Bitcoin’s long decline has taken the media’s center stage for most of 2018. As the world has watched BTC burn, altcoins–and all of their failures and successes–have fallen to the wayside, minor characters in the tale of a dying legend.
Upon closer examination, however, altcoins are far from dead. The markets continue to develop, to change, and to grow. So now, the question is: what will 2019 bring for altcoins? How will their role in the investing world change, regardless of what happens to Bitcoin?
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Rise in Coins and Networks That Support Dapp Development
Some analysts believe that one of the factors that has driven the cryptocurrency markets down is the exodus of speculative traders from the space. When the cryptocurrency markets were approaching their height, they attracted a multitude of short-term investors who sought to cash in on what appeared to be a momentous opportunity.
When the cryptocurrency markets fell during the first big crash of 2018, however, many of those investors split, never to return. Many of those that have remained in the markets have chosen to put their money into projects that have actual uses; that is to say, the projects they are part of are more than just a list of buzzwords like “decentralized payment system” and “trustless peer-to-peer network.”
Indeed, many of the projects that are surviving in spite of the suffering markets are cryptocurrency networks that support the development of ‘dapps’, or ‘decentralized applications.’ Dapps are applications that operate on a blockchain.
While there is not one singular definition of what a dapp is, they do have a few important things in common: they are usually open-source, they are decentralized, their users are incentivized, and they run on some sort of a blockchain or other form of distributed ledger technology.
In today’s blood bath, we must remember that nothing has ever changed. #blockchain #bitcoin #DAPP is the future and #TRON will decentralize the Internet. Check out #TRON 6 month data, we haven’t seen such amazing increase before. Plz check after 2 years! #TRX $TRX pic.twitter.com/pK3S8pJB9e
— Justin Sun (@justinsuntron) November 25, 2018
The Inevitable Rise of Security Tokens
A number of analysts also predict that 2019 will be the year of security tokens–cryptocurrency tokens that are collateralized with various assets, and legally represent the ownership of those assets. For example, a cryptocurrency token could represent a piece of real estate, a government bond, or equities.
The benefits to the widespread adoption of security tokens in the asset world are many–a network of security tokens would make asset ownership and trading incredibly simple and secure; trading could be done at any time, from anywhere, and for a negligible cost.
While there seems to be quite a bit of interest in security tokens from investors, there is not yet any single widespread system that has been adopted for their practical use. Additionally, the regulatory status of security tokens is unclear in most legal jurisdictions around the world.
Elizabeth White told Finance Magnates that security tokens represent a degree of tangible value that is unprecedented in the cryptosphere. “Investors are tired of speculative coins that promise ‘hopes and dreams’ and want to know that their investments actually have real world upside,” she said.
There are a growing number of security token platforms being born all the time, including Smart Valor and Neufund. Successful adoption of security tokens would most likely mean that either a single network would need to become the global standard, or that a layer of interoperability would be established.
Will Altcoins Follow the Price of BTC?
Throughout the history of the cryptocurrency markets, whatever happens to the price of Bitcoin is felt in waves throughout altcoin prices shortly after.
Elizabeth White believes that this connection will continue, but not for every altcoin. “We will continue to see high beta (correlation) between BTC price and the price of existing ‘speculative’ altcoins,” she told Finance Magnates. “However, we will certainly see a dislocation between BTC and asset-backed coins. In simple terms, if a token is fully backed by gold and is redeemable, it will track the price of gold and have nothing to do with BTC.”
With the massive uncertainty in the future of the price of Bitcoin, this could either be a very good or a very bad thing. One thing is clear, however: 2019 may be the dawn of a more stable, dependable altcoin market.
What do you think that 2019 will bring for altcoins? Leave a comment below–we’d love to hear from you.