Forbes — Crypto and Blockchain Predictions 2021 — by Luciano Britto
Every end of the year is marked by retrospectives and forecasts for the future.
Among the most relevant in this atypical year where no one survived unscathed, those of Forbes columnist Sean Stein Smith — professor at the University of New York (Lehman College) for Crypto and Blockchain in 2021 are quite consistent
I agree with the points raised, but in some respects, there is empirical evidence that tends to broader interpretations. With that, I decided to make my contribution.
Bitcoin in 2021
According to him, Bitcoin will close 2021 above US$ 30 thousand, but I not only think it is impossible to predict, but I also take into account two main factors:
- If the exchanges are highly regulated, we can enter another year of moderate growth, until the most serious and more structured ones organize themselves, in addition to the possibility of new, more professional stakeholders emerging, paving the way for quite expressive growth from 2022 as a result of an entry of greater institutional investment in a more regulated environment.
- The second point, which can counter possible heavy regulation mainly in the USA, is a strong tendency for large companies to keep part of their treasuries allocated in Bitcoin — a movement that started in 2020 and may gain strength in 2021. Demonstrations of this strong trend were the payment platform Square buying $ 50 million in bitcoin, which according to the company, represents about 1% of its total assets at the end of the second quarter of 2020. Jack Dorsey, CEO of Twitter and Square, has long championed bitcoin and believes that this is a transformative technology for the industry and wants to learn everything about digital assets as soon as possible. Michael Saylor, Founder, and CEO of MicroStrategy now announced in December a convertible debt issue of an additional $ 650 million for the acquisition of 29,646 bitcoins. The business intelligence company now has 70,470 BTC worth more than $ 1,596 billion in its treasury. Saylor said in a tweet that MicroStrategy has spent $ 1.125 billion in bitcoin so far, at an average price of $ 15,964 per bitcoin. It is worth mentioning that MicroStrategy is also a publicly-traded company, which does not even have cryptocurrency activities in its core business. Another striking fact was now in late December Elon Musk questioning Michael Saylor about this possibility of large Bitcoin acquisitions allocated in the company’s treasury and between comings and goings of messages Elon Musk was curious. If this trend catches on, Bitcoin can well exceed the $ 30,000 mark, reaching a value of around $ 100,000 USD.
Stablecoins in 2021
For him, the stablecoins will gain strength and even more spotlight in 2021, since in 2020 their total volume quintupled, from US $ 5 billion in January 2020 to US $ 25 billion in December.
Tether is still sovereign in the stablecoins, accounting for almost 80% of the entire market. Second is stablecoin USDC with more than $ 3 billion in circulation.
However, since 2019 with the announcement of Facebook’s controversial Libra — stablecoin project and the growing popularity of stablecoins, it has led the United States Congress to consider bills such as the recent STABLE Act, on linking stablecoins to bank license compliance. If approved, it will require that all stablecoin providers have a bank license.
But for those who are not very familiar with the subclasses of stablecoin, it is difficult to understand that this happening can legitimize the class of decentralized stablecoins — coined through collateralization and unrelated to fiduciary currencies.
With highly sophisticated issuance, stabilization and security mechanisms through CDP (Collateralized Debt Position) contracts, dynamics called “Rebases” in which the total supply of tokens is not pre-fixed, but automatically adjusts on an automated basis — these are also known like elastic tokens and analogues to synthetic commodities with fluctuating values and supplies that gradually stabilize. They are among the subclasses of the subclasses of stablecoins. It is complex, but I promise, soon, a post illustrating the intricacies of decentralized stablecoins.
But anyway, this among other physiological corroborate for automation and decentralization of stablecoins, which, like Bitcoin, are considerably safer than centralized stablecoins like Tether, Libra (Facebook), among others.
Bills such as the STABLE Act can act as fuel for the fire, in a good way — since more sophisticated arrangements drive innovation.
Central Bank Digital Currencies in 2021
He points out that the Central Bank’s digital currencies (CBDCs) should be launched next year and believes that the rise is almost guaranteed.
I consider it an effective gain for society if governments adopt them, however, a Trojan horse upside down for governments, since arrangements tokenized by their nature are more transparent, which naturally introduces faster responses to the exacerbated emissions that governments adopt in an ordinary way. Let us pray!
