Starting from the use of copper and bronze coins in 1000 BC to paper currencies that were put in circulation in China almost a thousand years ago, money has certainly come a long way. With the kind of milestones, we have achieved through digitizing almost everything under the sun, the next major overhaul in global economics shouldn’t come as much of a surprise.
That we would still be dealing with paper currency in the not so distant future is kind of farfetched. The global statistics on money transactions tell us the story.
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A World in Change
In China alone, a mind-boggling $9 trillion worth of transactions are implemented through just mobile payments. In contrast, the US has around $1 trillion worth of transactions in the same sector. Cash accounts have nearly disappeared in Sweden with just a measly 2% of the payment transactions attributed to cash. It’s safe to say that the future everybody predicted is already here.
In the last couple of years, there has been a meteoric rise in alternative payment solutions such as Apple Pay and Venmo. Although they do offer a level of convenience, steep transaction charges, that are not very different from what the credit card companies charge, continue to keep a major chunk of the population away. On the other hand, cryptocurrencies that provide much cheaper options altogether make this transaction system nonviable right off the bat.
Busting the Crypto Bubble
Bitcoin and other cryptocurrency campaigns have had a volatile year in 2017. With Bitcoin values shooting to a 1500 percent rise last year, an army of speculating investors jumped in to gain instant economic gratification. Unfortunately, ‘instant’ was never going to happen anyway. Currently, investing in cryptocurrencies – regardless of whether it’s Bitcoin or any of the new upcoming ‘star’ currencies – is a long term strategy.
2017, especially, experienced a massive proliferation of new currencies. This is quite similar to the dotcom bubble that started forming during the late 90s which eventually burst to result in the wipeout of all sub-standard companies; only the strongest prevailed.
Just like the dotcom bubble, it’s plausible that 2018 will see many of these currencies fading away and even Bitcoin could undergo a strong devaluation. It’s important to note that even if Bitcoin undergoes 90% deterioration in value, it would still retain the value it had around a year ago. This just goes to show that even in the worst-case scenario, a long term investor in Bitcoin certainly has something positive to look forward to. Over the years Bitcoin prices change and investors should understand Bitcoin statistics and trends in order to predict the rise and fall of investments.
It’s when the bubble bursts that you find a stable median value and the real scope for investment starts to materialize. This is the point where the speculative investors drop off the bandwagon and the serious investors, who invested their time to understand the dynamics of the market and the actual potential that cryptocurrency holds, make their move.
It’s Not Just Bitcoin Anymore
Another major trend to be expected in 2018 is the ongoing transition from Bitcoin to other alternative currencies. During the initial wave of cryptocurrencies, Bitcoin was the only focus of the conversation.
In the past few years, currencies like Ethereum and Ripple have not only made ground to catch up with Bitcoin but have also left Bitcoin way behind in terms of market value appreciation. As a result, even though Bitcoin may be present in all related conversation, these alternative currencies will show a relatively faster growth curve in comparison to Bitcoin.
The ICO Mirage
ICOs or “initial coin offerings” will continue to be a trend in 2018. This appears to be a takeaway from the IPO concept. As of now, almost every other person with a half baked blockchain-based concept and some reasonable computing skills is seen to be capable of raising millions of dollars of funding for a new cryptocurrency. This is attributed to the fact that any conversation around the topic generates buzz.
In most scenarios, they turn out to be nothing more than an economic mirage. Raising millions of dollars in initial capital is one thing, and on the other hand, having a rock-solid concept that’s scientifically verified and is capable of actually working as a practical business model to generate long term gains is a whole other story.
The year 2018 will most probably be the sieve for cryptocurrencies. Hundreds of ICOs worth millions of dollars leading to never-never land is going to be something of a common occurrence this year. The competition for the top spot will be interesting to observe.
Bitcoin has a lot of ground to cover in order to level the playing field. One of its major setbacks is that it does not offer the cloak of anonymity as many of its competitors do.
The Asian Supremacy
Among the global markets, the most interesting trends are expected to arise from the Asian continent. The past year certainly proved to be a windfall for Bitcoin and a great number of relatively new currencies such as Ripple and Ethereum. With the prolific rise of the cryptocurrency market in Asian economic powerhouses such as China, South Korea, and Japan; the governments and regulators in these areas took a measured liberal stance.
China generates more than half of the global hashrate and is accountable for a substantial number of mined coins. While South Korea was little more than a blip on the cryptocurrency radar, today, it is responsible for nearly half of the global Ethereum traffic.
Japan took a major step by accepting Bitcoin as a legal currency and, in the process, facilitated a favorable environment for cryptocurrency agencies or exchanges to function with relative ease. Asia has been on the forefront in terms of promoting cryptocurrency and accounts for the major chunk of blockchain operations around the world. That being said, these countries are still struggling when it comes to setting up a viable and consistent set of regulations.
The popularity that cryptocurrencies enjoy in the East has been explosive to say the least, however, there has been a fair share of scandals that have erupted over the course of time. These incidents were picked up by the media and widely publicized giving cryptocurrency a pretty bad reputation and, essentially, instilling public fear for anything related to them. As a consequence, heavy regulations were set up in response to protect the interests of potential investors.
The Regulation Conundrum
Asian countries like Japan and Korea have definitely set an example with regards to regulations. However, this is an extremely tricky phase and, at the moment, their efforts have been focused on pulling in the negative components and consequences of cryptocurrencies while simultaneously promoting the positive ones. This is no small feat on any scale.
Hopefully, Asian governments will be able to avoid these uneven regulation and policy implementations that contribute to this current state of high volatility. This high volatility would inevitably have a negative impact on their economies in the long term.
Through January and early February of 2017, the People’s Bank of China put forth restraints on implementing cryptocurrency exchange. The heavy regulations continued through the ban of ICOs within Chinese borders and consequently led to the shut down of exchanges entirely.
On the flip side, Japan implemented the official recognition of Bitcoin as a legal tender in April 2017. This led to an unprecedented spike in the cryptocurrency activity of the country. Japan went on to approve eleven other cryptocurrency exchange agencies with a concentrated effort to set up a secure system and to ensure the protection of all involved stakeholders.
The recent CoinCheck catastrophe led to a nearly 530 million dollars of investments vanish down the drain. However, Japan presently holds accountability for over 4000 points of sale that recognize Bitcoin and almost a third of all Bitcoin transactions around the world are represented in Yen.
South Korea started with aggressive tactics, similar to China, to the extent that the government almost placed a complete ban over cryptocurrency exchanges. However, the public response against it was overwhelming and it resulted in the government backtracking on the ban and eventually adopting legalization for trading in cryptocurrency. Having said that, the South Korean government does not tolerate anonymous accounts.
Taking the Middle Road
The cryptocurrency trends in 2018 will be heavily influenced by governments in Asia trying to strike the balance between setting up the necessary regulations – for an essentially bullish market that is on the road – to extensive correction and absorbing the positive effects of the cutting edge technology that powers cryptocurrency.
Though it could be a possibility in 2018, implementing a blanket ban on cryptocurrency would simply be skirting the obvious issue. In some shape or form, cryptocurrency holds the key to the future. As a result, a viable adoption strategy that serves the common interest is what everybody needs to be working on.
