Cryptocurrency Developments In 2019

“Milestones to keep an eye on in 2019”

Despite the heavy losses cryptocurrency investors experienced in 2018, the upcoming year has stored a lot to look forward to. Fundamental progress on blockchain and new advancements in technologies are in the works.

True enthusiasts know that crypto’s market cap is largely irrelevant when compared with the benefits blockchain may bring to everyday users. It hasn’t penetrated into the mainstream yet but, following developments might just give it the momentum to do so.

1 | Security Token Offering:
Security tokens have drawn significant interest from more traditional financial services giants and institutions, mainly established industry players operating in global equity markets are largely attracted to this model.

ICOs became a popular fundraising channel for many blockchain-based businesses, providing utility tokens that represent access to a company’s products or services mostly at future date.

While they are used largely for speculating in the beginning. These tokens have little long-term value until the startup that offered them launches their service. An event that never actually happens for more than 70% of the ICOs and the remaining fall short of their promises.

In addition, regulations have made it difficult for startups to raise funds through ICO.

– U.S. SEC determining that most tokens sold via ICO are considered securities and therefore must be compliant before being used to crowdfund new startups.
– Countries like China banned ICOs altogether, citing the risk for investors and rampant opportunities for fraud, speculation, and capital flight.

An alternative, Security Token Offering:
In comparison to Utility tokens, Security tokens are tied to real securities, which may represent tokenized assets. These tokens can represent actual equity, acting as “digital shares” of a company. They can grant the token holder an array of rights. This may mean equity ownership, periodic dividends, cash flows, debt repayments, voting rights and more.

2 | Enterprise Adoption & Use:
The largest firms do not typically make a move into a new market unless they see promising potential and prospects for enduring success. Amazon has become the first one to enter the market and sooner or later others will follow. Larger firms such as Google, MS, and Oracle have their own blockchain teams and have been preparing blockchain services. Their entry into the market is inevitable in 2019.

Some of the notable big corporations/enterprise implementing blockchain:

• Dutch banking group ING is gearing up for a year of more blockchain-based initiatives in 2019 to expand programs for trade and commodity finance in several sectors including energy, crude oil, soybeans, metals, and mining.

Tweet from ING twitter account, mentioning:
“Distributed Ledger Technologies (#DLT) are disrupting the #financial industry and make processes more efficient and secure.”

• Fidelity Investments, a financial giant with over $2.5 trillion worth of client assets under management, unexpectedly divulged its plans to launch Fidelity Digital Asset Services (FDAS), a crypto-focused subsidiary. As its name implies, this startup’s operations will be largely focused on the fledgling cryptocurrency industry, with Fidelity claiming that it will offer asset custody, trading execution, and “dedicated client service.”

Tweet from Bloomberg twitter account, mentioning:
“Fidelity announced today it was getting into crypto. That’s one step towards creating some certainty and security around cryptocurrencies, Galaxy Digital CEO Michael Novogratz tells @ErikSchatzker”

3 | Scaling:
Most talked cryptocurrencies, Bitcoin and Etherium are looking to make big changes in 2019 that helps to make the transaction in the respective blockchain much faster than its current transaction per second rate to the goal of competing with payment networks like VISA.

Implementation of Lightning Network for Bitcoin:
The Cryptocurrency community is eagerly anticipating the launch of the Lightning Network, designed to scale and enable instant Bitcoin transactions.

Lightning Network adds another layer to Bitcoin’s blockchain and enables users to create payment channels between any two parties on that extra layer, making transactions almost instant and the fees will be extremely low or even non-existent.
In simple terms, Lightning Network is essentially like having a person you want to talk to on speed-dial: you just need to press ‘1’ and your friend’s phone is already ringing.

Generalized State Channels on Ethereum and switch to Proof of Stake consensus:
As a part of efforts to scale ethereum for larger transaction volume, ETH plans to introduce State channels. Once implemented, these channels will minimize the number of operations needed to happen on the blockchain, freeing up network resources and space. This is done by moving many processes off-chain, while still retaining a blockchain’s characteristic trustworthiness.

In addition to State Channels, Ethereum in 2019 will switch to the more economic Proof of Stake (PoS) consensus model. In PoS, a user who holds ETH can stake by locking their coins into a node in the network and then earn more ETH when the node processes transactions of data on the blockchain. This will reduce the power consumption and load on machines.

4 | Launch of Bakkt:
Bakkt being launched by one of the most respected institutions in the world, Intercontinental Exchange (ICE) is building an open, seamless global exchange/network which will meet regulatory requirements and enable clients to buy, sell, store and spend digital assets simply, safely and efficiently.

To be soon launched physically delivered bitcoin futures contracts: Unlike futures contracts from CME and CBOE, Bakkt will provide the option of settling BTC futures contract in physical Bitcoin, not just cash. Aimed at institutional players who have stayed out of cryptocurrency markets out of concerns that they are unregulated and susceptible to manipulation.

5 | ETF:
Exchange-Traded Funds (ETF) approval is a dream for many cryptocurrency communities. A Bitcoin Exchange-Traded Fund (ETF) would allow bitcoin to be traded on SEC approved exchanges like common stocks.
The notion of a Bitcoin ETF has been swirling around the heads of crypto enthusiasts for more than a year. Approval will make Bitcoin highly accessible for retail traders through the traditional financial system and settle in the underlying currency.

Note: Hester Pierce, an SEC Commissioner, known for her pro-Bitcoin stance said that investors should not wait on a Bitcoin ETF because it may take days or years for the commission to approve it.

Approved or not, ETF will continue to be much debated and heavily anticipated in 2019.

6 | Stable Coins:
Currently, the most popular stable coin is Tether (USDT). It is the 8th largest cryptocurrency by market cap (as of this writing) and is in second place after Bitcoin in terms of daily trading volumes.
Supposedly to be one-to-one fiat peg, Tether varied in past 1 year between 0.96–1.04 USD, raising suspicions that the stable coin is not truly backed by US dollar. Also, the company is yet to agree to a transparent audit. As a result, other projects are scrambling to take shady Tether’s place as the world’s most popular stable coin.

A report from crypto wallet provider Blockchain released in Sept 2018, found that “the number of active stable coin projects has dramatically increased over the past 12–18 months and more than a dozen project teams have stated they plan to launch in the coming weeks/months.” There are now over 50 in development globally.

Recently in the news,

• FACEBOOK INC. is working on making a cryptocurrency (stable coin pegged to the US dollar) that will let users transfer money on its WhatsApp messaging app, focusing first on the remittances market in India.
• Samsung launching crypto wallet in their upcoming Galaxy S10.
• World’s largest crypto exchange OKEx, Binance as well as major competitor Huobi have listed multiple stable coins and actively looking for more options.

“2019 will be the year in which partnerships will be solidified and institutional investors will gain confidence in the cryptocurrency industry.”

The developments described above is just a tip of the iceberg and many countless other exciting developments such as decentralized exchanges will give crypto a necessary push towards where it should be.