Blockchain Megatrends That Will Shape 2018 And Beyond
2017 was a crazy year for Blockchain and cryptocurrencies. Many outside observers kept expecting the “bubble” to burst. But it didn’t. Instead, we’ve only seen demand increase for Blockchain technology across a wider range of sectors, for ICOs, and for investors making even more money from cryptocurrencies.
2018 has already got off to an interesting start. Price volatility is one thing. But the value of cryptocurrencies and underlying technology, such as Blockchain, is not based on one day, weeks or even years price fluctuation. Blockchain is bigger than that, the wider implications and impact is far more important. In the same way that apps and games, such as Pokemon Go, are representative — but a small piece of the puzzle — of the digital transformation humanity has been going through in recent decades.
Here are our megatrend predictions for Blockchain and cryptocurrencies in 2018
#1: Not your traditional bubble
Firstly, we don’t think Bitcoin, Ethereum or other Altcoins are in a “bubble.”
And here’s why.
Traditional financial speculation starts when the financial sector borrows money to bet against companies and megatrends, often betting on other speculative asset classes and, in the case of the previous recession, some banks and investors were betting and in the short-run, making money off toxic debt.
That’s simplifying it, of course. However, data backs this up. The majority of those buying Bitcoin and other cryptocurrencies aren’t going into debt to buy crypto. According to a CoinDesk report, only 19% of people they surveyed had borrowed money to invest and over half of those had paid back the money they borrowed.
This is the first so-called “bubble”, a speculative financial period, where a majority of the inputs aren’t coming from loans and investments (another form of borrowing when it comes through stock markets). Unlike other speculative events, the impact is already having numerous positive impacts across a wide range of sectors, with more real-world use cases appearing every week.
Back in 2007–08, only hedge fund managers wanted to sell mortgage-backed securities they knew contained mortgages that were unaffordable to the borrowers, bundled in with other seemingly AAA-rated assets. That isn’t the case here. The long-term impact will outlast any short-term price fluctuations caused by some investors desire to earn a quick buck at the expense of the wider market.
#2: Continued significant diversification
In January 2017, Bitcoin was the dominant force in crypto, accounting for 90 percent of the market.
Ethereum had a huge following, but low trading volumes. Until Q2 2017, when the ERC-20 smart contract emerged and tokens and ICOs were made possible. All of a sudden, investors and entrepreneurs and those who’d never bought any crypto needed Ether to participate; trading volumes rallied and Bitcoin started to lose ground.
Other Altcoins responded and gained ground as Ether started to take off. Bitcoin gained ground back towards the end of the year, until an ICO boom in December when Ethereum had another fantastic month. In the long-run, this diversification in the market is healthy. It makes Blockchain more secure, and many ICOs are creating tokens that can be bought and sold through a growing network of exchanges, thereby increasing their value and the value of dozens of innovative companies.
#3: China is out: South Korea steps in
It came as no surprise when China banned ICOs and shut down any crypto-exchanges operating in their sphere of influence. The Great Chinese Firewall won’t tolerate crypto.
But in no time at all, South Korea stepped in to fill the void. The Korean won quickly became “one of the highest-volume paired currencies in the industry, with particularly high XRP and ETH volumes,” according to a CoinDesk report.
We should expect a lot more crypto and Blockchain innovation to come out of South Korea in the years to come.
#4: Privacy wars
One of the main advantages of using Blockchain is privacy and security.
However, there is trouble around the corner as cyber attacks against token holders, ICO investors and anyone who’s used an exchange will encourage people to drop pseudonymity for true online anonymity.
There are several startups hoping to be crowned the most secure for crypto transfers, payments and interactions with fiat currencies, including Dash, Zcash, Monero and PIVX. It may take a few attacks before backers and users discover is the most secure. When that happens, expect users to flock to that company and the mainstream media to encourage higher adoption rates.
#5: Cryptocurrency will become a mainstream choice for investors
At present, only ten US finance brokers allow investors to buy up to 5 cryptocurrencies from their websites. CoinDesk only supports four currencies right now. Both fund managers, banks and industry exchanges are going to need to support a wider range of currencies and easier access to buy and sell to fuel the demand for crypto we are going to see in the coming year.
Price increases are going to drive continued interest from investors.
#6: ICOs are going mainstream
In December 2017, Indiegogo announced it is getting into the ICO game.
It probably helps that in one year, ICOs have already raised $3.5 billion, more than Kickstarter — the main competitor to Indiegogo — has raised for projects in eight years. Soon anyone, people with no crypto experience at all, will be able to invest in ICOs after a project has been checked over by the Indiegogo team. It would not be surprising if Kickstarter and others joined in this year.
#7: Expect some regulation
Blockchain entrepreneurs cannot exist in a de-regulated environment forever. No industry can survive and thrive that way. Just look at the advantages the gaming and gambling industry enjoy around the world.
ICOs are going to have to get serious about the same Know Your Customer (KYC)/investor regulations as other investment vehicles. Some regulation is going to have to step in to protect investors getting ripped off and scammed.
SEC Chairman, Jay Clayton published a letter in December, stating that the SEC supports crypto-innovation, but putting every Blockchain project on notice that ignorance of investment law isn’t a defence and regulators won’t tolerate bad behaviour, which is only fair. We should expect serious regulatory moves this year and in the years to come, in the U.S., UK, Europe and further afield.
#8: A growing number of real-world impacts
As ICO-backed projects move from MVP to functioning products, as financial sector investments start to pay off, we should expect to see Blockchain technology slowly making a bigger impact on the world in 2018 and beyond.
We are living in exciting times, when Blockchain will start to improve healthcare, transport, insurance, shipping, food production and the retail experience.