Eyes On Blockchain And Cryptocurrencies In 2019 – Eight Investments To Look Out For This New Year
2018 has been a hectic one for cryptocurrency holders, and for the blockchain market as a whole, there’s no better way of phrasing it.
While it began on a remarkable high note for enthusiasts worldwide; starting off with a history-making month in January, reaching the never before reached market cap of $900 billion at its height.
This was to prove a short-lived peak for cryptos as the slip began almost immediately, and over 2018, we saw how it had fallen over time. As of late December 2018, we saw a market decline of over 90 percent when compared to January.
While Bitcoin had initially enjoyed one of the greatest upswings in the cryptocurrency market, with its value reaching over £20,000 per BTC by November 2017. But this year has been, what can only be described as the darkest year for the cryptocurrency marketplace.
But while this would be good enough reason as any to have the more inexperienced investors peel out of the market, now is a time to be focussing on the future potential for the market. Especially now as we’re starting to see more institutional investors, and more sectors are starting to become interesting for crypto.
Here we take a look at some of the areas to look at for future investment.
1. Exchange Traded Funds For Bitcoin
More Specifically: The VanEck and Solid X Bitcoin ETF Decision Date – 27/02/2019
Over the last twelve months, Bitcoin ETFs have been a truly hot button issue for enthusiasts of all sorts. They’re given far more fame as a catalyst for increases to BTC value as well as a number of other cryptocurrencies.
One of the proposed Applications of these Exchange Traded Funds includes one with enough collective expertise in the financial field to get it approved. This being the collaborative venture between the investment company – VanEck, and the Blockchain-oriented SolidX which have been working in conjunction with the Chicago Board Options Exchange to create a cohesive ETF proposition.
As it stands, it is one of the only proposals that is regarded as a promising initiative by even the more skeptical financial professionals.
Should this proposal be approved by financial regulators, the issuing company behind the fund would need to go about buying real bitcoin, either from an exchange or from an Over the Counter provider (OTC). Depending on the scale of this fund, it would require the purchase of thousands of Bitcoin in order to ensure an ample supply to meet demand.
The net positive is that this fund would open up Bitcoin as a viable investment from a pool of investors and traders with a more institutional background. This would not only allow Bitcoin to be accessible to a broader pool, but also one that has more long-term aspirations for the digital asset.
Now, while this is all well and good, it’s an ETF proposal that is still under consideration from the US’ SEC (Securities and Exchange Commission). And while the ETF proposition was brought forward by highly reputable firms, the decision has been postponed on a number of occasions, sending the market heading downwards as a result.
The commission has since announced a new ultimatum in early December, stating that it will come to a decision on February 27th, which will be the day when the commission will approve or disapprove the proposal.
While there are plenty of crypto optimists out there that see the approval of the VanEck and SolidX fund as an inevitability, such as Bill Barhydt of CNBC, this remains to be seen. We can only wait and see whether the commission believes that this is the time to let the first Bitcoin physical ETF should be set loose on the market.
2. Token-Based Securities
Some of the newest words that entered vogue over the last year were a combination of Securities and tokens, and they’ve only been growing ever since, especially in the US. So what is giving it this much-enviable position as a buzzword for speculators? It’s largely because they’re regarded as an innovative step forward for many, with all the potential to disrupt the worlds of business and finance alike.
“Security tokens, not utility coins, will attract a significant amount of money from Wall Street next year.” This is according to Rohit Kulkarni who works as the managing director of SharesPost, which actively participates in the market activity for private securities. With an already well-versed knowledge of securities, Kulkarni gave that statement on Nasdaq recently.
While the field has been missing a certain amount of regulations that would otherwise make it stumble on the way towards broader growth for the industry, Kulkarni remains resolute that there is still plenty of space and time for it to mature and develop over the course of 2019.
“Ultimately,” Kulkarni argues, “we expect a more. stable regulatory environment over the next six to twelve months.”
