According to Julian Hosp, TenX co-founder, 2018 has a lot of potential to be the biggest year up to date for the cryptocurrency market. On a commentary Dr. Hosp made to CNBC, he gives 5 reasons why.
Scaling concerns Will Be a Thing of the Past
Bitcoin is the largest cryptocurrency in market cap. Most of the time, you have to change your money to Bitcoin in order to buy alternative coins, which makes the other cryptocurrencies dependant of the Bitcoin. Bitcoin usually dominates the market, but earlier this week, it represented only 40% of the market.
Even with the SegWit protocol upgrade, Bitcoin can’t handle more than 14 transactions per second. On the other hand, credit cards allow for more than 1000 transaction per second, so it is understandable that some people have doubts about Bitcoin’s capacity to be used at a larger scale. Further more, the transaction fees have gone up immensely in the last year.
However, the lack of liquidity and the scalability problems Bitcoin is facing can be solved with second-layer networks. A great example of a second-layer peer-to-peer off-chain network is the Lightning Network, which was invented by Blockstream. This network will increase the scalability of the coin and reduce the transaction time and the transaction fees. Lightning Network is growing exponentially by adding more and more channels and nodes to the system. Lightning Network could have a huge impact on Bitcoin in 2018. Dr. Hosp thinks it is reasonable to believe that Bitcoin will grow at least 60 % this year.
Regulations Bring Confidence to Investors
On a long-term perspective, regulations are going to be beneficial for the cryptocurrency market. They will bring many more institutional investors to the market. A lot of cryptocurrency investors are worried about regulations but their is no reason to be scared. When Japan and Australia regulated Bitcoin, the market crashed in the short term, but on the long run, it still grew considerably.
Ethereum and ICOs Growth
Currently, there are a lot more Initial Coin Offerings (ICOs) than in 2017. Generally, in order to invest in ICOs, you need Ethereum to buy the tokens. Ethereum is currently the 2nd cryptocurrency in market cap. Since there are more ICOs, the demand for Ethereum should, in theory, increase. More popular ICOs like the 1 Billion dollars will give more mainstream interest in Ethereum, which could make its price double in 2018 according to Julian Hosp.
Another reason why 2018 might be the biggest year yet for cryptocurrencies is that it will be the first year where banks and other financial investors will invest in the cryptocurrency market. This will bring massive sums into the market.
According to Dr. Hosp,
“It is estimated that $10 billion to $12 billion has so far flown into the crypto ecosystem, but that’s nothing compared to what institutional funds could invest. Since those first funds propped up the market to around $500 billion, the next $10 billion to $12 billion, which is peanuts for some funds, could double the market cap this year.”