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Economic Uncertainty Spells Good Things for DeFi in 2021

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Interest in cryptocurrencies has always flourished during times of economic uncertainty. From its inception in reaction to the 2008 financial crisis to Brexit, hyperinflation in Venezuela and unrest in Hong Kong, cryptocurrency adoption has spiked in times of economic instability. It’s no secret that we are in the midst of one of the most uncertain periods of modern history right now. Between the Covid-19 pandemic, shifting international powers and disruptive innovations, the future has become more difficult to predict than ever before. This volatility leads to a burgeoning interest in alternatives to dominant, fiat-powered financial instruments – a big win for cryptocurrencies and DeFi adoption.

Living in a blizzard of uncertainty

Unlike some of the more isolated instances of economic uncertainty experienced in recent history, we are currently living through a global period of anxiety fostered by the blizzard of health, political and technological change.

The Covid-19 pandemic has ensured that health is the greatest force driving government action as well as business and personal decisions. The International Monetary Fund cautions that though a vaccine could stimulate a return to pre-crisis levels in some industries, most economies will suffer lasting damage and extreme poverty will likely rise for the first time in 20 years. Though about 55% of executives expect economic improvement in the next six months, the impact of Covid-19 has been far from equal across business sectors. Big tech companies like Amazon, Google and Facebook have profited from the increased emphasis on e-commerce, remote work and digital services. Meanwhile, ghost towns are popping up everywhere where tourism and hospitality-based industry once flourished.

Shifts in international powers further complicate the precariousness of the future. Though the United States remains at the top of the Asia Power Index, its lead over China has been halved since 2018. The US dollar has enjoyed a special position as default international reserve currency since the creation of the United Nations system after WWII, but China’s Belt and Road Initiative (BRI), which creates trade relationships and connections across Asia and Europe, could threaten that status. If China mandates that all 138 participating BRI countries use its fast-developing central bank digital currency (CBDC) – the digital yuan – the country wielding the greatest economic influence will be China.

The widening wealth gap between the world’s 1% wealthiest individuals and everyone else is yet another aspect contributing to growing financial precariousness. In the United States, the wealth divide between the richest and poorest families more than doubled from 1989 to 2016. The accelerating rate of technological innovation is only widening these gaps. Artificial intelligence and automation now threaten the jobs of truck drivers, customer service representatives, retail sales clerks, market research analysts and even doctors. The idea of universal basic income to support people whose jobs are being replaced with algorithms is but a band-aid to the greater problem – the reality that the fiat economy is no longer working for the everyday person.

The good news – we are resilient

If there is a positive outcome from all this economic anxiety and global confusion, it’s that people, businesses and governments are demonstrating extraordinary resilience. Innovations take off during transitional times, and we’re already witnessing how goods and services that offer solutions to the current challenges brought forth by the Covid-19 pandemic are thriving. For example, online stock trading platform Robinhood raked in $180 million in Q2 of 2020, a 198% increase from all of Q1’s $91 million. The rise in contactless payments has ensured that many more people have joined the cashless economy. This escalating interest in online investments and digital payments suggests a growing comfortability with online transactions that smooths the path to cryptocurrency adoption.

Why 2021 will see massive crypto and DeFi adoption

Given the growing economic uncertainty furthered by a global health crisis, evolving international power dynamics and increasing income and wealth inequalities exacerbated by automation and technological change, it’s natural to look to alternatives to the centralized systems that have created this havoc. Enter – decentralized finance and peer-to-peer transactions using cryptocurrencies. When economic uncertainty grows, so does interest in crypto, and surging cryptocurrency prices and DeFi participation demonstrate that this period of economic uncertainty is no different from the others, except at an even greater scale.

