2018 Current Crypto Events for Consideration

Kenton PrescottBlockedUnblockFollowFollowing

Feb 1, 2018

We are already one month into the new year, and the space has rocketed, crashed, and stabilized-ish. The future has a lot of uncertainty, so if you’re in it just to ride, hold on and have fun.

Below is a compilation of current events and considerations I think are important for Crypto in 2018.

Business moves

Many well-respected companies, such as Robinhood, Square and Samsung, are announcing and launching their participation within the bitcoin network, whether it be through exchange or miner production. This increases competition, innovation, and market exposure, and what’s not to love about bitcoin when Square made an uber friendly animation on bitcoin?

Although I’m confident in the long term survival of cryptocurrencies, a company’s intention is to meet the demand of crypto users, ranging from irrational speculators to shrewd Somalian merchants, so remember:

“In a gold rush, the real money is made by selling picks and shovels.”

Lightning Network

After years in the making and through rigorous testing, LN is now live on the main net. There is a growing number of “How-to-LN-node” tutorials, and the number of channeled nodes is reflective of that. The Lightning network is a second layer to Bitcoin’s first layer protocol and solution to the infamous scaling problem.

Contentious Tether

“The Tether problem” has been a source of intense scrutiny due to its unverifiable reserve audits and shady corporate structure. In fact, US regulators are investigating the legitimacy of Tether’s claims. Tether is currently utilized by many cryptocurrency exchanges as a light weight alternative to traditional fiat deposit and withdrawal methods.

Capital inflows != Market Capitalization

There have been rumors (source) of a JP Morgan report on capital inflow of the cryptocurrency market. They estimate that $6 bn has been invested when the market cap reached $300 bn. As a simple back-of-the-napkin calculation, if we assume a linear relationship, then at a $600 bn market cap, $12 bn capital has been invested. At this time of writing, Tether has a market cap of ~2 bn, which could be ~16% of total capital inflow.

If Tether fails to prove adequate USD backing of all Tether coins, it could be concluded that cryptocurrencies, across the board, have been artificially priced. This may cause a literal explosion.

Developer focus

Under the token model, detailed here, developers are economically incentivized through token ownership for early contributions to a project. The problem: developers usually follow the highest return/risk profile of contributions to a token or cryptocurrency project. This results in a talent drain out of matured projects that boast higher redundancy and lower risk. Current Solution: company sponsorships, community donations and bounties. However, this migration could become a growing problem as great cryptographers, computer scientists, and visionaries move out of matured projects like Bitcoin.