The days of cryptocurrency as an obscure hub for experimental ventures in cryptography are long gone. 2020 was a landmark year for space, with cryptocurrencies making great strides in the mainstream as governments, supranational organizations and corporations alike made significant entries in an industry they collectively refer to as “Digital Asset Space”.
Following the choice of the centralized authorities, cryptography and its main characteristic, privacy, were relegated from the front-and-center role that they once played as the main attractions of cryptocurrency. In their place, a host of increasingly enticing DeFi applications have come to the limelight due to improved liquidity, income farming, and unparalleled economic models.
DeFi is a game changer
In the preliminary program of 2021, the trend lines are only further advanced. The DeFi umbrella has expanded convincingly across the cryptocurrency landscape, attracting investors and enthusiasts whose preferences speak for themselves: DeFi’s double-digit APRs and seamless user experience are simply more enticing than the subtle systemic benefits that privacy-centric exchanges offer.
And who can blame users – as long as the benefits of DeFi conflict with the prerogative of privacy, the former will continue to grow at the expense of the latter. It is no longer a general lack of awareness that holds back public interest in privacy, but a stream of ever greater compromises that individuals must forfeit in order to preserve them. For privacy to become an essential feature of our future exchange systems, it must be freed from the burden of mutual exclusivity. Only then can it take the form of a universally customizable function – a kind of virtually free accessory.
Private finances are coming
This is the imperative that sparked the organic emergence of the latest sector in blockchain technology – one that will disrupt an emerging crypto industry already known for its disruptive potential. Under the PriFi label, the emerging private finance campaign is bringing privacy back to the stage by bringing it back on the chain, that is, into the Ethereum and Polkadot ecosystems to quickly integrate privacy into a robust network of evolving applications of the decentralized Financing.
So far, data protection solutions have been isolated on stand-alone, data protection-oriented blockchains, which are isolated from the constantly growing functions of the DeFi landscape. Therefore, the private finance movement is not so much seeking to give users access to privacy in and of itself, but to forego compromises, boundaries and restrictions – and their calling could not come at a more critical time.
GameStop is the catalyst
Since the historical emergence of the cryptocurrency in the wake of the financial crisis of 2008, nothing has united the private investors of the world more resolutely than the market antics of the end of January, which NBC called “GameStop mania”. When a number of high-profile hedge funds were overwhelmed in short positions, retail investors rallied en masse on an online Reddit community called r / Wallstreetbets to raise the prices of the assets underlying the funds’ short positions – most notably including shares in GameStop and AMC.
Connected: r / Wallstreetbets vs. Wall Street: A Prelude to DeFi?
After a series of brief bottlenecks that forced the leveraged funds to cash out billions to cover their short positions, centralized companies like Robinhood, Charles Schwab, TD Ameritrade and others limited trading activity to the exponentially appreciating stocks protecting the remaining capital of the exposed Funds. Shocked, outraged, and effectively left to dry, retailers could only speculate on the backdoor briefings and deal-making that preceded the coordinated authoritarian market controls.
But as with all financial and other manias, loss and complaint provide an opportunity to learn and adjust. For retailers in 2021, this meant the awakening of two sobering realizations: that centralized markets will only remain free as long as they serve centralized powers, and that surveillance is a primary supportive feature of such power structures.
Connected: Going Feeless is the only way to enable blockchain adoption
Given the trading restrictions that apply to GameStop and AMC, among others, a new wave of retail investors are now turning to the crypto space to take the next step. This time, however, not for Crypto’s native digital assets, but for a new line of emerging derivatives: fully private synthetic assets in the chain, the values of which are securely tied to traditional financial instruments – stocks, commodities, bonds, insurance products and more.
This article does not contain any investment recommendations or recommendations. Every step of investing and trading involves risk and readers should conduct their own research in making their decision.
The views, thoughts, and opinions expressed here are the sole rights of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Alex Shipp is a professional digital asset writer and strategist with a background in traditional finance and economics as well as in the emerging areas of decentralized system architecture, tokenomics, blockchain and digital assets. Alex has been a digital assets professional since 2017 and currently works as a strategist at Offshift, as a writer, editor and strategist for the Elastos Foundation. He is an ecosystem representative at DAO Cyber Republic.