If 2018 can be regarded as an example of anything, it’s certainly a positive one for showing the kind of appetite there is for security tokens. For example, Overstock, which began to reach into the market, became one of the first companies with a billion dollar valuation to work towards the creation of its own security token exchange. According to sources, this same exchange is poised to open up trade during this year.
In addition, operating as one of the first US-based security token exchanges, Open Finance officially went live as of the 13th December 2018. Along with these two examples, there are a number of others interspersed throughout continental Europe, including on stock exchanges in Switzerland and Malta, both working to forge partnerships with other companies in order to form various security token exchanges. This is an industry to keep a close watch on as 2019 develops.
3. Institutional Interest – The NASDAQ and New York Stock Exchange
Dates of Interest – Later part of January – The proposed launch date for Bakkt.
There are no two institutions that can be epitomized as ‘institutional investment’ other than the two biggest exchanges in the world – the New York Stock Exchange and the NASDAQ. What gives these two a commonality is that they are both walking into the world of crypto with eyes wide and hands out.
One such example of this is the parent company to the New York Stock Exchange – ICE – Which is actively working on its own cryptocurrency exchange called Bakkt. Along with this exchange, it had first planned to launch what would be the very first physical backed Bitcoin futures position on its exchange by late January.
While this would make January a very exciting month for investors, this date is provisional and has been the subject to a number of postponements over the latter quarter of 2018.
While delays are an unfortunate inconvenience, the crypto investing population is under no allusion that this would be a possible game changer for getting a more professional pool of investors involved with the cryptocurrency market at large. The reputation that precedes Bakkt can also lend a lot of professional support to a market that has previously been beset with scandal.
While ICE was the first to run at the starting pistol, NASDAQ is not far behind with its own crypto mission. NASDAQ has announced previously that it would be working on its own Bitcoin futures trading position in 2019 too.
There has been even more news coming from NASDAQ this week as well, this included the examination of a number of security tokens already out on the marketplace, as well as measuring the prospect of creating . its own exchange for these assets in the near future.
It remains to be seen just what sort of shape this final security token and token trading system will look like for NASDAQ, but what this does demonstrate is that there is a very real crypto arms race taking place between the giants of the stock market world. And much like in any other kind of market, they are unafraid of diving into the fray and getting messy.
“The concept of having a digital currency that does allow for transfer of money across borders, that really transcends the banking system, and allows for a seamless transfer, is really really fascinating and one that we have to assume will become a part of the ecosystem of the internet,” this is according to the CEO of NASDAQ this week, Adena Friedman, who openly commented on digital currency trading, demonstrating a hawkish position on embracing them.
4. Solving Storage And Custody
Over the course of 2018, there have more than enough hackings and cyber attacks on cryptocurrency exchanges that have hit the news headlines. Over 2018, this has involved the theft of over $1 billion in cryptocurrency, which brings us onto another area for market and investment potential – security, custody and storage.
Keeping your digital wallet secure, as many of us know, is paramount if you intend to make your cryptocurrency investments worth something. It’s for this reason and others that the joint matters of custody and storage are hot issues to take into 2019.
These two matters transcend the individual crypto ‘HODLer’, and they are critical areas as more professionalized and institutional investors get involved in the market of buying Bitcoin, and unless a solution is found, the crypto market will have as much success netting these investors as a fisherman without a line.
They are such crucial matters for these investors that they’re often forbidden from conducting trade on digital asset platforms unless they are held in highly secure custody, which is often provided (under lush commission) by specialist companies.
The blockchain market hasn’t been blind or sedate on these matters, however, with a number of blockchain companies including Coinbase leading the way in the creation of crypto and digital asset custodianship over 2018. Another example of this is Fidelity, which is a very well known asset management company that manages assets for clients totaling a staggering $7 trillion.
What makes it unique as well as the fact that it has since decided that will seek to “make digitally native assets like Bitcoin and Ethereum, more accessible to investors,” and announced the founding of a new subsidiary company which will focus on the secure storage of digital assets for clients. This new subsidiary company, according to a number of news sources, believe that this initiative is currently working to onboard clients, and is expected to fully launch the platform within the first few months of 2019.
