What Lies Ahead for Cryptocurrency in 2019 and Beyond
Blockchain was one of the most buzzed-about technologies throughout 2017. Thousands of people from around the world attempted to invest and cash in on the rising price of Bitcoin and other cryptocurrencies. It seemed as though the world would run on these currencies in a few short years. Now, the setting is completely different. Prices have fallen back down to earth and many of the smaller entries into the market have folded. 2018 proved to be a watershed year that would determine the future of cryptocurrencies. In 2019, the field will see considerable expansion and may even face an identity crisis.
The 2018 blockchain experience
The 2018 blockchain experience was one of pain and heartache. A number of different companies associated with the blockchain collapsed. The price of Bitcoin dropped considerably. This drop resulted from the inevitable deflation of a speculative bubble. Much of the increase in Bitcoin’s value throughout 2017 was based on speculation and not on applications.
The cryptocurrency was still in its earliest stages of being adopted in the corporate field. Most people were buying cryptocurrencies in order to sell higher and make as much money as possible. But in 2018, this fervor began to decrease. Speculators deserted the field of cryptocurrencies as negative news stories showed their popularity among scam artists and hackers. News reports suggesting that most ICOs were fake only sped up the decreases. The price of Bitcoin in 2018 dropped by nearly 72%.
This drop was ten times larger than the percentage drop in the Dow Jones Industrial Average over the same time period. The hit to Bitcoin devastated a wide variety of other cryptocurrencies. The majority of cryptocurrencies simply folded in the past year. Others mainly survived based on their corporate or international strengths. The idea that cryptocurrencies were all scams or had passed their time was incorrect, however. There is still a robust future for cryptocurrencies in 2019 and far beyond.
More sophisticated players
2019 will most certainly be a year of large players in the field of blockchain and cryptocurrency. The market problems of 2018 mostly priced out all of the small, upstart competitors to large crypto companies. Those larger companies will continue to consolidate the market and introduce new innovations. The most likely outcome is that they will continue to work with prominent corporations in developing blockchain tools to aid their bottom line.
These competitors will also work to move smaller entities out of the field. There may be new networks that have prohibitive costs associated with entrance. Security and transaction networks could be crafted that exclude smaller players from easily entering without paying exorbitant fees. The restriction of new cryptocurrencies may not be particularly bad for the field of blockchain cultivation. Bitcoin, Ethereum, and other prominent cryptocurrencies will be entrenched and will be past the period of attracting small-time investors and speculators. Those who invest in Bitcoin in 2019 will be interested in investing in a field that will continue to make money and find new applications for an extended period Of time.
Slowing down the cultivation of new entrants also makes it more likely for products using blockchain to begin to repair its image. Companies that employ blockchain technology has been harmed over the past year with reports of fake initial coin offerings and cryptocurrency exchanges that were simply scams. Allowing fewer cryptocurrencies to reach the market will make it more difficult for these scams to make money and gain prominence in the media throughout the year and beyond. Recent congressional regulation such as the Token Taxonomy Act have begun this process.
One of the most exciting avenues for expansion in the world of cryptocurrencies is in the international markets. More and more companies are exploring partnerships with countries that need help stabilizing and rehabilitating their currencies. A particularly strong example of this phenomena is Venezuela. The country has been racked with massive inflation over the past several years.
Instead of simply suffering through an inflationary collapse, the president of Venezuela’s leaders have suggested that the country introduce a cryptocurrency pegged to the price of oil. The idea of turning cryptocurrencies into sovereign currencies could significantly alter the scale and scope of the blockchain. Instead of simply being used inside of companies or between individuals for transactions, this proposal would make the technology a major part of global currency markets. Blockchain companies could make millions or even billions of dollars facilitating the entire currencies of one or more countries. While the idea is still in its infancy, it has the potential to transform the idea of what companies can do and where they can go with blockchain technologies they are developing.
