By now you’ve probably read your fair share of “what to look out for in 2020” articles from all the usual suspects. And I’m guessing you’re pretty sick of them.
With that in mind… here are my top three crypto events of 2020.
The thing is, I’ve been wanting to write this article for a couple of months now, but I thought I would wait a bit and jump on the New Year bandwagon.
However, I think you’re going to find this article a lot more valuable than your average.
There really are some very big things just over the horizon, all set to be implemented in the coming 12 months.
So let’s get to them.
#1 Ethereum 2.0 is launching with Proof of Stake (basically crypto dividends)
You’ve probably been hearing about Ethereum moving to Proof of Stake (POS) for as long as you’ve been hearing about Ethereum.
But 2020 is the year it finally happens.
Ethereum, like most current cryptos, is not in its final form.
Right now, it has low transactions per second, not much built-in privacy and relies on “miners” for security.
Eventually, Ethereum will support thousands of transactions per second, have easy privacy options and rely on “stakers” for security.
It’s already moving on nicely with its privacy features and transaction speeds – as I reported on here: what Ethereum’s hard fork to Istanbul means for token holders.
But it’s the switch from miners to stakers that most people are really excited about.
Why? Well, that’s when you’ll be able to get a passive income for simply holding and staking your Ethereum.
So from an investment point of view, Ethereum is moving from merely a growth asset, to a growth asset that also provides a passive income.
And, if you spend any time thinking about finance, business or investing, you’ll know that passive income is the holy grail.
In fact, over the last few years, it’s become one of the biggest buzzwords out there. With many “gurus” cashing in on the craze and showing people how to create “passive income businesses” that aren’t really passive at all.
But I digress.
When is it happening?
It’s rolling out over the course of this year, with “phase zero” set for “early 2020”.
And that “early 2020” target was only confirmed last month. So it’s not like when a project sets a date five years in the future and then that date arrives and nothing happens.
Ethereum 2.0 phase zero will be coming in the first half of this year. And then once it’s been tested it should be rolling out in full by the end of 2020.
So, basically over the course of this year, you can expect a steady stream of updates and developments coming to Ethereum.
What are the implications?
First of all, from an investor’s point of view, Ethereum will produce passive income, as I said.
This will bring in a big interest from income-seeking investors and institutions. We’ve already seen the impact Tezos staking has had on the industry – as I wrote about here.
And Tezos is barely talked about outside of crypto circles. Ethereum, on the other hand is practically a household name. (At least in my household).
The more Ethereum that’s locked up by people seeking a passive income, the less will be available for trading.
And so, as you know, thanks to the laws of supply and demand, the price is likely to go up. Potentially a lot.
But there’s another major development that Ethereum 2.0 brings to the party. Scaling.
Yeah, it’s not all about investors. Remember, Ethereum is literally setting out to be “the world computer”.
And to do that, it needs to be able to process much more than the 15 or so transactions per second (TPS) it was maxing out at until very recently.
Today, thanks to Ethereum’s recent system upgrade to Istanbul, it can process thousands of TPS. But the way it does this isn’t so elegant.
Ethereum 2.0 is going to process “tens of thousands of transactions per second” according to Ethereum’s Lord and Saviour, Vitalik Buterin.
And it will do it in a much more user-friendly way.
If you were around in the heady days of 2017 and the dark days of 2018, you’ll probably remember the main criticism levelled at blockchain was that it can’t process enough transactions per second.
People love to quote the VISA numbers (up to 24,000 TPS) and say blockchain will never succeed until it can reach those numbers.
Well, Ethereum 2.0 will reach those numbers. And when it does, there’s no telling how big it could get.
I’ll leave the final words on this event to Vitalik Buterin, which come from a podcast he took part in back in September 2019:
“Blockchains as they currently exist are in many ways a joke, right? Like 15 transactions per second… you’re not going to run the world economy on top of that… So I’m definitely just really excited about turning Ethereum into a system that we can really, fully be proud of.”
“Ethereum 1.0 is a couple of people’s scrappy attempt to build the world computer; Ethereum 2.0 will actually be the world computer.”
#2 The Bitcoin halving brings a flood of anticipation back into the market
For some reason, the closer this event gets, the less press coverage it garners.
Which is strange. You’d have thought the opposite would be true.
Still, I’m sure coverage will start picking up again shortly.
Why? This is the biggest event to happen in Bitcoin since the Bitcoin Cash hard fork back in 2017.
Actually, it’s arguably even bigger.
To explain what the Bitcoin halving is – or the halvening, as some people call it – we need to go back to basics.
As you probably know, there will only ever be 21 million Bitcoin in existence.
Remember, Bitcoin came about as a backlash to the corrupt economic system and endless money printing (or “quantitative easing” if you want the correct term) of the US, UK and European Central Banks.
That’s arguably why Bitcoin’s genesis block had a line of code that read “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”.
The other side of that argument is that just so happened to be the newspaper headline on the day of Bitcoin’s creation, and Satoshi Nakamoto just used it as a proof of date.
But the “backlash against our corrupt economic system” angle is much more fun, so let’s go with that one.
Unlike state currencies, you can never “print” more Bitcoin. Bitcoin are “mined” into existence. And once all 21 million have been mined, there will be no more… ever.
This is one of the main reasons why they are valuable.
Right now, Bitcoin miners get 12.5 Bitcoin (worth about $107,000) every time they mine a successful block.
Every four years this reward halves, until there are no more Bitcoin left to mine. Hence the name the Bitcoin halving.
