The year 2018 proved to be quite polarizing for hodlers. The price of Bitcoin rose to a record of 20,000 USD before coming crashing down a little while after, losing more than 80% of its value. Most cryptocurrencies followed suit, giving rise to mixed emotions and opinions all-through 2018, from even the most seasoned investors. Blockchain technology, on the other hand, made massive strides in terms of being recognized by corporations, governments and organizations worldwide, with many of them recognizing the scope and potential of this technology. Furthermore, many blockchain companies attained proof-of-concept with their innovative services being adopted by the mainstream public. There is enough reason to be optimistic about the future of the technology and currency, with a number of new and disruptive projects being developed and put into motion. There is a lot to look forward to in the world of blockchain technology and cryptocurrency this year. Below, is a list of 12 exciting things that we can expect in the crypto and blockchain space, in 2019.
1. The Rise of Security Token Offering (Or the end of the era of ICOs)
For people following news related to blockchain and crypto, ICOs are not something new or beyond the realms of understanding. This means that they would also be aware of how problematic ICOs have proven to be in the last couple of years. With little to no regulation on these fundraisers, firms and companies have taken advantage of hodlers to make easy money through ICOs without fulfilling any promises that were made upon announcing the ICOs.
Scams worth millions of dollars were conducted through ICOs in 2018, which also ruined prospects for upcoming blockchain and crypto firms that actually had a viable product or solution to offer.
Enter Security Token Offering
Security Token Offering or STOs are emerging as the next big thing in the world of cryptocurrency and blockchain technology. STOs improve the functionalities and capabilities of the blockchain along with making the aspect of committing fraud significantly harder, an aspect at which ICOs failed terribly.
In the case of hodlers, STOs offer a safer investment and can be assured of their legitimacy with major corporations like Apple and Tesla publicly showing interest in STOs. This is visible sign of how bright the future is for STOs.
2. Even more Adoption
Though virtually all cryptocurrencies went into a downward spiral after January 2017, with Bitcoin and Ethereum leading the way, the rate of adoption wasn’t adversely affected.
A lot of people were met with disappointment upon witnessing the market crash. However, that was also the time when the ‘hype’ behind cryptocurrencies was at its zenith. Almost everybody, from corporations and governments to common folk were talking about cryptocurrency.
Furthermore, governments around the world who were against the very idea of cryptocurrencies were finally starting to reconsider the stance that they had previously taken. Acceptance of cryptocurrency by government spells more adoption, sometimes even bailing people out of hyperinflationary environments where government policy failed to stabilize the economy.
3. The Impact of TRON Arcade
TRON outdid itself in November 2018 when it announced the establishment of a sizeable blockchain gaming fund. The fund will invest an upwards of 100 million USD into projects which will revolutionize blockchain and gaming.
Creators will finally the resources they needed to make their dream games into reality and use the full potential of what blockchain has to offer to give people a gaming experience that has never been heard of before.
The gaming industry is already close to going entirely into its next generation—with augmented reality and virtual reality set to be a significant part of it—and blockchain based games can become a substantial part of what is about to come, and TRON arcade will definitely play a role in that.
The gaming industry is already entering its next generation with augmented and virtual reality set to become an essential part of the experience. TRON arcade will play a major role in combining the worlds of blockchain and gaming.
4. Recognition of Cryptocurrencies by Governments around the World
Governments around the world finally started acknowledging cryptocurrencies as a legitimate medium of exchange and a store of value, where fiat and paper currencies have been failing for some time now. Furthermore, they have been moving away from the notion that cryptocurrencies are mostly used by fringe techies or dark web dwellers.
Some countries were unsure in their outlook of this digital phenomenon, whereas others outrightly rejected it. The situation involving the latter made life hard for hodlers living in such countries. This, however, started changing in 2018 with the global mood towards crypto leaning to a more positive outlook.
The United States of America took big step by creating an agency within its Security and Exchange Commission (SEC) to exclusive monitor and regulate crypto.
We can expect more countries to re-analyze the stance that they had previously taken against cryptocurrencies, and create similar agencies to monitor and regulate crypto in their respective jurisdictions. Some people won’t be happy with the rules and regulations being imposed on cryptocurrencies, but most people will welcome it over banning digital currencies altogether.
