5 Things Cryptocurrency and Blockchain Investors Should Beware of in 2019
Just over ten years on from its inception, the cryptocurrency and blockchain space is still in the nascent stages of its development.
However, that should not be taken as a sign of slow progress. On the contrary, the blockchain space is evolving fast – so fast, in fact, that already we’re starting to see a departure from old standards, methods and practices, even those that were born very recently.
Here are five imminent trends to look out for in 2019.
Bullshit Artists Will Evolve
If you dig through cryptocurrency websites and whitepapers for long enough you start to notice certain trends. There was a time when all that accompanied the launch of a cryptocurrency was a Bitcointalk forum announcement and some Github links.
By 2017 the paradigm had evolved to where if you didn’t have a snazzy website, replete with edgy-looking space-age graphics, accompanied by appropriate links to thirty-page whitepapers and the LinkedIn profiles of various unknown Asian tech-geniuses – then you probably didn’t have much in the eyes of the average ICO investor.
Yet by 2019 that trend appears to be evolving already. More and more new projects are moving away from the standard model in an attempt to stand out from the crowd. Now, instead of dev groups competing to have the longest whitepaper, they’re competing to have the shortest.
One-pagers are becoming increasingly common, as is the use of video. Animations and graphics are evolving to attract and inform investors without the use of text, and one new project even launched with two issues of a manga comic which explained its use-case.
This might sound quite nice at first glance, but I suspect it will only serve to obfuscate, and make it more difficult to differentiate between genuine projects and shitcoins in the near future. ICO investments sunk like a stone towards the end of 2018, but the potential payoff for greedy team members is still enough that stumping up thousands of dollars for an extensive branding/PR campaign is a cost I’m sure most would be happy to pay.
Coins Will Die
The cryptocurrency landscape is in constant flux, and a glance at the front page of CoinMarketCap from 2013 reveals the fickle nature of the altcoin market. Only three coins from 2013’s top-fifty are still in the top-hundred today – Bitcoin (BTC), Litecoin (LTC) and XRP (XRP).
This past year alone saw numerous coins lose their mainstay status in the top hundred, such as Syscoin (SYS), CyberMiles (CMT), Iconomi (ICN) – and RChain (RHOC), which fell over 99% since January 2018.
In 2019 we may be surprised to see some major players fall by the wayside, and the reasons could be many-fold. If the market continues to sink as it has been of late, then the incentive structures of many major altcoins could find themselves being forced to endure severe stress-tests.
EOS (EOS), for example, is already perilously close to becoming an unprofitable venture for block producers. Meanwhile, mining rewards for such major coins as Ethereum (ETH) and Bitcoin have already fallen to such lows that all but the largest mining pools have perished.
Falling market prices could spell doom for many major players, but to put a positive spin on things: we should consider the bear market a factor of natural selection – it will allow us to see in real-time what works, what doesn’t, and what to look out for in the coming years.
The SEC Will Lop Heads
When SEC chairman Jim Clayton brought up the topic of cryptocurrency last November, he was crystal clear about Bitcoin’s legal status, namely that BTC does not fall under the category of a security.
However, that can’t be said for all the coins and tokens out there, and based on Clayton’s comments, the chances are that the typical holder is in possession of at least one security issuance:
“Many of the ICOs that you see and you talk about, they are securities. And if you’re going to offer or sell securities, you have to do so in compliance with our laws. We’ve been clear about that, the recent actions further emphasized that our securities laws to apply to the ICO space…”
To say that we’re still in the wild west of the crypto space is an understatement, and the SEC will have plenty of potential targets when they eventually decide to make their move.
Blockchain Will Thrive
Blockchain and cryptocurrency are proving to be two very different things. One is shrouded in mystery, taboo and FUD, while the other is shaping up to be at the core of digital, financial infrastructure.
Andreas Antonopoulos warned of the financial elite’s growing interest in blockchain (without crypto) back in 2014. And on January 29th, 2019, the chair of global research for JPMorgan Chase, Joyce Chang, called for blockchain to be further separated from cryptocurrency, which she regards as an apparent failure due to lack of merchant adoption, and falling trade volumes. She told Bloomberg:
“It’s been difficult to get through the regulatory issues (citing lack of ETF approval). We need to separate out blockchain from crypto. There’s been progress made on blockchain – there are successful use cases.”
Beware the Hybrids
The final six months of 2018 were dominated by XRP’s rise through the market cap rankings, fuelled by numerous partnerships with major banking institutions.
But it’s worth bearing in mind that much of the XRP hype train was founded on adoption of xCurrent – a semi-centralized blockchain payment service completely separate from XRP.
Likewise, one of the biggest pieces of news of 2019 so far – enough to gain coverage on CNBC with Ran Neu-Ner – was the launch of the BitTorrent Token (BTT). But as Tron founder Justin Sun eventually revealed, BTT payments will also make use of ‘hybrid payment channels’ outwith the Tron blockchain.
Furthermore, Over $3 billion in profit was reportedly made by the creator of online-gaming juggernaut Fortnite in 2018 alone. All of those in-game V-Bucks transactions were executed without a decentralized, distributed ledger, and are a possible sign that the booming digital payments industry could continue to push ahead, maybe even without blockchain.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.