Indeed, there was nothing short of a frenzy around trading on the CBOE bitcoin futures a few days ago, while the day after reports detailed a large digital heist surrounding Ethereum. Doomsday sentiment around this new area of tech convergence with that of the financial spectrum is plentiful. Just why is there so much fear around the area of cryptocurrency, and what will 2018 mean for this pioneering area, particularly as we move to a general cashless society that is easily driven and adopted by the massive Millennial demographic?
To answer this question, it's best to turn to those well-entrenched in the crypto area on a day-to-day basis. The following are real-time insights from a number of crypto executives as they see reasons behind the fears as well as key predictions for 2018 so that you can be prepared:
Konstantinos Karagiannis, Chief Technology Officer, Security Consulting Practice, BT Americas on why there is so much fear around crypto:
There’s fear on two sides: financial and technical. Financial is mostly that it’s a bubble. Every time Bitcoin pulls back in price, someone says it’s a bubble. Technical is that coins will be: lost, stolen/hacked, or just plain frauds (as is the case with some ICOs).
His top three trends in this space for 2018:
Fraud. We’re not done with scams like ICOs that are not real, or sites that will get you into a 'pool' of some sorts for a set fee. Creative theft in the real world. Someone was just kidnapped to try and get their coins. This could get worse. Hacking, of course. A lot of exchanges still make basic security mistakes. Ethical hacking needed here! John Monarch, CEO of ShipChain, a blockchain based logistics software company, on why there is so much fear around crypto:
It's a new asset class that has taken the world by storm since Bitcoin first hit the scene. The volatility in the market often is what leads to the fear, but the excitement around the tech itself is outpacing that. I'd say most people actually involved are more happy about the evolution of cryptocurrencies and blockchain than they are fearful. His top three major trends in this space for 2018:
Regulation. Governments will jump in and try to process very old securities laws, for instance from 1933 in the United States, and apply it to cryptocurrencies, or create new legal asset classes entirely. Many people see this as crypto 'growing up', though many of the purists don't like it. This includes the ICO market, which the SEC recently issued some guidance on as well.
Legacy companies entering the scene. You'll see an increase in crypto payment acceptance from larger companies. Overstock took a leap and did it. Many are rumoring and hoping that Amazon and eBay will soon enough as well. Most of these companies will be happy if they are able to immediately liquidate to fiat currencies, which with higher volume in the market will allow for that.
Governments and businesses utilizing blockchain. Aside from just cryptocurrencies, government and businesses will figure out where blockchain has a place in their world and using this technology to better their operations. Jim Angleton, President for Aegis FinServ Corp (which owns BitcoinBankUS and is a manufacturer of ATM-Kiosks offering CryptoCurrencies for qualified investors) on why there is so much fear around crypto:
Fear in the CrytpoCurrency space runs with the wind. Essentially the facts speak for themselves. They can be compromised via selected, targeted Cyber Intrusion leading to a hack with malware or ransomware. In addtion, your unregistered (not registered with Blockchain) are safer from hack than Registered. Many complaints filed with CFPB (Consumer Financial Protection Bureau) relate to Consumers indicating their blockchain registered bitcoin, litecoin, dodge coin and others are being hacked. Since there is no insurance or guarantees, investors fear is properly placed as their hard earned funds could be stolen hours, weeks or months after purchase. Many Cryptocurrencies have not been audited by their regulators (CFPB, IRS, SEC, FTC) and in 2018 they will become examples of financial audits. Many suspect their coin miner or exchanger will be closed or shut down due in part to noncompliance. Fear also is set when Governments have publicly banned their digital currency thus having zero recourse or refund. Buyer beware means more to a Cryptocurrency investor than any other type of public domain investment.
His top three trends in this space for 2018:
We see Blockchain becoming more diverse and adaptive offering new methods of privacy, security, ID security, Metrics to Secure online service and more. 108 Countries are experimenting with issuing digital currencies in favor of eliminating their paper currency and exiting dependence upon the U$D. We believe 20+ Countries will begin Beta Testing towards their goals. Bitcoin will see less “buyers’ and more sellers. Once this occurs the price per coin will reduce and or it could be classified as a ponzi style investment. The flip side is bitcoin continues along with their ETF Investment theories and become priced much higher thus leaving many individuals to lose interest.
Peter Loop, a blockchain expert with IT services and consulting company Infosys decided to get right to his top three trends in this space for 2018: With the rise of ransomware attacks demanding cryptocurrencies, blockchain and IoT cybersecurity will emerge with defenses based on cryptocurrency technologies.
Blockchain will drive digital transformation of the enterprise specifically with automation, digitization of processes, tokenization of physical assets and activities and codification of complex contracts. JPMorgan will open a cryptocurrency trading desk, despite Jamie Dimon's viral 'fire in a second' comments to any JPMorgan trader who was trading bitcoin. In short, 2018 will be a rollercoaster ride when it comes to this new area of tech. Stay tuned for much, much more in the year ahead.