Many investors and users were stupefied by the idea of ICO last year. This year many of them expect the negative consequences of such fanaticism. In addition, in 2018 the largest financial institutions intend to recognize virtual currencies. Also, this year can appear a huge number of new hybrid Blockchain in the market.
Increased control of ICO
Last year almost everyone was discussing virtual currencies. This new type of financial assets attracted the attention of regulators and speculators, who closely watched over developments in the digital currency market.
As of the beginning of December 2017, the total cryptocurrency market capitalization exceeded the level of capitalization of the largest financial institution of the United States – JPMorgan. The reason for this phenomenon was the popularization of ICO. In just a few months, ICO-projects, created in all countries of the world, could attract hundreds of millions of American dollars. At the same time, experts argue that the interest of investors in these projects in 2018 will significantly decrease.
In addition, experts believe that the regulatory authorities this year will begin to take measures to curb fraudulent actions of unfair ICO projects. The main reason for this is that most of the ICO attract investors’ funds, while not having any real business. Today, there are hundreds of cases when investors’ funds received by such projects have disappeared without a trace. A lot of regulatory bodies, including the SEC, have announced their intention to stop this type of fraudulent activity.
In this regard, there is a high probability that in 2018 you will be able to see fines, as well as prison terms, as a preventive measure for persons using ICO for fraud.
Recognition of virtual currencies
In 2017, in the digital currency market, most players were speculators. However, this year can change everything. Experts believe that large banking institutions, payment system providers, pension funds, and other financial institutions will join the cryptocurrency market.
Already today we can observe an increase in the level of over-the-counter trade in virtual currencies. For example, on the CBOE exchange today you can observe the possibility of trading Bitcoin tokens. This phenomenon adds liquidity to the cryptocurrency market. At the same time, experts are confident that sooner or later there will be futures of other types of tokens on OTC-exchanges. Presumably, this should happen before the beginning of the summer of 2018.
This event and the emergence of large financial institutions in the cryptocurrency market increases the potential for the growth of virtual currencies. However, in the future, there may also be difficulties in the development of digital assets. The most significant of them will be:
- The emergence of hybrid Blockchain;
- Intervention by regulators;
- Counteraction from the side of banking institutions.
The development of most digital currencies will be constrained by problems related to internal management, often leading to a network branching. The presence of such an unstable situation can adversely affect the output of innovative projects. This is due to the fact that such a situation raises the level of risks, and this raises doubts among investors.
The growth of the digital currency market can also be restrained by the uncertain position of the regulatory authorities of the PRC and the USA, as well as a number of other states. Despite the fact that in the Philippines and Japan today there is a new regulatory framework aimed at integrating the cryptocurrency into the economy of the country, governments around the world have not yet developed laws for this sphere.
For the development of the digital currency market, it is necessary that the governments of all countries act in a manner similar to the Philippines and Japan, and allow a new kind of financial services existing.
So, in the United States, only a few financial institutions serve organizations that use cryptocurrency. However, if such banks leave the market or digital laws are enacted against digital assets, this will negatively affect new, constantly improving, services. Credit institutions need clear instructions from regulators in relation to servicing enterprises that use virtual currency for their work.
Interaction of Blockchains with each other
Last year, the share of Bitcoin tokens in the digital currency market dropped by about 37 percent. This is due to the release of a number of new alternative types of digital currencies.
However, in order to make the use of virtual currencies ubiquitous, it is necessary to provide the possibility for existing Blockchain projects to interact with each other. It is quite natural that there will not be any dominance of particular Blockchain in the near future, just as today there is no specific dominance of any Internet service provider or e-mail.
Today, at any time, each person can correspond with their friends using mail from Gmail, Yandex or Outlook. The transfer of funds between different Blockchain projects must be done in a similar manner, and should not depend on which registry the sender or receiver uses.
Last year, developers took actions aimed at creating the possibility of interaction between registries. So, in September last year, the Raiden project, based on the distributed network registry Ethereum, created a new format for ERC-20 tokens, which makes it possible to ensure the compatibility of registries. Earlier, in June 2017, a new protocol was used to link registries, called Interledger Protocol.
If all users join ILP, the partitioning into groups using specific virtual currencies will disappear. This protocol will provide an opportunity to make the transfer of funds in any cryptocurrency, regardless which virtual currency the sender uses.
Creating a Hybrid Blockchain
Last year, each user will be able to observe the spread of both public and private Blockchains. Experts believe that the unique hybrid registers will be created in the near future, uniting only the best quality from the first and second.
Hybrid distributed registries will function in the open Internet space and each user can use them. Thus, in such Blockchains be used fewer check nodes and, like the private registry, improved Blockchain will have a narrow scope.
As an alternative to the use of smart contracts based on Ethereum and the development of ERC-20 coins, a personal mini registry will be launched that can adapt to the needs of a particular project.
For those, who want improved decentralization, higher functionality, and the lack of the need for frequent updates, there is no one-size-fits-all solution. However, in 2018, many will be able to use the specific Blockchain, which most suits the requirements of the user.
The systems used today make attempts to please every user in everything. In the near future, each Blockchain will have a narrower implementation opportunity. As an example, consider Yahoo, which is a technological giant with many products, but none of the really high-quality ones.
At the same time, Google focused most of its attention on data, and Apple on design. Based on this, we can say that the success is waiting for those Blockchain projects, which will focus on the only key proposal.
Soon, coins of a broader purpose will be able to replace narrow-purpose ones, and Blockchain of narrow application will be able to supersede the registers of a wide-ranging purpose.
Despite the fact that both these statements are contradictory, as the interaction between different registries improves, the relationship between them and the coins will weaken. Such a period creates certain difficulties for the growth of the cryptocurrency. In this regard, we can say with confidence that the 2018th year will be difficult and very interesting for the crypto industry.