The cryptocurrency and blockchain sector is currently at a turning point, with some upcoming developments that present a potential for disruption in the near future.
After months of declining value, many predict the cryptocurrency market value has reached ‘the bottom,’ and will soon begin a new bull run into 2019. However, the industry is faced with a few hurdles along the way.
Here we will examine five of the most prominent factors that could change things.
If anything has dominated the news lately, it’s the furor over whether or not the U.S. Securities and Exchange Commission (SEC) will approve a bitcoin exchange-traded fund (ETF).
So far, every attempt at an approval has been quashed by the commission, and those which have not been approved have been delayed. The application most likely to get approved is the VanEck/SolidX bitcoin ETF which has now been delayed until September 30. It’s likely it will get delayed even further as ongoing cryptocurrency market manipulation continues to provide the SEC with reasons to be skeptical.
For any hope of approval, the cryptocurrency industry has a whole will need to work together to develop methods to reduce manipulation and promote responsible trading within the community. If this can be achieved before the VanEck/SolidX deadline in February next year, then we may have a chance at approval. Many have pointed out though that while an ETF approval may provide a short-term price increase, it’s not likely to help the market in the long-term.
Potential for disruption: 5/10
The Chinese government is forging ahead with unrelenting plans to ban all and any cryptocurrency-related products in the country. Most recently it has banned venues from hosting blockchain and crypto-related events and conferences, and it’s popular WeChat platform banned crypto-related chatter. It also recently issued a warning to companies who may be involved in illegal fund-raising via virtual currencies and blockchain technology.
Interestingly, the Chinese government is attempting to develop a cryptocurrency, which may well explain it’s crackdown on any others. Considering China’s massive population, this could severely affect global markets as it has the potential to effectively replace the U.S dollar as the world’s reserve currency. Not only that, but it would almost certainly overtake bitcoin as the cryptocurrency with highest market capitalization.
Potential for disruption: 7/10
The Bitmain and Bitcoin Cash Saga
The world’s largest cryptocurrency mining hardware producer Bitmain, who remain massive proponents of bitcoin cash (BCH) and Craig Wright’s blockchain development company, nChain, are preparing for an upcoming initial public offering (IPO). Bitmain’s GBP 18 billion valuation going into its IPO is heavily grounded in the massive store of BCH that it currently holds.
Considering that bitcoin cash is in the midst of an argument that could see the blockchain forked into two incompatible networks, this is a necessary cause for concern. The collapse of the world’s largest crypto-mining company following an IPO would undoubtedly have considerable effects on the market.
Bitcoin cash and its supporters continue on their campaign to replace bitcoin as the original cryptocurrency, with nChain recently announcing the release of a new full node to the BCH blockchain titled Bitcoin SV – for Satoshi’s Vision. It claims to return the network to the original implementation outlined in Satoshi Nakamoto’s 2009 bitcoin whitepaper.
However, while BCH proponents admittedly work hard on their social media campaign, the original bitcoin still boasts ever-increasing dominance in the market with little indication of slowing down soon.
Potential for disruption: 4/10
Stellar vs. Ripple
Moving more into the blockchain side of crypto-sphere, the two biggest competitors for cross-border payment solutions, Stellar and Ripple, are both ramping up their developments moving towards year-end.
While Ripple remains undoubtedly the strongest competitor, Stellar is making moves that can’t be ignored. Most notably its partnership with tech giant IBM is a sure sign that the fledgling network is severely undervalued. While Ripple maintains its third-place market capitalization due to its year-long ICO, it also faces much skepticism from the industry due to its alleged lack of decentralization, a fundamental tenet of cryptocurrency.
However, while neither Stellar nor Ripple are genuinely decentralized blockchains, they still stand to serve a more important purpose in the blockchain industry by providing much-needed improvements to cross-border payments. Much like Paypal and similar companies before them, the partnerships they develop with financial institutions could serve to provide a much-needed avenue for bringing cryptocurrency adoption to the masses.
Which company succeeds in this mission may have quite considerably different effects on the future. Stellar is a non-profit organization with a vastly different philosophy than Ripple. Where Ripple has a closed system that works hand-in-hand with the very corporations that cryptocurrency originally intended to replace, Stellar offers a far more transparent model that is open-source and community focused.
Potential for disruption: 3/10
What would a discussion on cryptocurrency be without the mention of crime? Ever since Ross Ulbricht’s Silk Road got busted by the FBI in 2013, crime and cryptocurrency have been inseparable in conversation.
While these days it’s unlikely many people still use cryptocurrency to buy bags of weed online, crime still permeates the industry. 2018 has seen some of the worst cryptocurrency thefts and exchange hacks in history, worst of which was $500 million Coincheck hack back in January. Since then, a number of other thefts, scams, and fake ICOs have continued to drive investors away from the market which is possibly contributing to the never-ending bear-run that we are currently suffering.
Exchange security also appears to have been ramped up of late with no significant hacks being reported over the past few weeks. If exchanges can learn from the many disasters of 2018 and we can go into 2019 with secure infrastructure and a community that trusts it, maybe we can finally see some real growth going forward. One more devastating hack though, and we’ll be right back to early 2018.
Potential for disruption: 5/10
Mark Hartley is an IT specialist, freelance writer, keen traveler, and blockchain enthusiast. He has worked on the trading floors of the world’s biggest interdealer broker in London and helped integrate crypto-services into IT trading systems. When he’s not searching for the world’s most beautiful beach, he’s nose deep in any crypto and blockchain related news.