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Episode 12: Today I’m going to talk about three big trends in blockchain unfolding now. Trends that I see picking up lots of steam in 2020. And why is trend spotting so important? Because trends are like signposts or signals. Signals that indicate something is happening or going to happen. In our case that’s something of course is growth in the blockchain sector. Like maybe faster adoption of a specific category of cryptocurrency.
So here are the trends I’m looking for in 2020.
First prolific stablecoin adoption Despite all the drama with Libra coin, despite the issues that Tether has faced, the world won’t be able to get enough stable coins.
We created Tether the very first stablecoin to do exactly what Mark Zuckerberg is attempting to do now with Libra. There simply isn’t a better fair way to facilitate cross-border commerce for consumers. So look out for growth in the number of stablecoins in 2020. By the way, if the United States restricts the creation of stablecoins, say by labeling them as securities, expect them to take off in other parts of the world.
Why are stablecoins such an important trend to watch? Because the more stablecoins there are, the better it is for all categories of cryptocurrencies.
Trend number two, the growth in futures contracts. Now by the way this is an anti-trend. If you’re looking for cryptocurrencies to go up in price unabated then the growth of futures contracts is not your friend. Yes futures contracts do indicate a growing interest in cryptocurrencies as an asset class but keep in mind what their purpose is. They strangle volatility and a lot of people in the crypto industry like volatility.
John McAfee for instance, right now he’s hoping for a lot of volatility in 2020. He has a lot riding on that. Snip snip. OK. I believe there is no greater force directing downward pressure on the price of bitcoin than the use of futures contracts and the more broadly deployed futures contracts are in the crypto industry, the more range bound you will see all cryptos in 2020.
The third trend; it’s also the most important trend that we will see taking off in 2020. I’m talking about the explosion of DeFi or decentralized finance. DeFi will be the big story in crypto next year. I don’t believe anything else has caused more excitement in the blockchain space than DeFi and in fact this subject is so important.
I’m going to do a separate video on the emergence of DeFi but let me just highlight a few important aspects of DeFi here. DeFi today and probably over the next year is really about two things: collateral and lending. So first collateral. That means turning your crypto into a more fungible asset. There are lots of projects working on the collateralization process and some huge ones coming in 2020.
Oh and what do you do with all that crypto you’ve turned into a fungible collateral? Well you might choose to borrow against it so DeFi has a lot to do with lending. Lending in a manner by the way very different from our current banking system works.
There are no taxpayer insured deposits behind these loans. DeFi is a closed system so it does not produce the systemic shocks we saw with fractional reserve banking.
So that’s it. Look for these trends to really drive the blockchain industry in 2020.
Let me close by saying something about following trends and market signals. Yes they have predictive power, but that’s power not certainty. They are not all-powerful oracles. Think of them like breadcrumbs leading you to a more informed state of awareness which means you have a better educated opinion about the future of blockchain and cryptocurrencies.
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Disclaimer
The information contained herein is for general informational purposes only. Nothing herein shall be construed to be financial, legal, or tax advice. The content of this video is solely the opinions of the speaker(s). Buying and selling cryptocurrencies poses considerable risk of loss. The speaker(s) does not guarantee any particular outcome. Past performance does not guarantee future results. You should do your own research, incorporating your own personal financial situation and risk tolerances, before making any purchase or trading decisions. The speaker(s) is not an investment advisor, broker or dealer. Your financial decisions are solely your responsibility.
