By Alpha Roc on The Capital
The rise of cryptocurrencies and the growth of Blockchain.
2020 marks the twelfth year since the emergence of Bitcoin. Let us take a trip down memory lane over the past eleven years, where we identify the key trends that have emerged around cryptocurrencies and blockchain technology. After that, we will be able to examine how cryptocurrency markets have evolved.
In reflecting on the history of cryptocurrencies over their lifetime, one particular pattern immediately stands out. New developments in the ecosystem have galvanized each successive wave of interest in the cryptocurrency space. Two of the biggest catalysts were the rise of crypto exchanges and the initial coin offering craze.
In the early days of cryptocurrency, there were few crypto exchanges. Still, before long, their numbers increased rapidly, forming an integral part of the industry and are to date responsible for the price and volume of the vast majority of cryptocurrency as well as sales and liquidity. Before we examine the emergence of this crucial part of the cryptocurrency market, let us first briefly talk about what exactly is a cryptocurrency exchange.
What is a cryptocurrency exchange?
A crypto exchange is an online service that facilitates the trading of cryptocurrencies. There are two types of exchanges — Centralized (CEX) and Decentralized (DEX). Unlike a CEX, a DEX is not controlled by or managed by one entity. Instead, it is a peer to peer exchange.
The ICO craze
Fast-forward to 2016, Ethereum unleashed its ERC-20 token standard to the world, which resulted in the 2017/2018 ICO boom. To date, the ICO craze was probably the single most significant moment in the industry’s history. Tech entrepreneurs became aware of how easy it is to create their token, and the blockchain scene experienced rapid growth.
The ICO bubble burst
Even before Bitcoin reached its all-time high price of $20 000 in December 2017, there were talks of an ICO bubble. In a nascent sector where so many companies claim to offer a unique value proposition that is often carbon copies of its peers, it is inevitable that many of them eventually fizzle out. However, the crypto market is unusual in that the value of the underlying technology (Blockchain) is often perceived in line with the crypto market capitalization. When the crypto winter struck in 2018, the perceived value of Blockchain went down as well. Today, what remains of the crypto industry is merely less than half of its original size as many projects turned inactive. Since the 2018 crash, it has become evident that hype alone cannot sustain the industry. A vast majority of new initiatives that offered “revolutionary” promises have failed to live up to their expectations, leading to much criticism of Blockchain. Despite the critics, Bitcoins and some of the other more significant altcoins have survived well, and they did so by keeping their promise of offering a real-world use case.
Blockchain and cryptocurrencies will continue to pave the future
Due to the enormity of Blockchain, the growth of Blockchain in many countries can only be accepted by data proofing. As such, Blockchain committees have been formed in various countries. For instance, in the EU, the blockchain observatory forum was launched by the European Commission. In Holland, major national blockchain research was commissioned in June 2018. While in South Africa, Bitcoin ATMs were installed. As countries begin to adopt Blockchain and cryptos, let us take a look at how Blockchain is being adopted across industries.
Blockchain technology seems to offer the supply chain and logistics sector the promise of clear proof of provenance from the factory to end consumers. Maersk has since implemented its Tradelens blockchain solution in 2018, which now boasts more than 100 partners, including Thailand’s customs agency.
Walmart has also embraced the Blockchain technology for its live food business. In an interview, the Vice president of Walmart said that “Blockchain was able to shorten the time it took to track produce from six days to two seconds.”
As of April 2018, Goldman Sachs hired a crypto trader, Jason Schmidt as VP of digital asset markets in their securities division to help clients work with cryptocurrencies, and also announced the opening a trading desk for Bitcoin contracts.
Cryptocurrencies and exchanges are now more than ever making a more significant impact on the future of financial transactions around the globe. Its ability to be secure, immediate, and surpass geographical boundaries makes the cryptocurrency model one that can not only keep pace with today’s digital world but be a driving force of game-changing innovation, which can be seen via the growing adoption and applications of Blockchain. Now, what is stopping you from embracing the wonders of this technology?