Seven cryptocurrency trends likely to figure prominently in 2019

Over the last decade, Bitcoin and cryptocurrency have gone from an obscure, niche currency into the mainstream. Miners used high tech to earn coins, security has gotten better, and digital wallets have come and gone, replaced by better ones. Coins have been created and died, and companies are even using Initial Coin Offerings (ICO) to raise startup capital. 

Over the last year, though, Bitcoin had a rough time of it. After a volatile summer, the end of the year saw Bitcoin down by 37 percent in November, and values fell even further in December. Some say this is a market correction that was necessary as the value was vastly overinflated, where others say that 2019 will be the year of a big turnaround, and the coin may return to its $20,000 glory days or beyond.

No matter what the value does this year, the financial markets are sitting up and taking notice. Consumers have less confidence in banks and the security of traditional credit cards, so many are looking for a new place to invest and store their money. 

There are some cryptocurrency trends that will play a prominent role in the lives of a variety of coins this year, and all of them will have an effect on investors. Here are seven trends likely to figure prominently in 2019.

1. Regulatory Improvements

A certain change in the future of Bitcoin and other digital currency is that the SEC and other agencies are taking notice. Coin exchanges may soon be regulated in similar ways as stock exchanges, and traders will have to follow them.

Think this is something far off? Don’t make that mistake. The SEC has already been investigating illegal security offerings and scams in the ICO marketplace, and as the year goes along they will make these regulations clearer. The good news is there will be guidelines about how to issue coins, raise capital, and operate in the virtual currency space. This is not a bad thing for an industry that has to this point been largely governed like the wild west.

2. More Mainstream Trading

The buying and selling of virtual coins and even some day trading has become more mainstream, and even serious investors have taken notice. The next step is that major financial institutions will get involved. 

For example, the Intercontinental Exchange (ICE) plans to offer Bitcoin futures contracts starting in February. This program, called Bakkit, would allow mainstream investors to buy into cryptocurrency without having to manage the funds themselves. Coinbase and eToro are two other exchanges, but even NASDAQ plans to start offering Bitcoin futures trading to investors. Fidelity is also working on a cryptocurrency platform for its investors who wish to trade in this area. 

Essentially, the investment in Bitcoin and other crypto is going from obscure exchanges to the larger exchanges and financial firms, taking another step toward legitimacy. 

3. Improvements in Blockchain Technology

It is pretty well known that the technology behind cryptocurrency is the blockchain, and the idea of applying it to other fields has been in the works for a long time. But now there are startups that are working on one thing: improving the technology. The idea is to make it even more secure and useful to other companies.

The Corda blockchain program is one of these, and even traditional banks have started to adopt this program, and the idea behind it is to offer it to more firms at an enterprise level. This is just one of the companies working to bring this technology into the mainstream financial sector to improve security and increase customer confidence. IBM is working on the Stellar blockchain, and Ripple is another company offering solutions to the financial industry. 

4. More Blockchain Applications

At the same time that blockchain is being improved and more financial institutions are using it, other industries, including healthcare, the legal profession, and even retail and sales are getting into the game as well. Facebook is looking at how social media can use the blockchain, and Apple has already applied for a patent related to blockchain technology. 

Amazon is also working on the blockchain and offering related products. With its AWS platform being one of the largest cloud computing platforms in the world, this could mean a boom in innovation and applications over the next year. This will include the way data is stored, accessed, and secured. 

There are many applications for blockchain beyond just cryptocurrency, and companies are already exploring what those look like. The next year will see an explosion of more applications and the exploration of new ones at the same time. 

5. Clearer Taxation Laws

One thing is certain, and that is as cryptocurrency rises in popularity, taxes will be a part of the picture, and already are. For the most part, digital coins are treated as virtual property or securities, but new tax laws will have to look at whether getting paid in Bitcoin is like a stock option or falls under more traditional income taxation. 

The key is that companies once converted Bitcoin to “hard currency” rather than retaining it because they feared market volatility, and rightfully so. However, as they anticipate that it will rise in value and stabilize, some are holding on to it in huge virtual wallet accounts. For the IRS and others, the question becomes how and when virtual coins are taxed, and those laws will become clearer over the next year. 

6. Exchanges Will Change

With the adoption of mainstream exchanges for cryptocurrency and Bitcoin futures as well as the increase in regulation, coin exchanges will have to adapt to survive. This means they will have to comply with the same rules as other exchanges, and may have to modify fees to be competitive. 

Also as cryptocurrency becomes more mainstream, it will become more of a target for hacking and theft. How people store cryptocurrency and the way exchanges store and keep it secure will change in 2019 as well. Smaller exchanges may struggle to survive, and mergers and larger exchanges will likely become more common.

7. Stability Will Become a Larger Factor

At the moment, any investment in digital currency is a volatile one. Money is made and lost in hours or days, not months and years, and stability is not assured. Many coins offered this year are already trading well below their initial values, and most will probably never recover. 

The truth is, the coin market may never completely stabilize, but coins that are well know and more reliable investments will gain some traction, and ICOs will be met with more skepticism until companies have proven themselves.

Some of this will come from regulation and more mainstream trading, while others will come from investor demand and expectations.

One thing is sure, 2019 will be a year of change for cryptocurrency and the blockchain, and most of those changes will be for the better. 

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