We’re already over 85% of the way there now, with over 18 million of the 21 million total having already been mined.
The halvings are there to ensure we don’t reach 100% too soon. The thinking behind this is that the longer it takes, the more evenly distributed Bitcoin will be.
Since Bitcoin’s creation in 2009, it has already been through two halvings, which coincided with price rises.
Here you can see what happened before and after the last halving, which took place on the 9th of July 2016:
So the expectation is that the next halving will lead to major price rises, too.
When is it happening?
The Bitcoin halving will happen on the 12th of May 2020.
If you want to track it, bitcoinblockhalf.com lays all the numbers out pretty nicely.
What are the implications?
Again, investors are hoping this reduction in supply leads to big price rises.
And even if it doesn’t directly, the hype it will generate will bring a whole heap of interest into Bitcoin… which would then lead to price rises.
The question people are asking now, though, is: is the halving already priced in?
I mean, each halving is a fixed event that has been known about since Bitcoin’s creation over a decade ago.
So it’s not like the upcoming halving is a surprise event.
However, Bitcoin has been ticking up nicely since the beginning of this year. And that’s led many commentators to suggest the halving isn’t actually priced in yet.
I guess we’ll find out in the coming weeks.
Either way, the halving is going to be a major event this time round, which could positively impact Bitcoin prices indefinitely.
#3 IOTA’s “coordicide” makes all other cryptos obsolete
I haven’t written much about IOTA on coin confidential so far.
But if you followed my writing on Exponential Investor or Crypto Wire, you’ll know it’s pretty much my favourite crypto. That is, if you can really have a favourite crypto.
I’ll go into why IOTA is so revolutionary – even within the world of crypto – in another article.
But to quickly summarise: IOTA is feeless, doesn’t need miners, can be used with complex smart contracts and actually speeds up as more and more people use it.
It’s that last point that’s really the “revolutionary” part.
Whereas most networks – Ethereum, Bitcoin… mobile phones, the internet… – slow down the more people use them, IOTA actually speeds up.
So it’s TPS is essentially limitless.
And the way it does this is extremely elegant. Instead of using a blockchain like Bitcoin and Ethereum, it uses a directed acyclic graph (DAG).
This means that it can remain immutable and dynamic.
Now, if you’re a normal person those last two paragraphs probably just sound like gibberish. So I’ll explain.
Basically, when you make a transaction on IOTA, you need to verify two previous ones before yours goes through.
It’s as simple as that.
And because the people making the transactions are doing the verifying, there is no need for miners and so no need for fees.
So you end up with a feeless crypto that speeds up as more people use it.
Unlike most major cryptos that are working on scaling solutions after the fact, IOTA was simply designed with scaling in mind from the beginning.
And because it’s feeless, that makes it perfect for machine-to-machine micro transactions.
IOTA is designed to be the backbone of the Internet of Things, IoT. Hence the name IOTA.
And the IoT is projected to be worth a staggering 1.6 trillion by 2025. (Source).
As I said, IOTA promises to fulfil all the promises of crypto on a single platform.
But up until now, it’s been just that, a promise.
That’s because IOTA relies on something called the coordinator to make sure its network runs as it should.
Because of this, IOTA isn’t truly decentralised, and decentralisation is essentially the entire point of crypto.
Crypto’s purpose is to create censor-resistant networks that run themselves, without the need for any middlemen or third parties.
So, by needing a coordinator to coordinate its network, IOTA isn’t fulfilling that promise.
The IOTA Foundation has always said that once IOTA has enough transactions, the coordinator will no longer be needed. Its network will coordinate itself.
But until mid-2019, many thought this would never be possible.
Then on the 27th of May 2019, IOTA’s co-founder, Serguei Popov, released a video saying his team had solved the Coordicide problem:
“The main goal of this event was exactly to figure out how to kill this coordinator. We call it Coordicide. And I think we… we did it. There is a lot of work to do, but we did it”.
A few days later a whitepaper followed, with all the mathematical proofs.
IOTA had done it. They’d really done it.
But of course, coordicide would take a good amount of time to be implemented.
And over the next six months, many people just sort of forgot about coordicide.
But it’s coming, and sooner than expected.
When is it happening?
On the 18th of December 2019, IOTA released a long-awaited roadmap. You can read it here: https://roadmap.iota.org/.
And one of the sections was dedicated entirely to coordicide. Take a look at it below.
So we can now see coordicide will be launched as an alphanet in early Q2, with a testnet following shortly after. The full release appears to be scheduled for the end of 2020.
What are the implications?
If IOTA pulls this off, it will essentially render every other crypto obsolete.
That’s not to say other cryptos will die out, nor should they. But they will be the technological equivalent of dial up, whereas IOTA will be 5G.
Needless to say, this could mean extreme price rises for IOTA and a likely placing in the top 5 cryptos by market cap – once the dust has settled.
Plus, it will enable the IoT to really get off the ground and up and running.
But wait, there’s more!
The three events I’ve written about today are all about specific cryptos and their development.
These events, although important, are really only the micro level of what is happening in the world of crypto.
There are also three macro events converging on us right now.
Those events are:
1. National cryptocurrencies from China and the EU
2. The rise of DeFi
3. The rise of Security Token Offerings (STOs)
And those three events are what I’ll be covering over the next few weeks.
Each of those events is not only affecting the world of crypto, but the “real” world too.
So look out for next week’s issue.
Thanks for reading.