Data from Grayscale shows that the Covid-19 pandemic led to an increased interest in Bitcoin investments in 2020, with more than 55% of US investors now interested compared to just 36% in 2019. Of the investors surveyed, about 63% expressed that Covid-19 impacted their decision to invest in Bitcoin. Indeed, the prices of Bitcoin, Ethereum, and other cryptocurrencies have shattered ceilings built back in 2018. The DeFi explosion and impending Ethereum 2.0 update are certainly contributing factors to crypto’s recent surge, but the greater market mover is and always has been an unclear economic future for fiat.

DeFi, which was valued at about $1 billion a mere seven months ago, has now surpassed $20 billion in total locked value in Ethereum-based protocols. Part of the reason for DeFi’s massive growth is the development of protocols that enable global access to financial services like lending, borrowing, savings and insurance that were previously inaccessible to anyone without a bank account. These more accessible systems offer a much-needed antidote to the centralized ones that have led to widening wealth gaps and economic downswings (like the 2008 financial crisis).

As the global pandemic continues to bankrupt businesses, put millions of people out of work and change the nature of many jobs, people have been forced to explore alternative sources of income and wealth generation. More people are online and learning to use digital technologies than ever before because of the shift to remote work, contactless payments and virtual communication. All of these factors combined create a ripe environment for cryptocurrency and DeFi adoption. 2021 very well could be the year Bitcoin surpasses $100K, Robinhood users become DeFi users and a majority of businesses with digital payments also accept cryptocurrency payments.


James Wo is an active investor and the founder of Digital Finance Group (DFG), a firm that manages investments in excess of $550 million. He oversees a digital asset fund that is largely outperforming the market and a VC portfolio that includes Polkadot and its ecosystem projects such as Bifrost, Tidal, Crust, Acala and more. He’s also managed investments in Brave, LedgerX, Bloq and Circle.

 

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Source: https://dailyhodl.com/2021/01/14/economic-uncertainty-spells-good-things-for-defi-in-2021/

Blockchain

Bitcoin Price to $1 Million in 10 Years ‘Very Reasonable’ Says Kraken CEO

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With bitcoin currently enjoying a near 70% YTD increase, bullish predictions see the asset topping into a six or even seven-digit territory in the following decade. These projections came recently from Kraken’s CEO, Jesse Powell, and the Managing Director of Magnetic, William Quigley.

Bitcoin to $150K in the Next Year

Founded in 2010, Magnetic is an investment firm with a pro-cryptocurrency approach, having allocated funds in the industry as well. In a CNN appearance, the company’s Managing Director and Co-Founder, William Quigley, spoke about bitcoin’s future, price performance, and the impact of the COVID-19-induced financial crisis on the asset.

By referring to historical price developments after each halving, the executive forecasted a somewhat bullish projection that can take the cryptocurrency up to $150,000 in the following months.

“We are about half-way through the post-halving bull run, so, by my judgment, we have a lot more to go with bitcoin. Certainly – $100,000 and quite possible $150,000 by the end of this year or maybe Q1 next year.”

Quigley also touched upon the growing number of companies putting BTC on their balance sheet, which he classified as “huge.” He believes that the general narrative for corporations to allocate some of their trillions of dollars currently held in cash in government bonds is fading. Instead, they will continue to look for an asset with a finite supply, namely bitcoin.

He noted that the most critical issues for corporations are inflation and the diminishing of the dollar. In contrast, being a limited-supply type of asset, BTC could serve as a hedge with its decreasing inflation.

BTC to $1M, Says Kraken CEO

In another widely-bullish prediction, Jesse Powell, the CEO of the US veteran crypto exchange Kraken, said that the asset price is going to “infinity.”

When asked to specify in dollar terms what that amount would represent, Powell said that even reaching $1 million per bitcoin sounds “reasonable.”

“People that are believers in bitcoin see it’s going to replace all of the world fiat currencies, so that means basically whatever the market cap of the dollar is, the euro, all of that combined is what bitcoin could be worth.

In the near time, people see it surpassing gold as a store of value. So, a million dollars as a price target within the next ten years is very reasonable.”

