If there’s one thing that’s certain about the cryptocurrency markets, it’s that the news cycle moves at a breakneck speed. Perhaps it’s because, unlike traditional markets which trade according to hours or business, digital assets are on the go 24-7.
However, in 2019, it’s fair to say that a handful of key trends has occupied most of the cryptocurrency space. Furthermore, the fact that some of them have even dominated the mainstream news is a testament to how far cryptocurrency has evolved from its cypherpunk roots.
It’s hard to imagine that at the start of 2019, the idea of a Facebook, Inc. (NASDAQ: FB) cryptocurrency was mere speculation. In June, when the company announced its intentions in June, the price of Bitcoin rocketed to its 2019 high of over $13,000.
However, the regulators quickly swooped in. US Congresswoman Maxine Waters, Chair of the House Financial Services Committee, immediately requested that Facebook pause its development of Libra so lawmakers could scrutinize the plans. Around the globe, governments have expressed their discomfort with allowing a tech firm to embed itself into the world of finance. Particularly given that the tech firm in question has already proven influential in national elections.
Facebook's Libra in the pool of speculation, will it flop? What will it do to the cryptocurrency market? Time will tell if Libra will be used as just another payment method or will it actually drive more adoption to the space. Image Sourced from Pixabay
The possibility of developing sour relations with regulators is the most likely reason that companies, including Visa Inc (NYSE: V), PayPal Holdings Inc (NASDAQ: PYPL), and Stripe, started abandoning the Libra project in early October. It could prove to be a prescient move, given that Mark Zuckerberg met with overwhelming negativity towards his Libra plans at the recent Congressional hearing.
The question is, if lawmakers decide to legislate against Libra, what does this mean for the wider cryptocurrency space? It’s fair to say that Bitcoin, Ethereum, and others are decentralized, and Libra isn’t, but how would Congress draw the line?
Google Steps Up The Quantum Threat
Alphabet Inc's (NASDAQ: GOOG) recent announcement that it had achieved quantum supremacy whipped up a storm among cryptocurrency enthusiasts. Quantum computing represents an existential threat to blockchain security as we know it because the cryptography used by blockchains such as Bitcoin or Ethereum could eventually break under a brute-force attack from a quantum machine.
However, the actual threat may yet be some way off. Johann Polecsak is the CTO of a blockchain company called QAN. In a statement to crypto news outlet Bitcoin.com, he said:
"The notion of Google achieving a quantum breakthrough sounds very dramatic, but in reality, it’s hard to gauge the significance at this time. How can we be sure that Google’s quantum computer is more powerful than D-wave’s, for example, which surpassed 1,000 qubits four years ago?"
Polecsak has a particular interest in the quantum threat, given that his company is developing a quantum-resistant blockchain. It uses a post-quantum variant of cryptography that’s designed to ensure that even a quantum machine couldn’t brute-force the private keys of user accounts. Furthermore, it’s also built with scalability in mind, achieving far faster transaction speeds than its predecessors.
It will be intriguing to see if the quantum threat allows newer blockchains like QAN to outpace established blockchains such as Ethereum.
QAN is a quantum resistant blockchain that has recently gained a lot of momentum in light of Google's Quantum supremacy claim, QAN is also the first IEO to launch on BitBay's new Launch pad.
The Rise Of The IEO
QAN is following in the footsteps of many other blockchain projects in 2019, in using the initial exchange offering (IEO) as a means of releasing its token. The company just announced it will be the first to list on the BitBay exchange when it launches its IEO platform on November 18.
BitBay is the latest in a line of exchanges to open up an IEO launchpad, signifying another major trend in the blockchain space. During 2019, the IEO has emerged as the crowdfunding mechanism of choice for blockchain startups. The interesting thing is that nobody saw coming.
After the ICO bubble burst in the first quarter of 2018, many talking heads in the space predicted that the next big trend in crowdfunding would be the security token offering (STO.) However, at this point in 2019, it’s reasonable to say that the STO hasn’t really taken off. Instead, the IEO has emerged as the crowdfunding mechanism of choice for blockchain entrepreneurs.
IEO vs. STO Funding. Source: PwC
The IEO involves a blockchain startup partnering with a cryptocurrency exchange so that the exchange lists the startup token. Typically, there will be a time-limited event during which the exchange customers can buy the startup token, after which it becomes listed on the exchange.
Some of the biggest names launched as an IEO this year have been Bittorrent and Fetch.AI. In terms of volume, crypto exchange Bitfinex eclipses all of them, having raised $1 billion.
Institutional Investors Prefer Bitcoin
Bitcoin has seen a surge in dominance this year, rising to over 70 percent of the total market cap in September. Furthermore, its notorious volatility is also showing some signs of slowing down in 2019.
Both of these are likely attributable to an influx of institutional investment during 2019. Although cryptocurrency futures are a relatively new product, they’re proving to be a hit. Pioneered by CME and Cboe at the end of 2017, May was a record trading month for Bitcoin futures on the CME. Unregulated crypto exchange BitMEX also had a record trading day in June, recording over $1bn in open interest.
So if 2019 is the year of Bitcoin futures, then 2020 seems set to see further growth in the crypto-derivatives markets. Newly launched crypto futures platform Bakkt has recently announced it will launch an options product in December, beating rival CME, which will launch its own version early next year.
However, one vehicle that’s unlikely to be the next big crypto-finance product of 2020 is the ETF. The SEC recently rejected another application for a Bitcoin ETF, which was submitted by investment company Bitwise. It’s the latest in a long line of such rejections, with the SEC citing ongoing concerns about market manipulation within the cryptocurrency markets.
Of course, the cryptocurrency space will inevitably continue to evolve. However, given the pace at which the regulatory wheels move, it’s also likely we’ll continue to see more than one of these topics dominate the headlines for some time to come.
Image Sourced from Pixabay