Everyone knows this story. When the first block of Bitcoin (BTC) was mined, the protocol itself entered a world of dangerous economic uncertainty. Just before the market hit its lowest point in the recession in 2009, Bitcoin established itself quietly and fell like a lifeboat along with the flood economy of the time. The now infamous phrase “an adviser on the verge of a second aid to the bank” is taken from the headlines and immortalized in the code of the original story of one of the most convincing, innovative and best-performing assets of the last decade.
But Bitcoin did not immediately take root outside the small community of true believers. Bitcoin and digital assets in general have had much in their relatively short history: from purely speculative investments and “magic internet money” to a refuge from the crisis and an attractive hedge against “hyperinflation”.
In the face of the COVID-19 pandemic, accompanying market crash and massive central bank stimulus, cryptocurrencies have proven to be extremely resilient.
But when we see the spread of vaccines across the country, we are cautiously optimistic that the end of the pandemic is near, so where will the coding be in the post-pandemic world? If the history of its resilience shows us anything, we expect cryptography to adapt to what the next few years bring – crisis or not.
About the topic: How has the COVID-19 pandemic affected the crypto space? Experts answer
Just three years ago, executives from some of the world’s largest banks even refused to talk about Bitcoin in interviews, calling the asset itself a “scam” and calling those who want to buy it “idiots.”
Today, the public mood varies considerably between banks. Following Clarification No. 1170 from the Office of the Currency Controller, which made it clear that federally accredited banks can offer banking services to companies legally operating in the digital assets area and having digital assets on behalf of their customers, banks have been looking for the best way to disclose clients on. For in-demand cryptocurrencies. We expect that the interest of older financial players in cryptocurrency in the next few years will only grow as cryptography becomes a major requirement for financial services.
In the short term, banks will almost certainly rely on subsidiary relationships with digital asset professionals to transfer cryptocurrencies safely and efficiently into the hands of their customers. This is because it is easier to handle complexity on the side of the original encryption than vice versa.
About the topic: The need for dialogue between cryptocurrency companies and regulators.
We also expect a number of acquisitions as some cryptocurrency providers are taken over by banks that have deep enough pockets to trade. As the demand for crypto services grows and there is clarity in the regulations, more and more companies will enter the market.
Distribution of decentralized applications
Just as Bitcoin was created in response to the flaws of the old system, decentralized financing has become the cryptocurrency response of financial intermediaries. Until recently, however, entire parts of this ecosystem were inaccessible to institutions, often due to a lack of secure sharing facilities.
Slowly but surely, enterprise-class DeFi devices are being introduced to the market, and we expect this trend to continue. Not only will we see further spread of DeFi growth, but enterprise-class tools will facilitate institutional participation.
About the topic: Was 2020 “the year for DeFi” and what is expected of this sector in 2021? Experts answer
Despite significant growth, the DeFi room is still largely fragmented. Interconnection – or lack thereof – is still a problem. Organizations want to be able to utilize their assets in the DeFi ecosystem. We expect significant growth in this area as more and more Layer 1 protocols are linked to DeFi and the broader Ethereum ecosystem – a development that can also improve liquidity along with market stability and efficiency.
Corporate Treasury bonds and lower barriers to entry
In the midst of a seemingly endless monetary stimulus, many private companies see digital assets as a hedge against inflation. Some of them, such as Square and MicroStrategy, have taken significant positions in recent months. We have seen MassMutual buy up to $ 100 million in Bitcoins. And with a $ 1.5 billion purchase of bitcoins from Tesla this month, the trend shows no signs of slowing down. We expect digital assets to be a large part of the balance sheet of private companies in the coming years.