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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

PlotX v2 Mainnet Launch: DeFi Prediction Markets

Republished by Plato

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[PRESS RELEASE – Please Read Disclaimer]

AscendEX, formerly BitMax, an industry-leading digital asset trading platform built by Wall Street quant trading veterans, congratulates PlotX – a cross-chain prediction market protocol on their v2 Mainnet launch on the Polygon Network on May 14 at 12:00 p.m. UTC.

PlotX Version 1 (“v1”) was launched in October 2020 as a decentralized non-custodial prediction market protocol on the Ethereum Blockchain. PlotX allows crypto-traders to use their skills to predict the future value of digital assets like ETH, BTC. Markets on PlotX v1 were automatically created in intervals of 4 hour, 1 day and 1 week.

The v2 has been under development since December 2020 and the testnet was released on April 13th, 2021 for the public. After rigorous testing by the community, the launch of PlotX v2 on the Polygon Mainnet is now scheduled on May 14th, 2021.

PlotX v2 has focussed heavily on simplifying the prediction-making experience for users thanks to a consistent dialogue with their community via the research forum and their official community telegram group. It brings the experience closer to mainstream applications while retaining the DeFi ethos of being non-custodial and permissionless.

This can be seen in the marquee features that PlotX announced via their recent blog post about the mainnet release:

  1. Gasless prediction-making – via meta-transactions that abstract the process for users so they only have to make a single transaction while making predictions
  2. Smooth token bridging – via cross-chain swap technology, that enables users to move $PLOT between Ethereuem, Polygon and other EVM compatible chains like BSC & Solana, from within the application itself
  3. Guaranteed liquidity provisions – via incentive alignment of market creators for providing liquidity for new markets, making it lucrative for users to participate in
  4. Simple onboarding experience – for users, especially ones who are not familiar with metamask and RPC changes, to login using their email addresses without compromising on the non-custodial nature of the dapp

The team has built a class product and is highly receptive to the community. As per the roadmap, upgrades in V2 do not end here; numerous new features are slated to be introduced that will equip users with exciting new prediction opportunities.

Ish Goel, co-founder PlotX, shares his thoughts “It has been an exciting journey for us since the launch of PlotX v1 in October 2020. Prediction markets have always been an exciting derivative for crypto traders. However, they have always faced the challenges of a complex UX, high gas fees & low market liquidity that has also resulted in a lack of growth of the space. With PlotX v2 we have worked alongside our community to solve these challenges by introducing an overhauled UX, deploying on Polygon and introducing liquidity bootstrapping mechanisms for new markets. The community has reacted positively to these features and we’re super excited to reveal the mainnet app to them as well as the larger crypto trading community!”

About AscendEX

Originally founded in 2018 as BitMax.io, AscendEx is a leading crypto and digital asset financial platform catering to both professional and retail traders. Our venue offers spot, futures, margin trading and staking products and incorporates key elements from the DeFi space to foster a unique market structure for users. AscendEx is led by a team of Wall Street veterans who have applied traditional markets’ rigor to create a robust, secure, and reliable experience for all participants; and a consistent source of liquidity for primary offerings.

About PlotX

PlotX is a cross-chain Prediction Market protocol built by the ex-CTO of Nexus Mutual (>$1bn mcap). It enables crypto-asset price predictions, like “What will be the price of BTC/USDT in the next 1 hour?”

Dubbed as the Uniswap of Prediction Markets, PlotX is the simplest and most fun DeFi derivative for crypto traders.

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Source: https://cryptopotato.com/plotx-v2-mainnet-launch-defi-prediction-markets/

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Blockchain

CBDCs Are Not That Stable And May Eventually Kill Bitcoin, Says Financial Expert

Republished by Plato

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Edward Chancellor – a British journalist and financial historian, explained that the first central bank digital currencies are likely to raise inflation which can lead to the destruction of Bitcoin. He agreed that CBDCs are ”cool” but certainly not stable.

