2020 has been a rough year for so many. Bitcoin, on the other hand, has seen an explosion in value. Over the last year, the price of a Bitcoin has more than tripled to over $30k. No single positive development can explain this bull run. Rather many have come together to make 2020 a banner year for cryptocurrencies.
And the best news is that many will continue into 2021. Analysts are predicting 2021 to be another great year for digital currency. Let’s look at some of the signs of the bright year ahead.
Increased Merchant Acceptance
Not only are online sites beginning to accept cryptocurrencies for all types of products and services, but they are even incentivizing their customers to do so. For example, you can get bigger bonuses if you deposit with Bitcoin at the right site, which Sportsbook Bonus can help you find. The list of companies that are accepting Bitcoin has grown a lot over 2020.
This should be a snowball effect: as more companies offer incentives, their customers will get more into cryptos, thus encouraging more companies to accept digital cash, and so on.
An incomplete list of retailers that accept BTC includes:
- Home Depot
- Whole Foods
These are huge names and will help make Bitcoin part of the daily life of more and more people.
In addition to commercial venues, large, financial intuitions are also giving cryptocurrencies and blockchain technology the green light. This type of institutional approval is a huge boost to cryptocurrency. While we have begun to see the growth in value, we can expect these to have continued effects. Large financial institutions build this type of infrastructure for the long haul.
Decentralized Finance Sparks Opportunities
Decentralized finance or DeFi is an innovative technology related to cryptocurrencies. It is related because it is based on the same blockchain technology, and some Alternative Coins, such as Ethereum, run DeFi. 0
DeFi allows for complex financial transactions without central banks or other more authoritative centralized financial institutions. For example, with smart contracts, you can lend and borrow money without any other enforcement authority.
DeFi has grown even more than Bitcoin over 2020 and is no doubt fueling much of the added value in digital currencies. Over 2020, the number of funds grew by 10x to a total of $11 billion in October 2020. There is no sign of this slowing down. In fact, as financial committees weigh in on DeFi, expect them to legitimize it as they pass laws to regulate it.
One of the main attractive aspects of Bitcoin is its limited supply. The rate that Bitcoins enter circulating supply gets halved roughly every four years. Currently, every ten minutes 6.25 tokens enter circulation. Before May 2020, that was 12.5.
This means that miners get fewer BTC for their effort. Supply restricts as demand either rises or stays the same. This will have positive pressure on the price for a long time. The stream of Bitcoins will only continue to shrink. The next halving is expected sometime in 2024.
But Possible Competition
With so much success, new powerful competition has been cropping up. This is one 2021 possibility that could be bad news for current cryptocurrencies. Expect more central banks to announce digital currency projects. China has already launched a regional pilot program.
In this case, privacy would be heavily reduced, rather than increased. Bitcoin has been so appealing partly because it is anonymous. However, the digital Yuan in China would not come with these privacy guarantees.
By some estimates, 80% of central banks are considering some form of their own digital currency. This could go either way for BTC value. Perhaps people will just use the official digital currencies, leaving Libra, BTC, and Ethereum to drop in value. Or, the idea of digital cash will become even more accepted, and people will prefer the more private and safe option.
Only time will tell exactly how everything will play out!