second-most populous nation. As the result of government actions to stop local banks working with crypto companies, Indian citizens could no longer trade cryptocurrencies on exchanges, forcing them onto peer-to-peer networks, and, in the case of those wanting to trade from fiat, to the black market.

In March this year, the Supreme Court of India issued a landmark ruling overturning the decision and deeming it “unconstitutional.” The move effectively relegitimized cryptocurrencies to 1.3 billion people.

Although there have been some tentative rumblings that another u-turn may be on the way, the ruling of the SCI has given the Indian crypto scene a considerable boost. By June, a wave of new exchanges had launched in the country, opening up cryptocurrency services to millions of new users.

JPMorgan

It was all the way back in February 2019 when banking behemoth JPMorgan announced it was planning to launch its own cryptocurrency to help speed up settlements within its network. In October this year, JPM coin was finally released, effectively a straightforward dollar-backed stablecoin. However, given the size of JPMorgan’s global reach, it’s estimated that the coin will save the global finance industry hundreds of millions of dollars in peripheral costs.

Related: JPM Coin debut marks start of blockchain’s value-driven adoption cycle

The move is unlikely to have any impact on the crypto markets at large, simply because JPM Coin is only to be used within JPMorgan’s closed network. However, the bank reportedly processes transactions worth around $6 trillion over more than 100 countries every single day. Therefore, it could easily become one of the world’s most adopted cryptocurrencies by transaction volume. In mid-December, Goldman Sachs signed on to use JPM Coin for its repo trades.

Uniswap 

Decentralized Finance has had a stellar year in general, but it’s fair to say that the release of Uniswap V2 in May has made 2020 a milestone year in terms of decentralized exchange adoption. By August, the exchange had topped the trading volume of Coinbase Pro, and by December, it had achieved over $50 billion in lifetime volume.

Furthermore, Uniswap inadvertently found itself the victim of its own success when SushiSwap launched in August. The new exchange emerged as a clone of Uniswap’s code but with its own token in the background. Dubbed a “vampire attack,” the move appeared to threaten Uniswap’s dominance by draining liquidity from the exchange. Even worse, SushiSwap’s move spawned a string of similar copycat exchanges, with several setting up home on Binance’s newly launched Smart Chain.

Related: Uniswap fights back as competitors drain value from the DEX

However, Uniswap had the last laugh after it launched its own token in September, distributing UNI to anyone who had ever contributed liquidity to the platform. The move helped Uniswap win the liquidity wars, and it continues to outperform its rivals today.

Spencer Dinwiddie

It was in September 2019 that reports first emerged regarding NBA player Spencer Dinwiddie planning to tokenize his contract extension worth $34 million. His plan was to sell digital tokens linked to the contract, where investors could receive principal and interest.

It’s fair to say that Dinwiddie’s road to a tokenized contract sale was far from smooth. After coming up against opposition from the NBA itself, Dinwiddie went ahead and launched a Gofundme campaign in May, attempting to raise nearly $25 million worth of BTC as a means of allowing participating fans to decide the fate of his next team move. However, he closed the campaign after having raised just $1,160, which he donated to charity. He later managed to sell 10% of the token shares of his NBA contract to eight investors.

Nevertheless, it’s fair to say that Dinwiddie’s support of cryptocurrency has helped to bring it to mainstream attention. Bleacher Report called him the “bitcoin savant of the NBA.”

GoodDollar

Launched by eToro in September, GoodDollar is a social impact project aimed at delivering a digital universal basic income at scale. GoodDollar mints its tokens, called G$, based on the yields generated by investing a basket of cryptocurrency reserve assets into DeFi protocols. It then distributes them as a basic daily income.

Since the platform launched in September, the company claims to have signed on more than 40,000 people from 180 countries, and said it distributed over 14 million G$ tokens. Users can’t yet change their tokens for fiat, but they can use them to purchase online services via the Facebook GoodDollar marketplace, which currently has nearly 16,000 members.

The idea of a universal basic income already had broad support, including from former U.S. presidential candidate Andrew Yang. However, the coronavirus pandemic has precipitated further backing for the idea given so many people continue to be affected by the economic fallout. Therefore, GoodDollar is an intriguing experiment in generating a sustainable source of funding for a UBI.

COVID-19

Bear with us here — this last entry is controversial. But it can’t be ignored that the biggest Bitcoin bull run in history has come at a time when the world is fighting the devastating coronavirus pandemic. In November, Cointelegraph already highlighted the fact that the economic fallout of the virus had contributed to shifting perceptions on Bitcoin and digital money.

Even before that, it was becoming apparent that the pandemic was accelerating digital innovation thanks to stay-at-home orders and

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Ethereum (ETH) and XRP Price Gains Dwarfed Bitcoin Rally, Which Cryptos beat BTC in 2020?

by Blockchain News

No one can dispute the incredible year that Bitcoin has had but despite the BTC price gaining over 150% in 2020 the original crypto’s gains have been dwarfed by the price increases of other altcoins—including Ethereum (ETH) and Ripple’s XRP token.

Ethereum, Ripple, XRP, Price, Bitcoin, 2020

So which other cryptocurrency’s price gains have outperformed Bitcoin in 2020 and why?

The Bitcoin price has more than doubled since the beginning of the year driven by a new wave of institutional investment confidence in the crypto’s ability to hedge against coming inflation, and numerous financial leaders proclaiming BTC to be a new form of digital gold.

As the Bitcoin price rallied higher last week and continues to test the $20,000 BTC price resistance, public interest has surged and many crypto traders now expecting a further boost to the altcoins that have been outperforming Bitcoin all year—namely XRP and Ethereum, as well as a host of other cryptos.

