Crypto Market Brief & Slush 2018
2018 has been a year of wild disappointment in the public markets of crypto with its current peaking point occurring at the end of November. However, this mistrust has principally been focusing on coinmarketcap and price speculation of single coins and tokens. Understandably so, as considerable number of individuals lost a tremendous chunk of their life savings on Bitcoin, which obviously resulted in the “Bitcoin bubble burst” mania all over again. However, especially during these times, the spotlight should be directed to development activity, education and institutional interest and adoption, which in the longer term might be more accurate variables to measure when predicting where the industry is headed.
Despite what is told on several mediums, the crypto market is far from dead. We are seeing a constant rise in critical metrics that determine the foundation for a promising future. DApp development and general developer adoption in the blockchain and crypto space is undoubtedly on its rise.
On top of the surge in developer action, top universities have shown great leadership in terms of crypto adoption by pouring millions into crypto VCs and offering extensive cryptocurrency and blockchain education modules. Coinbase study report shows that 42 percent of the world’s top universities now offer at least one course on crypto or blockchain. Two years ago the numbers were close to zero. That again is a graph were a clear upward trend unfolds.
What about Bitcoin?
Bitcoin’s importance in the overall market still plays a drastic role as its dominance of the total cryptocurrency market falls around 50%. Also, taken into consideration that it is by far the most secure payment network in the whole world, it justifiably deserves its own section in this post. Currently, there has been a lot of discussion on Bitcoin’s sustainability for the future. However, the fundamentals look quite strong.
Price drop
So yes, this has happened before. In 2011’s 5-month bubble burst and wiped 94% off the price and took 19 months to recover to a new all-time high. Same happened in early 2013, yet 7 months later we witnessed a new ATH. Late 2013 we experienced an 87% drop in bitcoin price, which was followed by a steady growth hitting new ATH over a three-year period. Now, when looking at the current price it doesn’t seem that horrible at all. Apparently, the bottom of this latest drop is yet to be seen.
Energy consumption
Bitcoin’s energy consumption is usually compared to whole countries total consumption and often it is seen as a completely unsustainable protocol. The math is subjective, but focusing on energy consumption rather than the source of generation may lead to wrong assumptions. Also, expecting Bitcoin’s energy consumption to increase with the number of transactions in its network linearly, is not a valid statement either. Usually emerging technologies tend to consume vast amounts of energy, but eventually, the value creation ends up outweighing the cost, just like on the internet. Andreas M. Antonopoulos explains this quite well here.
This quote by Christopher Bendiksen should also give you perspective:
“…the combined power draw of global PS4, Xbox One and Wii U units running four hours a day (4.9 GW) is higher than that of the entire #bitcoin mining network (4.7 GW).”
User adoption
The number of Bitcoin wallets have shown strong growth during the past two years.
The total amount of transactions in the Bitcoin network looks impressive. It is actually close to overtaking Mastercard’s daily transfer volume.
Sidenote: The State of Ohio has decided to accept Bitcoin as a payment option for taxes. Bitcoin is clearly spreading.
Hash rate
Hash rate, which is the measurement of the combined processing power of the Bitcoin network, has experienced a significant downturn for the first time in Bitcoin’s history. This is to be expected, as the return of investment for mining operations falls hand-in-hand with the price per one Bitcoin.
Part of Bitcoin’s design is the concept known as mining difficulty, which is a measurement of how hard it is to find a new block (and get the finder’s fee in Bitcoin). Mining difficulty rose astronomically in 2018, all the while Bitcoin’s price fell. It is not surprising then that some miners aren’t seeing the profits levels that they expected and will cease operations, or mine some other cryptocurrencies. Before the mining difficulty gets properly adjusted due to processing power leaving the network, mining Bitcoin is not as profitable as it used to be.
Furthermore, without going into extreme details and debates on the future of crypto let’s dive into the outlook of the market and our focus at Slush.
2019 and onwards
Majority of the funding is still going to the infrastructure area because it still plays a significant role as a foundation in the industry.
As the market develops, there is a natural flow of attention from underlying protocols to decentralised applications (value creation and capture is a post of its own).
Even though the graph is a radical simplification of industry development focus, it gives a good understanding of where the market is positioned. However, simplification usually has its shortcomings. We have already seen applications that have demonstrated a strong utility and network effects such as Binance Coin.
For the past 12 months, Binance Coin has performed a healthy 175% price increase, while Bitcoin and Ethereum have fallen 65% to 75% respectively. It might be an unfair comparison, but still, it shows that strong application utility combined with smart architecture design (i.e. token burning reduces total supply of tokens, which results in value creation for existing owners, read more) is already a powerful combination despite the immaturity of the overall infrastructure. Time will tell what the end game of Binance is, but it already shows strong signs of adoption outside of trading applications.
SLUSH focus
ODA Network strives for projects that are solving real-world problems by building real-life use cases. Simple as that. Blockchain requires high-scale adoption. In order to achieve that we need to think cohesively and cherish a variety of different skills needed to build awesome stuff. Engineering is crucial, but so is design and marketing.
We are looking for the boldest token projects with highly experienced teams that are building a product or service that has mass appeal. A) On the technical infrastructure layer, we are looking for teams building solutions for developer tools, scalability, privacy, and governance. B) For trading infrastructure, we are looking for exchanges, custodian services, and institutional services mainly focusing on the European markets. C) On the decentralised applications layer, we are looking for high-growth products focusing on global B2C markets mainly in the areas of gaming, payments, collectibles, marketplaces, and platforms.
ODA preferred token models
If you identify yourself as a passionate entrepreneur capable of building amazing products focusing on the above-mentioned areas, feel free to submit your project at oda.network and let’s talk!
See you at Slush 2018! #slush18
P.S. We are not looking for “tokenise everything” solutions.
