The crypto trends 2020: This happened this year

The crypto trends 2020: This happened this year
A look back helps to prevent unwanted accidents. Image by Mark Nieno via Flickr.com. License: Creative Commons

Afterwards you usually know better: the year 2020 comes to an end and we summarize what the crypto trends of the year have been-and what it has not managed to trend. Our mega-year review includes 11 trends and 7 flops.

What exactly the year 2020 has dominated is not easy to say and of course depends on the observer’s perspective. What is a trend for some was a flop for others – and vice versa.

We have identified the following trends:

Banks, institutions and companies invest in
Bitcoin as inflation protection. The consequence:
The Bitcoin dominance increases again.
The big trends at Ethereum are against it
Decentralized Finance (Defi) and
Non-fungibe tokens (NFTS). This is accompanied by an ascent of the

Stable coins, which also finds the attention of regulators, as well as
A first wave of security tokens, which takes its outcome, especially in Germany.
The so -called “villain states” are more and more recognizable the value of bitcoins,
While the Darknet is increasingly relating to Monero, and
The ransomware hackers increase their ransom by threatening Leaks.
Technically, this does not happen much, even if a trend towards blockchain 2.0 or 3.0 is to be determined.

In addition to these trends, we also have a list of topics that, contrary to some assumptions, have not become trends:

So neither Lightning nor Liquid nor other second layer solutions have managed to achieve a critical mass.
Despite the hype, Facebook Libra did not succeed in going live in 2020,
And the Darknetmarkets, once a pillar of the Bitcoin adoptions, have largely stagnated.
The large Bitcoin acceptance also failed to materialize in retail, despite remarkable progress,
As in the micropayment, which is actually a predestined application of cryptocurrencies.
And although the first Bitcoin atms made it to Germany, the demand remained quite narrow.

A lot of hyped block grove applications, for example in identity or in the supply chain, are also waiting for your breakthrough.

Now in detail about the trends and untrends:

Trends

Banks, institutions and companies

The Rally, with which Bitcoin ends the year, is less of private investors than from companies and asset managers.

More than ever before, banks, companies, funds and institutions have started to invest in bitcoins and other cryptocurrencies or to enable their customers. Examples are the investments from Microstrategy, Square and Massw you’s – while PayPal and Swiss Bank Sygnum bring cryptos to their customers. Special service providers and storageers create the regulatory and technical basis for this, for example Nydig from New York.

Bitcoin as inflation protection

During the Corona crisis, numerous states have expanded the money supply to finance aid measures, such as the EU or the USA. So far, consumer prices, if at all, have only increased moderately. However, as for a good decade, there is considerable inflation in the prices of assets – such as gold, real estate, stocks or cryptocurrencies. The consequence of this is an extreme expansion of the gap between poor and rich.

Bitcoin established itself as a asset in 2020. The price reacted simultaneously to other assets: first he collapsed in the Corona crisis, then he skyrocketed to finally reach a new all-time high for a moment. At the same time, more and more investors discover cryptocurrency than “safe haven”.

Bitcoin dominance increases again

The Rally 2020 came from Bitcoin from the interest of great investors. She pulled most of the old coins, but overall hardly any cryptocurrency could get their value compared to Bitcoin. In 2020, the markets were less interested in technically interesting blockchains with potential usage cases – but above all for stable value memory such as Bitcoin.

2020 also became a lesson in terms of network effects: All coins that are leading in their league have expanded their value to their competitors: Ethereum as a platform for smart contracts, Monero as privacy coin and Bitcoin as a value memory and means of payment.

Decentralized Finance (Defi)

Decentralized Finance, Defi for short, was perhaps the trend of the year: financial applications that run decentrally on the blockchain as a “DAPP” usually as a smart contract on Ethereum. Defi had existed earlier, but for a long time only consisted of the maker dao that publishes the Dai dollar and some experimental niche applications. In 2020, several defis made a breakthrough, such as the change-dao uniswap or lending daos such as compound, which increases the market capitalization of all defi from $ 600 million to $ 15 billion.

An essential element of the defi hype were and are the defi tokens. These are usually so-called “governance tokens” that release the smart contracts to the users, for example if you provide liquidity at Compound. These tokens were able to increase the return of the defis enormously – some to more than 100 percent a year – but not sustainable. As a rule, you could watch how your price – and with it the return – collapsed in a short time.

The defis also introduced a new type of hack: a hack that does not (only) exploit code errors, but (also) hidden economic imbalances of the smart contract, and which pack the entire hack in a single transaction that plays on the keyboard of the entire defi system. These hacks are even more complicated than the classic hacks – which makes them hardly understandable for normal mortals.

And of course, a lot of fraudsters drive in the slipstream of legitimate defi deps … Nevertheless, the defi trend is so formative that centralized stock exchanges are already thinking about how they find their right to exist in the age of Defi ..

