Halfway Through 2020, Where Has Crypto Taken Us?
By Ashish Singhal, CEO of Coinswitch.co and CRUXPay
What a year it has been, and one that will certainly find its way into the history books. Consisting of perplexing market booms and enormous loss for mammoth industries, the COVID-19 pandemic has brought with it unprecedented turmoil for the financial space, happening amidst growing recognition of the potential of cryptocurrencies. Let’s have a look back and observe the progression of cryptocurrencies throughout the indelible months of 2020 we’ve had so far.
January 2020 had a roaring start for crypto, with the rapid expansion of the market for regulated bitcoin derivatives spawning an increase in overall confidence in crypto. For the most part, digital markets experienced a strong bullish trend, with a valuation of all 4,000+ coins approximating $235 billion in mid-January. Alleged signals of a Bitcoin price rally ahead of the 2020 halving event paired with the boost in the “bitcoin as digital gold” narrative as a result of Iranian-U.S. tensions, saw Bitcoin hitting the $10,000 mark for the first time since 2019.
March saw the World Health Organization (WHO) officially declaring the coronavirus a pandemic. The 2020 Olympics were postponed for the first time since 1944, and the Dow plunged 2,997 points in its worst drop since 1987. Cryptocurrencies were not excluded from the unforeseen financial duress caused by the COVID-19 outbreak. As a consequence of these violent market fluctuations, most digital assets provided negative returns. Bitcoin, for instance, took a significant dip below $4,000.
Since we’ve witnessed a disruption in crypto markets in tandem with stocks, there is little new evidence supporting the safe-haven sentiment around bitcoin. Similarly, the narrative surrounding “ETH as money” also suffered, with the resultant failure of flagship DeFi systems like MakerDAO amidst the crash raising questions about Ether’s potential. With that said, the crash of March 13th saw a daily trade volume of $75.9 billion for crypto – a record high. Moreover, strategists from JP Morgan attested to crypto’s resilience through this crash, describing a more robust market structure than that of currencies, equities, treasuries and gold.
2020 highlight: The rise of India’s crypto scene
It has been a seminal year for crypto in India. Advocating on behalf of cryptocurrency startups, the Internet and Mobile Association of India (IAMAI) succeeded in its appeal to the Reserve Bank of India (RBI) circular, overturning the two year old ban on cryptocurrency trading. The verdict will push for regulators to come up with regulations that not only help startups in the cryptocurrency space, but also safeguard users and customers.
In the wake of this decision, Binance and its local subsidiary, WazirX, established a fund to reinvigorate growth in Indian blockchain startups. With $50 million in the fund, investments will be made for the sole purpose of catalysing the development of robust infrastructure for the Indian crypto market. With an array of underlying factors supporting India’s case for using cryptocurrency, an extensive software development talent pool, and a growing appetite for crypto among the population, India is uniquely positioned to become a major crypto hub.
Blockchain in the fight against COVID-19
While it would be easy to take a dim view of the past few months, it is important to acknowledge the benevolent initiatives that emerged as a result from the booming blockchain space. In February, Hyperchain responded early to the coronavirus epidemic by launching its blockchain-based platform. Serving as a medical supply donations portal to support hospitals in central China, this demonstrates the potential of blockchain, when paired with the internet, big data and AI, to improve administrative functions. Lack of transparency and censorship were the prevailing themes during the start of the outbreak, highlighting the necessity of a credible mechanism-based society.
Helperbit enabled organizations to leverage crypto in their endeavors, namely the Italian Red Cross and the Colli Albani Committee, accepting cryptocurrency donations to combat COVID-19. Ripple Labs also made a significant contribution, donating $200,000 to two different non-profit organizations in response to the outbreak. Although the circumstances were unfavorable, this allowed the blockchain space to demonstrate its benevolent capabilities and foster widespread trust.
Continuing this thread, the WHO launched the MiPasa platform in collaboration with several large tech companies, such as Microsoft and IBM, to streamline the distribution of data concerning COVID-19. With the persistence of the pandemic forcing increased surveillance, blockchain based healthcare initiatives could offer a solution that would keep anonymity intact. Manipulation of data has also been a recurring theme throughout the last few months, which is another problem that blockchain solutions can mitigate.
Exploring mainstream adoption and industry achievements
When Bitcoin was pioneered back in 2009, the idea of a digital currency was totally new. As the industry has continued to grow, this still-nascent domain is finally finding its way into key mainstream markets. For example, the beginning of 2020 saw the South Korean government debating a bill that would enhance the transparency of trading virtual assets. This would later pass in an unanimous vote, as one of the world’s first comprehensive cryptocurrency laws.
Coinbase became a principal member of Visa, enabling the crypto exchange to distribute debit cards without relying on third parties. In keeping with the theme of a digital payments revolution, Visa began hiring crypto experts in March, and later filed a patent for a ‘Digital Fiat Currency’ using blockchain tech. These announcements came subsequent to an episode of The Simpsons featuring cryptocurrencies. Given the producers’ affinity for predicting the future, one could expect mainstream adoption of crypto to continue on its upward trajectory.
More recently, Binance acquired crypto wallet app Swipe, allowing users to convert crypto currencies into fiat currencies via the Visa payment network. Paired with the news from Kirobo, which has developed a technology to cancel a wrong transaction and retrieve the funds sent to an incorrect wallet address, it is clear that cryptocurrencies are approaching the simplicity and security of traditional online banking.
This year saw the 10th anniversary of the famous 10,000 BTC pizza order, and also Ethereum’s 5th anniversary, representing a clear marker of progress and cryptocurrency’s real-world use. Although the outbreak of COVID-19 rattled the global economy, causing the most severe financial reshuffling in recent memory, it is fair to say that blockchain and crypto are not just the next short-lived craze. While not unscathed, this global crisis has pushed people away from traditional institutions and will ultimately bolster distributed ledger technologies in the long run.
2020 is far from over, and another wave of COVID-19 may be looming for various nations around the world. This could present its own set of new challenges — potentially even more severe than the last. The unforgiving abruptness of the initial wave exposed our collective vulnerabilities, highlighting the importance of sustainability. Efficiency will be the key for those companies that will persist, and blockchain tech has presented a strong foundation to build upon.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.