The cryptocurrency market kicked off 2018 with a bang but ended with a slump. However, investors are still pouring billions into crypto space even though crypto tanked in 2018. Blockchain and crypto-related firms raised $3.9 billion as of October 2018 and many investors see its long term prospect and see the current bear market as something that will soon be over. Many investors are convinced that the worst is over and see crypto as a viable investment opportunity. 2019 is expected to bring in some big names in wall street to crypto along with mutual funds, banks, pension funds, even NASDAQ itself.
NASDAQ is allowing investors to buys stocks from its exchange in security tokens. DX Exchange, based in Estonia, is a NASDAQ backed startup which aims to bridge the gap between traditional financial assets and cryptocurrencies. At the start, it will only offer the top 10 stocks and will roll out the rest later. JP Morgan is working on the Ethereum platform to tokenize gold bars which will allow people to invest in gold in tiny quantities. Goldman Sachs has a dedicated team dedicated to crypto even though they are not planning to trade Bitcoin or Ethereum anytime soon. But the bank is soon going to roll out trading products linked with cryptocurrencies.
Venture capital investment
Crypto startups have been the hardest hit with the recent tank in the price of cryptocurrencies. Cash started to get tight and raising new funds in the bear market was almost impossible. Many companies scaled down their operations, some even had to shut down and many lost their jobs. 2018 wasn’t particularly good for venture capital investment into crypto space, and come 2019 many analysts expect a resurgence. What happened in 2018 weeded out many unprofitable and weak startups, and as an ecosystem what is left is a healthier and resilient pack of startups.
Pension funds have been trying to find new avenues of investment. Traditionally, they invested in government bonds, etc. Nowadays these have lower returns than they used to. Also, the demographic change including the increased life expectancy of people has made an impact on the pension sector and most of them weren’t prepared for this. Hence many pension funds are looking for new investments with high returns and many see crypto as a possibility. One of the characteristics of pension funds is that they are long term investors, which brings lower volatility to the market which is every investor’s dream.
STO stands for Security Token Offerings. They are in essence ICOs which are securities, they allow one to buy, sell and trade stocks in cryptocurrencies. This means that stock markets can operate 24×7. It also gives investors the ability to buy and sell stocks all around the world. Many hurdles have to be overcome before STOs become reality. Regulators will be the biggest hurdle STOs will have to face. Once a reality, all stock trading, in theory, can happen through the crypto platforms. Even at the height of the crypto craze during early 2018 the market cap of the entire cryptocurrencies were 1 trillion dollars while the market cap of major stock markets is around 70 trillion. That kind of cash flow into crypto will surely be a game changer.
Gaming and nonfungible tokens
One of the unlikeliest use of blockchain technology is the use in gaming, many developers use the buzzword ‘crypto’ in order to generate interest and increase revenue. There is also a huge push to adopt crypto for in-game purchases which are basically microtransactions. This will increase revenue for the developer as they can avoid commissions paid to platforms like RareBits, although, platforms like dBay claim to offer zero commission. The third use is to enhance the gameplay, the only current example would be CryptoKitties where blockchain is used to ensure uniqueness and ownership of assets. CryptoKitties are nonfungible tokens, hence not interchangeable. Nonfungible tokens have many real-world usages such as the record keeping for land and property.
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