Non-fungible tokens (NFTS)

Another trend on Ethereum are the non-fungible tokens, for short nft. These are tokens that are assigned to a specific smart contract – one could say that a family – but each of which has each individual properties.

NFTS can represent digital assets such as works of art, collecting cards or in-game items. They celebrated their debut in 2017 with crypto kitties-but something happened in the area in 2020: Several platforms for digital works of art as NFTs (such as OpenSea and Rarible), and the developers managed to get well-known institutions on the train: Soare, for example, convinces one football club after the other (including FC Bayern), while BBC gives your Doctor Who brand for an NFT-based collective card game. At the same time, there also seems to be the first network effects on the defi trend, for example when someone uses a crypto kitty token as collateral for a loan.

It is difficult to say whether you can already speak of a agreed trend. But something interesting happens in any case.

Stable coins

Blockchain token, the value of which is bound to Fiat currencies, is commonly called “stable coins” (which is somewhat misleading given the inflation of the fiat currencies)).

Stable coins prevailed in 2020: they became crypta bonds for the most traded currency – before Bitcoin, in front of dollars in bank accounts. Stable coins also appeared more and more in hacks. One reason for the rise of the stable coins could also be the defi trend: thanks to the smart contracts you can do interesting things with dollars that are a token on the Ethereum blockchain that you cannot do with dollars on the bench.

So far, stable coins have been a pure child of the crypto scene. They are published either by combative-regulatory companies such as Tether (USDT), by tammer crypto startups such as Coinbase and Circle (USDC) or of decentralized blind smart contracts such as the Maker-Dao (DAI). But the first “non -specialist” institutions are already about to publish stablecoins, such as Facebook with his Libra, who is now called Diem, or that of Haydt Bank that will soon be released the EURB.

This trend does not pass through governments and regulators. On the one hand, the governments are determined to put as many stones as possible in a private currency of Facebook; On the other hand, stable coins are increasingly coming to the fore in the discussion about regulating cryptocurrencies – and for the first time on blacklists.

Security token

Security token Offerings (STO) are the serious continuation of the initial coin offerings (ICO), which have become the plague of 2017/2018.

Security tokens are regulated securities that are saved and traded as tokens on a blockchain. Unlike ICOS, which created a new, access -free and unregulated financial product, promoted security instruments such as stocks or bonds on the blockchain reproduce security token. Technical modernization is intended to increase the speed, reduce costs and, under certain circumstances, also eliminate the means.

In 2020, security tokens became a trend – especially in Germany. Here Bitbond has started to pass on his experience with his own StO in finance. This obviously hit a nerve. The one of Haydt Bank begins to token Ve briefs, Clickown outputs tokenized bonds that are covered by real estate, and Kapilendo tokens SME bonds – to name just a few examples. All stos created around Bitbond use the Stellar-Blockchain.

Another example would be the Cologne startup Classiccarcoin, which enables an investment in classic cars with a security token on Ethereum Blockchain (this will soon follow an article).

Security token promise to make the trade and the custody of securities cheaper and more efficient. Germany takes a pioneering role in this trend, which is mainly due to the acting of a single startup – to Bitbond.

“Rogue states” rely on Bitcoin

One of the most fascinating trends 2020 is the increasing use of Bitcoin as a shadowy bike by the so -called “rogue states.”

The Trump government was not just stingy with financial sanctions and also tried to enforce them. Especially for countries such as Venezuela and Iran, this has led to a growing problem in recent years to maintain foreign currencies – i.e. foreign currencies, usually dollars with which one can pay for imports from abroad.

Bitcoin has obviously gained enough trust and acceptance to offer these countries more and more than shadowy sorts: Iran promotes mining in the country, but wants the Bitcoins to be used for the import of goods, while the Venezuelan state is already an exchange and a mining center and allegedly also for imports from Iran and Turkey with Bitcoins paid.

This year it has been shown that Bitcoin can actually influence the geopolitical situation and undermine the effect of financial sanctions.

Monero as the gold standard of privacy

Bitcoin is still the standard in the Darknet, but is increasingly getting competition from the anonymous cryptocurrency Monero.

This too is a trend that could be observed very clearly in 2020. Monero is now the most commonly accepted cryptocurrency on the Darkent markets, while some ransomware groups exclusively demand Monero for the ransom. However, the trend is most clearly recognized by the fact that hardly a report by the law enforcement officers does not require the indication of Monero and even the US tax administration has advertised a price for breaking the anonymity of Monero.

Ransomware threatens Leaks

Ransomware has been a plague of the Internet since 2013 and one of the “killer apps” that you are not quite as proud of as a Bitcoin fan.