5. NASDAQ and Bitcoin futures, Ethereum Upgrade, Cardano
2018 was the most turbulent year for cryptocurrency market. Start of the saw good promise, but the end saw an approx 400% drop in cryptocurrency prices. But. 2019 may be the year in which you can see some huge advancements in crypto market. Some of the developments to look forward in 2019 are,
The start of 2018 saw positive developments for the crypto market, but in the end – there was a 400% drop in the value of cryptocurrencies. The fall did not spell the end of cryptocurrencies, with upgrades and advancements being made even as we speak. Here are some developments to look forward to:
NASDAQ’s listing of Bitcoin futures
It has been confirmed that NASDAQ will be listing Bitcoin futures. This will pave the Bitcoin’s mainstream future.
Ethereum will undergo two major upgrades in 2019 – one of them will be ‘Constantinople’ in January and other, later in the year. Constantinople is designed to improve the efficiency of the blockchain, reduce block reward for miners, and make the blockchain more ASIC-resistant. The later upgrade will include the implementation of Casper Protocol and Sharding.
Cardano which was the second most developed cryptocurrency of 2018, is expected to release the features of the Shelley phase in 2019. Shelley is a phase in the development of Cardano aimed at making the project fully decentralized and autonomous. Also, Cardano is expected to deliver on advanced smart contract capabilities suitable for enterprise usage, especially with reference to the speed of transactions.
6. Reduction in Mining Energy Consumption
Mining is an activity that requires nodes that can lead to a high level of energy consumption. The costs associated with mining can often hinder the level of profits for miners. Apart from high energy consumption, mining cryptocurrencies generates large amounts of heat. This requires mining rigs to be kept at low temperatures by using high capacity fans for cooling.
The fall in the price of Bitcoin saw a massive reduction in energy consumption. The reason is – when the price of Bitcoin reached 19,500 USD, there was an incentive to mine Bitcoin. However, with the drop in prices, this incentive was reduced significantly. Mining rigs that were used to mine Bitcoin are being decommissioned. If the trend continues in 2019, we will see a marked reduction in energy consumption.
7. Crypto Lending business boom
There are two primary reasons for investors to consider crypto-related lending. During the 2017 bull run, investors put up their cryptocurrency holdings as collateral to take out cash loans to pay bills or complete home renovations. Investors can obtain cash in this manner without having to fully cash out on their holdings.
The other reason for collateralizing crypto assets is for short selling. Short sellers collateralize their cryptocurrencies to essentially place a bet over the assumption that the price of a crypto asset will decline. When the open short is closed, the investor who placed the bet will receive either cash or an additional sum of cryptocurrency depending on how the contract is settled. Should the price increase while a short is open, a portion of the collateral will be lost.
With the introduction of crypto supported credit cards, we will see this trend of crypto lending increasing.
8. Expansion of Crypto based credit cards
Recent years saw a huge acceptance of cryptocurrencies, even though in some countries the regulations may have stalled the trading. Many people are now accepting cryptocurrencies and this trend is going to increase. Due to frequent fluctuations in the crypto market, people do not want to spend their cryptocurrencies, but rather save them. And hence, many people are looking to invest their cryptos and/or loan them. And hence, here comes the concept of crypto-based credit cards. It allows you to have your crypto as well as use it in the form of fiat currency.
9. Blockchain in trade finance
Digitization of international payments has proven to be far more of a daunting task than one can possibly imagine. In particular, communicating and verifying data for a large number of variables and information present in cross border transactions have lead to numerous complications along the way. Hence, a decentralized ledger was proposed as the most efficient way, going forward – to create the necessary disruption that the trade finance industry has been crying out for decades. However, despite the fact that there has been an unprecedented number of ventures proposed, tests and pilots for the digitization of trade finance in the years gone by – will 2019 truly be the year when blockchain comes of age in this space?
Operating as an irrefutable, encrypted, and transparent decentralized network; the blockchain protocol provides each participant with end-to-end visibility and a clear view of the entire supply chain mechanism. The parties to the transaction will also be able to track the progress of the goods in question, in transit. Relevant documents can be shared in a matter of seconds via the digitized ledger, as opposed to the long drawn out process of manually sharing them. Furthermore, no single participant can modify or delete any record without first receiving the consensus from the others on the network. This provides for improved visibility, efficiency and security.
