Pushing encryption technology to unprecedented heights in 2021

Challenges promote progress. Technology, like life itself, cannot be set in stone. Only dynamics can stimulate positive changes. With the collapse of the cryptocurrency market in mid-May, many retail and institutional investors began to lose confidence in the bright future of cryptocurrency and Bitcoin (Bitcoin) in particular. Companies and institutions, whales and early adopters converge in a single impulse-the Internet is overwhelmed by a wave of distrust, and is the best defensive asset for “cryptocurrency first”, superior to gold and all previous inventions Other assets.

People need to see the whole picture here to realize what is happening. The last time the market suffered more or less comparable and significant losses was a year ago, in March 2020.This year, a series of negative events triggered panic selling-Elon Musk’s Twitter Crusade against Bitcoin, This Rumored court case Against Binance and the latest Fight against cryptocurrency From the Chinese government-Reminiscent of the huge collapse of digital assets when interest rates on many assets peaked in December 2017 and the ensuing “crypto winter”.

related: Expert answer: How does Elon Musk affect the crypto space?

However, many people who have little knowledge of how the cryptocurrency market works are not aware of the depth of changes the space has undergone in recent years. In the rapidly developing digital asset ecosystem, emotions are the worst enemy of investors or traders. It is worthwhile to calmly look at the facts, analyze the changes, and understand the true value of the ecosystem that grows on the fertile soil of the blockchain.

Wind of change

In recent years, the investment mentality has changed. Although it continues to be dominated by a highly speculative component, settlement also has practical applications. Investors shifted from short-term speculation to long-term games.The number of Bitcoin ATMs is Doubled Since 2020. This sharp increase clearly shows the growing demand for the world’s largest crypto assets.From a niche market perspective, the cryptocurrency industry has Evolution Enter a multi-billion dollar industry.

Stablecoins—tokens linked to their corresponding legal assets (such as U.S. dollars, euros, etc.)—have gained significant weight from 2020 to 2021. For example, with the emergence of new platforms known as decentralized finance or DeFi protocols, opportunities seem to provide profits without major asset risk. Such platforms are nothing more than distributed programs that provide clearing, custody, and settlement services. Every year, they get a bigger piece of cake from traditional financial institutions. The surge in activity in the environment of decentralized trading platforms is also because their infrastructure does not have the same common vulnerabilities as centralized trading platforms.

Decentralized exchanges are superior to centralized exchanges in terms of trading volume, showing thousands of times Grow Only last year’s transaction volume. The interface that interacts with DeFi can be created by any programmer anywhere in the world. The essence of this interaction is to develop a financial ecosystem running on the global blockchain.So far, the market value of DeFi has Arrivals More than 100 billion US dollars, and this trend will undoubtedly continue soon.

related: The rise of DEX robots: AMM promotes the industrial revolution in the trading field

Speaking of examples, we can summarize that even large companies like Deutsche Telekom have given up private blockchains and are Research public infrastructure, Supports nodes in the Ethereum, Solana, Algorand, Celo and other networks. This fact shows that the decentralized financial world is taking a place in the global clearing, custody, and settlement services market—just like Bitcoin’s previous status as a protective asset that removes gold from its throne.

We have observed that when the real interest rate of US dollar deposits becomes negative (central bank interest rate minus inflation), corporate demand accelerates. Inflation expectations have intensified in the past year, stimulating demand for long-term capital preservation. Today, Bitcoin has not only successfully won the hearts of speculators and hedge funds, they have realized the inevitability of the depreciation of the dollar balance, voted with their money and transferred part of the treasury’s liquidity to digital assets.

related: Predicting Bitcoin prices using quantitative models, part 2

Still challenges

At the same time, the divergence of supervision methods continues. Some jurisdictions have enacted bills, but they have no practical application. At the same time, other countries have only just begun to formulate regulations, and some countries ban the use of cryptocurrencies—recently China is a good example.

For example, in the United States, banks are allowed Provide hosting services For cryptocurrency assets. Emerging markets such as China, Russia, and India have their own merits. They are all hits and go their own way, trying to promote at the national level to provide potential investors with so-called “tech candies.” Unfortunately, in practice, all world-class projects are often transferred to other jurisdictions-which is very sad.

related: With mass adoption approaching, stablecoins have brought new difficulties for regulators

The future of the cryptocurrency industry is undoubtedly optimistic. Any period of “cleaning up” and dumping of price ballasts, corrections, and declines should be regarded as another round of evolution. In the near future, we should expect investors to shift their attention from meticulous market monitoring, hype coins (no value to the community) and new price records to the development of products in the development area. The cryptocurrency field looks forward to providing a more convenient, reliable and accessible interface for mainstream investors to interact with the digital asset market and the 3.0 generation blockchain-fierce competition will erupt in the next few years.

This article does not contain investment advice or recommendations. Every investment and trading action involves risks, and readers should research on their own when making a decision.

The views, thoughts, and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Gregory Klumov Is a stablecoin expert, his insights and opinions often appear in many international publications. He is the founder and CEO of Stasis, a technology provider that issues the most widely used euro-backed stablecoin with high transparency standards in the digital asset industry.