After the rapid growth of interest in cryptocurrency in period of 2014–17, today it has plummeted. This is evident from the statistics of leading channels in popular social networks that are devoted to this topic. The decline in rates of Bitcoin and Altcoins, as well as their fixation at the same level, does not inspire optimism for investors.
Today, everyone is focused on the analytical information of the future of cryptocurrencies, as the optimists and supporters say that this is only a temporary stagnation, the opponents happily rub their hands and gladly spread rumors that this direction has collapsed and will soon disappear altogether. But in order to see the trend for the future, it is important to remember the history of the blockchain and compare it with other innovations in the currency market.
The reason for the rise and fall
The technology of the blockchain and the first cryptocurrency (Bitcoin) from the first days of its entry into the market received very positive reviews. It was enough to mention the word “blockchain” in any project to be on the HYPE. The very ideology of this development was aimed at strengthening the free market of electronic payments, protecting the personal data of users and creating the most reliable system for storing, accumulating and investing funds.
But after successful implementation and testing, the cryptocurrency did not gain the desired popularity, because the masses did not have confidence in it, and the policy of regulators in many countries was ambiguous about the new product (many immediately threatened to ban it). The main reason for the growing popularity of Bitcoin was the ability to produce this currency yourself. Thanks to the so-called “mining” millions of people and even organizations began to produce cryptocurrency.
Three very important events took place during this timeframe:
Altcoins began to appear – this is a set of free cryptocurrencies that are not Bitcoin. Many popular people, movie stars and pop stars, as well as big businessmen and companies created their money. Many ICO (Initial Coin Offering) projects appeared that offered investors both new cryptocurrencies and special services for their earnings. These were multiple exchanges, faucets, as well as trading robots. For the first time the blockchain has affected the real economy. The fact is that to create a cryptocurrency requires very powerful processors, which in most cases are installed on gaming video cards. Therefore, the ones that wanted to earn bitcoins and altcoins, began to buy them in large quantities, which caused an unprecedented boom in the computer hardware market and a sharp rise in prices for video cards.
It was these reasons that at first ensured a sharp rise and then a fall in rates. Because of the wide variety of altcoins and the rapid growth of their popularity, “bubbles” began to appear – the unsecured masses of cryptocurrency began to emerge, in the development of which the developers invested almost nothing. Most of the ICO projects in the process of growing popularity were replaced by fraudulent pyramids, which were cleverly disguised as startups, but after (or in the process of) fundraising they collapsed, and their managers disappeared along with the money. In the real sector, the collapse also began to occur – after several years of enormous super-profits, video card manufacturers began to prepare for losses due to the glut of the market.
What technology has brought and what effect it has
Despite the criticism of many opponents, the blockchain technology still left indelible consequences for everyone. Most experts today do not hesitate to use such terms as “cryptocurrency world” instead of “cryptocurrency market” and this is quite fair. The fact is that the blockchain technology turned out to be much more reliable and progressive than the existing banking system. After all, it essentially allows each user to have their own bank. And the fact that each transaction is stored in the system eliminates the possibility of artificially exaggerating (understating) the rate. In addition, cryptocurrency cannot be created indefinitely – the ability to create is always limited by the demand for it or by the mining process.
In the following image you can see the difference between the traditional money transfer system (such as SWIFT) and the blockchain:
All large corporations and banks appreciated the entry of Bitcoin into world capital, as a result of which cryptocurrency was allowed for international trading along with currencies of different countries. Today, hundreds of millions of dollars are invested in the blockchain technology; investments are made by banks, large financial organizations, software developers and even food manufacturers. The giant companies have already become interested in the blockchain technology: Microsoft, IBM, BMW, Hyundai and others. Even such as Samsung, invest huge amounts of money in capacity development. Such companies can afford to keep on staff experienced analysts who would not have allowed the company to invest hundreds of millions of dollars in projects without future. The prospects for the blockchain are such that over the next 5-10 years it will be implemented everywhere. The same time it took some time ago for cellular communication and credit cards. Now these things are common things. The interest of large companies and government structures in the future will make the cryptocurrency market much less volatile. Already based on this, it is safe to say that the blockchain is the technology of the future, which will later change the concept of the payment system and the banking sector.
What will happen to ordinary users
If everything is clear with large companies and financial corporations, today miners, traders and simple users of Bitcoin and altcoins are depressed. But the main reason for this is the lack of easy money. Yes, at the very beginning of the Bitcoin it was very easy to make money on faucets and various services. Then we had to invest in the construction of special “farms”, which quickly paid off and began to generate income. And now only professional market players can earn money. And the matter here is not at all in the cryptocurrency itself – just large corporations have invested a lot of money in its promotion and popularization. It was at their expense that many were able to earn in the early stages of the development of this system.
Today, investors no longer need to “feed” the interest of the simple public to the blockchain technology. Now they intend to return their investments and get profits, which is why a kind of “restructuring” takes place in the market. The course has stabilized, and the likelihood of new jumps remains quite low. As for the positive aspects, as experts note, in the future ordinary users should expect the emergence of new ICOs. They will be exclusively working projects that will completely push financial pyramids out of the market. They will get investments not at the initial stage, but gradually, as the project develops. They will represent a technological product, and not just another speculative scheme or a new unpromising altcoin. Those ICOs that did not offer consumers a finished product will no longer be able to gain popularity with ease. At least until the cryptographic market is covered by a new wave of super-hype that may come after the start of normal regulation of projects in China and the United States.
In connection with the introduction of blockchain technology into the banking system and huge investments by corporations in the future, we can expect that if it does not replace cryptocurrency, it will become a full-fledged competitor to the existing payment system. To understand what it will look like, it is enough to study the Chinese experience of implementing the WeChat settlement system. In this country, in just a few years, mobile phone payments replaced cash and bank cards, which triggered positive changes in the country. This implementation has accelerated economic growth in times of crisis and as consequence, private business began to grow more actively.
The main feature of the cryptocurrency market is that it is very young. Therefore, the manipulation and speculation of large companies is a common thing. Whales use any informative background for their own benefit, and the proof of this is the events in the market over the last year of 2018.
In general, the year 2018 can be called the year of presales. In the future, individual small investors will sink into oblivion. All investments in the cryptocurrency market will become long-term. To participate in the investment of large projects in the near future will be possible only with the help of accredited investors, whose capital is more than a million dollars
The blockchain technology will ultimately bring big changes, not only within one state, but the whole world. Initially, perhaps not all countries will support this, but in the end, they will also have to obey to the mass adoption of cryptocurrencies.
May the blockchain be with you!
by Sergiu Marandiuc