The Cryptocurrency Boom – A Year Later
A year ago, one Bitcoin would have cost around $7,500 CAD. Two months later one Bitcoin was worth nearly $26,000 CAD. A year later, Bitcoin slumped to under $9,000 CAD. To say Bitcoin has experienced price volatility is an understatement.
Amidst that boom and volatility the world found out what a cryptocurrency is. During this period, hundreds more initial coin offerings (ICOs), cryptocurrencies, and blockchain projects emerged. In reaction, global regulators began the fight to understand and apply frameworks to a new world of money.
While cryptocurrencies await the next big price shift after months of sideways trading, the technology that powers them, blockchain, has become an independent technological ideal. It’s now being investigated and developed by many companies across all industries.
The explosion of available cryptocurrencies
Coinmarketcap.com, a go to for cryptocurrency prices and performance, now lists over 2,000 coins and tokens. Around 1,700 of those listed have value invested in them, so the coin or token is in circulation, and has a value attached to it.
Bitcoin still has the highest value, excluding a few anomalies, and a market capitalization, or total market value, of of over $148 billion CAD. Some of the lower spectrum coins and tokens are worth just a fraction of a cent each.
Today, the total market capitalization, the total amount invested in cryptocurrency, is over $276 billion CAD. A year ago it was around $130 billion CAD, but at the market’s peak in December 2017, the total market capitalization reached over $420 billion CAD.
The ICO reckoning
Many of the coins or tokens that emerged in 2017 and 2018 were created as part of ICOs, used as a way to raise capital funding.
Global consulting firm Ernst and Young (EY) published a report on October 20, 2018 about ICOs. It analyzed ICOs that formed 83% of the total money invested into ICOs in 2017. Of this “Class of 2017,” 30% have lost most of their value and a year later only 29% have working products or prototypes.
However, some of the largest ICOs to date have been very successful. Blockchain and smart contract platform EOS, for example, has raised the most to date, the equivalent of around $5.3 billion CAD in capital backing.
EOS launched its mainnet, its own independent blockchain, and platform for developers to build decentralized applications (dApps) in June 2018. There are now over 100 dApps built on the EOS blockchain.
Blockchain technology is being developed for use in banking and financial systems and in supply chains, trade, and export. Outside of these economic mechanisms its being applied to energy management, to track food from farm to table, to ethically source diamonds, and even to manage the world’s waste plastic.
Most of these developments look to take advantage of the blockchain’s secure way to store and share information, offering transparency and traceability for their various projects.
One indicator of blockchain’s growth is the number of new jobs in the sector. Hiring platform Glassdoor produced a report in October 2018 which found that the number of blockchain related job openings, in the U.S alone, had risen 300% in 2018 compared to 2017.
Though cryptocurrencies are not yet “mainstream” in use, an analyses of blockchain’s permeation, compared it to the early development of the internet. While there’s a ways to go, it seems that blockchain is approaching mainstream adoption in business and enterprise. This acceleration of blockchain use has occurred predominantly in the last 12 months. And it doesn’t stop there.
A report by KPMG, based on U.S figures, estimates that investment in blockchain will be twice as much in 2018 compared to 2017. In the U.S alone, for example, $858 million was invested in blockchain technology by businesses in the first half of 2018.
Regulation in a rush
Much of the global rush to regulate the cryptocurrency markets has occurred in the last 12 months. Now, 25 countries have absolute or implicit bans on cryptocurrencies and 33 have moved to regulate cryptocurrency in some way.
Many within the cryptocurrency and blockchain space are actively encouraging regulatory frameworks that do not curtail innovation. Others are concerned that regulation might restrict cryptocurrencies and reduce prices. In fact, a study by the Bank for International Settlements in October found that the price of cryptocurrencies is actually positively impacted by news of regional and global regulation.
Most recently the international anti-money laundering watchdog, The Financial Action Task Force (FATF) announced it would create the first set of global rules for governing cryptocurrencies by June 2019.
The community is still bullish
The last 12 months has seen cryptocurrency bulls, those confident in the market, predict Bitcoin’s price to hit anything from $20,000 CAD to over $100,000 CAD by the end of 2018. The dip and volatility of recent months has done little to dissuade them.
Billionaire investor Mike Novogratz believes that the market has now “bottomed” and Bitcoin will recover to over $13,000 CAD by the end of the year. Fundstrat CEO Tom Lee recently reconfirmed his prediction for Bitcoin to reach over $30,000 CAD by the end of 2018.
Venture capitalist Tim Draper believes the entire market capitalization, or value, of cryptocurrencies will reach over $100 trillion CAD in the next 15 years.
The next 12 months look set to be just as exciting for cryptocurrency and blockchain. A full price recovery is expected by most proponents and more money is plowing into blockchain bringing technological advancements, new applications and platforms. On top of this, an acceleration of institutional adoption and investment into Bitcoin and other cryptocurrencies is due at any moment.
Image credit: Shanahan McDougal, PLLC
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