• 2 hours Chinese Stocks Soar On Bullish Economic Data
  • 8 hours Apple’s “Holy Grail Of Data” Leaves Energy Traders Disappointed
  • 10 hours Gold Rally Adds $250 Billion To Top 50 Miners' Market Cap
  • 1 day TikTok Is Becoming A New Battleground For Tech Politics
  • 1 day Peru's Mining Industry Pummeled As Coronavirus Cases Surge
  • 1 day Why The World Is So Divided In Its COVID-19 Response
  • 2 days Equities Cheer Stellar Jobs Report, But It May Be Fleeting
  • 3 days Is Tech Billionaire Peter Thiel Done With Trump?
  • 3 days Musk Takes To Twitter To Troll The SEC
  • 4 days Lunar Mining May Commence As Early As 2025
  • 5 days Immigration Will Go Bust Without $1.2B Bailout
  • 5 days The Economics Of The Space Race
  • 6 days Why The World's Central Banks Aren't Yet Sold On Renewables
  • 7 days How Much More Cash Can Uber Burn?
  • 7 days Inside The Biggest Counterfeit Gold Scandal In Recent History
  • 7 days EU-U.S. Trade Relations Are Deteriorating
  • 8 days Over 184 Companies Have Bailed On Facebook
  • 8 days BP Sells Petrochemical Business For $5 Billion
  • 8 days U.S. Moves To Secure Domestic Rare Earth Supply
  • 9 days E-Commerce Explodes As Boomers Go Digital
$32 Million Crypto Heist Halts Tokyo Exchange

$32 Million Crypto Heist Halts Tokyo Exchange

Tokyo’s Bitpoint Japan Exchange has…

Iran Looks To Launch Its Own Cryptocurrency

Iran Looks To Launch Its Own Cryptocurrency

Iran has proposed the creation…

U.S. Pushes For Digital Currency For Immediate Stimulus

U.S. Pushes For Digital Currency For Immediate Stimulus

The world’s governments are rushing…

Jan Bauer

Jan Bauer

Staff Writer, Safehaven.com

Jan is a writer for Safehaven.com She has 15+ years experience in FX trading and focuses on crypto currencies, FX, gold and silver investments

Contact Author

  1. Home
  2. Cryptocurrencies
  3. Other

The Next Step In Crypto’s Evolution: Consolidation

BTC

The crypto market has been running on steroids, and like an adrenaline junkie, it risks seriously burning out or suffering a catastrophic heart attack.

In fact, the industry is evolving at such a breakneck speed that Morgan Stanley recently drew parallels between crypto and the Nasdaq prior to the Dotcom crash, saying the only difference is that the crypto market is evolving 15x faster.

Major Shakeout Looming

It's a well-established fact that early-stage industries tend to be heavily fragmented before embarking on a consolidation phase as they mature. But things have been a lot more dramatic in cryptoland.

From just a few dozen cryptos a few years ago, the crypto industry now has a deluge of digital coins with the tally now approaching 2,000. 

The cryptocurrency industry is so heavily fragmented and littered with scams that a huge consolidation exercise is the only way to clean it up.

Related: Earnings Beat: 10 Stocks That Crushed Expectations

The DeadCoins websites lists nearly 800 cryptocurrencies that have been deceased, and the list keeps growing.

Explosive growth by ICOs gives you an idea of what is at stake here.

Through ICOs, startups design tokens which are sold in secondary markets via a crowdfunded model. All token sales are powered by blockchain technology. This novel fundraising mechanism has proven very popular, thanks to its key attractions including zero dilution for the owners, strong network effect and high returns. Indeed, ICOs are frequently oversubscribed and have already overtaken VCs as the preferred method for startups to raise equity.

Startups raised more than $5 billion through ICOs in 2017 by selling hundreds of coins in the digital bazaar, and industry experts see this ending in pain and tears for many investors.  

A worrying trend in the market is that a lot of money has been going into weak and unproven technologies that are likely to fail the test of time.

If you want to know how far investors are willing to go with their crypto investments, look no further than Dogecoin.

From 2013-2014, Dogecoin managed to carve a respectable niche in the crypto world as a currency mainly because rivals such as Bitcoin and Litecoin were considered serious assets. Every day, thousands of Dogecoins would zip around Reddit and Twitter. Dogecoin was able thrive for years despite receiving zero upgrades. That surprised even their founder, Jack Palmer.

With so much money being pumped into unproven cryptos, it might take years before self-regulation is able to weed out weak or worthless players.

Cloud Evolution Provides a Blueprint

The cloud industry gives you a good idea of how the crypto evolution might progress.

The cloud begun as a novel concept of remote server access. Once it achieved mainstream adoption, it sparked off an app-building mania very similar to the token mania we have been witnessing with ERC20 (Ethereum’s Token Standard Interface).

But once the cloud ecosystem became flooded with apps and tools, larger platforms created huge networks of native applications that enabled companies to adopt other successful tools via APIs.

Meanwhile, weaker technologies were gradually eclipsed while others were acquired by the titans.

Ethereum co-founder Vitalik Buterin has predicted that at least 90 percent of cryptocurrencies on built on the Ether blockchain will end up worthless. Another Ethereum co-founder, Charles Hoskinson, says the crypto market will first go through a  massive crash before proper consolidation begins in earnest.

By Jan Bauer for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment