On Predictions and the 2021 Crypto Crystal Ball

(Update: This essay has been chosen as one of the winning submissions. 🏆)

I.

Soona Amhaz, the founder of Volt Capital, posted this set of predictions on December 24th, 2020.

44 very intelligent people had chimed in, giving their predictions on what they think would happen in the crypto space in 2021. As always, some are right, and some are wrong. In this essay, I want to focus on giving my thoughts on the predictions that I found interesting. It is never easy to make predictions about market conditions, specially when the market is as volatile as the crypto markets. Thus, I will not be judging others based on their price predictions(Most predict a 100K+ BTC in 2021, which is still possible), but instead, I’ll be looking at what they predicted the tech would look like this year.

Everyone seemed to understand the importance of DeFi and many rightly predicted that DeFi is here to stay. The list of people bullish on DeFi is long. [ Matt Huang, Paradigm. Alexis Gauba, Opyn. Avichal Garg, Electric Capital. Lauren Stephanian, Pantera Capital. Simon Chamorro, Valiu. Ian Lee, IDEO CoLab Ventures. Su Zhu, Three Arrows Capital. Imran Khan, Volt Capital. ]

It is important to remember that this took place in December of last year, when the DeFi TVL was starting to go parabolic. It has stabilized a bit now, but regardless of a continued bull run, DeFi is changing the way people do finance, making it accessible to the masses, just like Bitcoin changed the way people thought about money.

Trustless finance done from the comfort of your own homes should be far more appealing to everyone than dealing with brokers and management firms. I believe we have only scratched the surface of what is possible in DeFi. We have seen lending and borrowing, but we have also seen ingenious ways of finance like liquidity mining, farming and governance mining. This place is moving fast, and in the next five or ten years, DeFi should be considered a more appealing option than traditional finance. The barrier to entry is mostly low, and that should change as the technology evolves.

Banks and institutions shouldn’t be afraid of this. Fiat can coexist with crypto. Just like online publications didn’t make the printing press obsolete, decentralized finance shouldn’t necessarily make banks a thing of the past. But it will do away with those that don’t adopt with the future.

Many predicted that more and more banks will take notice, and institutions will double down on their crypto investments. There are also many predicting a bridge between DeFi and banks which is yet to come, but seems inevitable, none the less. [Alexander Svanevik, Nansen]

Colleen Sullivan, CMT Digital, rightly said that regulation in some spaces is necessary, and while that might seem counter-productive to crypto , it makes sense that some parts of it need to be regulated to enable wide-scale adoption. That is happening. India, which initially had a harsh stance on crypto, might soon deliver its crypto bill that will regulate these transactions despite most Indian banks being sour about it. Other places like Nigeria which “banned” Bitcoin, is slowly realizing that they cannot really stop people from using it.

So again, the predictions relating to banks, DeFi and institutional adoption are mostly on track. We are yet to see the likes of Google or Apple announcing a Bitcoin purchase, but once that happens, there’s no going back.

II.

There are predictions about NFTs and Gen Z adoption, and that has turned out to be mostly true. [ Meltem Demirors, CoinShares. Qiao Wang, DeFi Alliance. Jason Lau, OKCoin. Stephen McKeon, Collab+Currency. ]

Creator economies are slowly embracing NFTs, and more and more platforms are coming out, each with more to offer. This year, WWE announced an Undertaker NFT, and that felt like my childhood legend embracing my adulthood dreams.

As more and more companies embrace NFTs, mainstream adoption is only a matter of time. Imagine seeing your favorite movie star offering an NFT, and imagine a friend who has no idea what NFTs are- asks you about them. Those small moments are tiny butterflies flapping their wings, leading to thousands of inevitable storms spreading the mind virus of crypto that saves all of us from an old, broken system of MMT.

It’s getting easier and cheaper than ever to launch new tokens. We’re going to see increasingly specific tokens targeted towards very specific and small communities. Call them “community tokens,” “social tokens,” whatever — these long-tail tokens will each have tiny addressable markets but will collectively act as a bridge between crypto and the rest of the real world. These tiny, targeted tokens will let community members capture value — value that might otherwise leak outwards to the traditional brokers and beneficiaries of capital and access.

