The cryptocurrency market has been in disarray in the past year as prices of most tokens and coins on board collapsed by over 80%. Bitcoin saw a price collapse from an all-time high of $19,800 USD to $4,000 USD today following a selloff during the past year. However, the falling prices do not change the bright future the industry is set upon according to Travis Scher, the Blockchain VC of Digital Currency Group (DCG).
In a Medium post, Travis shared his thoughts on the future of Bitcoin and other cryptocurrencies. Furthermore, he offered ways the cryptocurrencies can bounce back from the valley of death to fulfill the mass potential the field holds.
“The Industry Must Engage With Regulators.”
Last year saw the gavel drop harshly for cryptocurrencies as regulation in the industry increased substantially across the globe. Cryptocurrency companies have struggled cope with these extreme conditions forcing some to close shop. DCG reported compliance and regulation to be the toughest challenge most companies faced in 2018 beating product-market fit challenges and capital constraints.
“Policymakers need to create and apply rules that leave room for good actors to innovate, while also limiting the potential for bad actors to engage in fraud and manipulation.”
Scher called for governments around the world to work on a regulation that will boost creativity and innovation in the industry while limiting the bad participants in the industry. In the past, governments such as China and India have closed down their local exchanges citing malpractices and scams. However, Travis believes a more pragmatic approach could have been taken to keep the good cryptocurrency exchanges in place while driving away the rotten few.
The dark ‘regulatory skies’ have a silver lining as jurisdictions in the US, Japan and Mexico are working on regulations to promote the growth of the industry. The latter two have rules that must be followed by local exchanges allowing banks to get comfortable offering these exchanges their services.
“Many Crypto Startups, Projects, And Funds Will Die.”
In a past article, Lujan Odera, a cryptocurrency, and blockchain analyst explained the dangers of having too many cryptocurrencies. The number has surpassed 2000 projects since the advent of digital assets but very few of these coins offer any real use case. Actually, most of the projects are copies of earlier projects with no vision of their own and does not solve any problems.
The long winter in crypto markets is yet to thaw and funding may be more difficult in 2019 than it was in 2018. Over 90% of these projects are projected to fail as they sold unrealistic short-term visions to investors, held too much of their capital in cryptocurrencies and let their burn rate get out of control.
Strong Crypto Companies Will Get Stronger.
With the weak companies chaffed out, the remaining companies will only get stronger according to Travis. He compared the current changes in the cryptocurrency industry with Darwinian evolution of natural selection. He wrote,
“The easy money in 2017 and early 2018 bred a lack of discipline, massive over-optimism, and, in some cases, straight-up arrogance. Companies with shaky foundations will get washed out in 2019, but those that are well run and mission-driven will end up even stronger.”
The Cryptocurrency Industry Should Prepare For Institutional Investment
The past year recorded an increase in institutional investment in the crypto space as more companies looked into integrating blockchain into their systems. Gaming is one of the key areas that has seen massive adoption of blockchain technologies in 2018. The global financial corporations including Goldman Sachs, JP Morgan, Santander Bank are heavily investing in the crypto space publicly. Others include Facebook, which recently announced to add a stable coin on its platform.
These institutions have a huge role to play as cryptocurrencies aim for global adoption.