Cryptocurrencies
The year 2020 is probably one of the most challenging chapters for the global financial system and the world economy. The coronavirus pandemic has struck the global economy hard–ever more than the financial meltdown of 2008. Governments worldwide have imposed strict lockdowns and social distancing to control the spread of the disease, which severely limited business activities. These draconian measures not only devastated economies but relegated global economies to a recession and massive unemployment.

To curb social unrest and violence and ameliorate the downfall of the economy, governments have announced huge stimulus packages of trillions of dollars, euros, and anything else that they can get their hands on. Economists believe that unless there is a viable vaccine or containment of the virus, many countries' economies will contract. The stimulus packages will cause unprecedented levels of inflation and devaluation of the major currencies. With the fear of a global recession and devaluation of the fiat currencies, more and more institutional investors are fleeing towards cryptocurrencies as a safer and more stable alternative to traditional financial assets.

So, it seems that 2021 will be the perfect time for further adoption of cryptocurrencies and to become a potential contender potential as an asset in the existing financial system.

The Meteoritic Rise of Bitcoin

Earlier this month, Bitcoin broke its records by surpassing the $20,000 mark. The world's most recognizable cryptocurrency is now trading over $27,000 when this article is being written. Bitcoin has witnessed an unprecedented increase in its value this year—a colossal 240 percent increase since the beginning of 2020. In October this year, the price of Bitcoin climbed from the $11,000 range and hovered around $19,000. Even more, smashing is that Bitcoin's market cap recently was above $345 billion. It's an all-time high. Now is it becoming more common for people invest some of their retirement into a Bitcoin IRA.

What's behind the meteoric rise in the price of Bitcoin? Many people want a definitive answer, and so far, there hasn't been one. Market observers say the cause is pretty clear: more buyers with deeper pockets. Well, that explains one side of the story, but there's another plausible theory. Recently there have been some unusual circumstances that might have constrained the supply of Bitcoin to almost half. Albeit its temporary status, this incident has ramified Bitcoin's continued gains. We will discuss some of the events later in the article.

If you’re looking for a good and secure trading company that offers competitive interest rates and a smooth user experience, BlockFi is a good choice. BlockFi has exciting products that are being offered at very competitive rates you can read the Full Blockfi Review here. We also recommend you check out Paxful, which is a great online marketplace for buying and selling bitcoin. You can read the paxful review: complete exchange overview. Another trusted exchange, which you have probably heard of, is cex.io. This exchange is has been around for a while and has a trusted and secure reputation check out this reference. To know more about cryptocurrencies, crypto exchange platform reviews, and amazing educational resources, you can visit our website.

Ethereum: The King of Decentralized Finance

Speaking of cryptocurrencies rising in value, you can't help but mention Ethereum—one of the most promising cryptocurrencies to invest in 2021. Ethereum, the second-largest cryptocurrency after Bitcoin, has shown a great performance in 2020, and this month, Ethereum has a market capitalization of $80 billion, according to OKEx. The cryptocurrency traded around $125 at the beginning of this year and soared to around $600—a 380 percent price surge in 12 months.

So, why is Ethereum lucrative to invest in 2021?

Ethereum operated on an open-source blockchain network and is the best network for decentralized applications (dApps). Its native cryptocurrency, Ether (ETH), supports Uniswap (UNI), Aave (AAVE), and Maker (MKR), and other crypto platforms, which are highly preferred cryptocurrencies in the Decentralized Finance (DeFi) sector. Industry experts are highly optimistic about DeFi and believe it can transform savings, loans, and insurance schemes, making them sovereign from traditional banks and other financial institutions. Investing in an Ethereum IRA is also gaining in popularity https://www.brokerchoices.com/ethereum-ira/.

Ripple: A New Payment Ecosystem In The Making

Ripple was created to replace the traditional financial payments system by transforming and facilitating cross-border payments. Ripple became live in 2013, but it took the platform years before being adopted by mainstream financial institutions. Today, Ripple is supported by over 100 financial institutions, and this year the Ripple blockchain is being supported by more than 300 providers in 40 countries, including industry titans such as American Express, JP Morgan, Bank of America, Banco Santander, HSBC Holdings, and the HDFC Bank, India's largest bank.

That begs the question: what makes Ripple one of the top 10 cryptocurrencies to invest in 2021? According to the Official Monetary and Financial Institutions Forum (OMFIF), Ripple could very well become an alternative to SWIFT. Thanks to Ripple's proprietary distributed ledger technology or DLT, the platform can solve major issues plaguing SWIFT: speed, security, cost, traceability, transparency, and risk management.

The cryptocurrency was valued at around $0.60 per coin during December 2020, twice the amount in October this year. Ripple's perspectives only seem to get brighter than ever before as the European Commission is actively encouraging its member states to transition to digital finance through DLT technology and cryptocurrencies in the future. Ripple is now also available to add to your IRA and you can find out more information at this source.

Inflation and the Gradual Decreasing Purchasing Power of the Dollar

Massive stimulus spending over the years by the US Congress, the recent stimulus bill of nearly $1 trillion, aimed to help those suffering from the coronavirus pandemic has increased money supply, which lead to greater inflation rates, ultimately lowering the purchasing power of the US dollar. In a bid to hedge against this inflation, investors are turning to assets that either appreciate or maintain their value. Besides gold and other precious metals with limited supply, Bitcoin has become an asset considered a store-of-value.

The Halving

Gold has long been considered a store-of-value asset due to its scarcity. We still don't know how much of it exists with complete certainty. But, with Bitcoin, we know how many will ever exist. We can tell with absolute certainty how many Bitcoins with be mined now and will be in circulation in the future. This makes Bitcoin the only asset with a finite and fixed supply.

To understand why Bitcoin has a finite supply, it’s time we get acquainted with the term 'Halving.' Bitcoin is undergoing a halving. For every 210,000 blocks mined, or after every four years, the rewards that go to miners for successfully mining a block or processing Bitcoin transactions are reduced in half. This inflation adjustment mechanism will continue until all 21 million Bitcoin is mined and released into the market. This will automatically increase Bitcoin prices because there will be 900 fewer new bitcoins coming to the market every day, but new investors are increasing every day.

PayPal now Supports Bitcoin

In March 2020, PayPal announced in March that US customers can use their services to buy, hold, and sell bitcoin and use it to make payments. This major development increased the price of Bitcoin from $5,000 to $25,000, an enormous 400 percent increase in the last eight months.

Institutional Adoption and Maturity

Due to the advent of uncertainty, inflation, and fear of a new recession—the demand for Bitcoins and other cryptocurrencies as a store-of-value asset has increased substantially with institutional investors in 2020. The confidence in the future of Bitcoin and cryptocurrency is stronger than any time before when it comes to institutional investors. Furthermore, the infrastructure built around Bitcoin and other cryptocurrencies underwent significant development and maturity over recent years, elevating its status as a safe investment than ever before.

Several institutional investors, both public and private, have been diversifying their assets by buying Bitcoin instead of cash. According to BlackRock, while speaking to CNBC, said, "It could take the place of gold to a large extent." A Citi analyst predicts the price of bitcoin could surge to $318,000 at the end of 2021. Furthermore, JPMorgan claims that institutions are now accumulating Bitcoins and other cryptocurrencies three times more than the amount they bought in the previous quarter of 2020. Governments and Central banks worldwide are also considering the potential of introducing a central bank digital currency (CBDC).

These events increased the institutional adoption of cryptocurrencies, particularly Bitcoin, both as a safe investment and as a service, enabling its price surge.