Top 7 Crypto Trends to Watch Out for in 2020 (Part 2)
By Alluva on The Capital
In the previous part of this four-part series on the top seven crypto trends to watch out for in 2020, we took a look at an increasing trend of regulatory presence in the crypto industry as well as the rise of Central Bank-endorsed Digital Currencies (CBDCs) and corporate coins. In this second part, we look at two more major trends that we believe will shape the crypto industry in 2020 and beyond.
Decentralized Exchanges Will Continue To Grow
While the early days of the crypto market were dominated by centralized exchanges such as Mt. Gox, security shortfalls and other dubious practices prove that there is a large market for a decentralized alternative. In 2019 we saw the emergence of major decentralized exchanges, including Binance’s DEX and Bisq.
Decentralized exchanges (DEX) offer an unprecedented level of security since there is no governing authority, organization, or corporation. On the other hand, centralized exchanges require traders to trust the owners and their security practices to safeguard their crypto assets — similar to trusting a bank with your deposits.
Cryptocurrencies and blockchain technology is built on the premise of decentralization, that is, not relying on middlemen. In a DEX, crypto changes hands between traders in an entirely peer to peer manner without a third-party overseeing the transaction. Escrow is managed by code, ensuring that neither party’s funds are compromised. As a result of this automation, transactions can be completed quicker and cheaper.
Having said that, many believe decentralized exchanges need to grow further before they become as easy to use and intuitive as centralized exchanges. Most decentralized offerings currently have limited functionality. Furthermore, the lack of a simple user interface makes them less than ideal for many people.
However, the fact that decentralized exchanges haven’t reached their full potential yet isn’t stopping traders from switching. For instance, the total value of Ethereum traded on decentralized exchanges surpassed $2.3 billion last year.
Much of this growth and increase in volume has come as a result of government regulation and increased interest in the crypto industry. Healthy competition has led to new technologies and services being introduced to existing DEX like perpetual contracts, exchange-as-a-service, and cybersecurity enhancements. Many decentralized exchanges are also in the process of rolling out full Know Your Customer (KYC) processes in a bid to improve security and ensure regulatory compliance.
Achieving Real-world Scalability
For real-world crypto applications to thrive, scalability is an important consideration. Currently, most cryptocurrencies can only process a few dozen transactions per second.
Developers of Ethereum, the second-largest cryptocurrency in the world by market cap, are working on a major software update known as Ethereum 2.0 or Serenity. The final update is slated to bring significant updates like the long-awaited integration of the Proof-of-Stake consensus mechanism. The update will be released in four phases:
Phase 0: Beacon Chain (Q1/2020)
Phase 1: Shard Chains (2021)
Phase 2: eWASM (New Ethereum Virtual Machine) (2021)
Phase 3: Continued Improvement (2022)
Serenity is very important not only for Ethereum but also for every other cryptocurrency out there as it will likely lead the development of other coins. Ethereum 2.0 should improve the reliability and security of the network, while making it significantly faster as well.
Ethereum isn’t the only cryptocurrency that’s looking to be more scalable in 2020. The Lightning Network, a “second layer” payment protocol which allows users to trade without using the main Bitcoin blockchain, has surged in popularity. Theoretically, the Lightning Protocol will allow up to 1 million transactions per second and solve one of the biggest problems of the cryptocurrency in recent history — scalability.
Leveraging Increased Scalability and DEX
The increasing scalability of cryptocurrencies and the popularity of decentralized exchanges mean that more and more people will join the global crypto community in the coming months. These trends are part of hundreds of investment opportunities that arise every year in the form of market trends. However, most people and enterprises are unable to capitalize on these opportunities in time because of either market noise or lack of clarity.
Alluva alleviates these problems by giving institutional investors, analysts, and traders exclusive access to real-time market trends. Alluva is an analyst marketplace that allows analysts and individual investors to predict the growth potential of various crypto-assets for free. Accurate predictions are rewarded in the form of Alluva tokens. Institutional investors around the world use Alluva to track market sentiment and other important metrics.
Level up your due diligence process by signing up for a free Alluva account here. For more interesting content on the crypto market, follow our blog here and Medium channel here. To keep up with the latest Alluva related developments, follow us on Twitter here or join our Telegram group here.
