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2020 will be remembered as one of the most difficult years for contemporary societies: countries and entire populations have faced lockdowns and economic crises, financial markets are still suffering the dire consequences of the economic recession and COVID has claimed more than 2 million lives . -19.

Despite this, other sectors have been affected in other ways during the dire global health crisis – which looks far from over, even as vaccines are starting to spread in rich countries. Economies have been radically digitized, hedge assets have sparked mistrust, and the crypto market has had one of its most significant years since 2009, the year of Bitcoin’s (BTC) launch.

In fact, the crypto and blockchain markets have stood out in the face of a crisis that has spared almost no sector. Cryptocurrency funds are among the most profitable of the year, Bitcoin and the biggest altcoins are reaching new historical highs, major institutions and investors in the financial markets have allocated investments in Bitcoin, and blockchain technology has removed barriers in the financial sector and in production . chains of the most diverse sectors.

What can be expected for the future, in the face of a year of profound changes? CoinTelegraph Brazil invited some of the country’s top crypto and blockchain experts to map out next steps for the market.

Institutional investments

Institutional investments was marked in 2020, finally reaching the cryptosphere, and it promises another year of growth in 2021.

According to Rodrigo Borges, founder of the Oxford Blockchain Foundation, the large Bitcoin contributions from institutional investors – who have bought even more BTC than the production capacity of miners – will increase in 2021: “As for Bitcoin, I think there will be an increase. in the demand for institutional investors, which could create new products with exposure to Bitcoin, ”Borges analyzed. He also sees “2021 as a year of consolidation and strong development in the industry.”

As for Tatiana Revoredo, MIT blockchain expert and CoinTelegraph Brazil columnist, the custody of cryptocurrencies by traditional financial institutions and the acceptance of stablecoins will be key in the new year:

“In the financial sector, we will see crypto asset custody applications launched in Brazil, with the potential for traditional market participation. And if the regulatory authorities allow it, stablecoins will play an expressive role in the Brazilian market, with sales able to quadruple in size. “

Crypto Markets

Crypto markets had a year of extreme optimism – or greed, as the Crypto Fear & Greed Index shows. Bitcoin hit a dramatic bottom near USD 3,800 in March, and it is beat the all-time high of $ 20,000 in 2017 on December 16. In Brazil, the currency set a new all-time high in November when it hit $ 106,000 Brazilian reals.

Cointelegraph Markets reporter Marcel Pechman highlighted the behavior of the market despite the setbacks during the year. He recalled, “The Bitcoin and Ethereum markets developed in 2020 like never before, both in terms of trading volume, price and the contribution of renowned investors such as Paul Tudor Jones and Stanley Druckenmiller.”

Pechman said that despite the crypto market experiencing some setbacks, the impact of those setbacks on market performance was not that great: $ 280 million hack, and none of these affected the market. “

Pechman also recalled that the 2020 DeFi race led to expensive transaction fees on the Ethereum network, but had no impact on market sentiment.

Original My CEO Edilson Osório agreed with the promising future of the DeFi sector, but he warned against fraud:

“This is an experimental and promising market, but it needs extra attention due to malicious groups using scams and fraud in general. Being a very new market, platforms can have issues with hacks, and due to the great centralization that exists (even if many platforms present themselves as decentralized), there is still a risk of exit scams. “

Regarding the innovations of 2020 and the digitization imposed by the COVID-19 crisis, Pechman also said that it will go even deeper in 2021:

Successive innovations, including Taproot, Schnorr and Lightning Network in Bitcoin, in addition to the launch of Ethereum 2.0 phase 0, pave the way for the next wave, with ever-larger, scalable applications and interconnected with traditional finance. The final proof? Fidelity offers loans backed by cryptocurrencies. “

In the domestic markets, Osório is betting on the tokenization market in Brazil, which is already used by the country’s largest crypto exchange, Mercado Bitcoin. According to him, 2021 will be a year in which “the security token market matures.”

“Existing protocols are starting to be well appreciated by regulators, as most of them provide for greater participation and visibility on the part of the regulator themselves and allow for mitigation of various risks inherent in this market. In this race, there is a good chance that Brazil will gain prominence, as the local regulator has set up a regulatory sandbox and are already starting to mobilize the first projects to run their applications in a more legally secure environment, ”- noted Osório.

