Crypto 2020: One Step Up; Two Steps Back

If 2020 taught us anything about cryptocurrencies, it’s that they’ve reached a tipping point. Or maybe that cryptocurrencies have yet to go mainstream beyond the headlines because fraud still lurks.

It all depends on how you look at it — and where you look, of course. If one measures success for digital currencies in buzz — and in price appreciation for many of the marquee names — then 2020 stands out as a banner year. Here are some of cryptos’ key developments for 2020:

Bitcoin Goes Higher And Higher

Bitcoin, of course, exists as one of the most widely recognized cryptocurrencies. You might even consider it shorthand for the crypto space itself.

And one of the most notable events of 2020 was the big appreciation in bitcoin’s price, tied as it is (and was) to optimism about cryptos’ future.

As of this writing, bitcoin is trading for a bit more than $23,500, which marks a notable rocketing up from the value seen at the beginning of the year — a more than a tripling, in fact.

You might point to the fact that cryptos might be embraced as a hedge against other investment holdings — a hedge against inflation or even against geopolitical risk.

To be sure, the popularity of cryptos as part of a portfolio has seen some traction. “Staking a claim on bitcoin trading can pay off,” we wrote in this space recently.

Square, for example, said in its latest earnings report that revenue from bitcoin trading came to $1.6 billion, tied to activity facilitated through a trading feature in its Cash App. As reported, the company also said bought $50 million of bitcoin to hold on its balance sheet.

Investors, we noted, watch other investors and may bid prices higher — in expectations that prices will go, well, higher.

Building The (Retail) Use Cases

Part of the enthusiasm from investors comes as use cases have proliferated.

Jeremy Allaire, CEO of financial technology firm Circle, told PYMNTS that digital currencies are ready to transition from speculation to become more broadly adopted in everyday commerce. 

“The biggest problem was they are highly volatile and really still are because they are more like commodities that people are trading,” he noted to PYMNTS.

Part of that “priming the pump” (that’s our term) for mainstream acceptance involves giving banks at least some stake in conducting traditional financial activities.

Over the summer, the U.S. Office of the Comptroller of the Currency announced that banks could hold reserves on behalf of customers who issue stablecoins — which are, of course, a form of crypto but are pegged to an underlying asset such as a dollar.

Said Allaire of the bid to get digital currencies more front and center: “Regulators are getting their arms around them … the digital asset market is now moving, more and more, into the mainstream of finance, FinTech payments and banking world.”

And, of course, the crypto landscape extends well beyond bitcoin. PayPal and Visa have…