The stage is set for 2018 to be a transformational year for crypto assets. A crazy 2017 saw the little known Bitcoin capture the attention of mass media and become the second most searched news term on Google in 2017. This level of attention has given governments and large financial and technology institutions no choice but to adapt their business models or dig their heels in and yell ‘FRAUD’. Get ready, because if you thought 2017 was wild, 2018 will be sure to please the masses, upset the hordes and yield both good and bad surprises for crypto assets!
This week’s hot topic - 2018 Predictions
Initial Coin Offerings (ICOs) will legitimise
In 2017, over AU$4.4bn was raised through ICOs. Many of these ICOs had little more than a 10 page word documents and a ‘promise’ to deliver products to investors. New institutional investors and rating agencies are requiring a greater level of visibility on which to conduct detailed due diligence in order to make sound investment decisions. This will ensure that 2018 is the year that ICOs are required to provide greater detail and show greater sophistication and structure to investors, including; detailed IT roadmaps, business plans, proofs of concepts (POC), growth plans and institutional and government partnerships.
Magnet noticed that many upcoming ICOs are launching with either; a working product in the market they are looking to tokenise (e.g. Jet8); having conducted a proof of concept (POC) in a sample market (Fan controlled football league); or having contracts with governments and/or businesses in place for when they launch (e.g. WePower). Structured ICO’s are something we’re excited about and could see a larger stake in the portfolio should they meet requirements.
Governments will digitise their currencies on blockchains
There is an increasing threat that crypto assets could partially replace Fiat currencies (government issued currencies) for the transfer of domestic goods and services. Governments are reacting by announcing plans launch and develop their own digital currencies to ensure that they can run effective fiscal policies, manage monetary compliance and controls, build a revenue streams to run the country and monitor criminal activity among other things. Transitioning fiat currency to the blockchain can remove many of the current pain points individuals are frustrated with (slow domestic and global transfer of value, high exchange rates, large bank fees, security and fraud etc).
Magnet expect several governments to commence developing digital currencies but few to implement in 2018. We will be keeping a close eye on China, Switzerland, South Korea, Japan, Singapore, Gibraltar and Estonia who we believe to be the most proactive countries in this space.
Financial institutions will cater to crypto assets
Enterprise Financial Institutions will provide brokerage, custodianship, trading, advisory and research services to the public, starting with institutional investors only, with slow education and roll out to the retail investor. Goldman Sachs have plans to launch a trading desk in Q3 2018, JP Morgan, Citi, BAML will follow closely, but not until they ensure the entire ecosystem is ready, a new line of legislation to protect investor’s crypto assets will give custodians new life in 2018.
Magnet - We see the crypto asset market continuing its growth and reaching $4tr market cap in 2018. With such a large valuation, financial institutions will create products, trade cryptos and provide advisory services to take part in this new market and break down barriers for institutional adoption. This will spur a new wave of alternate investment as well as intelligent developers moving into blockchain space. Unfortunately, these businesses move slowly, Goldman will be the first test bed, expect others to issue notices in Q2 for a Q4 2018/Q1 2019 implementation.
You will finally be able to spend your crypto assets!
Despite mass media attention, it is still extremely difficult to spend your Bitcoin or other crypto assets for everyday goods and services. A small handful of organisations including Microsoft, Expedia, Overstock.com and Shopify.com currently allow for Bitcoin payments, but look for many more household names to be added to that list in 2018.
Magnet - Some of the world’s largest organisations, including Amazon, Facebook and McDonalds, will start to accept various crypto assets as a form of payment in 2018.
Bonus week on wall street - Employees at major IB institutions such as, Morgan Stanley, Citigroup, JP Morgan, Goldman Sachs and Bank of America expect to see their bonuses between now and the end of January. Given the relatively stable price of Bitcoin over the last 2 weeks and excitement for the space, could this be where this new money is invested?
Binance worth US $2Bn - A popular crypto exchange based in Hong Kong offering excellent services and a large variety of Alt Coins (crypto other than Bitcoin) has been valued at US $2Bn - a company which started operations 6 months ago.
Just for fun - Leading experts are certain 65% of the time, that the Bitcoin price in 2018 may be between $30,000 - $100,000 accounting for a +/- 60% margin of error, ensuring to disclaim that they are not to be held to this valuation.
South Korean financial authorities have cracked down on anonymous exchanges and anonymous personal crypto accounts. Stricter regulation will now require exchanges to request and capture relevant KYC information and identification documentation from users to ensure their identity is accurately reported.
KODAK and WENN Digital announced plans to launch a major blockchain initiative and a cryptocurrency. The blockchain, whose native token is KODAKCoin, will serve as an image rights management platform which allows photographers and agencies to have greater control over image rights.
Chinese search engine giant, Baidu, has unveiled a blockchain as a service platform, ‘Baidu Trust’. As described on the Baidu website, the platform will be able to be used for "efficient and low cost traceability and trading, ideal for digital currency, payment and settlement, digital ticketing, bank credit management, equity proof and exchange-traded securities, insurance management, financial auditing and more."
KFC Canada is now accepting Bitcoin for “The Bitcoin Bucket”, a bucket of fried chicken
- International money-remittance firm MoneyGram has announced a partnership with Ripple. MoneyGram will pilot the use of XRP tokens for international payments.
In what feels like the first time, we are reporting a majority decline this week in the crypto markets. A number of factors have contributed to a general decline amongst crypto assets, including: speculation of South Korean regulation; a Chinese Bitcoin mining ban; and the holiday period (which is historically a bad time for cryptos)
NEO has been the top performer due to an increase in the number of planned ICOs being launched on the platform.