Cryptocurrency market's upside potential could rise to up to seven or eight times present levels according to Hosp.
1. The work on scaling issues
"Bitcoin (BTC) is the most important cryptocurrency. Most government-backed money that goes in and out of crypto goes through bitcoin, so what happens to the original cryptocurrency affects the entire market.
The token's market dominance stood at about 40 percent as of Wednesday. By my estimates, however, it's clear bitcoin's market dominance should return to 75 percent of the entire space.
I actually see a 150 percent potential upside in bitcoin for 2018.
Why? Well, BTC is still dominant. It has the biggest user base and the biggest industry. Still, it faces a challenge in scaling up for wider use.
Bitcoin now can't handle more than six or seven (or, with the "Segregated Witness" protocol upgrade, it's 12 to 14) transactions a second. Compare that with credit cards, which involve thousands of transactions per second, so the criticism about bitcoin's ability to be useful at larger scales is understandable.
The scalability challenge results in high fees as well.
What is the solution? It is the so-called second-layer peer-to-peer off-chain networks. To cite an example, look at the Lightning Network. Created by Blockstream, the Lightning Network allows for transactions off the blockchain, thereby decreasing the transaction costs almost to zero and increasing the speed and scalability almost infinitely. And it's just getting started. As you can see from this map, more and more nodes as well as channels are being established. It is growing exponentially.
In the coming months, we will see a sharp uptick in transactions and the use of more bitcoin in these channels. What's more, the Lightning Network doesn't have any fee.
In other words, second-layer networks solve the problems bitcoin faces — scalability and lack of liquidity. That could be a key reason why bitcoin surges this year.
At the end of 2017, I foresaw that bitcoin would drop as low as $5,000 — but it could potentially climb to as high as $60,000. Lightning Network will have a big impact on the potential upside.
There are also other second-layer projects like Rootstock that would allow computations similar to those of ethereum (a blockchain-based computing platform that supports another cryptocurrency named ether) to be done through bitcoin.
Exciting projects such as those could cause a significant spike in BTC. I would dare say in the realm of 60 to 70 percent with the potential upside of 100 percent — and maybe even more.
2. Large scale and more legitimate ICOs
Like last year, initial coin offerings (ICOs) will impact the ethereum network because ICOs usually require plenty of ether. That will buttress the demand for the platform's digital coin. More legitimate ICOs will lead to greater interest in ether as we are already seeing with the billion-dollar ICO of messaging app provider Telegram and that of Kodak.
That means we could see a rise in the market cap of ethereum to $200 billion by the end of the year from less than $90 billion on Wednesday. The cryptocurrency's price could possibly double to $2,000.
Though other platforms could see similar gains, I believe ethereum will be the main focus.
3. Regulation
Many believe regulations hurt markets, but that is a short-sighted perspective. In the long run, companies require rules for the sake of legal stability and certainty. Regulation gives users and institutional clients the confidence to invest.
We saw something similar when Japan started regulating bitcoin. The market dropped initially, but it rose eventually. Ditto in Australia.
Other countries could follow the same rule book — I think we are going to see something like that with South Korea and probably many others — but the market's fate will be no different than after what played out in Japan and Australia.
4. A lot of execution and usability
There are several start-ups like my own that offer debit cards to help people spend their cryptocurrency holdings.
That means the number of users and merchants is set to increase sharply in 2018.
This would burnish the reputation of cryptocurrencies, with more and more companies trusting them. The firms that execute well this year will stand out and create a survivorship bias — where a few companies thrive and others fail, but people focus on the winners and ignore the losers.
Most start-ups bomb, but the spectacular successes of companies such as Facebook and Airbnb help mask those failures. Likewise, the success stories of a few entities in the cryptocurrency space will overshadow the negative news of several going bankrupt.
5. Institutional investors
The last reason why 2018 will be a stellar year for cryptocurrencies is that this will be the first year of solid institutional money flowing into the ecosystem.
It is estimated that $10 billion to $12 billion has so far flown into the crypto ecosystem, but that's nothing compared to what institutional funds could invest. Since those first funds propped up the market to around $500 billion, the next $10 billion to $12 billion, which is peanuts for some funds, could double the market cap this year.
Summing up
To sum up, the likelihood of all five factors happening is not 100 percent. But I still see a probability of 70 to 75 percent. And each one of them might grow the market's overall size 50 to 100 percent — maybe even 200 percent.
If you combine those factors, the market's upside potential could rise to up to seven or eight times the present levels. While this might not be as much of a multiple as what we saw in 2017, it is much higher in absolute terms. That could make 2018 the most successful year in crypto ever. Additionally, the growth might not be based so much on hype or hope as it would be on solid foundations.
That being said, the reader should not see this piece as investment advice, and should definitely read my discussion of potential risks. When you dismiss real risks as fear, uncertainty and doubt (FUD), you could be blindsided."
Source: CNBC
If Everyone Buys + HODL = Wealth @senseicat
2018 will be the year of Cryptocurrencies but most likely after mid May.
Great reasons! An additional one to consider is that given the needs of the new technology, education will become huge which in return will add human capital to the industry. This will continue to accelerate innovation and growth in the space.
That is an excellent point because we are still considered early adopters and as time progresses, knowledge will continue to accelerate.
Good post and useful ..
Hopefully your predictions come true.
Everyone can and will benefit with this strategy and the wealth will be immeasurable.
thats informative post.
@resteem done
Nice
Good post
@senseicat
great post @upvote and @resteem done...
Indeed @senseicat. That's why i am motivated to promote and be empower in this platform. Thanks for being an ambassador. Be bless.
@senseicat, well said friend, i agreed with your words. and you shared more valuable thing that i dont know. Thanks for sharing the reasons about cryptocurrency importance and awareness in 2018. Appreciated your efforts as well as my Support with you.
good post..thank u...
@resteem done
I guess may of us didnt knew before.
Thanks for the info.
I'm putting almost every penny i have into cryptocurrencies, from 2018 until 2020 we will see cryptos going mainstream.
i don't understand people saying regulations are a bad thing for the crypto market, all markets need regulations! Having regulations will make the market more trustworthy and bring in new investors!!
That Eth one i actually have to disagree, i think ETH will get some nice competition from other cryptos like EOS... I'm putting my money on EOS until may, my portfolio will consist of mainly EOS and VEN, after that ETH and then, a really small % of some cryptos like TRX, NEO, XLM, IOTA...
I'm not putting STEEM on my portfolio BTW, don't know if i ever will since i see this has more of a game/social network then an investment...
What about your portfolio? How does it look?