He justified his quite optimistic prediction with the excessive amounts of fiat currencies printed by the US and other global superpowers following the COVID-19 pandemic. Additionally, Powell believes that the younger generations are keen to adopt the primary cryptocurrency, which could skyrocket its price.

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Source: https://cryptopotato.com/bitcoin-price-to-1-million-in-10-years-very-reasonable-says-kraken-ceo/

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Blockchain

First Major Rug Pull on Binance Smart Chain? Over $30 Million Drained

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  • Binance Smart Chain has become somewhat of a hot topic amid DeFi gem seekers in the past few weeks.
  • The network saw an influx of new projects, reminiscing of the early days of the DeFi craziness last summer.
  • In any case, hours ago, the community was shocked earlier today when news broke out that one of the newer protocols, Meerkat Finance, was drained.
  • Meerkat Finance is a yield farming protocol that runs on Binance Smart Chain, and a few hours ago, the team revealed that it was “hacked” and drained by 73,000 BNB and 13 million BUSD. The total number amounts to roughly over $30 million at the time of this writing.
  • It appears that the alleged hacker stole the money by changing the protocol’s smart contract using the original deployer’s account. In other words – the private key of the deployer contract must have been compromised.
  • The Twitter account of the project, as well as the website, have also been taken down, causing some to believe that the team rug pulled the entire thing.
  • Meanwhile, the official account of Binance prompted the community to provide any additional information they may have on the case.
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Source: https://cryptopotato.com/first-major-rug-pull-on-binance-smart-chain-over-30-million-drained/

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Blockchain

Parity To Educate Berkeley Students on Developing Blockchain Projects on Polkadot

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The popular DLT protocol Parity Technologies has partnered with Berkeley’s Blockchain Xcelerator program to provide educational panels for students in the university’s blockchain curriculum.

As part of the collaboration, Polkadot’s co-founder Gavin Woods will be a guest lecturer in the A. Richard Newton Distinguished Innovator Lecture Series.

Parity to Educate Berkeley Students About Blockchain

Parity Technologies, a core DLT infrastructure company, announced its latest partnership in a press release shared with CryptoPotato.

According to the document, Parity will employ its substrate blockchain-building framework to educate and work together with the university to raise “the overall awareness of next-generation blockchain technologies in order to promote adoption among students and the community at UC Berkeley.”

For the ongoing 2020-2021 academic year, Parity’s developer education team will collaborate with the faculty, students, and the community studying blockchain technologies in their respective coursework. This includes involvement in curriculum preparation, project ideas, and resources to “enrich the educational experience.”

Furthermore, Parity and the university’s DLT-oriented program called the Berkeley Blockchain Xcelerator will advise students and entrepreneurs on how to develop and eventually launch blockchain startups on Polkadot and Web 3.0 ecosystem.

Jocelyn Weber, an executive at the Berkeley Blockchain Xcelerator, said that the “work with parity and other Polkadot ecosystem startups had demonstrated the potential of this technology in educating our community.”

“We strive to expose our students to the tools and skills they will need to enter this space and immediately start making significant contributions – which is why improving their knowledge with tools such as Substrate and networks like Polkadot will be an important part of our curriculum development.” – Weber added.

Gavin Woods to Give a Lecture

The statement also outlined that Dr. Gavin Woods, the co-founder of Ethereum, Polkadot, and Parity, will give a lecture in the A. Richard Newton Distinguished Innovator Lecture series this month.

Wood commented that blockchain innovation is expanding at a rapid pace and has advanced “beyond legacy networks into next-generation, production-grade blockchains like Polkadot.” This makes it “critical” for the newer coders, engineers, and entrepreneurs to be able to take on the growing competition and develop ground-breaking projects.

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Source: https://cryptopotato.com/parity-to-educate-berkeley-students-on-developing-blockchain-projects-on-polkadot/

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