Crypto Market 2019 Trends: Security Tokens, Coin Privacy, BTC Lightning Network and Scaling
Cryptocurrencies have been developing rapidly ever since Bitcoin came to be ten years ago. However, the development and trends in these first several years were slow and steady when compared to what has happened to the crypto space since the hype of 2017.
This was when digital coins truly came under the spotlight, and countless new developers, investors, traders, and even regular coin enthusiasts entered the space, wishing to learn more about it.
As a result, a flow of cash, ideas, and talents allowed the crypto world to start expanding and developing much faster. In the short time of about a year and a half, crypto has made more progress than in several years before, combined. This has also brought a number of new trends, which managed to be born, live a short life, and die, most of which has happened in 2018, with the ICO trend being the best example.
However, that is behind us now, and 2019 promises to be another busy year, with numerous new trends expected to arrive.
Depending on their quality, some of these may stick around for much longer, and possibly even stay, or open the door to new, unexplored areas. With that in mind, here are several trends that are expected to arrive at some point in 2019, and hopefully contribute to the short but rich history of digital currencies.
1. The rise of STOs
After the ICO trend died out, many have started searching for an alternative way to sell coins and gain investment money. During this search, STOs (Security Token Offerings) emerged as the most promising solution, as they do not depend on investors trust in the project, but can actually offer something in return for the investment money.
Security tokens are believed by many to be the bridge between cryptocurrency and conventional finance.
They have the ability to tokenize real-world assets, and thus be backed by something of value, including gold, diamonds, and even real estate. They can also allow easy sharing of ownership over these assets, which has already attracted the attention of institutions and individual investors alike.
2. Strengthening of stablecoins
Stablecoins emerged as a form of cryptocurrencies some time ago, but they did not become popular until the market crashed in early 2018. With the prices of regular coins going down, many investors turned to stablecoins, as they provided a stable alternative. Stablecoins are typically backed by other assets, such as fiat currencies (USD, EUR, GBP), or even other coins. As such, they have the ability to maintain a fixed price.
Because of this, they are immune to volatility problems, which have brought the price of BTC from $20,000 to $3,500 within a single year. The biggest stablecoin to emerge and gain popularity was Tether (USDT), which has since lost some of its influence due to a controversy in 2018. More precisely, Tether refuses to provide insight into its accounts and prove that it can actually back all of its coins.
While many are still using it, a large part of the crypto community has already turned to newly-created alternatives, such as Gemini Dollar, USD Coin, True USD, and alike.
If the bearish market persists throughout 2019 as well, it is likely that stablecoins will see a lot more popularity and growth, at least until regular cryptocurrencies start growing once more.
3) Solving Bitcoin's scalability problem
Scalability has been a large problem of the crypto world ever since Bitcoin went live in 2009. Developers recognized the issue early on, although they did not really feel it until BTC became popular. Due to its blockchain design, BTC can only handle between 4-7 transactions per second (TPS), which is not nearly enough when there are hundreds, if not thousands of transactions being made all the time.
As a result, a lot of them are forced to wait their turn, can take a long time, as well as a large fee. The issue remains unresolved to this day, despite several solutions that were proposed over the years. However, one of the solutions is believed to have potential, and that is Bitcoin Lightning Network. The LN is imagined as another layer that would be added to BTC blockchain. This layer would allow traders to establish a series of tunnels that would connect them with one another.
These tunnels would then serve for sending smaller payments that would not be recorded on the blockchain. As such, there is no need for their validation, and each of the smaller transaction will be instant. The final state of things would only be recorded when one of the tunnels is shut down, which would significantly reduce the number of transactions that need to be validated and recorded.
The LN is currently still in development, and it is currently unknown when it might be completed. However, many are hoping that it would happen at some point in 2019.
4. Privacy protocols
Privacy is a big thing on the internet, and it is even more important when it comes to cryptocurrencies. While there are many privacy coins around, such as Monero or Zcash, there is still a lot of room for improvement.
However, in 2018, a privacy protocol called Mimblewimble was created, and so far, two coins — Grin and BEAM — implemented it. The end goal of such protocols is to provide users with true anonymity while making online payments, as confidential transactions are desired by many within the crypto community.
Even so, Monero and Zcash themselves made significant improvements, such as Monero's integration of bulletproofs (a type of zero-knowledge proofs) which has reduced the sizes of anonymous transactions. Zcash, on the other hand, came up with a new upgrade, called the Sapling upgrade, which cut down the amount of time and computation needed for making a shielded transaction.
Bitcoin itself, which was often criticized for being barely pseudonymous, is working on adding a new protocol called Dandelion++, which is yet another layer that enhances the privacy features. Similar efforts were made by several wallets.
There is still more that can be done to improve privacy and anonymity within the crypto world, and with new ideas and increased attention on the issue, some of the massive potential improvements may become a reality in 2019.