Another player in the Brazilian crypto markets, João Paulo Mayall – head of operations at QR Asset Management – is also optimistic about the tokenization market in 2021. He emphasized the role of regulators in the expansion of the sector in the South American country: “I believe that the future is the symbolization of assets, bonds, judicial bonds, sovereign debt. Brazil is very advanced in its banking system and we will have many surprises in this sector, so I am very optimistic. Tokenization is a billion dollar market but it is missing to the infrastructure. Innovation was ahead of the regulators, but I think they are open to listen to it and work on it. I think [the regulation] will happen next year, even before March 2021. “

Finally, blockchain expert Tatiana Revoredo argued that cryptocurrency adoption in Brazil, which saw its currency melt in 2020, will increase, with Bitcoin reasserting itself as an economic safeguard. She believes the crypto markets “will see an increase in interest from Brazilians, resulting in an increase in the Brazilian market, with Bitcoin assuming a prominent role as a protective asset.”

CBDCs and National Governments

The digitization of economies has placed the discussion of central bank digital currencies, or CBDCs, at the center of the debates of financial authorities around the world. One of the countries that has definitely taken part in this race is China, which is already running real tests of the digital yuan in the country. Its main geopolitical rival, the US, announced that it has no plans to digitize the dollar for the time being, but is already seeing internal pressure from not following China’s leadership in the sector.

The Central Bank of Brazil has also commented on the transformation of the Brazilian real into a digital currency a few times, although there are no concrete plans to do so in the near term.

Osório believes that the European Union will soon join the hype, further accelerating the global race for CBDCs: “While China appears to be leading the CBDC race, other countries are also starting to move in this direction. Among them Estonia, which recently started an internal consultation for the launch of its currency in the digital version. In particular, I believe that a more comprehensive and organized movement along these lines should take place in Europe, given the incentives promoted by the European Union. “

Many experts are trying to predict the impact of CBDCs on economies – one of the top concerns of economic regulators. Governments, largely studying blockchain adoption in their public processes, should also engage in the debate about privacy and the digitization of money.

According to Tatiana Revoredo, “In the government sector, the forecast is for growth [blockchain] requests in document registration and health applications, as well as greater public concern about the relationship between privacy and CBDC. She also claims that payment processors should monitor this innovation closely:

“Those who should pay more attention to these movements are the means of payment, such as PayPal and their colleagues. They will have to look deep into their business models once governments start issuing their currency digitally. “

Blockchain adoption

Governments have also viewed blockchain technology through a positive lens. In Brazil and Latin America, several government agencies are already using the technology to certify documents, including customs and notary offices. Large companies are also applying blockchain to certify production, with use cases that are only expected to grow.

Borges said the acceleration of blockchain adoption by major corporations and governments could positively impact crypto assets:

“Within the reach of blockchain technology, I see the development of interesting solutions, with the increasing involvement of traditional players, especially in financial and agribusiness, which can result in increased liquidity for certain assets.”

Revoredo agreed, highlighting the advancement of technology in the agricultural sector: “ Significant advancements have been made in agribusiness, with use in device identification (e.g. drones), integration with IoT and artificial intelligence to provide greater reliability and quality certification. of agricultural production. “

Osório defended the growth of the blockchain market in 2020 and the outlook for the near future: “When we look at the advancements in blockchain with applications beyond digital currencies, we see a growing market in decentralized digital identity, also with the approach of governments. We have seen movements in governments in the US and Japan interested in modernizing their digital governance models. And the pandemic has certainly helped speed up and foster discussions on the problem around the world as it understands that the digitization of analog and traditional services is a necessity. “

The end of 2020 was a milestone that ended one of the most dramatic years in the history of contemporary societies, but it also revealed ways to combat global economic and health crises.

Blockchain technology has helped societies fight corruption, adopt more transparent processes and even contribute to the certification of drugs and vaccines during the most serious health crisis of the last 100 years, in addition to helping companies provide procedures, products and services. improve.

Meanwhile, Bitcoin has strengthened as an economic protection and investment product, attracting institutional investment giants, and – along with other crypto technologies – even laid the foundation for central banks around the world to start implementing their own digital currencies.

We still don’t know how deep the revolution we are going through with the digitization of societies and the weakening of national currencies around the world, but by the end of 2021 we will certainly have many answers to the questions that still plague us. at the beginning of this new year.

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