2020 Recap: Bitcoin and cryptocurrency (BONUS: SECRET 2021 predictions)

As we approach the end of 2020, I felt it's very important to look back at the key events of this year, especially in relation to Bitcoin, decentralized finance, farming, algorithmic stable coins, and of course, government-issued central bank digital currencies. Now, that's quite a lot to look through, but one of the key reasons for looking back are reflecting on this year is so we can extend that knowledge, extend the learnings of this year, and try to see what's going to, the trends that's going to happen next year and use that knowledge for, well, for the better, right? So that's the kind of key point of this video to both give a recap narrative of everything that's going on, then talk about some of the expectations that's going to come in 2021, because 2021 is going to be a huge year for crypto. Like that's a given at this point with the amount of buildup of cryptocurrencies at this current point in terms of pricing. Like that's insane at the current point we're reaching all time highs every day. But beyond that, I think the purpose, the use case of crypto is growing and especially this field of decentralized finance. I think in 10 years, everyone's going to know what it is. And right now, just even looking at the news right now, it's still very secluded to a small group of people, which is great for us, I guess, in that sense. So anyways, this is going to be a full on recap of 2020. I hope you guys can actually share this video too, especially to people who don't really know what's happening in crypto as well, because this is a great way for them to catch up and for them to be aware of the developments here. So anyways, without further ado, I hope you guys can share it and hope you guys have a wonderful new year as well. It's the end of the year this year. I'm really want to celebrate with you guys as well. So anyways, Happy New Year guys, and let's get started. Now looking at the Bitcoin and the whole overall cryptocurrency space, I think it goes without saying that it's been pretty much a rocket ship ride. Starting off this year, this year opened with Bitcoin at $7,142. I mean, yeah, it's not, not great. But then it ends up where ending up here at $28,725. I mean, mind blown, right? And what's the reasoning behind that exponential rise in price? And there's multiple reasons. And I kind of divided that into push factors. So this is push factors towards Bitcoin, pushing people towards Bitcoin because other assets and stuff blowing up. We'll talk about that. And also pull factors, some of the extractive nature of Bitcoin, which is unique to Bitcoin. The biggest push factor this year is global uncertainty. So what is that? Well, with COVID, that kind of limited and changed everything that we knew. And with a lot of businesses closing, and unfortunately, the way of life, everyone, you know, being restricted, being at home, the government dealt with that by printing a huge amount of money. So this is just in the US or in the US, 22% of the circling supply of USD was printed in 2020. That's kind of ridiculous. It's like a fifth of currency was being printed. There's huge risk of hyperinflation when money inflates like this. It's not a small deal. You know, it really means you're kind of diluting your USD. Now, this is also happening around the world as well. I mean, every country is affected by COVID and economies around the world are kind of in a little bit of trouble to say the very least. So because of that, people are worried. People want to have a form of currency that doesn't hyperinflate. And which is why Bitcoin becomes very strong because there's only 21 million Bitcoin total in this world. That's the amount that's ever going to be. That's the magic of it. So that's a total supply of Bitcoin. People like these predictable numbers. People like limited supply in times of this. This also kind of explains why gold is also rising because the amount of gold in this world is finite. And also why stock market is also performing too as people move towards stocks like Tesla, which is blew up this year. Anyway, so that's one push factor. And the other very big push factor that we shouldn't forget is the trade war. So this was front and center pretty much this year, but it's still going to go on, right? There's still going to be this conflict between China and the USA. And not just China and USA, but also between countries in Southeast Asia and around the world. This uncertainty has also caused a lot more tension around the world, which has limited how money can be transferred and being used. So this year, China also doubled down on how to limit the flow of renminbi out of China. And this is where Bitcoin really comes in because Bitcoin is neutral. It's decentralized. So no government, no single government controls it. No president or prime minister can call up the bank of Bitcoin and say, yo, freeze assets, restrict this account. You know, that's politically not in the same category as we are. But Bitcoin is fully neutral, fully decentralized. And also you have full control over Bitcoin. That's I think this is one of the most unique parts of Bitcoin that kind of really pulled everyone towards Bitcoin this year. The fact that you can fully control it, the fact that anywhere you are in the world, you can transfer Bitcoin to any other person at any other amount. So with these factors coming in, what we saw is that institutional investors really picked up Bitcoin, right? This year, it became kosher to talk about Bitcoin in this investment scene, in the institutional investment scene. We have MicroStrategy announcing over a billion dollars of acquisition of Bitcoin. And the same goes with Coinbase Custody. You can see that there's a huge inflow of institutional investment money into this. This is kind of the biggest driver. I mean, this basically got Bitcoin to push beyond the highs of 2017. So we saw a