Private finance emerges as the next major catalyst for crypto growth

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The days of cryptocurrency are long gone as an obscure hub for experimental crypto companies. 2020 marked a pivotal year for the space, with cryptocurrencies making major strides into the mainstream as governments, supranational organizations, and businesses made significant entries in an industry they collectively refer to as’ the digital assets space ”.

Depending on the choice of the centralized authorities, cryptography and its main feature, privacy, have been relegated from the prominent role they once played as the main attraction of cryptocurrency. In their place, a range of increasingly attractive DeFi applications have been put in the spotlight thanks to improved liquidity, yield farming and unprecedented business models.

DeFi is a game-changer

In the opening act of 2021, the trend lines only advanced further. The DeFi umbrella has convincingly spread across the cryptocurrency landscape, attracting investors and enthusiasts whose preferences speak for themselves: DeFi’s double-digit rate APR and a seamless user experience are simply more appealing than the subtle systemic benefits of a confidentiality-centric exchange.

And who can blame the users – as long as DeFi’s benefits remain at odds 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 dampens public interest in privacy, but an ever-expanding stream of compromise that individuals must give up in order to maintain it. For privacy to become an intrinsic feature of our future trading systems, it must be freed from its burden of mutual exclusivity; Only then can it take the form of universally adaptable functionality – a sort of accessory with virtually no cost.

Private funding is coming

This is the imperative that triggered the organic emergence of the most recent blockchain technology sector – one that risks disrupting a nascent crypto industry already renowned for its disruptive potential. Arrived under the ‘PriFi’ label, the burgeoning private fundraising campaign is bringing privacy back to the stage by bringing it back to the channel – that is, into the Ethereum and Polkadot ecosystems – to embed privacy into a robust network rapidly scalable applications of decentralized finance.

Until now, privacy solutions have remained siled to stand-alone, privacy-focused blockchains, isolated from the ever-expanding functionality of the DeFi landscape. So the private finance movement is not so keen on giving users access to privacy per se, but about dispensing with compromises, borders and restrictions – and its calling could not come at a time. more critical.

GameStop is the catalyst

Since the historic formation of cryptocurrency following the 2008 financial crisis, nothing has united the world’s retail investors more resolutely than the market antics of late January. double by NBC as “GameStop mania”. When a number of leading hedge funds were caught in over-leveraged short positions, retail investors flocked in droves to an online Reddit community called r / Wallstreetbets to push up the prices of the underlying assets. short positions in funds – most notable among them actions of GameStop and AMC.

Related: r / Wallstreetbets vs. Wall Street: a prelude to DeFi’s emergence on the scene?

After a succession of short presses in which leveraged funds were forced to pay billions to cover their short positions, centralized companies, such as Robinhood, Charles Schwab, TD Ameritrade and others, limit trading activity on stocks which appreciate exponentially, thus protecting the remaining capital of the funds exposed. Shocked, outraged and effectively left in the dark, retailers could only speculate on the backdoor briefings and the conclusion of deals that preceded the coordinated authoritarian checks of the market.

But as with all fads, financial and otherwise, loss and grievance provide opportunities to learn and adapt. For retailers in 2021, this has meant the awakening of two realizations: that centralized markets remain free only as long as they serve centralized powers, and that oversight is a primary supporting element used by such structures. to be able to.

Related: Going without feeling is the only way to enable blockchain adoption

In light of the trade restrictions imposed on GameStop and AMC, among others, a new wave of retail investor rallies are now looking to the crypto space for their next step. But this time it’s not about the digital assets native to crypto, but about a new range of emerging derivatives: fully private chain synthetic assets whose values ​​are firmly attached to traditional financial instruments – stocks, commodities. , bonds, insurance products, etc.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research before making a decision.

The views, thoughts and opinions expressed here are those of the author alone 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 the emerging areas of decentralized system architecture, tokenomics, blockchain, and digital assets. Alex has been professionally involved in the digital asset space since 2017 and is currently a strategist at Offshift, writer, editor and strategist for the Elastos Foundation, and is an ecosystem representative at DAO Cyber ​​Republic.


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