1. Bitcoin Block Reward Halving
As we know, bitcoin is a highly scarce asset, with a total supply of only 21 million. Every 4 years, the production of new bitcoin will be reduced by 50%. Now we are just 5 months away from the next bitcoin halving, which is around May 2020. Historically bitcoin halving has been a price driver because it reminds people of how scarce bitcoin is. However, while we are positive that bitcoin price will reach its new peak in the future, there is also evidence showing that each bitcoin market cycle took significantly longer than the previous. With each dollar added to the market cap, the percentages become more incremental, therefore a bull market at this scale will take years to play out its full effect.
2. China Issues Digital Currency
China has been very proactive in the field of blockchain and cryptocurrency. In terms of bitcoin mining, currently “65% of bitcoin hash power is in China.” Chinese president Xi Jinping made a public statement on Oct 25, “[We must] clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation.” One of China’s major developments is the Digital Currency /Electronic Payment (DC/EP) Initiative based on blockchain technology.
“What the central bank have in mind is a centralised digital currency among all,” Yao Qian, who leads the research at the People’s Bank of China (PBOC), told the South China Morning Post, “As money has evolved from the barter system to its metallic and paper forms, it is now going digital.”
3. Facebook Libra
Facebook’s payment network plan has been struggling under the scrutiny of US and European regulators. However, the Libra project’s GitHub repository is still active, and code submissions are ongoing. It is expected that when Libra officially launches, it would be restricted in terms of application, partners and functions at the beginning. However, with an ambitious mission to “enable a simple global currency and financial infrastructure that empower billions of people,” Libra should be able to maintain a relatively stable developing momentum once (if) it goes live.
4. Ethereum 2.0
Ethereum 2.0 is a major network upgrade on the Ethereum blockchain that is designed to migrate its current Proof-of-Work (PoW) consensus algorithm to Proof-of-Stake (PoS), and the block validation function will be passed from miners to special network validators. PoS is generally expected to be more scalable and energy-efficient than PoW blockchains like bitcoin.
The first “phase zero” stage of the Ethereum’s transition to Ethereum 2.0 is scheduled to take place on 3 Jan, 2020, which coincides with the 11th anniversay of Bitcoin genesis block. According to Vitalik Buterin, the transaction costs on the new Ethereum blockchain could rise 5-10% and Ethereum 2.0 may possess only about half the transaction capacity as originally planned.
5. Fi and On-chain Derivatives
In 2019 we have seen incredible progress of Decentralized Finance (DeFi), led by the market’s most systemically important protocol- MakerDAO. Maker’s stablecoin DAI underpins the majority of the DeFi ecosystem, but will likely face steep new competition on the lending and stablecoin fronts. As the DeFi industry continues to grow, it’s expected to see new on-chain derivatives being tested as crypto finance mimics traditional finance quite closely. If 2019 was the year of DeFi lending, 2020 will be the year of DeFi derivatives.