lot of retail fear missing out in 2017. But 2020 was a year where institutional investors really came in with, you know, medium sized bags, I would say, to really take a big bet because of all these push and pull factors that we're seeing here. Now, I definitely see that this is going to grow next year as well. I don't see political, kind of the global uncertainty. I don't really see that going away. There's still going to be a huge, giant push factor there. Trade war definitely is going to go on. And all these parts, the kind of unique properties of Bitcoin are super important, which is why I see 2021 to become a very big year for Bitcoin. Now, that being said, of course, you know, before we all go crazy and think that it's going to be an exponential rocket ride upward in 2021, I do want to say that because of how fast Bitcoin is growing, we're going to have these huge swings. This is pretty much kind of expected. It's very crypto, which is why the hodl meme comes into play. I mean, if you bring crypto, you heard hodl, hodl, hodl. And one of the reasons why is because there are these wild swings down and up. And it's part of the culture here. It's because it's very hard to quantify, you know, what is this worth, right? So at the end of the day, that's going to be volatility in 2021. But in terms of what I expect in terms of use case, I definitely expect kind of the unique properties of Bitcoin becoming very strong and dominant, especially the ability to send it anywhere around in the world. Now, decentralized finance this year has been a total game changer. So kind of funny, right? Right before doing this video, I searched up kind of the public, the mainstream media understanding of decentralized finance. And there's no mention of Uniswap, compound lending platforms, yield farming, none of that. But this is the great part, because we understand that. And the simplest way to describe it and the simplest reasons why mainstream media isn't really covering this, is not only because it's complicated, but it directly tackles the traditional financial system. So why decentralized finance is so powerful is because once code has been deployed, once a programmer taps in, types in that code deploys it, that code becomes law, that code cannot be changed. And it operates exactly like how it's supposed to. This gives a lot of power, because this allows people who understand it, and who can vet it, to feel confident that they know exactly what's going to happen, whether they're saving money on a lending platform, trading money on exchange, they know exactly what's going to happen next. So you're kind of replacing that trust that banks used to have directly with decentralized trust. And one of the biggest powers of that is two things, two folds, right? First of all, you can be a lot more creative with all the products they're producing. So just take, for example, Uniswap, right? Uniswap is a decentralized exchange, and you can directly swap any coin on Uniswap. You can just list it, swap it. And one of the biggest powers of Uniswap was that it allowed people to crowdsource your market making to that liquidity. This is very, very important. This is one of the biggest reasons why centralized exchanges like Binance are very powerful, is because there's a lot of liquidity there. You can make a big transaction, a big purchase of that currency without it drastically affecting the price. So it creates and allows more and more people to enter and feel safe. And also they can also exit, because it doesn't drastically affect the price. But anyways, you can see that this year, like something like Uniswap just blew up, right? If you look at the liquidity on Uniswap, it's nuts, right? Went from small, you know, millions of dollars to right now to having a liquidity of $2.1 billion. And this is the point where it completely challenged Binance or other centralized exchanges. You kind of saw that this year, there was a switch that flipped. All of a sudden, a lot of projects were choosing to list on Uniswap, DEX offerings, as opposed to going directly to centralized exchanges. So we see the effects of DeFi very immediately in crypto first, but I feel like this is going to expand way beyond just purely crypto. It's going to directly challenge traditional finance. I think that's the way it's heading towards. We also have lending platforms like Compound, Cream, Wing. They're allowing us to deposit a certain currency, use that as collateral, withdraw another currency, and take a loan, crypto loan. Now that's becoming super powerful and useful as can people start using that to do advanced trading features. On top of that, we have synthetic assets. So synthetics and linear, they're creating the ability to trade other assets like stocks, for example, based on crypto. It's like mind-blowing. I feel like this year has been a start for people to understand what decentralized finance is, but 2021, I feel, will take us to a whole new level. And one of the reasons why is because of the ability for someone very, very quickly to deploy code. And this is one of the good parts about decentralized finance and the culture surrounding it right now. A lot of developers, they're releasing the code to the projects, whether it's Uniswap or whether it's Compound, that code is out there. So other developers can learn, adapt, improve on it. And this is how fast the space moves. And we've seen multiple products, multiple ideas, multiple innovations coming this year. I definitely see that growing in 2021. Next up, we have the topic of yield farming. So yield farming really took off this year. So it took up to such exponential highs that we had a mini kind of drought as well. So I'll kind of tell the story and tell you where I think it's going. First and foremost, you know, the first one that started off, Y-Fee, that was just insane, right? So the market cap of Y-Fee right now is $647 million, no small amount. And in essence, it