What a year 2020 turned out to be for cryptocurrencies! From Bitcoin witnessing a slight dump in its prices early on in the year to leaders of Iran, Malaysia, and Turkey discussing ideas for a cryptocurrency for the Muslim countries- the crypto world saw it all. As the first month of 2020 comes to an end, let’s take a look at how the year 2021 might pan out for cryptocurrencies.
Bitcoin halving is undoubtedly the most important event for the year 2021. The event, which is scheduled to take place in May, would reduce the Bitcoin mining reward from 12.5 to 6.25. When the halving took place in 2012, it resulted in Bitcoin’s price soaring from $10 to $100. There was a significant spike in Bitcoin’s price again when the halving happened in 2016.
The way various YouTubers, Instagrammers, and the Twitterati have hopped on to the bandwagon in spreading the possible outcomes of this event has led me to believe that halving would be much more dramatic this year. It is because of the hype created around it, which might eventually trigger the FOMO factor and make the traders jump into BTC without carrying out due research. Also, the altcoins might underperform in the first few weeks after the halving. The way everyone seems to have latched on to this Bitcoin mining news would bear ample testimony to this claim. However, as many studies suggest, altcoins might start regaining their momentum from 30 to 60 days after the halving.
Another event that will be worth watching is Libra’s launch. Libra is set to be launched in May this year. The asset-backed stablecoin had been in the thick of several controversies in 2020 with many of its partners, including Vodafone, Visa, MasterCard, and PayPal backing off from the project. The project continues to be mired in a pool of uncertainties, and there are several questions that the regulators, traders, and investors will need to find clear answers to before the coin is finally launched. As the crypto world sits back in anticipation, Libra will need to get its act together.
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TON’s Entry into the Crypto Space
Other than Libra, Telegram’s TON is also slated to hit the market in April 2020. TON was scheduled to be launched in October last year. However, a restraining order from the Securities and Exchange Commission put paid to any hopes of the project kick-starting last year. As the project seeks to target millions of users around the world, it’s going to be essential how it finds a way to deal with regulatory bodies. It’s certain that if governments such as the US aren’t cooperative towards it, TON and other similar projects will have to find ways to enter more crypto-friendly environments such as Singapore.
Rise of CBDCs
2019 turned out to be a year of central-bank backed digital currencies. In 2019, we saw the People’s Bank of China (PBOC) disclosing their plans to build a new digital currency that would soon be used in the country. Many crypto enthusiasts believe that the US Government-backed FED will also step into the crypto space in 2021. Reports suggest that there might be some credibility to these beliefs as many members from the FOMC have also voiced their support to the idea of a state-backed digital currency.
Another important event for 2021 is the launch of Ethereum 2.0. There hasn’t been much change in its consensus model since its creation, but 2020 definitely holds a lot of significance for ETH tokens. Updates would help Ethereum scale substantially through the introduction of a proof-of-stake mechanism, instead of proof-of-work mining, which is quite expensive. Also, ETH 2.0 would introduce the concept of ‘sharding’, which would boost the transactional speed.
The crypto world is undergoing massive transformations at lightning speed. I am certain that we shall continue to be treated with more shocking crypto events in 2021 as we tread further down the year. We have set foot into a new decade that can potentially change the lives of many people; the question that all of us need to ask ourselves is whether we are ready for these changes.