The year 2019 turned out to be a remarkable one for the global crypto market. Despite a secular bear market, it involved new groupings, novel trading solutions, and a number of blockchain protocols emerging and maturing. Global regulatory bodies are also becoming less apprehensive of cryptocurrencies and can be seen developing their own blockchain infrastructures. As a matter of fact, China has entered the global competition as well and is driving innovation with its deep pockets. In short, the blockchain and crypto market is far from slowing down as the momentum is gradually picking up.
So, let us have a look at how the market is going to pan out in 2020 and what is the outlook for the year to come.
Decentralized finance—also popularly known as DeFi—is the way to go forward given its wide-ranging advantages. Then, it naturally comes across as the breeding ground for innovation. DeFi projects have now crossed the value of $650 million. Though it was beyond belief a few years ago, trust-less and secure provisions of financial services have now introduced fresh lending and margin trading facilities. It has enabled traders to easily switch between different debt positions. Market operators such as Babel Finance are also helping big-time miners to avail large capital by keeping crypto as collateral.
Ethereum 2.0’s Phase 0 has now reached the final phase of testing with the launch of public multi-client test-nest. Thankfully, the teams spearheading the development of clients and components have paid close attention to the feedback given by the community. They also have been actively giving updates about the developments. This has generated confidence around the novel Ethereum blockchain. A partial launch could be seen in 2020.
Crypto derivatives have now substantially grown in size and accessibility. Earlier, there were just a few exchanges offering them, now a majority of them enable their investors to trade in futures as well as options for large-cap cryptocurrencies. This development will make the market more competitive in 2020 as more exchanges jump to the picture.
Lightning network has turned out to be a boon in disguise for crypto traders. It is a layer-2 payment protocol that is implemented on any blockchain-based cryptocurrency. It paves the way for instant bitcoin transaction settlements. The protocol uses off-chain data to catalyze the transaction speed and also decreases the associated charges. In the year to come, we will be witnessing the establishment of more nodes, channels, and applications that build on lightning network infrastructure, thereby acquainting us with unforeseen market efficiency.
Privacy in Transactions
There has been an increasing concern around privacy of transactions within the market. Thankfully, we have also seen the development of privacy tools to serve the purpose. For instance, Ernst & Young have developed Nightfall for private transactions over the Ethereum ecosystem. It is a prime example of how various companies will be driving their transactions via public main-net with zero-knowledge privacy protocols in place. We will see considerable momentum on this front as well as multi-party computations.
Wyoming, a state in the US, has enacted around 13 laws around blockchain and cryptocurrencies over the past two years. And suddenly, the least populous state of the US has become a global hotbed for cryptocurrency companies. This is because these regulations are digital-banking-friendly and distinguish digital assets into three different categories. It barely came as a surprise as other US states and regulatory bodies followed suit. We can anticipate other regulators to do the same in the upcoming year.
Lastly, 2020 is going to be quite vital for blockchain technology and the broader ecosystem. A majority of experts believe that there will be a secular bull market in 2020 as the period of consolidation seems to be fading out. Digital assets have already become a force to reckon with and it will be interesting to see how the upcoming year pans out.