What 2018 will bring for cryptocurrencies
Fraud concerns will lead to enhanced regulations INSIGHT
If we witnessed the dawn of the financial technology era towards the end of 2017, 2018 looks set to be full on sunshine in the world of fintech, specifically in regard to cryptocurrencies. As we’ve seen in recent months, fintech is dramatically changing the way in which we access and utilise money, and as a result of constantly evolving technologies and rocketing demand, the digital currency phenomenon is set to take a firm hold and gain momentum this year. Particularly as the world becomes more globalised and digitalised.
Just this week, the surge in value of Ripple’s digital currency, XRP has been making huge waves in the stock market. Both Western Union and Seagate have experienced a considerable uptick in valuations on the back of Ripple associations. As it stands, XRP has a market capitalisation of over $80 billion following a colossal appreciation in price over the past 12 months.
Indeed, digital currencies such as Bitcoin have truly captured our imagination in this fintech era. Looking back to only two years ago, there was not much talk of it, but those who invested in Bitcoin at the beginning of last year enjoyed a 900 per cent increase.
Consequently, with these digital currencies now becoming more mainstream, an increasing number of people recognising their inherent value, and, of course, that more businesses are now accepting them, this has all contributed to Bitcoin’s stratospheric rise in price.
That said, although Bitcoin is the largest digital currency by market value at present, and as such tends to take centre stage, it is the concept of cryptocurrencies that is exciting more and more people.
Therefore, it can be reasonably assumed that both existing and new currencies will gain more of a market share as the year progresses.
The digital world we are now living in requires digital currencies. This is perhaps, quite feasibly, the reason why the Chicago Board Options Exchange is now permitting investors to trade Bitcoin futures, and, moreover, why there are reports of a central bank digital currency launching in China this year.
To aid the rise in demand of cryptocurrencies, the world has evolved in three key ways.
First, from a technology viewpoint. Indeed, technology is playing a bigger part of our lives than ever before. As well as existing technologies, pioneering tech advancements are also set to make a huge impact on every factor of daily life. Our financial affairs will be no different.
Also, the world has changed politically. We are seeing a significant, and escalating demand for currencies that are not controlled by governments and central banks. With the use of digital currency, privacy remains intact. There is no requirement for identity or location sharing, or the transaction details. It is absolutely decentralised. Indeed, cryptocurrency advocates say digital currencies are the remedy for the wrongs caused by the traditional system.
Third, sociologically. Yes, globalisation is here and it’s not going anywhere. People are becoming much more inter-reliant and globally-minded, which can be incredibly beneficial for business and trade all over the world.
Naturally, there are concerns about possible fraud or misuse of digital currencies, as is the case with all new technologies. Although, this will of course lead to enhanced regulations and enforcement, which will soon follow suit.
Therefore, as we embark on this new year, it’s now impossible to consider cryptocurrencies as a fly-by-night fad. As their popularity continues to grow and they become ever more established, cryptocurrency mania will undoubtedly result in the introduction of many more digital currencies to cater to escalating demand. The writer is founder and CEO of deVere Group. Views expressed by him are his own and do not reflect the newspaper’s policy.