With big tech becoming more involved, efforts to regulate cryptocurrencies under discussion, a president tweeting and experts meeting, virtual currency is building up to a major disruption of the global money system.
Some of the trends for Cryptocurrencies 2019 include possible efforts to regulate either cryptocurrencies or the companies that create them, new blockchain platform, a wider acceptance of the new payment method and the quiet involvement of big technology. There is also much discussion around what the future will hold for this dynamic sector in 2020 and beyond.
Cryptocurrencies have always been designed to be free from government regulation. But that does not mean that someone won’t try. The United States government, for example, seem poised to make moves in this area. President Donald Trump’s tweets have indicated that he was is not a fan of cryptocurrencies and that “unregulated crypto assets can facilitate unlawful behaviour, including drug trade and other illegal activity.”
Trump’s tweets have already seen an impact on the section, with the biggest of the cryptocurrencies, Bitcoin, trade significantly lower following the statements made by the US President on Twitter. Bloomberg also reported on Trump’s warning to Facebook over its plan to create the Libra, a digital currency to be used on the social network. He advised the social media giant in a series of tweets to “seek a new banking charter and become subject to all banking regulations, just like other banks”.
Up to now the White House has not commented on cryptocurrencies even when federal regulators raised the issue. In testimony before the House Financial Services Committee earlier in July the chairman of the Federal Reserve, Jerome Powell, also expressed his “serious concerns” over privacy, money laundering, consumer protection and financial stability” of cryptocurrency.
Facebook plans a boost for cryptocurrency
After tumbling last year, Bitcoin, the world’s most-traded cryptocurrency, has surged more than 200% in 2019. The Consensus 2019 conference into cryptocurrency had many positive signs for things to come in the industry, with some commentators stating the crypto is on the verge of being the world’s new bull market. In particular, Facebook’s “Libra project” has boosted interest in digital currency.
Facebook released a 12-page white paper late last month which detailed its plans for its own cryptocurrency, the Libra, which was roundly met with controversy. According to the paper, by next year Facebook and its partners aim to launch “a simple global currency and financial infrastructure that empowers billions of people”. Libra will be based on blockchain infrastructure that will be globally accessible.
The payment network will be governed by a non-profit organization in Switzerland which Facebook and its partners set up specifically for this purpose. This organization will hold a reserve of bank deposits and short-term government securities to back the currency.
Retail adoption set to explode
It seems likely that the number of retailers accepting cryptocurrencies will “explode” in the coming year. Startup company, Flexa launched the Spendn app earlier this month that will allow users to use bitcoin, Ether, Bitcoin Cash or Gemini dollars to pay for goods. According to Flexa, they have 30 475 retailers on board.
This trend is yet to be truly realised – the number of new institutions in the cryptocurrency sector has not increased significantly this year so far. However, there has been a degree of pickup across the industry which suggests that retail adoption is on the verge of a boom which may very well be seen in the second half of 2019.
A shift in mindset
The Consensus 2019 showed a significant new mindset for the cryptocurrency industry: there was a notably open-minded approach to the sector which hasn’t really been seen before. That is to say, that the business sector is much more open learning about crypto, and how they could benefit from it. It seems that business is finally ready to accept that this could be a big opportunity, rather than a fringe element or a threat.
An increase in Blockchain Developer Platforms
Discussing Developments at Neo, Ethereum, Komodo and Zilliqa, experts told Consensus 2019 that they have seen a significant expansion in blockchain ecosystems and Web3 applications. In a report published in September last year global auditing firm, Deloitte, stated that blockchain was still “too slow” and too complex, amongst other concerns, and needed to improve before large scale adoption.
Big Tech is in
The presence of global technology companies like IBM and Microsoft at Consensus 2019 was indicative of a major trend. Reports indicate that there are plans to bar big technology companies from issuing digital currency and that these have been set out in draft legislation before the American Senate’s Financial Services Committee.
Bitcoin still leading the pack
There are a now a huge number of cryptocurrencies, and some like Ethereum and Ripple are increasing in popularity. However, it seems like Bitcoin, for the foreseeable future will continue dominate the more than 1600 cryptocurrencies available at present in terms of market capitalization, user base, and popularity.