The continuance of corporate adoption
Corporations began their adoption of cryptocurrency in earnest in 2017. In that year, companies such as JP Morgan Chase began to explore the potential of using blockchain to protect transactions within their company. While they drop in the price of Bitcoin garnered considerable attention throughout 2018, there was not a subsequent drop in interest from prominent companies.
Companies are still trying to explore the technology of blockchain and its potential applications in security and identification throughout companies. This investment will only continue to strengthen and grow throughout 2019. In 2019, there is a high likelihood that a technological breakthrough will be reached by these companies. A company that is on the vanguard of blockchain usage is likely to pioneer a product that revolutionizes the relationship between security, companies, and blockchain. That product will influence the market for years to come.
The embrace of regulation
Companies in 2017 were often fearful of regulation. They were still worried about the potential of blockchain to change the world of finance and work outside of the traditional monetary system. The collapse in Bitcoin and other cryptocurrencies throughout 2018 has actually reversed this mindset significantly.
Companies are beginning to invite the kind of scrutiny that they would have hated one or two years ago. They want the legitimacy that comes from government oversight. Companies and cryptocurrencies know that a primary factor holding them back is the reputation of cryptocurrencies as a pseudo-scam and a front for illegal operations. The field believes that a greater level of regulation will help to shut down unscrupulous competitors and invite greater public acceptance of cryptocurrencies. To that end, the field has begun to hire lobbyists and present introductory plans for regulation.
They have begun to lend out their most sophisticated technology for the use of government agencies. The hope is that government agencies will use the blockchain, enjoy it immensely, and then spread its usage and respect to the idea of general regulations. Whatever the eventual outcome, the next few years will see even closer ties between cryptocurrencies and government regulators. There may even be a representative elected primarily with the support of cryptocurrencies and blockchain companies. This individual will become the lead supporter of policies and regulations designed to help the field of cryptocurrencies instead of dampen their potential.
The facilitation of exchange
Exchange will be a critical part of blockchain technology throughout 2019 and beyond. The basic infrastructure of major cryptocurrencies has been established. But some of the ancillary aspects of buying, selling, and using currencies based on the blockchain is still in flux to a certain degree. A large number of Bitcoin exchanges have been shut down over the past year. These shutdowns were often due to some combination of poor management and unscrupulous practices.
The building of new ATMs for cryptocurrencies has slowed down as well. Public-facing companies have simply lost their ability to connect with the public in the same way that they were able to throughout 2017. But certain developments in the field are beginning to change this approach. One of these developments is the remarkable success of Bitcoin’s lightning protocol. The lightning network has expanded immensely throughout 2018 and will only continue to grow into 2019. This network makes it easier for individuals to buy and sell Bitcoin with one another. The success of the lightning network makes
New opportunities abound in the fields of Bitcoin and cryptocurrencies in general. There are a number of newer currencies and currencies that are achieving a certain degree of success. The Ripple protocol continues to be adopted by more companies and banks throughout the country. This protocol will only increase the number of corporate applications of cryptocurrencies and cause a general amount of fervor surrounding the field. There is also the possibility of greater consumer acceptance of cryptocurrencies through the release of an exchange-traded fund (ETF) pegged to their performance.
Exchange-traded funds are some of the most popular investment vehicles in the world. They are the way in which millions of investors buy a stake in a particular area of the economy. These funds also hold a certain degree of legitimacy that the world of the blockchain desperately needs. An ETF that tracks cryptocurrencies is currently being evaluated by the SEC. If it is accepted, an entire new class of investors may become affiliated with the world of cryptocurrencies.
Supporters of cryptocurrencies and blockchain were understandably shocked by the events of 2018. They may feel discouraged or disoriented by the violent price swings in Bitcoin and Ethereum. But supporters of the blockchain should not lose faith. Cryptocurrencies may still potentially be a corrective to traditional forms of currency and transaction security. Thousands of companies might still adopt the blockchain over the next five years. Entire countries may provide millions of revenue to the field and change global politics at the same time. 2019 should prove to be the year in which the blockchain rebounds and becomes a pivotal part of the international financial discussion once again.