In the following article I will highlight five reasons why 2018 could be the best year ever for the crypto world.
Reason 1: Resolved scaling Problems of bitcoin and so-called “Second Layer” Technologies
Bitcoin (official site bitcoin.org) is the most important cryptocurrency. Most of the Fiat money comes into the crypto market via Bitcoin and goes out again via Bitcoin. So whatever influences bitcoin has an effect on the whole crypto market. Bitcoin’s market dominance is currently at an all-time low of only around 30 percent. However, given the downward trend in its market dominance – which is absolutely normal as more and more Altcoins enter the market – it becomes clear that Bitcoin’s market dominance should actually return to 75 percent. For Bitcoin alone, this means an upside potential of 150 percent, which I see as absolutely realistic for 2018.
Why? Because Bitcoin is the clock. Bitcoin has the most users and the largest industry behind it. He only has a few challenges to overcome. Most important: the scaling. Currently Bitcoin can only perform six to seven transactions per second (with Segwit 12 to 14). Compared to credit cards, which can execute thousands of transactions per second, the great criticism of Bitcoin’s scalability and usability is therefore quite understandable.
Furthermore, the scaling problems result in high fees. So what is the solution? These are the so-called “second layer peer-to-peer off-chain” networks. In English: networks that directly connect parties on a second level away from the blockchain. The lighting network is one example. It is being developed by Blockstream and is in its initial phase. As can be seen in the link, more nodes and more payment channels will gradually be set up. The growth is exponential. In the coming weeks and months we will see more and more transactions and bitcoins being used through these Lightning Channels. That’s gigantic.
Not least because the Lightning Network is free of charge. It has no scaling problems and binds the liquidity of Bitcoin. This could actually be the reason for a huge increase in the price of bitcoin. By the end of 2017 I had already predicted that Bitcoin would see both the $5,000 and $60,000. And Lightning will have a huge impact on Bitcoin’s upside potential. However, there are other factors, such as the Rootstock project, which would allow Bitcoin to perform similar tasks to Ethereum.
These two projects and many more are very promising for 2018 and could result in a massive increase in the price of bitcoin. I think it’s very likely. I would say in the range of 60 to 70 percent, with an upside potential in the price of bitcoin of 100 percent, maybe even 200 percent and more.
Reason 2: Large and more Legitimate ICOs
Because an ICO requires a lot of ether, and thus increases the demand for ether, the large and legitimate ICO will have a massive influence on the Ethereum network – just like last year’s ICO. In 2018, more legitimate ICOs with a better reputation will come onto the market, leading to greater interest in Ethereum, just as we are currently seeing with the billion dollar ICOs from Telegram and Kodak. I also think that we at Ethereum will see the same increase in market capitalisation compared to last year. I suspect a market capitalization of 200 billion dollars, which will probably double the price of Ether to 2,000 dollars. Obviously, similar can happen with other platforms. Nevertheless, I think the main focus will be on Ethereum.
Reason 3: Regulations
Regulation is usually the reason why markets fall. However, this is a short-sighted perspective. In the long term, companies will actually need regulation because it provides them with legal stability and security. This in turn gives users and institutional clients confidence to invest more money in crypto. We saw a similar phenomenon when Japan began to regulate bitcoin. At first the market value fell, but soon after it rose again. Something similar was observable in Australia and China. When one thought that China would regulate (and perhaps even ban) bitcoin, one could immediately register a strong fall in the market before it rose again.
And I think we will see something similar with South Korea and probably many other countries. Perhaps Europe will also enforce regulations on crypto currencies. Yes, the market will be pushed through it first and that is also the reason why I always see downward potential in the short term, but it is also the reason why I see massive upside potential in the medium to long term. I think we will see more regulation this year, again with a 70 to 80 percent probability with a positive effect on the crypto market. This alone is likely to double the total market capitalization of the entire market.
Reason 4: High Design and Usability
There are many companies that are about to finalize their crypto products. This will open many new doors for both the user and the retailer in 2018. This development will improve the reputation of the entire ecosystem many times over, with companies gradually beginning to trust crypto currencies more and more. Those companies that really put their ideas into practice this year will stand out and have a chance to establish themselves – only a few companies will succeed, most others will fail.
Finally, the focus of the masses will be on the winners, while the losers will be forgotten. This will be a jumping point and have a very positive impact on the reputation of the ecosystem – just as Facebook’s success makes many people forget that most start-ups actually fail. I think the same will happen in the crypto market this year, and the success stories of a few companies will drown out those of the failed ones.
Reason 5: Institutional Investors
The last reason is that 2018 will be the first year in which “solid” institutional money will flow into the ecosystem. Based on a few rough estimates, between ten and twelve billion US dollars have so far flowed into the crypto-ecosystem. This is nothing compared to what institutional funds could currently invest. Because ten to twelve billion US dollars have brought the market to around 500 billion US dollars, the next ten to twelve billion US dollars, which are only a drop in the ocean, could easily double the market again.
In summary, it can be said that all these five points will not come with a probability of 100 percent. But I’d say they’re all in the 70 to 75 percent range. And each of them has the potential to increase market capitalization by 50 to 100 percent, perhaps even 200 percent. If we add all these factors together, there is a relatively high probability that the market will increase seven to eightfold from its current level. While this is a smaller multiple compared to last year, in absolute terms it is much more and can make 2018 the most successful year ever for Crypto. Moreover, this growth will no longer be based on pure hype and pure hope, but on a solid foundation.