Ethereum and DeFi Price Gains

Decentralized Finance (DeFi) has been a hot topic in 2020 and the interest in this sector—which aims to offer traditional financial services through blockchain technology—has seen a number of cryptocurrency prices well exceed the 150% yearly gain of Bitcoin.

The majority of DeFi projects are built on Ethereum blockchain, which has seen the ETH token price surge 300% this year—double Bitcoin. With the launch of the ETH 2.0 transition to staking underway, and the interest in DeFi continuing, many expect the ETH price to continue to surge.

Kosala Hemachandra, the CEO of MyEtherWallet said:

“The recent rally in Ethereum is associated with multiple factors […] benefiting from the overall crypto rally, and the first phase of Ethereum 2.0. […] This is just the initial phase (phase 0) of the Ethereum 2.0 roll-out, building the foundation for Ethereum 2.0’s success. I expect that Ethereum will continue to gain prominence in mainstream circles as we hit future Ethereum 2.0 milestones.”

Another cryptocurrency and network that has found a lot of utility within the DeFi space is Chainlink. The popular price oracle is leveraged by decentralized exchanges (DEX) to link up data sources, APIs, and payment systems, and the token price of LINK has surged by 500% in 2020, leaving BTC’s price gains in the dust.

These incredible 2020 price rallies by BTC, ETH, XRP, and LINK are again made to look minor when compared to a handful of even are dwarfed by the returns recorded by a handful of more minor cryptocurrencies. Popular yield farming DeFi protocol, Yearn.finance, seen it YFI token price increase by a mind-blowing 2,600% in just the last year.

Ripple’s XRP Token Booming

This year has also seen rapid growth from Ripple’s native token, XRP. The cryptocurrency managed to hit a two-year high in 2020 and has rallied bullishly alongside Bitcoin (BTC) and Ethereum (ETH).

Ripple’s XRP token has also seen a price surge of around 165% this year, with most of its price gains coming over the course of the last month.

The XRP price seems to be surging further as the Flare Network, which is a smart contract utility fork of XRP, will be dropping more than 45 billion of its native Spark token on December 12. Anyone owning Ripple (XRP) tokens and participating in the airdrop up to this point will be able to receive Spark tokens on a 1:1 ratio.

Ripple’s token is the third-largest cryptocurrency by market capitalization and the XRP price seems to be surging further as the Flare Network—which is a smart contract utility fork of XRP—will be dropping more than 45 billion of its native Spark token on December 12. Anyone owning Ripple (XRP) tokens and participating in the airdrop up to this point will be able to receive Spark tokens on a 1:1 ratio.

Along with XRP, two other popular cryptocurrencies—Cardano (ADA) and Stellar Lumens (XLM) which has seen price surges of 300% and 200% in 2020.

As 2020 draws to a close, Bloomberg analysts recently concluded that there seems to be little to stop Bitcoin’s upward trajectory, particularly following its correction and a period of disdain. The analysts predict that BTC will move sideways for a few months but that the BTC price outlook for 2021 should gain to about $40,000 indicating that this bull run will not be stopping anytime soon. As BTC rises both in value and in public awareness, investors expect to continue to see gains in top ten cryptos like XRP and ETH as well as within the booming DeFi sector.

Image source: Shutterstock

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What Will Be The State of Bitcoin Going Forward?

by Blockchain News

Bitcoin has features that can be seen as both strengths and weaknesses, especially in comparison to other cryptocurrencies that are present in the market.

Let’s try taking a closer look at the first crypto – what advantages does it have, what problems is it facing, what could it look like in the future?

First of all, it needs to be noted that Bitcoin has no original team behind it. What it has is an open source community, and, in a way, that’s what makes Bitcoin’s further development hard. The size of its community means that a lot of effort is required to reach consensus on implementing big changes in its blockchain network. 

This can looks like a weakness if we compare Bitcoin to other blockchains – like Ethereum, for example. Ethereum has a native team and a community leader, which makes large-scale changes to its network relatively easier to pull off. 

 

But on the other hand, it can also be seen as a strength. Because Bitcoin offers high decentralisation in terms of altering the blockchain’s code, it means that for changes to take place, a proper worldwide consensus is required. This, in turn, acts as a guarantee that only the truly desired features will be added, and that the changes will happen in a secure way. This keeps the Bitcoin blockchain reliable and straightforward.

 

Then there is the matter of blockchain consensus and the debate of choosing between Proof-of-Stake and Proof-of-Work framework. Many modern blockchain projects choose PoS for the sake of transaction processing speed, but Bitcoin will likely continue to employ PoW. 

 

With Proof-of-Work format, high hash power means that the blockchain network has better protection against data loss and attacks – it has proven to be secure in the past. Proof-of-Stake, however, is still relatively new as a concept and potentially not quite as reliable.

 

And speaking of hash power – this factor rests heavily with the miners’ willingness to invest effort into finding new blocks. Miners’ revenue comes in Bitcoin, and now that its price is on a major rally, it represents a huge motivational factor for miners. And this, in its stead, increases the blockchain’s reliability compared to alternatives. 

 

To sum up, we can say that Bitcoin is fundamentally slow – there have been attempts to solve this issue (like SegWit and Lightning Network), but ultimately they could not solve the issue of low network throughput. Because of the complexity of reaching consensus in the network in order to implement changes, it is likely that, in terms of scalability, Bitcoin in the future will remain mostly the way it is now.

 

This means that other blockchains are likely to surpass Bitcoin when it comes to speed and transaction algorithms. But that is fine, because that is not where Bitcoin’s true value lies. In my opinion, it is likely that, rather than the currency of choice for everyday payments, Bitcoin is going to play the role of a long-term method of storing value in the crypto world, going forward. As well as a reliable way of transferring large amounts of capital and paying for expensive goods and services.

 

Image source: CEX. Io Media

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