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2017 was an extraordinary year in blockchain. The total market cap of all cryptocurrencies exploded from $18bn to over $600bn. In the fourth quarter alone, Bitcoin hit $5000 for the first time and then quadrupled from there (before ending the year at $13,400). And Bitcoin’s mere +1,400% return lagged the mind-blowing performance of Ethereum (+8,700%), Litecoin (+5,400%), and Ripple (+35,000%). Overall, 30+ crypto’s achieved market caps in excess of $1bn, and 150+ crypto’s reached market caps in excess of $100mm. Meanwhile, over $3bn was raised in ICO’s and blockchain startups Coinbase and Ripple became the industry’s first paper Unicorns.
Evidence that blockchain has entered the mainstream abounds. Coinbase now has more users than Charles Schwab, and cryptocurrency coverage dominates the airwaves on CNBC. The CBOE and CME launched Bitcoin futures, and Goldman Sachs is said to be setting up a crypto trading desk. Consumer fintech companies Square and Revolut both began offering crypto buying and selling to their millions of users. And Mark Zuckerberg said he plans to learn more about cryptocurrency in the new year.
We have long forecast that bitcoin and other blockchain-based assets will gain widespread adoption. But even we did not foresee crypto crossing the chasm so quickly (though much remains to be accomplished before blockchain technology has a truly profound impact on society). In the midst of so much volatility, the only safe bet is that 2018 will be another roller coaster year filled with wild twists and turns. So, rather than providing specific prediction, here are some areas and open questions that we'll be monitoring closely:
- Blockchain Infrastructure
- Can Bitcoin, Ethereum, and other blockchains implement on-chain and/or second layer scaling solutions to improve their performance? Will faster, more scalable non-blockchain DLT networks gain adoption?
- Will existing digital currency exchanges retain their dominance, or will new institutional-grade exchanges, with less downtime, stricter compliance, and superior UI's/UX's, emerge to seize market share?
- Will institutional custody solutions arrive, thereby enabling more large institutions to invest directly in crypto?
- New Types of Cryptoassets
- Which DApp or AppCoin will be the first to reach a mass market and actually deliver real end-user value?
- Can a fully or partially decentralized stablecoin actually work? Will Tether collapse?
- Several exchanges are seeking licenses to become ATS’s so they can trade tokenized securities. Will tokenized securities that comply with all applicable regulations proliferate, and will they offer meaningful advantages over traditional securities?
- Initial Coin Offerings and Token Sales
- Can the ICO projects that raised “endowment funds” (ie. hundreds of millions of dollars) deliver?
- What happens to the ICO projects that stall and collapse? Will token buyers get their money back?
- Almost every ICO project has reserved a significant allocation of tokens to give away to users, developers, partners, or customers (or just to airdrop to random cryptocurrency holders). Will these “growth pools” actually drive adoption?
- Will the SEC pull the punch bowl?
- Enterprise Adoption
- How will banks and other established FI’s react to the growth of crypto? Will they finally get comfortable touching bitcoin and/or facilitating trades for their clients?
- Many new token projects are premised on the idea that big companies will be willing to buy, hold, sell, or send cryptocurrency. Will they?
- Will meaningful private blockchains go into production, and will any private blockchain company start earning significant recurring revenue?
The answers to these questions will determine the course of blockchain development, and we look forward to revisiting them at the end of 2018. Regardless of what happens, it promises to be another fascinating year in blockchain!
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21 rebrands as Earn.com. 21, a company which allows users to get paid in Bitcoin for viewing messages and emails, changed its name to Earn and announced its plans to create a native token (in order to accelerate network effects and address high Bitcoin network fees). More here.
BitFlyer to enter the US Market. Yuzo Kano, the CEO of Japan's leading digital currency exchange BitFlyer, announced the company's plans to enter the US Market as Consensus: Invest in November. BitFlyer is one of the world's largest bitcoin exchanges. More here.
Bitmark announces partnership with KKBox. Taiwan-based Blockchain asset management startup Bitmark will work with KKBox, one of Asia's largest music streaming services, to create a rights management platform using Bitmark's technology. More here.
Blockstack raises $50mm in ICO. NY-based startup Blockstack (fka Onename) completed a $50mm ICO on CoinList. The USV-backed company is aiming to build a more decentralized version of the internet. More here.
Circle acquires NY-based startup Trigger. Circle, the boston-based digital wallet and OTC trading desk, acquired Trigger, an early startup that allowed people to automatically trade equities based on events. More here.
Decentraland completes Genesis City Auction. Decentraland, a project to build a decentralized virtual world with ownership recorded on the blockchain, completed its initial sale of virtual land (the "Terraforma"). $26mm of MANA, Decentraland's native digital currency, was spent in the auction. That MANA will be burned and forever taken out of the circulation. More here.
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Abra, the digital currency wallet and “rebittance” startup, raised a $16mm Series B from HCM International, the venture arm of Taiwanese giant Foxconn Technology Group. More here.
BitGo, the provider of multi-signature wallets for blockchain assets, closed a $42.5mm Series B led by Valor Equity Partners, with participation from David Sachs, Bill Lee, DRW, and existing investors, including DCG. More here.
BitPay, the world's leading Bitcoin payments company, announced a $30mm Series B led by Aquiline Technology Growth, with participation from existing investors, including DCG. More here.
Colu, the Israeli local currency digital wallet startup, raised $14.5mm from IDB Development Corporation. The funds represent a combined investment in the company and Colu’s new CLN token. More here.
Omniex raised a $5mm seed round to build institutional trading tools for crypto. The round was led by Wicklow Capital, with participation from DCG, Sierra Ventures, Clocktower Technology Ventures, and ThirdStream Partners. More here.
RadarRelay, a new decentralized exchange built on 0x, raised a $3mm seed round led by Blockchain Capital, with participation from Collaborative Fund, DCG, Notation Capital, SV Angel, and others. More here.
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Crypto Facilities is a UK-based cryptocurrency derivatives trading platform, authorized and regulated by the UK's Financial Conduct Authority.The platform offers long and short trading with up to 50x leverage. Additionally, the company is the creator of two Bitcoin price indexes, which are used by CME in its new Bitcoin futures product.
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Etherscan is the leading Ethereum blockchain block explorer. The site provides data and analytics related to transactions on the Ethereum blockchain, including information regarding ERC20 tokens. The company went through BoostVC and is based in Malaysia.
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Purse is the best place to spend your Bitcoin. Using Purse, Bitcoin holders can buy anything from Amazon at a discount. Purse is also the company behind bcoin, a new fullnode Bitcoin implementation for miners, wallets, and exchanges.
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