Tax foreclosure in 2021
He also believes that the IRS and other countries will tax cryptocurrencies more effectively, however, I do not see them classified with a different class of assets. Today they are already taxed and each country has its own fiscal policies.
Blockchain in 2021
His view of blockchain technology is that it should expand beyond financial services and that 2021 will be the year that blockchain will become even more popular. As a result, the technology will reach a much broader range of economic sectors, specifically citing the health, transportation and logistics sectors as areas that could benefit from broader adoption of blockchain.
It is not new that blockchain today goes over the status of a trend towards an effective reality. Dubbed the “coordination machine”, its main function of data coordination is not just a competitive differential — it is becoming a regulatory requirement, for customers, for consumers in general and is beginning to impact all sectors of the global economy.
But let’s be careful … Blockchain in its most pragmatic essence is applicable in two areas: Financial and Data.
In the financial field with issuance of tokens such as: Cryptocurrencies — Bitcoin, Dash, Monero, Litecoin, Zcash, among others — in which their main characteristic is immunity from censorship and have no correlation with a real asset; Utility Tokens — “tokens” for using some platform function — for example, processing contracts on the Ethereum network; Security Tokens — in which they represent a real asset such as companies, real estate, debentures etc. in a public offering of securities; Stablecoins — stable currencies used for direct peer-to-peer transactions, usually pegged at 1–1 to the US dollar; Governance tokens — which represent governance rights in specific projects, but can also be listed on the secondary market.
It is worth mentioning that all of them, when offered publicly, are subject to review by the Securities and Exchange Commission of the United States, the SEC, which by the way, also at the end of the year is suing Ripple, in the figure of its former CEO and founder Christian Larsen and its current CEO Bradley Garlinghouse, as a result of an unregistered bond offering. The SEC claims that Ripple violated securities laws by selling XRP and failing to provide its investors with the appropriate information they needed to assess any potential risks.
In the financial sphere, all these classes have gained spotlight and stand out even in face of the inherent deficiencies in 99% of the existing blockchain protocols, with high transaction and registration cost (gas fee), low scalability, low capacity and efficiency in the processing of smart contracts in scale and also the absence of effective arrangements of veracity of information loaded from the off-chain world (all information that is outside the blockchain), to the on-chain world (all information registered in the blockchain). However, from the point of view of data registration and automation, another promise is the use of blockchain for coordination of goods, such deficiencies are quite significant impediments. Scalability and transaction cost are ultimately highly relevant factors.
Think that, a user can absorb the fact and be taxed at 10, 15, 20 dollars in a transaction for larger purposes, where he is having a gain of 1,000, 10,000, 1 million dollars. However, for the purpose of end-to-end goods coordination, it is not viable. It is exactly in this gap that Rhizom is positioning itself, when developing a new data-oriented protocol, with second-tier solutions that demonstrate its efficiencies — fundamental to unlock global merchandise coordination.
I will add here 3 other trends for 2021, in which I also intend to explore specifically in posts throughout the year, given that their adoptions are intended to create very significant impacts on the crypto and blockchain ecosystem.
- Oracles 2.0
- The rise of Synthetic Assets
- Interoperability Bridges between layer 1 protocols and their exponential impacts based on ecosystem principles. Here I also highlight that it would be premature forecasts that give rise to interoperability mechanisms through bridges. At Rhizom, our research and development focus seeks to address solutions to interoperability problems through tokens and parallel consensus models in truly smart contracts.
Conclusion
Sean Stein closes the article by pointing out that 2021 will be an exciting and dynamic year for the blockchain and crypto assets space, and the future looks bright for continued growth and implementations.
However, we can also highlight other major areas of transformation for 2021 in addition to the consolidation of the financial space and the great impact on food production — with more security in processing, transparency in the content of food products, packaging and optimization of supply chains.
We will also see the beginning of arrangements based on the proof of social and environmental preservation in all companies around the planet, so that they can prove responsible and sustainable initiatives.
Blockchain is the best way to do this!
Happy 2021!
Rhizom: the first blockchain protocol in Latin America
