For many years, cryptocurrencies were a fringe market, worth a small amount, hardly discussed. They had a huge increase in 2017, which then leveled off to a price higher than before the increase, but much less than the peaks.
So why the huge assumptions for growth by the end of 2018? Booming or maturing?
The first question many experts are asking is whether the market for decentralized currencies is booming or maturing. A boom, after all, is usually paired with inflation, while a maturing market is simply growing at its natural rate.
An argument for maturation is that the technology behind cryptocurrencies, blockchain, is suddenly finding uses in many other applications. Investors and innovators are looking for ways to use blockchain to create reward programs for shoppers, create legal contracts, manage big data, and much, much more. This interest in the technology itself could be causing a natural growth of the market as it appeals to a wider range of investors.
On the other hand, some market experts are comparing the rapid expansion of the cryptocurrency market to the Dot.com bubble in the late 90s and early 00s. Trading volatility isn’t helping experts feel that the growth of cryptocurrency will be sustainable over the long term; there have been times when the value of Bitcoin was halved in a single day
. Prospect of regulation and security
The main concerns about the ongoing future of cryptocurrencies are the prospect of regulation and security. Lack of security has long been one of the biggest concerns for traders. A research by Encrybit
showed that security of deposits was most important to 40 percent of the traders.
In the United States, companies have begun to launch crowdfunding campaigns based around digital coins
rather than traditional fiat currencies. In Japan and other countries, however, regulations have emerged which have tightened control over these currency types and how they may be used. If this regulation continues to expand around the world, the market for cryptocurrencies may change dramatically.Innovative prospects
Some experts compare the rise of cryptocurrencies to the expansion of the internet in the early and mid-90s. Much like the internet promised to change how human beings communicated and interacted in the world, they argue that cryptocurrencies like Bitcoin and other altcoins have the potential to completely disrupt the financial industry and change how business is conducted around the world.
These backers argue that digital wallets – the way we can now tap our phones to make payments in many stores and restaurants, using the technology of our phones to access our credit or debit cards – are already shifting the mindset of Americans towards using altcoins. After all, if you tap your phone to make a payment, what difference is it to you whether your payment comes from an altcoin or a debit card, as long as the transaction is completed? The only people who are likely to have a major change in their payment use is those who still use a significant amount of cash. Eagerness of younger markets
As millennials come into their own spending power, we are seeing dramatic ways that they affect the markets at large. One of these changes could be the growth in the cryptocurrency market. While adoption in this population is still slow, it’s definitely progressing faster than it is with Gen Xers or babyboomers. Many millennials were still in school during the economic crash of 2008 and saw people losing jobs and personal wealth at absurd rates.
They have less trust for the traditional financial markets, and more concern about how the market could affect them if another big recession were to occur.
Millennials also travel much more widely than their parents did. They are often frustrated by the slow speed of financial transfer when they are outside the US; with altcoins, transfers usually happen within just a few minutes.
It’s difficult to know what exactly will happen to the cryptocurrency market in the coming year. Current valuations certainly do seem to be following predictions, and the market seems to be growing rapidly. For increases to continue, altcoins will need to continue to find a market beyond their initial adopters, regulation will need to be friendly towards cryptocurrencies, and the technology behind the cryptocurrency market will need to prove to be as useful as it seems to be. Those who choose to invest in this growing market should, as always, be cautious and investigate the product as thoroughly as possible before making the choice to invest.