10. Institutional cryptocurrency
As we head into 2019, a number of important questions remain to be answered in regards to the future of cryptocurrency investing:
Will there be an overarching framework, covering a consistent set of standards for the industry to adhere to? What are the various market opportunities for cryptocurrency? Will regulation play a pertinent role in the institutional crypto? How will the market find ways to employ digital assets
The investing landscape is ever changing and evolving. Cryptocurrency has grown out of its infancy – in which it was essentially a no man’s land serving as a ground for novices, amateur speculators and self-declared ‘crypto gurus’. Today, it transformed into an high-functioning asset class in which large financial institutions and funds seek to invest in. In fact, KYC and AML policies are looking to be put in place to help monitor the space. This will be among the first steps to regulation.
Despite recent developments, there is still a long way to go before crypto is accepted as a mainstream asset class operating and trading at the same level as stocks and bonds. However, there is hope for the future as large banks are aggressively moving to venture into the space. For example, Goldman Sachs which is among the largest banks in the world has recently started offering a Bitcoin trading product. Furthermore, the New York Stock Exchange has also reportedly become involved with the Bitcoin futures market.
11. Crypto Exchanges to be registered and impose compliance for security
The promise of an asset class based on decentralized protocol was met with tremendous enthusiasm in its initial stages. Investors envisioned currency that could not be manipulated by a central authority, remained unaffected by inflationary or recessionary environments and had no single point of failure. However, the furor has since been replaced with skepticism by many of it’s strongest supporters as cryptocurrency scams and exchange hacks with fraudulent ICOs running rampant in recent times. This has lead to a consensus that in order to be recognized as legitimate, some form of regulation is necessary. However this has been met with the question, ‘how does one go about with regulating cryptocurrency?’.
The main issue with regulating cryptocurrency is one of it’s biggest strengths – it’s decentralized nature. Due to this, no single authority can create and impose the standards for governing it. A global system approved by all countries, consisting of a panel of experts on the subject may be required to outline the framework presiding over this unique asset class. Furthermore, authorities should outline the possible risks and rewards in detail so that all investors are informed about the space and how to navigate investing in it.
While regulations are shrouded with bureaucracy and the framework may prove to be complicated to be designed, there is no doubt that they are required. International regulators are working on solutions to make this a reality while not hampering the fabric of the blockchain mechanism itself. This will help investors differentiate legitimate blockchain companies and cryptocurrencies from the fraudulent ones and help usher in an era where faith is restored in the space, while helping the asset class maintain its independence, autonomy and unique nature.
12. Will international regulators work together to make the crypto space more efficient?
Regulation is perhaps the word a lot of crypto investors and blockchain companies fear the most. Blockchain technology, famously christened as a decentralized public ledger free from government interference and regulation, initially thrived on that concept. However, amongst the vast array of scandals in the recent past, it has become increasingly clear that basic regulations are vital for the next stage of growth in the cryptocurrency industry
Fraudulent ICOs and blockchain companies, created with the objective of scamming investors, have run unchecked in the past few years causing many investors to shy away from cryptocurrencies. This widespread skepticism has stifled the growth of the industry and hampered its progress, leading to investors doubting the validity of even the most legitimate companies. Hence, laying down the foundation for basic regulatory framework could help the crypto industry tap into its largely unfulfilled potential and usher in a new era of disruption and innovation, as funds and resources will be made freely available due to the increased trust placed in the industry.
Some traders even believe that if everything goes smoothly, the U.S. Securities and Exchange Commission (SEC) will introduce a bitcoin exchange-traded fund. Blocktrade.com, a new exchange platform which is expected to roll out shortly and trade several cryptocurrencies, aims to adhere to the recently implemented MiFID II framework. This legislative framework was formulated by the European Union to regulate financial markets and improve protections for investors with the objective of restoring confidence in the financial industry. It is important to note that several industry experts are of the opinion that – in the future, an unlicensed cryptocurrency exchange will be the equivalent of an unlicensed bank, and simply won’t be practical or secure for investors. Hence, it is safe to conclude that as the regulatory landscape becomes clearer, exchanges that are compliant with regulations will rise above the rest, as they will be deemed more trustworthy and transparent by both institutional investors and the general public alike.
While 2018 was an interesting year for crypto, 2019 is shaping up to be a worthy successor. The only real question is – will it be able to surpass 2017 and become the best year of crypto of all time?
Let us know in the comments below.
About Bank Of Hodlers
Bank of Hodlers is building a customer-centric bank on the blockchain, by providing financial services like cryptocurrency-backed loans and cryptocurrency-backed cards.