What's going on: After I took some days off I decided to end this very exciting year with not a recap but an outlook. So here are the 5 things that in my opinion will shape the crypto space in 2018:
1. Blockchain in the Real World
It doesn't matter if Bitcoin is worth 1k or 100k for the idea behind the Blockchain to succeed. Cryptocurrencies are a first test run, to prove the power of a "distributed ledger". Banks and every larger company in the world noticed this shift, the genie is already out of the bottle. Blockchains, in it's most basic form, are systems of trust. This principle holds in areas way beyond money: food and pharmaceutical, art and music can all benefit from knowing what was agreed or planned, and how it took place. Architectures will evolve (for example with sidechains) but the blockchain principle can apply wherever the risk of fraud could exist, which is just about everywhere.
2. ICO Shakeup and Crypto Growing Pains
2017 was not only the year everyone talked about Bitcoin (and regreted that he or she did not invest earlier), it was also the year of hundreds of ICOs and the meteoric rise of Ethereum, that made it possible to issue tokens very easily. Investing in ICOs not only felt like buying lottery tickets, it pretty much was exactly this: Prices fell or went up because some rumors on reddit or Twitter, while only a handful of crypto startups really have a working product or competent team. I think 2018 will be the year where we will see a lot of promising ICO-funded companies implode, we will see people losing their investments and we could see panic sells across hundreds of ICO-coins or tokens. It means that we will potentially see even more volatility than we are used to.
Like Julian Hosp, Co-Founder of TenX, told CNBC: "I don't think it's going to be a bubble that's just going to burst and everyone is going to lose their money, but I think it's going to be that all the coins and all the assets with very little use or value are going to get sorted out. The money is going to flow into those assets in this cryptocurrency space that really deliver value, have new technology, and are being used by people."
3. More Regulation
It would be naive to think that governments and central banks will just keep watching how the crypto space develops in the coming months. Sure, in democracies a crackdown is not as easy and as fast happening as it did in China, where exchanges and ICOs are still prohibited. But South Korea for example shows how it could turn out in most democratic countries, who know what they are dealing with: Coindesk reports that "the South Korean government announced today it will move to prohibit domestic cryptocurrency exchanges from allowing users to make transactions through anonymous accounts." South Korea also seeks to bar banks from issuing new virtual accounts to cryptocurrency exchanges.
In 2018 we will see governments taking action. The question is if this means less or more space for growth.
4.Efficiency and Scalability
Both Bitcoin and Ethereum that one of the main problems of crypto is - despite all the benefits of decentralization - is scalability. Bitcoin transactions at the moment take long and fees are as high as never before. The whole Ethereum Blockchain was slow as hell during popular ICOs and nearly collapsed when everyone suddenly wanted to trade cute CryptoKitties. And competitors like IOTA, who claim to have solved all this, are still in it's early phase and also don't work as they should when they get more attention than usual.
Sure, the teams behind these projects are aware of that. Bitcoin will hopefully get Lightning Network soon, Ethereum will implement a different approach called Sharding. The most popular cryptos need significant upgrades to deliver what they promised. 2018 will show if this is possible - or otherwise we will encounter bigger problems than ever before.
5. Government Cryptos
Venezuela seems to be the first state that could issue it's own cryptocurrency, the petro. After hyperinflation and a severe economic collapse, it seems that this is some kind of last resort for the government."It is a matter of days before we announce the first issuance of the ‘petro’ cryptocurrency," Information Minister Jorge Rodriguez said at a press conference broadcast on state TV. The petro should help Venezuela, which has faced increasing diplomatic isolation over President Nicolas Maduro’s crackdown on local political opposition, avoid attacks from the international financial system, according to Rodriguez. 5 billion barrels of Venezuelan oil reserves will be used as financial backing for the petro, according to the nation’s oil ministry.
Estonia could also launch it's own crypto token. The "estcoin" could be used in three different ways: First as some kind of "community estcoin," which would be some kind of incentivised ICO-platform to help Estonia shape out it's plan to become a Blockchain-Startup-Hub. The second use case for the token could be to provide a basis for secure, government-issued digital identities. And a third – and the most controversial – option could see the token pegged to the price of the euro – an idea that was blasted by European Central Bank president Mario Draghi. "No member state can introduce its own currency; the currency of the euro zone is the euro," Draghi said of the concept in September.
No matter what really happens and how cryptocurrencies are used by governments: The fact that these things are discussed openly by officials is a sign that this is becoming reality faster than most people thought it would.
Source: gigaom.com, coindesk.com, bloomberg.com
GIF: giphy.com
Want to get essential news on Cryptocurrencies and everything Blockchain for free? Subscribe to Cryptomizer, the daily newsletter with the most essential news on Bitcoin and everything blockchain.