Tess Rinearson, Interchain

It is exponentially easier to create a token now, be it an ERC-20 token or a BEP-20 token.

Speculative meme coins, made from such tokens, is something that came out of this- coins with no purpose or benefits, incentivizing holders to hold and bring others in, coupled with the viral nature of online memes. Although many new investors unknowingly got hurt by FOMOing into pump and dump schemes and rug pulls orchestrated by some bad actors and projects, I’m hoping the educated ones will stay and make better choices in the future.

Dogecoin is one of the first investments for many millennials. Tokens like Shiba Inu, which looks and feels like a meme at first, is introducing an entire new generation to things like Dexes and NFTs, and if these succeed (despite the annoyances of crypto purists), I’m certain it would help the crypto space as a whole. All the rug pulls have already given this space a bad rep, and if dog-themed coins and meme tokens are what we need to introduce a generation to the true power of crypto and decentralization, maybe that isn’t such a bad thing after all.

There is a prediction about Gen Z entering the market this year. [ Stacie Waleyko, Casa ]

Crypto tiktok and the subsequent banning of it will perhaps accelerate the process. When has banning something ever made something invisible? The Gen Z fortunate enough to witness this thanks to algorithms will realize crypto’s true power and from my personal experience with all the Gen Z friends I have, I’m certain they will do exactly what they’re told not to do.

Privacy, privacy, privacy.

Elena Nadolinski, Iron Fish

Privacy coins have still not gained the hype they deserve. Monero, ZeCash and others are still lagging behind but many(including me) believe that they will blow up someday. That is inevitable once people realize that no one, not even regulators or institutions can know anything about your transactions made through privacy coins. Because of this, privacy coins might also be the first ones to be de-listed from exchanges, and banned by governments. Layer-2 solutions are also being built for different Layer-1 coins and its tokens, so we will see how this plays out.

III.

In 2021 the real battle of the next decade begins: BTC vs MMT.

Balaji Srinivasan, Angel Investor

No one predicted that a country adopt Bitcoin, or countries would enter this space in 2021, but Balaji’s prediction probably comes closest to that. I’m sure everyone believes that sooner or later, Bitcoin will be accepted as legal tender in most countries, no one predicted that one would enter the space this year. The legal tender cycle will probably come in the next 10 years, and by the next cycle, we’ll have proper statistical evidence of what this adoption ended up doing for the smaller players that entered first.

No one could predict that a billionaire would start making uninformed tweets about Bitcoin and start promoting an inflationary meme coin as it’s replacement. No one could predict the (5th?) Chinese ban on cryptocurrencies and mining either. But if 2021 proved one thing right, it’s that Bitcoin can handle the harshest of shocks and come out stronger, proving itself to be truly anti fragile each time. This year, the combined forces of the second richest man in the world and the second richest country in the world failed to kill Bitcoin despite their best efforts. Day by day, year by year, the world will realize what we already know: Bitcoin cannot be killed.

IV.

My favorite predictions are these two-

The bitcoin price:

– will go down

– will go up

Buckle up!

Amiti Uttarwar, Bitcoin Core Developer

Investors will continue to make predictions by extrapolating the 3-month moving average of the latest narratives. Founders will continue to build the ideas they wake up every morning thinking about.

Larry Sukernik, DCG

It is true that most of the people in crypto are here to use crypto as an alternate form of investment. Most who get in early and in good projects will end up rich. It isn’t easy to do that, and the price of this risky investment is doing your due diligence and investing in projects that you have done careful research about.

But as someone who is learning Solidity at the moment, I want to build something in this space someday that ends up making a significant difference in the world. I know it’s not going to be a quick or easy process, but time is on my side and my mind is filled with dreams and code.

No one could predict the advent of Bitcoin, except maybe Peter Thiel, who was talking about “unstoppable currencies” in 1999. In the same way, be it this or the next, the greatest invention is probably being worked on right now- not by full-time Harvard grads, but by lone thinkers working on fun side projects.

And soon, one of them will end up will end up creating something that changes the crypto space first, and the world next, forever.

No one can predict the future accurately.

But the only ones who can successfully predict the future with 100% accuracy, are the ones who try to create it.


This was my review of The 2021 Crypto Crystal Ball: Halftime edition. If you liked it and want to read my posts in your inbox, sign up here-

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