This on its own is particularly exciting for the market as a whole, but there are those more optimistic types that believe that major multinational banks will start to move to join the likes of Fidelity, ICE, and NYSE in providing secure storage solutions for companies buying Bitcoin among other crypto-assets.
According to a number of past reports, Brad Garlinghouse, the CEO of Ripple made clear during the Fintech festival of 2018, argued that a number of banking organizations are poised to offer some form of blockchain asset custody solutions for their list of clients over the course of the year.
5. OTC Trading (Over The Counter Trades)
Previously, this medium for the buying and selling of cryptocurrencies and digital assets gained notoriety due to their inherent impact on the volatility of the market. While this is the initial reason some recall Over the Counter trading (or OTC for short), it’s just another colloquialism for the private buying and selling of cryptos that takes place all the time, the only conceivable difference is the scale of these trades.
It is, in fact, because of these large scale trades that panic can ensue on an exchange, especially if the OTC trade results in the buying/selling of a large chunk of assets, for a smaller exchange, that is more than enough to cause a volatile market.
Over the stretch of 2018, the number of searches both on search engines and social media for Bitcoin OTC’s increased significantly, increasing in tandem with the amount of activity taking place on them.
For the moment, Circle is one of the largest Over the Counter trading platforms out there. Backed by the multinational Goldman Sachs, the platform recorded a total of $24 billion worth of OTC trades in 2018. Of all the ventures the banks have become involved in, Circle is fast being seen as a veritable money-maker.
“Over the course of 2018, we have seen more than triple-digit growth enrolling in our OTC venture. That is a major growth area,” declared Jeremy Allaire, Circle’s CEO during an interview in late 2018.
It’s because of this spectacular success that a large number of cryptocurrency exchanges have since been driving forward to create their own Over the Counter trading platforms. In the case of Coinbase, however, it covertly launched one in just a number of months.
In stark contrast, Binance has since reacted in a very different way to its San-Francisco based rival, founding its own investment-centred wing called Binance Labs. Since its creation, it has invested roughly $3 million into Koi Trading, which is an Over the Counter trading desk out of the United States.
So with a number of the big players in the cryptocurrency exchanges deciding to move into the Over the Counter trading field, it will be playing an increasingly important role for the blockchain world. Investors would be wise to dive into this field.
6. The Banking World And Blockchain Technology
Baking is all about fostering and creating a “seamless experience for storing and managing digital assets” for customers worldwide.
Multinational banking corporations spanning the world have wasted no time in getting their hands on blockchain technology and putting it to work in order to solve areas of the business that may need some updating in order to streamline its processes. Currently, this includes leveraging the technology in order to support and make the process of cross border payments and trade more efficient.
Over the span of 2018, there are a number of milestones that were achieved that should give us pause for thought on how the next 12 months might run for banks as they continue to apply blockchain into 2019.
Some of the first major transactions between customers and major banking organizations have already been conducted using a blockchain platform as an enabling body. The more recent example is We.Trade, which was put into action on the 3rd of July 2018.
By doing so, it’s regarded as a monumental achievement for the adoption of blockchain in banking. With a number of institutions from any number of industries, having previously expressed no interest in the technology, deciding to possibly put it to use.
This is a truly positive step for blockchain technology, and we still have a number of banking organizations still adopting and leveraging the technology wherever they can. There are a number of new competitors in the market that have their eyes set on creating branches of banks that center their business on blockchain assets and cryptocurrencies.
A number of countries across continental Europe, as well as island nations in the Caribbean such as Bermuda, have been pushing for more cryptocurrency-positive legislation in order to give incentive to blockchain ventures to set up in these countries. One such challenger to institutional banks includes the dynamic venture called EQIBank, which is made up of a number of experts from Credit Suisse, UBS, and HSBC. It has announced that its first customer accounts will be opened as of December 2018.
