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2017 was one of the most interesting years for cryptocurrency yet. We watched and debated over the implementation of various scaling protocols, saw the introduction of the first futures contracts traded on highly reputable financial exchanges, and were glued to our screens checking how much our paper worth was increasing each day during the massive runs almost all cryptocurrencies experienced. After the holidays, it’s almost felt as if the hangover has set in from the sometimes irrational exuberance over blockchain technology. We’ve had the party, but where does that leave us now? If you only care about the price of your favorite cryptocurrency, 2018 may not be the most exciting year for you. However, for those who care about increasing adoption and better tech the year is already off to a roaring start. In the following sections of this recurring, monthly update, I’ll go over some of the most notable happenings in the crypto economy during January and provide some commentary on where things may be going over the rest of the year.
The pace of adoption for cryptocurrency and blockchain technology has been much more intriguing than the price in 2018. Celebrities, CEOs, and average Joe’s can’t seem to stop talking about crypto. Major companies are announcing varying degrees of cryptocurrency support, and finance magnates are beginning their regulated journeys into cryptocurrency through futures and new hedge funds. Over the course of this year, adoption of blockchains and cryptocurrency will continue to increase regardless of price action. Will Bitcoin be dethroned as the king? Only time will tell, but based on the current trajectory, it’s not likely this year if only for the reason that Bitcoin products are being traded on major stock exchanges.
When the first futures contracts for Bitcoin expired this past month, history was made. Some have speculated that these futures contracts played a part in the downturn in price for Bitcoin this year. The argument is that the peak price in December, which occurred right around the launch of the first futures contract, was the result of traders loading up on the underlying asset. At the same time they would place a short on the new futures contract and sell the underlying asset off around time of contract expiration. This would drive prices down and result in a profitable short.
Whether this was the case or not, volume for both futures offerings has been relatively low this year, especially when compared to actual Bitcoin trading volume. However, the fact that there are legitimate, regulated contracts trading for Bitcoin at all is bullish in and of itself as it indicates a growing acceptance of cryptocurrency as an asset class. Over the rest of the year, volume will likely increase in these futures markets as investment firms become more comfortable trading them. Also, when Goldman Sachs Group Inc. (NYSE: GS) launches their cryptocurrency trading desk, slated for no later than the end of June 2018, expect regulated Bitcoin trading to increase and for other cryptocurrencies like Ethereum or Ripple to potentially see their own futures offerings.
In the vein of regulated cryptocurrency-related financial products, one can’t forget Overstock’s tZERO platform (NASDAQ: OSTK) which caused a lot of excitement with their ICO and subsequent implementation of a regulated platform for trading equity tokens. This past month, Kodak (NYSE: KODK) announced the upcoming launch of the KODAKOne platform which will be the first third-party token to trade on tZERO’s exchange. As the website for the new cryptocurrency states:
The KODAKOne image rights management platform will create an encrypted, digital ledger of rights ownership for photographers to register both new and archive work that they can then license within the platform. KODAKCoin allows participating photographers to take part in a new economy for photography, receive payment for licensing their work immediately upon sale, and sell their work confidently on a secure blockchain platform.
Despite how incredible it is that less than 10 years after the launch of Bitcoin we’re seeing a major company implement their own public blockchain, there are still conflicting opinions on whether this a good thing or not. On one hand, companies have capitalized on the blockchain craze without offering much in terms of product. An example of this is the iced tea manufacturer who was facing potential delisting from the Nasdaq who rebranded to Long Blockchain Corp (NASDAQ: LBCC). For no apparent reason other than tying a buzzword to their company, their stock price surged mere minutes after the announcement. Bitcoin or Ethereum maximalists might also argue that, unless Kodak’s coin is operating on an already established blockchain, it’s just another altcoin. On the other hand, unlike LBCC’s quick fix to a company problem, Kodak’s offering at least has a strong idea behind it which has some similarities to Factom (FCT).
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