CBDCs Would Mean The End Of BTC

Nowadays, many central banks of numerous leading economies such as China, Japan, and the US, are researching the option of launching their own CBDC. In a recent interview for Reuters, Edward Chancellor opined that central bank digital currencies are highly risky projects.

He said that CBDCs might even kill Bitcoin. Chancellor explained that it is much easier to distribute and ”print” digital currencies rather than cash, and that will cause an utterly high level of inflation.

He then added that in order to solve the issue, the governments and central banks would have to fix the emission of their digital coins – which number would be much higher than 21 million bitcoins:

”When banks get it right with CBDCs this will kill Bitcoin.”

The historian analyzed that changes in the form of money are normal and have happened multiple times in the past. As an example, he pointed to the paper money which once replaced metal coins. Chancellor predicted that in the process of the financial revolution, digital currencies would invade the world, but he opined that Bitcoin would not be among one of them.


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In conclusion, the journalist said that central bank digital currencies are ”cool” as a project but can not qualify as stable.

Deutsche Bank on CBDCs

Recently, the multinational investment banking giant – Deutsche bank – shared similar thoughts. The CIO of the German institution – Christian Nolting – predicted that CBDCs could damage Bitcoin’s role as a payment instrument. He also suggested that the primary cryptocurrency could serve as a store of value.

According to Nolting, the crypto industry is ”here to stay.” On the other hand, he warned that ”governments and more digitally-aware populations might ultimately prefer to go with CBDCs,” instead of relying on the decentralized nature of BTC. Furthermore, some potentially harming legislative frameworks developed by world regulators could reduce digital assets’ chances of serving as international payment instruments:

”A widespread introduction of CBDCs accompanied by higher regulation of cryptocurrencies could create a more challenging environment for crypto assets as some of their advantages compared to traditional financial assets would fade in the longer term.”

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Source: https://cryptopotato.com/cbdcs-are-not-that-stable-and-may-eventually-kill-bitcoin-says-financial-expert/

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Blockchain

Bitcoin Mining Company Vows to be Carbon Neutral Following Tesla’s Recent Statement

Republished by Plato

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It goes without saying that Tesla took center stage last week when the company announced it would no longer support bitcoin payments for its electric vehicles.

The message seems to have resonated, as Greenidge Generation Bitcoin Mining has vowed to be carbon neutral in 2021 and beyond.

Carbon Neutral Bitcoin Mining

After announcing plans to expand its Bitcoin mining operations last month, Greenidge is now looking to go entirely carbon neutral this year and in the future.

The company is committed to the cause, and it plans to invest in US-based renewable energy projects.

According to a recent press release, the company will also take part in the Regional Greenhouse Gas Initiative, which is a market-based program where participants sell CO2 allowances through auctions and invest the proceeds in renewable energy and energy efficiency.


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Speaking on the matter was Jeffrey Kirt, the CEO of the company, who said:

“Our bitcoin mining capability is already best-in-class and seamlessly integrated with our electricity generation that powers thousands of homes and businesses. By taking the bold and unique step of making or cryptocurrency mining fully carbon neutral immediately – as opposed to some distant date in the future – Greenidge is once again leading in environmental efforts.”

Musk’s Message Resonates

Greenidge’s announcement comes days after the leading electric vehicle manufacturer, Tesla, revealed that it would no longer support bitcoin payments. As a reason for its decision, the company cited environmental concerns related to bitcoin mining.

Elon Musk, the company’s CEO, confirmed and reiterated that he is bullish on crypto but so long as it doesn’t have a negative environmental impact.

The company also said that it’s looking for ‘greener’ alternatives to Bitcoin so that it can continue accepting crypto payments. This led to many speculations about which cryptocurrency it would choose. Shortly after, Musk said that he’s working closely with Dogecoin developers to improve transaction efficiency, causing many to believe that the meme-inspired coin might be Tesla’s choice.

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Source: https://cryptopotato.com/bitcoin-mining-company-vows-to-be-carbon-neutral-following-teslas-recent-statement/

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