According to the EQIBank team, it seeks to offer customers a seamless service for the storage and secure management of users digital and real-world assets. This is according to a recent press release. For those curious about possible fields of investment, this one is more than just a passing trend, as an increasing number of crypto-based startups are going on to apply for a banking license wherever they are.
7. Cryptocurrency Based Insurance
Blockchain has steadily been put into the hands of international companies, and insurance is one of them. Companies like Allianz and MetLife, for example, are some of the early adopters and enthusiasts in researching for the potential of adopting it wholesale.
The inclusion of this technology is only reasonable considering that ledgers which boast complete transparency, and smart contracts for conducting transactions and exchanging services without third parties. These are the best kinds of advancements that can come to the insurance world.
It’s not constricted in the kinds of applications that blockchain technology has within the world of insurance, and can be included in the automation of payments in line with whatever insurance plan is laid out for a client, as well as storing the information and transactions, and streamlining the process of claiming on insurance. All of it is being enabled thanks to the powerful modes of storage that blockchain-based IoT allows for.
Speaking on behalf of the international insurance giant, R3, Its global head of insurance, Ryan Rugg stated that the current landscape for insurance businesses is at a place where it can take a giant leap forward using this technology.
“These developments can prove to be innovative for any kind of sector, but when we take into consideration the kinds of processes underpinning the insurance industry have remained largely unchanged for hundreds of years, the evolution is even more dramatic.”
Rugg went on to explain that, when regarding the future, insurance companies will undergo a truly digital transformation in how they conduct business day to day.
“2019 will undoubtedly see the insurance industry enter the next stage of its digital transformation.”
8. Innovations In The World Of Regulation
Depending on where you look across the globe, financial institutions and the governments behind them can often be positive towards blockchain ventures, hesitantly waiting for clarity, or openly hostile towards its application.
For emerging small states such as Malta, for example, the small Mediterranean island has become renowned as a cryptocurrency/blockchain haven for its firm buy fair and open blockchain regulation. Smaller jurisdictions have since been getting started in the creation and opening of security tokens internationally, while the Securities and Exchange Commission of the United States has been waging a large-scale crackdown on controversial ICOs.
Blockchain technology and the ventures and cryptocurrencies, it represents are well on their way to becoming a highly matured market, and very lucrative industry. While there are good prospects for it in the near future, there are a number of regulatory matters that countries need to wrestle with in order to ensure a global scale rate of adoption for blockchain services and technology can happen.
2018 has proven to be an interesting foundation point from which regulation can be built up for blockchain technology, and may result in a significant amount of progress as we move into 2019, with the United States and the European Union being some of the big names to come forward with regulatory policy.
We are already seeing a number of signals that validate this theory, in October, for example, the Securities and Exchange Commission made public the launch of a FinHub, which would be responsible for the research and evaluation of new regulatory approaches for new financial innovations such as Blockchain and cryptocurrencies.
Malaysia has made it clear that it wants to get moving on the roadmap to introduce legislation for blockchain technology over 2019, placing just narrowly behind the small state of Singapore.
According to the Malaysian Finance Minister, Lim Guan Eng, the priority in the minds of the Malaysian government, must be focused on safeguarding investors.
“While there are some parties that may be skeptical of this space, there can’t be any doubt that we need appropriate regulatory measures in order to enforce and safeguard the interests of investors.”
In the small state of Liechtenstein, the government has announced that it is in the process of forming and passing the Liechtenstein Blockchain Act, which would possibly allow the country to tap into a wider market of institutional investors to start eyeing it up as a lucrative market.
These smaller states are certainly not alone in their desire to update their regulations and laws in order to provide a better landscape for blockchain and cryptocurrency investors. Some of those countries seeking to update their laws include the Kingdom of Thailand, the United Arab Emirates, Israel and Russia, including a number of member states that make up the European Union.
Momentum is finally gathering behind new world-spanning regulations in a number of areas of Distributed Ledger Technology (DLT). With all of this in mind, we are gearing up for a truly exciting time for blockchain technology. And with all of this excitement, there are plenty of lucrative markets to start investing in.