The Top 6 Cryptocurrency Trends Dominating 2018
Disclaimer: This post is for information and education purposes only. Investing in cryptocurrencies like Bitcoin, Ethereum and Ripple is an extremely risky affair. You should only invest what you can afford to lose.
Today marks 10 years since a very proud Satoshi Nakamoto introduced his paradigm-shifting brainchild, Bitcoin, to a world that couldn’t possibly imagine how radically this virtual coin would disrupt the global economy. And you’ll agree with me that 2017 will be remembered as the most significant year for cryptocurrency ecosystem. We witnessed unprecedented growth in virtual currency market along the dramatic development of blockchain technology.
Bitcoin saw an incredible price surge from around $800 in December 2016 to an all-time high of close to $20,000 by the end of 2017. Seldom have we seen the value of a currency rise at such a pace. However, the market lackluster performance at the start of 2018 pales in comparison to its stellar thousand-percent gains last year. That's why investors have to stay tuned into the ever-changing landscape of cryptocurrencies.
Below are the current trends that are reshaping the cryptocurrency space in 2018, and how they may impact your investment decisions as the year progresses.
1. The dominance index of Bitcoin has fallen to an all-time low
At the beginning of 2017, Bitcoin enjoyed a market share of almost 90%, according to data from CoinMarketCap.com. As the year progressed, bitcoin’s position dwindled as other cryptocurrencies like Ethereum and Ripple jostled for more recognition.
John Spallanzani, chief macro strategist at GFI Securities in New York, commenting on the current landscape, said that a shift from bitcoin to other digital currencies has been happening in the space.
Bitcoin saw its price fall by over 40% in the first quarter, according to the CoinDesk Bitcoin Price Index (BPI). Pundits note that the high transaction fees and long wait times have largely fueled the growth of alternative cryptocurrencies.
2. Bitcoin is becoming less attractive to cybercriminals
For the past eight years or so, bitcoin and criminals have become inextricably linked. Yes, bitcoin seems like it’s the de facto currency for drug dealers, money launderers and ransomware merchants in the underworld. But, recently, authorities have been noticing another shift in how criminals are buying and selling their wares in the online black market.
Rob Wainwright, Europol’s Executive Director, raised the alarm several months back, saying that nefarious profiteers who use the dark web to sell weapons, drugs, and stolen credit cards are ditching bitcoin in favor of less known coins like Zcash and monero – which are more difficult for law enforcement agencies to trace.
While there is no name attached to a bitcoin wallet, the path a bitcoin transaction travels is public – meaning eventually if the dirty coin is going to be converted into hard cash – it becomes easy for anyone to trace transactions back to its account of origin.
Police and security firms like Chainalysis are now able to trace bitcoin transactions linked to specific crimes. For instance, a former federal special agent Ilhwan Yum was able to trace $13.4 million in bitcoins from the Silk Road directly to the personal computer of Ross Ulbricht, the alleged kingpin of the underground drug marketplace.
Monero touts enhanced anonymity features that solve several key privacy vulnerabilities that dog bitcoin. It uses stealth addresses, ring confidential transactions, and ring signatures to obscure the origin, destinations, and amounts of all transactions, which makes any tracking almost impossible. These privacy properties make Monero a brilliant choice for those who wish to operate under the cloak of anonymity.
If bitcoin’s privacy shortcomings drive a certain group of users away, the virtual coin will quickly lose its value.
3. ICO is the latest craze
The Initial Coin Offerings (ICO) dominated and captured attention in 2017. ICOs repeatedly set new fundraising records as existing virtual currencies like Ether and bitcoin simultaneously soared in value. According to Fabric Ventures and TokensData, cryptocurrency token sales raised over $5.6 billion last year. There were 913 tokens sales with 435 of them deemed successful. The average amount raised by successful ICOs was $12.7 million.
This relatively new fundraising method has captivated businesses ranging from startups to large-cap enterprises. And this year looks even better for businesses that are looking forward to organizing their own ICOs.
ICOs have a huge potential in becoming the next big thing. However, critics say the whole think is just a bubble waiting to burst.
4. The Rise of Stablecoins
The price of bitcoin has been a rollercoaster ride since its inception. It is the hyper-volatile nature of digital coins since the start of 2017 that has caused jitters within the financial circles. This is one of the primary factors driving merchants away from accepting cryptocurrency as a form of payment for goods and services.
A research study conducted at Cambridge University shows only 100,000 merchants accepted bitcoin as payment as of 2015. Adoption from a consumer standpoint is also challenging, because of the concerns that exist with reference to fluctuations in purchasing power. For this reason, building a “stablecoin” has long been considered the Holy Grail of virtual coins.
A stablecoin is a token (like bitcoin or ether) that exists on a blockchain – often pegged to a fiat currency like the USD. It is the hottest trend in the cryptocurrency ecosystem and one that promises to bridge the gap between digital currencies and financial markets.
5. 2018 Is a Year of Cryptocurrency Regulations
Of course, regulation in the decentralized, volatile, and highly unregulated cryptocurrency space and blockchain technology has been a long time coming. Countries have long been concerned about virtual coins’ role in money laundering, organized crime, and tax evasion.
South Korea laid down regulations which prevent anonymous trading of cryptocurrencies. China, once a global hub for virtual coins, went ahead and banned all domestic and foreign cryptocurrency exchanges and Initial Coin Offerings. The US and EU member states are also mulling mechanisms to help prevent illegal uses of virtual currencies.
6. Tech giants embrace decentralized technologies
Digital Conglomerates such as Facebook, Starbucks, and Amazon are expected to invest heavily in cryptocurrency space. Starbucks Executive Chairman Howard Schultz told Fox Business that he sees Blockchain technology as something the company will embrace soon.
Facebook CEO, Mark Zuckerberg, also expressed a kin interest in blockchain technology. The Silicon Valley’s wealthiest billionaire said he plans to study the decentralized technology as part of the larger bid to improve Facebook in 2018. This prospective move by big-league companies will be good for the cryptocurrency space as it will help hasten mainstream adoption.
These cryptocurrency trends are all opportunities, in one way or another. But one thing is for certain, crypto and blockchain technology is here to stay and will definitely make investing more interesting in the future.
© 2018 Solomon Magawi