2017: A Big Year for Cryptocurrency [Report]
Let me take you back to 2008 for just a minute – it was a big year in science, technology and finance.
In Switzerland, the Large Hadron Collider was turned on for the first time, and the hunt for the Higgs Boson began. SpaceX, a privately-funded company, managed to put its first spacecraft (the Falcon 1) into a stable orbit. And during the peak of the 2007-08 financial crisis, President Bush signed the TARP program into law – a desperate attempt to keep the US economy afloat.
Another breakthrough was born that year, on a relatively obscure mailing list for cryptography enthusiasts. A short, 9-page white paper was published under the pseudonym “Satoshi Nakamoto”, detailing an outline for a peer-to-peer electronic transaction system called “Bitcoin”.
Today, Bitcoin is anything but obscure. In 2017, the public interest around the cryptocurrency exploded, and the race to the top has officially begun. There are many noteworthy stories, but I’d like to focus on three.
Venezuela replaces Dollars with Bitcoin
Venezuela’s economy has been in a downward spiral over the last few years, and plunged into chaos during 2017. Between hyperinflation of the Bolivar, and a critical shortage of US Dollars, locals have been forced to turn to an alternative – Bitcoin.
In September, it emerged that local establishments have started accepting the cryptocurrency for day-to-day payments, as it’s proven to be a more stable platform for business compared to government-issued currency.
While Venezuela’s situation is unique, fleeing to Bitcoin during times of economic and political uncertainty is not. A growing number of investors are seeing Bitcoin as a safe store of value during uncertain times, and their confidence is spurring the growth of the cryptocurrency space as a whole.
$100bn Total Market Capitalization
On June 6, 2017 at around 1:45am UTC, the total market capitalization of all the cryptocurrencies tracked by coinmarketcap.com rallied past the $100bn mark.
While $100 billion is a fractional amount compared to worldwide gold and currency reserves, for many investors it was a breakthrough moment, kicking speculation across various cryptocurrencies into high gear.
It took the cryptocurrency market 9 years to reach the first $100 billion in market cap – and less than 6 months to balloon to $200 billion. Financial analysts believe the USD/BTC rate could peak as high as $25,000/BTC, and that cryptocurrency could end up a significant new asset class.
The cryptocurrency space has never been hotter, with hundreds of new tokens going live every week, and institutional investors starting to consider Bitcoin as an investment vehicle, which leads us to the biggest news of 2017.
CME announces Bitcoin futures
CME Group, the world’s largest derivatives marketplace, has announced the launch of bitcoin futures contracts in Q4 2017. This will enable larger investors to trade on derivatives, but more importantly, sends a clear signal that Bitcoin is ready to be taken seriously as a financial instrument.
This paves the way for institutional investment in Bitcoin, and given the meteoric rise of the cryptocurrency’s value over just the last year, will make a very attractive option.
The blockchain technology initially devised for Bitcoin has much broader applications, and over the last few years, several notable projects have emerged. While trading and investing in BTC will no doubt be the headline feature for years to come, there are other advances well on their way.
R3.com is building a distributed ledger platform to enable networked financial services, powered by the blockchain. The efficiency gains from the Corda platform allow for decentralized, frictionless commerce, and have the potential to change the way large businesses conduct transactions. Hyperledger, sponsored by The Linux Foundation, is making advanced blockchain ledger technology available to the public. The applications go beyond finance, to include supply chain management, bond trading and asset issuance.
And less than two weeks ago, MIT announced their Digital Certificates Project (commercialized as BlockCerts), which aims to issue virtual credentials alongside paper certificates. The virtual credentials can be issued and verified using an open blockchain.
The blockchain represents an entirely new way of storing, sharing and verifying information, and is here to stay. Bitcoin’s adventure as a digital asset is just beginning, and at this point, there’s no telling how far it’ll go.