was distributed in less than two and a half weeks, right? It's just total insanity. Distributed for free to people. So it became a very good way to distribute coins to people. And kind of why yield farming works is because you give more coins to people who are more committed. The more coins someone locks up onto your platform, or the more they kind of do, they get more rewards. And because you're rewarding the people who contribute more, they're more likely to kind of push that more and kind of build that community with you. Community becomes super important in this case. Now, it also had some lows as well, where certain scams started to kind of issue out new coins for no particular reason other than issuing out new coins. And they kind of had crazy Ponzi-nomics along the way as well. So that's why it's not all roses in the yield farming scene. But what I do see is that this has become one of the key ways to establish and build communities. And that's becoming super important. Now, I also want to compare this kind of with airdrops. Like airdrops are super popular for building communities in 2017. And in many senses, airdrops are more fair. You know, everyone gets dropped a certain amount of coins. It's great, happy everyone's fair. But with yield farming, the people who have more deposits, the whales, so to speak, have more coins. And it seems like it's more unfair. But it turns out that whales have more power to move the markets as well, because obviously, they have more proof of capital. So in that sense, I see that yield farming is going to still become a very popular way for new projects to distribute coins and establish communities in 2021. Now, approaching the end of 2021, I have to talk about algorithmic stablecoins. They're all of a sudden becoming this huge rage of this entire year. So what are they? So they're a way to create a stablecoin that's stable relative to the price, but they don't have anything backing them. Rather, they have an algorithm that can kind of change the supply amount or create a sort of dynamic to change or to try to affect the market. It's a very vague way of putting it because we have projects like Apple Forth that does something called a rebase. So it changes the global supply of currency to try to change its price and make it stable. But more importantly, recent developments, we have like basis cash, we have more DSD or ESD, and they have a different mechanism to try to establish the price of a currency. Now, why is this all the rage? Quite frankly put, it's a money printer. It's essentially trying to create a stablecoin, but out of nothing, out of thin air, out of bits of code, which means that people who kind of get involved in this, quite easily put, they'll experience either huge explosions or huge collapses of value. So this has become one of the biggest speculation areas. And we're going to cover that in 2021 as well. I feel like this is something that's just becoming, it's a new field. I still feel like with the amount of innovation coming in here, it's a new field, and we're going to look more. If you want to find out more, of course, we have an interview with Base Protocol on this channel, and we have some overviews of this kind of algo stablecoins as well. But I definitely feel like people who thought it wasn't going to stay in 2020, like me included, that was one of my mistakes, I thought, you know, this will never work. But it turns out that there's more mechanics that can be added to this. And I think that 2021 will be a huge year where people experiment with even more kind of mechanics of how to stabilize a algorithmic stablecoin. Lastly, I just want to touch upon central bank digital currencies. This is one of the biggest trends of the year as well, in terms of the digital currency scene, China launched their own. So China launched DCEP, digital currency electronic payment, and that's pegged one to one to the renminbi. So this is issued by the government, it is fiat money, and it kind of borrows a lot of the technology that we saw. So kind of in blockchain, but it's not blockchain, it's not decentralized at all. This is going to become a huge trend, because it's innovating on how fiat money is used and moved around. The moment that China deployed it, we saw every country just jumping in like, USA, we got some more in here. We saw that with England and every bank just saying, oh, yeah, we got more. We have plans. That's going to become a huge, huge, huge move in the years ahead, because that kind of takes paper money and makes it much more spendable. But at the same time, kind of something that's interesting, and that's an opportunity here. So while this is centralized, government controlled, kind of the technology that allows us to link this together becomes very important. Can you create these more bridges? Can you bridge something like DCEP and Bitcoin? Is that possible? And this is something that will be explored in the future. And that's offers a lot of opportunity for crypto as well. Because once people start understanding and using fully digital currencies, they'll start naturally understanding Bitcoin more. So I feel like that's a huge opportunity to come. It's already, the trend already started this year, but I see that continuing in 2021 as well. And guys, that's it for the summary of 2020 and looking forward into 2021 as well. We'll do more videos in the future. There's definitely lots of stuff to cover. I think this just barely covers the tip of the iceberg of all the developments. But I'm super excited for next year. And I hope you guys have a great, great new year and just kind of celebrate the end of 2020. I know it's been a pretty horrible year for a lot of people. Yeah, like our ability to travel is completely removed. I know it's been pretty rough. But at the same time, you know, crypto has been doing super well. So you know what, let's enjoy the end of this year and have a great 2021. 2021 2021 2021