Cryptocurrency isn’t just about monetary transactions without using a bank – it can do all sorts of things, and certainly buying and selling cryptocurrencies is big business as it’s a secure payment method with lower transaction fees.
Financial experts tell us that in 2020, we are going to see other cryptocurrency payment systems becoming popular and also delivering payment that meets the needs of today’s global economy.
Other cryptocurrencies besides Bitcoin
While bitcoin may have changed the way people think about money, there are many other cryptocurrencies that have emerged such as Litecoin, Ethereum and Facebook’s Libra which has been released this year in 2020.
- Litecoin for instance is similar to Bitcoin – just a last faster. Because Litecoin mining is also easier than Bitcoin, users with slower computers can also become miners.
- Then there is Ethereum which makes use of more sophisticated blockchain technology than Bitcoin. It allows its users to design their own decentralized apps on its blockchain. Ethereum developers can build dApp versions of centralized apps such as Amazon and Facebook among others.
- Facebook has changed its plans for its Libra cryptocurrency project because of all the regulatory pressure. Facebook will support government-backed currencies such as the dollar and euro as well as the Libra token when it is ready to launch. The American social media company is talking about Libra, a blockchain digital currency with its launch planned for 2020, but according to some expert investors, Libra has tarnished Facebook’s reputation, revealing that the company jumped on the blockchain bandwagon without much thought.
Businesses and Governments looking at own cryptocurrencies
Some crypto evangelists say that the sentiment among crypto advocates is that the capitalization of cryptocurrencies could explode over the next few years. We’re going to see more businesses and governments coming up with their own cryptocurrencies.
Even though there is such an interest in crypto, governments are cracking down on the digital currency as it has no central authority in the same way that the U.S. government has authority over the dollar. There are financial experts who believe that crypto actually is a threat to central banks and national security.
In response to Libra, China’s central bank is doubling down on its efforts to launch a cryptocurrency as well. In fact, we won’t have waved goodbye to 2020 before seeing other governments and business leaders coming up with their own cryptocurrencies.
There’s also been some information about China’s digital money experiments with the country releasing something to the public this year, 2020. Its digital currency/electronic payments plan has already been a while in the making. There are challenges with a digital wallet system, but a digital currency issued by the People’s Bank of China would provide the leverage the country wants.
Bitcoin established because of economic crash
What is the future outlook for bitcoin? Cryptocurrency saw fraud and misuse in 2019 with investors experiencing massive losses. With the economic crash when many people’s savings were wiped out, bitcoin was established.
It became widely accepted for a number of reasons such as it having a predictable inflation rate. Investors say that bitcoin will always be around because it can be trusted more than most government currencies.
Certainly, the world has undergone tumultuous changes in recent months and you can see that it will need to get ready for banking transformation.
Product developers are working on products to bring Bitcoin to general use, and shortly there will no longer be any reason to pay banks 2.5 to 4% each time you swipe your credit card. This is because bitcoin is a smooth transaction and for this reason its value is set to increase.
Cryptocurrencies kept a low profile in 2019 after a crash in 2018. Many investors are wondering if cryptocurrency is worth looking at in 2020?
There are some financial experts who say that the decline of cryptocurrency was actually good for the market as it showed investors that you require deep knowledge bout the coins you invest in.
Despite the chaos with the crypto markets, there are other investors who believe that 2020 is going to be bitcoin’s year.
Blockchain saw a rise in mainstream enterprise interest and there is more interest in how cryptocurrency and blockchain can be applied to deal with public crises.
Governments all over the world are offering stimulus packages to compact the economic impact of the current pandemic, but investors aren’t convinced that these packages will be able to meet the citizens’ needs. Bitcoin and the stock market have resumed a downtrend, and even gold is being sold for quick cash. With the global economy edging towards a recession, bitcoin might well come into its own.
The year 2020 is not likely to soothe the crypto market down but it seems as if there will be some important happenings that will assist it to becoming an important feature in the future of finance.
There are a few things that are likely to shape the digital asset market during 2020, and one of these is bitcoin halving. This will bring down the number of bitcoins rewarded for mining a block in the digital ledger.
It has happened a couple of times before with halving introducing new scarcity to the market, and bitcoin traders anticipating similar price growth as was with the previous halvings.
The third bitcoin halving has happened and according to some financial experts, there is some advice about which cryptocurrencies to buy for 2020 and which have a bright future.
The whole purpose of cryptocurrencies is simple – to make use of technology to cut out the middle-man in financial transactions and make buying and selling things less costly. With blockchain, a public ledger can’t be edited unless the entire network agrees with the update.
Traditional currencies need big banks to verify all transactions whereas cryptocurrencies don’t, making them more efficient and less costly than regular currencies, as there is no middle-man to pay.
There aren’t an unlimited number of bitcoins in the world but a fixed amount, and each time an individual updated bitcoin’s ledger – known as mining – they’d unlock new bitcoins.
The bitcoin system is set up so that once in a while, the number of new bitcoins unlocked for mining a block is halved.
Bitcoin has undergone three halvings, with the first in 2012 and the most recent now in May 2020. The second halving was in 2016. After the halving, bitcoin prices rose about 2,000% over the next 18 months. During these times, there have been alternative cryptocurrencies that have risen more than bitcoin. In other words, these halvings have been bullish for cryptocurrencies.
Prices are determined by supply and demand and if supply slows, prices go up. Because of the most recent halving, bitcoin’s supply is expected to rise by 2.5% in 2020 which is an all-time low for the cryptocurrency.
Lower transaction costs as well as faster transactions are enough to warrant there being a bright future for cryptocurrencies.
Cryptocurrencies have certainly been a fintech innovation and in less than 10 years, blockchain and crypto tech have released a wave of innovation for the future of finance. Bitcoin’s value has increased dramatically and we may well see more investor interest in the next years. This year and beyond we’re going to see even more innovation.
A Viable currency of the future?
The thing is, whether you invest in crypto now during 2020 should depend on whether you believe in the potential of blockchain technology. Some investors believe that blockchain technology is becoming increasingly important and that it is a good long-term investment, even it is high risk. The biggest companies in the world as well as countries talk about cryptocurrency as a viable currency of the future.
Supply chain transactions are coordinated across individual-, organizations, geographies and legal jurisdictions. Blockchains will be implemented into business models in a variety of ways, and regardless of the industry, positive changes are expected and which will have a great effect on a broad audience.
The safe-haven status of Bitcoin
When investors want to protect their portfolios against volatility, they buy ‘safe haven’ products such as gold. Looking at Bitcoin as a safe-haven during 2020 is going to be put to the test.
The reason for this is that Bitcoin is still seen as a volatile asset and considered a high-risk investment. However, bitcoin has shown that is it uncorrelated with most traditional financial asset classes and its price doesn’t necessarily follow other asset classes when there is a market downturn.
Uncorrelated assets are popular tools with investors to hedge their portfolios, and bitcoin, being an uncorrelated asset, may well adopt the identity of a safe-haven. Then again there is the possibility that it could be discarded in favor of traditional safe-havens.
The murkiness of cryptocurrencies becomes clearer
But is bitcoin and crypto going to be used as an everyday fiat alternative? No one can predict the future with accuracy. One thing though, a bill has been introduced to Congress known as the Cryptocurency Act of 2020.
It will bring about a clearer set of regulations on cryptocurrencies, making it easier for businesses and ordinary people to participate in the ever-growing industry with far less confusion.