Top 7 Crypto Trends to Watch Out for in 2020 (Part 1)
So far cryptocurrencies have been the wild west of the finance world, and that’s set to change. But how? Discover more.
2019 turned out to be an extremely eventful year for the cryptocurrency market, especially in comparison to the previous year’s lackluster growth. Previous growth and adoption records were broken, and new ones were set. We also saw quite a lot of new cryptocurrencies being launched (and getting popular) as well as institutional investors not only showing interest in cryptocurrencies but also actively including cryptocurrencies in their portfolios. All in all, we ended 2019 on a high and the new decade shows nothing but promise for the industry.
Having said that, we do expect the industry to drastically transform in the near future. By closely monitoring the global market throughout the year, we’ve identified seven major crypto trends to watch out for in 2020 and beyond. Let’s explore each one in greater detail.
Regulation
The term “government regulation” is often interchangeably used with “government intervention” in many areas of business. While true to some extent, the latter has a negative connotation to it — one that doesn’t necessarily apply to the crypto industry. Here’s what we should expect regarding government regulation specific to the crypto sector:
- Standardization: The standardization of global crypto trade will be beneficial for the community as it means that cryptocurrencies will be simplified and made more accessible to the general public. The complexity of owning and storing different cryptocurrencies has been a major pain point for not only consumers and individual investors but also for institutional investors.
- Officially Regulated Exchanges: Many exchanges (including some of the major ones) have fallen victim to some of the biggest breaches, frauds, and thefts in the entire crypto industry. However, experts believe that exchanges regulated directly by national governments will be less prone to these attacks because of stricter rules as well as tighter security standards.
- Cryptocurrency Laws: Most countries have little in the way of cryptocurrency-specific laws, making it rather easy for businesses with malicious intent to exploit consumers. However, this is set to change as countries (including the G7) are pushing for stablecoin regulation, guidelines, and cryptocurrency laws by 2020.
- 5AMLD: The European Union’s fifth Anti-Money Laundering Directive is an amendment to the fourth Anti-Money Laundering Directive which will require businesses trading in crypto-assets to register with national financial regulators and follow similar rules and regulations as traditional financial markets.
While there is a lot of activity surrounding upcoming regulatory changes and government involvement in crypto, most of it is misinformation and fear-mongering. In reality, more regulation will pave the way for increased adoption, especially among institutional investors who will finally have a direct way of investing in cryptocurrencies. Institutions are already adding hundreds of millions of dollars worth of crypto assets to their portfolios through less convenient and direct methods.
Central Bank Digital Currencies (CBDCs) and Corporate Coins
Cryptocurrencies are not issued by the central banks, unlike fiat money. As a result, they aren’t backed by any government agency either. With the emergence of this new form of money, governments are already gearing up to launch their own centralized alternatives to Bitcoin and other cryptocurrencies.
Consequently, CBDCs or Central Bank Digital Currencies are on the rise, particularly as a digital form of fiat money to complement cash. Central banks are motivated to explore this route for the following reasons:
- To combat increasing money laundering, fraud, and corruption. For instance, cash often goes undetected in the form of untaxed money. This can be prevented with CBDCs, which will be completely traceable on a digital ledger.
- Central banks will also have far more control over digital currencies than cash. As a result, counterfeiting will be impossible since the currency would be based on a decentralized ledger (similar to the Bitcoin blockchain, for example).
- A cryptocurrency backed by the government would also incentivize paperless and digital transactions because of the greater speed and convenience.
- Lastly, the “programmable money” characteristic of CBDCs means that the same token can have different uses. For instance, a token can either be programmed to pay interest or be sold in wholesale, among other things. Each central bank will have the ability to program their tokens differently and add special attributes that suit their citizens’ requirements.
Another interesting trend shaping up in 2020 is the rise of corporate coins. While not as influential as CBDCs, corporate coins will still be important as enterprises are leveraging these types of tokens for promotions, giveaways, and as a digital currency on E-commerce stores as well as to reward employees with a financial incentive.
The emergence of CBDCs is a strong signal of regulatory interest in cryptocurrency as well as governments’ trust in the technology that powers all of these currencies. Furthermore, this move is an important step towards making cryptocurrency more mainstream and making valuations more stable.
Staying on Top of Developments
While the effects of a country making significant changes to its cryptocurrency laws or launching its own CBDCs will be felt in the global market, they’ll affect the overall crypto market most. This isn’t a bad thing at all. The bad thing, however, is investors being unable to forecast the signs and determining the upcoming changes in time.
Every year new opportunities in the form of market trends arise. However, most people and enterprises are unable to capitalize on these opportunities in time because of either lack of clarity or market noise. For instance, in 2018 alone, $725M worth of institutional crypto investment was lost as the level of unpredictability was far too big a risk for some enterprises. Furthermore, there continues to be a lack of enough information for institutional investors to do due diligence before investing. This is the problem Alluva is solving.
Alluva gives investors, analysts, and traders access to specialized tools and metrics that monitor trends and help make predictions. Alluva is an analyst marketplace that allows investors to predict and rate crypto-assets and earn rewards for correct predictions. For institutional investors, this means they have access to more predictions, experts as well as market opinions, and other important metrics that change the way they do due diligence. More importantly, the wealth of information and opinions of other analysts can be the difference between making money and losing money.
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