According to Europol, the “industry” is considered one of the fastest growing branches of the cybercrime. This could also be due to the fact that Ransomware 2020 has developed a new business model: Instead of encrypting the data of the victims and demanding bitcoins for deciphering, the virus robs the data, threatens with a leak – and demands even more bitcoins to refrain from doing so.

In 2020, several well-known companies fell victim to this trend, such as a celebrity law firm from New York, while the height of the ransom celebrated new records.

As a marginal note, it should be noted here that ransomware in the United States is now acted as a “cyber terrorism” and there was a first fatalities in connection with the malware in Germany.

Blockchain 2.0 or 3.0

Technically, relatively little happened in 2020: Bitcoin remained what it is like, Ethereum 2.0 started, but is not yet ready to talk about a trend, while Iota also celebrates the New Year in 2021 with the central coordinator. Instead of reinventing the wheel, you try to invite passengers this year.

Nevertheless, some technical trends can be discovered. You could “blockchain 2.0 or 3.0 “Name: New architecture concepts for a blockchain that replace the energy hungry proof-of-work either with a modern form of Proof of Stake or with more election-based consensus procedures. These new blockchains promise to scale much better than Bitcoin and Ethereum, sometimes they should also become the center of a network of several blockchain.

Examples of this are Cardano, Polkadot, IOTA (2.0), Ethereum (2.0), Cosmos, Vechain, Avalanche and others. They replace an older generation of innovative blockchains such as Lisk, Steem and others.

No trends

Some things just don’t want to become a trend, as much as you try, or stop being a trend. We also find the deserved mention.

Lightning, Liquid and Layer 2

So-called “second layer solutions” have been considered the future of blockchains for five years. But in 2020 the trend failed. Despite the unbroken enthusiasm of the community and some remarkable developments (such as Multi-Path playments), the Lightning network continues to lead a niche existence with stagnating liquidity; The Sidechain Liquid should make Bitcoin more scalable, private and tokens, but did not manage to win a significant number of users.

Nothing illustrates the flopping of the second-layer solutions for Bitcoin as much as Ethereum: Instead of flowing on Lightning or “Sidechain” on Liquid, they are token with WBTC-and only end up on another blockchain. A stock exchange that a token has released on the liquid-sidechain (and then pretended to be the future of the token) has now token her token again in Ethereum to make it defi; Even Bitcoin hardliner around the Liquid operator Blockstream output her tokens on Ethereum.

But even on the Ethereum side, the grass is not only green. The hype for tokens and defis brought the blockchain to its load limit, which gave the fees a surreal high level. Accordingly, it is also announced on Ethereum “Second Layer” as an alternative, which means “rollups” in different variations here. But here, too, it cannot be seen that this scaling solution prevails.

Libra

So much train station, so much pomp, and then … – Facebook’s Libra was announced so loudly in mid -2019, the governments and states started so much, drummed up so many companies in the Libra Association, but then – nothing happened at all. One month after the other passed in 2020, but Libra just didn’t want to start, while Facebook dealt with regulators around the world and one member of the Association jumped after the other. The project is not dead at the end of 2020, but is planned as a bold stablecoin, with an experimental, non-public blockchain. So there is not much more of a revolutionary idea than a new PayPal that sits on Facebook and for some reason a blockchain needs.

Darknet markets

In the past, in the wild years of Bitcoin, the Darknet markets drove the distribution. Today they play a niche existence, even in the cybercrime. The marketplaces in the Darknet have survived the many attacks in law enforcement. But they are still far away from taking over global drug trafficking. On the whole, they stagnated in 2020.

retail

The dream of bringing Bitcoin and other cryptocurrencies into retail is old – and still unfulfilled. There is a very remarkable attempt from Austria to bring crypto payments into widespread terminals. But so far there is no real success. If you can pay with your wallet in retail today, then because a debit card from Visa or Mastercard is connected to the wallet.

Bitcoin money machine (ATM)

It didn’t look much better at machines. In 2020, some Bitcoin money machines finally brought to Germany, which caused one or the other headline. But the German financial supervision Bafin had most of them removed, which overall not noticed so badly. Bitcoin-ATMS has been around in 2013-but the great success was also in 2020.

Micropayments

The situation is similar with micropayments: always, they have been considered a potential Killer app from Bitcoin, other cryptocurrencies or offchain networks such as Lightning. And since anyway, one startup after the other has chosen your teeth on it. Despite many promising projects, blockchain-based micropayments were not able to win a meter this year.

Blockchain-Tech

After all, we want to mention the so-called “blockchain tech” that has been advertised since around 2015. It has long been said that blockchain will be the future of supply chains (supply chains) or digital identities. The Federal Government even passed a “blockchain strategy” to support this new technology. But what became of it? You suspect – nothing.