We are only halfway through 2018 but it has already been quite a year for the crypto industry. Before we look ahead to what the rest of the year holds for this exciting and constantly-evolving space, let’s examine the progress that’s already been made. From increased institutional adoption to the wildly popular Consensus conference in New York City, here are five of the biggest wins for crypto so far in 2018.
1. Increased regulation of the space. In March of this year, the U.S. Securities and Exchange Commission (SEC) issued a statement declaring that every cryptocurrency exchange must be registered with the agency. Specifically, it said “The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not. Many platforms refer to themselves as exchanges, which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.” While many cryptocurrency companies balked at the idea of regulation by the SEC, I believe it was actually a very positive development.
It is my opinion that the success of crypto depends on widespread adoption, and widespread adoption depends on trust. Oversight by the SEC helps build crypto’s legitimacy in the eyes of previously skeptical investors. It also helps build trust for institutional investors who have been waiting for some type of regulation to be enacted before entering the space.
2. Participation from traditional financial institutions. There’s a widespread myth that the mainstream finance world is inherently against cryptocurrency. This is simply not true, and the actions from several traditional financial institutions within the last six months demonstrate just how false that claim is.
The Cboe Futures Exchange kicked things off in December when it launched Bitcoin futures trading. CME, the largest futures exchange in the world, quickly followed suit and launched its own Bitcoin futures trading the same month.
Not to be left behind, Nasdaq announced a partnership with Gemini in April, which entails Gemini leveraging Nasdaq’s SMARTS Market Surveillance technology to monitor its crypto marketplace.
Shortly after in early May, Goldman Sachs sent shockwaves through the finance world when it announced it was launching a Bitcoin trading operation, and this was just a day after Morgan Stanley teased that it was planning on launching some type of crypto initiative and wanted to beat the rest of Wall Street to market. Clearly, institutional investors are highly interested in making their mark on the crypto space, and that interest in and of itself is a huge win for the industry.
3. The Lightning Network’s LND software launching in beta. The Lightning Network (LND) is a decentralized network that leverages smart contract functionality to enable instant payments across its community of participants. It is an “off-chain” solution that’s built on top of the blockchain to tackle some of the inefficiencies related to trading cryptocurrency – namely speed and cost. Leveraging smart contract functionality, LND allows users to send Bitcoin and Litecoin to other users without settling those transactions on the blockchain. This eliminates the need for volunteers to verify each transaction, which expedites the process substantially. According to Elizabeth Stark, CEO of Lightning Labs, the ultimate goal for LND is to facilitate “many thousands of transactions per second and maybe someday even millions per second.” For context, this is faster than the transaction rates for many mainstream credit cards such as Visa.
In March, LND launched in beta. Given its commitment to addressing Bitcoin’s scalability limitations, the beta launch was seen as a huge victory in the crypto community and I believe it will undoubtedly help propel the industry forward.
4. The hugely popular Consensus Conference in New York City. Crypto enthusiasts from across the globe gathered in New York City for the industry’s biggest event of the year, and I was fortunate enough to attend. This three-day event was a celebration of blockchain and crypto and the array of exciting initiatives that are currently underway in the space. Excitement filled the air from the first moment of day one, with new Lamborghinis lining the streets around the conference to set the tone. It is a common joke in the industry that the first thing an investor will do after hitting it big with crypto is buy a Lamborghini – the ultimate status symbol – so having the cars outside the conference was a fun way to engage attendees from the get-go.
Additionally, the New York City Economic Development Corporation (NYCEDC) announced two programs focused on blockchain innovation. The first is the launch of the NYC Blockchain Resource Center, which aims to build public awareness of blockchain technology through increased education while simultaneously supplying business resources to entrepreneurs in the field. The second is the launch of a blockchain competition aimed at developing blockchain applications to help improve public sector services and processes. I could go on and on about how inspiring Consensus was – from Snoop Dogg performing to the Winklevoss twins announcing that Gemini would now support Litecoin, Zcash and Bitcoin Cash – the excitement did not stop.
5. Amazon partnering with a blockchain startup. In May, Amazon Web Services (AWS), the cloud computing arm of Amazon that offers customers a paid subscription for cloud computing platforms, announced a partnership with ConsenSys’ blockchain startup Kaleido. Kaleido is a blockchain business cloud that helps enterprises build and manage blockchain platforms without having to develop the technology in-house. It is the first blockchain software as a service (SaaS) that provides a turnkey solution for businesses. According to a blog post from Amazon, this will enable “consortiums to launch and operate enterprise blockchain networks on AWS without spending months and millions of dollars writing custom code.” Amazon has been a dominant force in the global tech world for decades, and its doubling-down on blockchain further demonstrates the technology’s influence.
It is hard to believe we are only just starting the third quarter of 2018, as the advancements we’ve seen across the crypto industry in the last six months have been simply astounding. If the progress achieved during the first half of the year is any indication of what’s to come, I believe that 2018 is sure to be the most exciting year for crypto to date – and I can’t wait to see what lies ahead.