Luno foresees positive 2019 for Bitcoin
Despite 2018 being characterised by the fall in the Bitcoin price, there will be increased adoption of the digital currency this year and the technology behind it will scale faster.
So says Marcus Swanepoel, CEO and co-founder of Luno, giving his predictions on how Bitcoin will fare in 2019.
"Despite the so-called 'crypto winter', which fixates on the price, we're gearing up for a positive year ahead," says Marius Reitz, Luno's country manager for SA.
The price of Bitcoin, the world's most popular crypto-currency, reached $20 000 in 2017, and at the time of publishing today, was trading at $3 566.
Below are Luno's crypto-currency predictions for 2019.
More regulators around the world are providing clarity for crypto-currency companies to operate either within existing frameworks, or with new licences. Luno believes this will help increase trust, weed out most if not all of the bad apples, and form the foundation for large-scale institutional money to move into the crypto ecosystem.
The South African Reserve Bank (SARB) last week announced its plans to regulate crypto-currencies. The central bank is looking to provide an overview of the perceived risks and benefits associated with crypto assets.
Luno says visibility around illicit activity is an important issue. With crypto-currency, the bar has been set high by regulators, banks and the media; in many cases at a zero risk tolerance level.
"We see 2019 as a critical point where this sentiment will shift from one of 'risk elimination' to 'risk mitigation', which will have a big knock-on effect for the industry's growth prospects," says Reitz.
Over the last year or two, initial coin offerings (ICOs) and "blockchain projects" have been in the spotlight.
Luno expects that another major trend for 2019 will be the mass abandoning of these blockchain and ICO projects, with attention and money shifting back to decentralised crypto-currencies.
Investor, fintech interest
While Luno doesn't expect to see mass institutional adoption in 2019, it expects to welcome some early movers into the space.
"Early adopters are institutions like Fidelity and BAKKT that will get the momentum started," says Reitz. "We also predict that smaller fintech and other tech companies will enter the space via partnerships with existing crypto-currency companies"
This year will see better education around the crypto-currency market, says Luno, adding this will be helped by the media, crypto-currency companies and existing financial institutions that are not ready to launch crypto-currency projects yet, but are dipping their toes in the water to test customer interest.
According to Luno, this year will see crypto-currencies like Bitcoin scale better in terms of speed, cost and security. "We believe the scaling trend will continue and slowly help start unlocking more value to the overall network and industry," says Reitz.
No silver bullet
Luno expects more implementation of crypto use cases in niche products and services where they demonstrate that crypto-currency does what the existing financial system cannot, such as immutability and traceability. Emerging markets in particular are expected to grow.
New financial system
Challenges to crypto-currency growth and adoption this year will remain, says Luno, pointing out that while regulatory views are positive overall, some countries will take longer to align their views and this will have a negative impact on those markets.
It adds that banks, which are essentially the de facto regulators of the industry right now, will continue to work only with select crypto-currency companies, which dampens competition and growth.
"Innovation happens slower than early adopters hope, but faster than sceptics believe. Either way, it's important to take a long-term view of the market and we believe that this means a major transition in the way the world thinks about and uses money in the next five to 10 years. The reality is that the existing financial system was built over hundreds of years and we're not going to build a new financial infrastructure overnight," says Reitz.