Cryptocurrency, Stablecoins–With Bitcoin making a shaky climb closer to $4000, the entire industry of cryptocurrency is still reeling from hitting a relative low on the year last week. Since the start of the year, the number one cryptocurrency by market capitalization is down nearly 80 percent since peaking close to $20,000 in December 2017.
For some, the falling price of Bitcoin and the broader altcoin has raised the alarm and led to widespread selling out, negativity and a soured mood towards crypto and blockchain-based assets. Just yesterday, EWN reported on the significant number of crypto-based startups which have been forced either to close shop or make substantial staff cuts in response to the ongoing bear market, in part due to overexposure through plummeting coin prices.
While the dire state of the industry has some lamenting the future of cryptocurrency–and others claiming Bitcoin to be dead for the 300th time–others see 2018 as a severe correction, but overall miscue for an industry that is still experiencing growing pains on the way to broader adoption and more focused development. During a Crypto Summit held on Friday in London by financial outlet Bloomberg, a series of panelists seem to suggest that, while there’s no denying the immediate outlook for cryptocurrency is shaky at best, the industry is just experiencing a temporary setback that will eventually see the market back on the expectation-shattering pace that characterized the end of 2017.
Speaking on the panel, Chief Investment Officer at CCL Investment Management James Bevan gave hope to investors who have continued to stick with crypto through the falling market year,
“I don’t regard this as an existential crisis, I just regard it as a bump in the road and institutional investors have had plenty of bumps in the road in conventional currencies and transaction systems.”
Interestingly, panelists singled out the areas of stable coins and digital contracts as two potential avenues for cryptocurrency to expand into 2019 and beyond. While the latter has been a familiar mainstay in crypto, with third largest coin by market cap Ethereum being viewed as the industry leader for executing smart contracts, the rise of stablecoins has characterized 2018 in much the same way that “blockchain” became a buzzword throughout last year.
“While no one forecast an immediate rebound in crypto prices — Bitcoin has lost about 80 percent of its value this year — they cast the current downturn as more like growing pains than rigor mortis. In fact two areas of growth for the industry will come from low-volatility tokens known as stable coins and so-called security tokens, digital contracts that represent ownership of assets such as real estate or stocks.”
Given the level of innovation, security and digital functionality instilled by the technology of cryptocurrency, the industry of coins as a whole has a established a precedent that is going to be difficult to fully do away with. Merchants who continue to be rebuffed by the lack of price protection and are looking for a more stable form of Bitcoin to transact in will find more benefit in the less-volatile nature of stablecoins.
Price-stable coins, such as Tether’s popular yet controversial USDT, allow both merchants and consumers to transact in crypto without being exposed to the severe price volatility that has characterized the market throughout 2018. While some, particularly investors looking to trade and speculate on crypto, will find the lack of price appreciation or market-driven value a drawback, the majority may find stablecoins more palatable for everyday use–which is the type of adoption that could set cryptocurrency back on the road to greater acceptance.