In 2018 we experienced a drop of up to 90% in individual cryptocurrencies, will 2019 bring the deathblow to the crypto industry? The negative voices around digital currencies like Bitcoin and Co. already have been loud during the crash in 2018, in 2019 they now see the end of cryptocurrencies. "The biggest bubble in the history of mankind has burst," US economist Nouriel Roubini announces, raging against the entire industry with the red figures of the Bitcoin prices in the back of his head. The falling price has pushed up the number of skeptics, but now crypto experts and supporters who are thinking about the further development of the industry in this phase are positioning themselves against them. Economically speaking, says the Crypto Research Report published in January 2019, "after a bubble, only a crash can create the basis for new growth". So what will 2019 bring for the crypto scene?
Survival of the fittest
According to the MIT a calm, almost "boring" phase will settle in after the bull run 2017 and the following crash. They are not talking about a lack of interest, but of a changing focus, which those left in the industry are now focusing on meaningful projects. The first hype as well as the frustration that many have experienced has been regarded as a natural selection and left behind projects for 2019 that primarily work on meaningful use cases. At the peak of 2018 there were well over 2,500 cryptocurrencies, many of which were struggling with a trading volume close to zero towards the end of the year. So Darwinism is intervening in the crypto scene and selecting from the mass of projects that have sprung up in the last two years.
Institutional players get on board
The change in focus is also reflected in the growing amount of institutional capital flowing into internal and external blockchain and digital currency projects. Already in 2018, more and more corporates were involved with the technology and were looking for fields of application in their business areas. Examples include retail giant Walmart, which has been testing a private blockchain for tracking supply chains for several years. In addition, there are Intercontinental Exchange (ICE), Fidelity Investments and investors from Wall Street. Although the number of small investors who put their money in every project that only included the name Bitcoin in 2017 and early 2018 has decreased, they have been replaced by fewer yet larger trading volumes.
Call for more stability
In addition to the idea of pure investment, a special form of cryptocurrency is currently also arousing interest at the state level: stablecoins. Stablecoins are digital currencies that are linked to fiat currencies. The best-known example of this is Tether, a crypto currency based on US dollars and euros. Danger by Stablecoins prevails, if these are not covered to 100% by their fiat currency, as this abuses the confidence of the investors in this stablecoin. Nevertheless, nations are also jumping on the subject and developing their own national digital currencies. For example, Christine Lagarde, head of the International Monetary Fund, says that government-backed digital currencies could reach more people, offer more security, privacy and better consumer protection than private cryptocurrencies.
STOs taking over
Another type of token appearing on the screen are security tokens. Due to various factors security tokens are continiously replacing utility tokens, namely ICOs (initial coin offerings) which had their peak in 2017 and the beginning of 2018. As regulators have taken a closer and sterner look at fraudulent ICOs the ecosystem moved ever more in the direction of more regulated and legally defined digital coins – security tokens. While 2018 showed a significant increase in the number of security token offerings, the emergence of exchanges supporting them most of all indicates a bright future for them. An example is the Börse Stuttgart which issued an exchange to also trade digital assets. Moreover, returns of these kinds of investments are not influenced by the Bitcoin market price but linked to the positive cash flow of a business. This definitely brings back some of the confidence of investors which has been lost during the market drop down.
Is the market ready for mainstream adaptation?
There’s no denying that not everything in the industry is running ideally at the moment, but there are still opportunities for 2019 both in blockchain technology and above all for cryptocurrencies, which are increasingly becoming mainstream due to institutional interest. However, if mass adaptation is to take place, there must be an infrastructure that makes it easier for both companies and private users to use these digital currencies. One not unessential and already familiar topic for our readers is the tax return, which also does not spare crypto users. Profits may be limited in 2018, depending on trading behavior, but a complete documentation is the basis for any legal security. For this our recommendation is quite clear: as soon as one deals with cryptocurrencies, the subject of crypto taxes must also be considered, after all in certain countries (e.g. Germany) losses can also be carried forward into the next year and offset against possible profits. With the Blockpit platform the whole thing is (almost) automated and fully compliant with authorities. The first full version is launched at the end of January. Until then take a look at the still running beta version.
"In 2019 blockchains will become boring" (MIT)
"Die größte Blase in der Geschichte der Menschheit" (Handelsblatt)
Bitcoins bright future (CCN)
Crypto Research Report
Where cryptocurrencies are headed (Investopedia)
Börse Stuttgart plans exchange for digital assets (Heise.de)
Security tokens’ market potential (Hackernoon.com)