Digital money: Cryptocurrencies becoming more institutional, less obscure

Digital money: Cryptocurrencies becoming more institutional, less obscure

Cryptocurrencies blasted through the last quarter of 2020, and the total crypto market capitalisation reached record highs. Bitcoin almost tripled in value over the quarter, followed by many of the alternative coins ('altcoins') such as Ethereum which doubled in value, and the trend has continued into 2021.

A significant driver for the crypto rally has been the increasing institutional interest and the growing enthusiasm about DeFi ('decentralised finance'), by which entrepreneurs in the crypto industry can re-create standard financial instruments outside the control of companies or governments. The DeFi industry has evolved from Ethereum as an initial application to 'stablecoins', which are pegged to a fiat currency such as the USD, and to more advanced solutions.

Furthermore, the initial stage of the upgrade to Ethereum, ETH 2.0, was launched in December, seeking to increase the transaction bandwidth in a more secure and sustainable way. The question is whether these drivers are strong enough to maintain the crypto bull market throughout 2021.

The benefits of a decentralised currency

The supply of fiat money is controlled by governments and central banks through the ability to print money at their will. It has led to many cases of hyperinflation in past centuries, with the Western Roman