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The end of the beginning

Matthew Morris of Carr Consulting

In 2017 there began a cascade of Bitcoin headlines lauding the millionaires created by the stratospheric increases in crypto prices. Meanwhile, ‘blockchain’ became the buzzword on the lips of the business world to rival robo-advice and artificial intelligence.

In contrast, 2018 ushered in drastic falls in price from around £14,000 a Bitcoin in January 2018 to roughly £3,000 by the end of the year amid declaration of the death of digital money. So what can we expect from Bitcoin in 2019? 

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Price predictions are pointless. No-one knows for certain what will happen and timescales are even harder to predict. The swarm of retail investors badgering their clients about Bitcoin appears to have cooled along with the wild price upswings and it is unlikely to return in 2019.

According to eToro’s October research, 63% of IFAs surveyed have been asked about cryptoassets by their clients. 

However, while the value of Bitcoin and the overall crypto market plummeted in 2018 the technology continued to develop, even while the amount of money being pumped into the sector cooled.

The good news for 2019 is that this has smoked out many of the weak start-ups, second-rate schemes and get-rich quick suckers who were particularly taken in by initial coin offerings (ICOs). 

Meanwhile, Bitcoin’s scaling and cost problems appear to have been overcome by an innovation called the Lightning Network, making it able to deliver a genuinely universal form of money in 2019.

I expect blockchain will continue to be utilised in many sectors desperate for disruption, particularly in the field of energy and data security, while I strongly suspect we will see at least one blockchain rival (blockchain is just the most well-known example of a technology called Distributed Ledger Technology) offer a revolutionary way to make payments.

Also, expect to see the terms ‘security tokens’ and ‘stablecoins’ become buzzwords in the sector this year.

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Bear in mind that the cryptocurrency and blockchain sectors are barely a decade old and we are roughly at the stage of development as the internet was in the mid-90s. Those who think the collapse in the price of Bitcoin heralds the bursting of a fool’s gold bubble are mistaken. 

There was a speculation balloon that still has room for deflation, so this year the sector will likely focus less on quick money and more on developing the MS Windows and Google companies that opened up the internet and made its investors billions.  

Behind the headlines that pronounce the end of Bitcoin, the real work is progressing fast and, in 2019, I expect us to move into the next stage where real world uses are adopted. Last year was only the end of the beginning.

Matthew Morris is a partner at Carr Consulting

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