Cryptocurrency in a simpler sense is virtual currency that uses cryptography for transactions, for the creation of units, and for transfer verification. Despite analysts trying to predict cryptocurrency through patterns, the digital phenomenon is still unpredictable. This is proven by last year’s huge plunge (dubbed the “cryptopocalypse”) by Bitcoin just after hitting its highest peak.
However, banks are not too keen on cryptocurrencies as they recognize possible issues in security and question whether to issue official versions. According to Bank of America, cryptocurrency also poses a threat to the bank’s businesses as people might conduct business via cryptocurrency instead. Bank of America says this would “negatively affect our earnings” and “the willingness of our clients to do business with us.” Despite the financial risks for both parties, many are still enthusiastic to join the crypto-craze.
With its impending impact on society, here are some of the many speculations for cryptocurrency this 2018.
1. Most predictions say Bitcoin will hit the roof again in just months.
After Bitcoin’s huge plunge by the end of 2017, analysts predict that Bitcoin will come back up again, and double by July. According to Fundstrat Global Advisors managing partner Thomas Lee, analysis of Bitcoin’s 22 corrections since 2010 show that the cryptocurrency would peak by July same as it’s $20,000 value last December 17 before declining.
Lee says, “Bitcoin recoveries take 1.7 times the duration of the decline and this implies that 85 days are needed to recover prior highs.” This means it’s July this year.
Experts have also predicted a 3,000% increase in Bitcoin with a possible peak of $43,472 by the end of the year.
While there are mostly positive predictions regarding Bitcoin’s future, there are also predictions that it will plunge to a near-zero. In a recent article, 24-year-old Ethereum founder Vitalik Buterin advises investors not to put too much money on cryptocurrency as it is a volatile venture that could instantly lose your money.
2. Other cryptocurrencies will also surge.
While Bitcoin is expected to outperform other cryptocurrencies, that does not mean that others will not increase in value. According to 13 crypto-experts gathered by finder.com, Ethereum will experience up to 200% increase this year. Meanwhile, Ripple will gain a slight growth but will drop by 8% towards the end of February. Experts also predict Cardano will become a good candidate to invest in as it will rise by more than 1,600%.
According to finder.com UK CEO Jon Ostler, the 13 experts presented positive predictions as the cryptocurrencies will recover from last year’s huge dip. Most cryptocurrencies will experience a steady rise.
3. ICO will be modified.
Initial Coin Offer, or ICOs, are “unregulated means by which funds are raised for a new cryptocurrency venture.” This works by selling a part of the cryptocurrency to early backers in exchange for real money, or other cryptocurrencies, usually like Bitcoin. Last year, 230 ICOs launched from scratch with projects such as Filecoin and Tezos. Experienced investors will continue to join the market this year. This will bring a need for transparency and business validation similar to traditional fundraising ventures which may become difficult for those who need the funds.
4. ICOs will slow down due to regulation.
Due to unregulated processes and experienced investors continue to move in the crypto market, the idea of financial scams and deceiving investors becomes a concern. This resulted for countries such as China, South Korea, and India to ban the use of cryptocurrencies. More countries will possibly follow resulting in ICOs moving to countries with less strict regulations such as Switzerland and Luxembourg.
This year, the UK Treasury will regulate cryptocurrencies due to anti-money laundering and counter-terrorism rules. Online cryptocurrency platforms are also obliged to take legal steps on customers and to report suspicious transactions.
Regulating cryptocurrency may lead to a fall in prices and trading volumes, but for only a short period of time. In the long run, this may help legitimize cryptocurrency.
5. New platforms and approaches will arise.
Concerns regarding performance and scalability will open doors for new crypto platforms and approaches. One of these concerns is that Bitcoin mining hardware is said to consume almost the same energy as the country of Denmark and by 2020 will use more power than how much power the world uses today. As more people join the platform, Bitcoin’s transaction times slow down taking up to several days, and transaction fees rise to over $4.75 per transaction.
These shortcomings make investors and crypto-enthusiasts seek out other cryptocurrency platforms such as Litecoin, ZCash, and Ripple, among many others. 2018 will see new and “better” platforms such as BitTorrent’s Chia. It claims to be a “better Bitcoin” because it will provide “reliable, eco-friendly mining and security measures.”
Solutions to issues mentioned above will also present itself. To avoid slow transactions and high transaction costs, off-chain solutions are used such as Raiden for Ethereum and Lightning Network for Bitcoin. Ethereum will upgrade its protocol for more secure transactions.
With so many factors involved, no one can accurately predict the future of cryptocurrency. With investors move into the cryptocurrency and processes start to be regulated, will cryptocurrency become an actual legal means for transactions in the future?
Thinking of setting up your own tech business? Let us help you. Learn how Cloud Employee works, see our Developer Pricing Guide, or talk to us. You can hire dedicated offshore developers with us across many technologies.