Earlier we reviewed the results of 2017, the year that we will soon call “last”. It was a truly remarkable year for cryptocurrencies, with new records set, rising appreciation from a wider public, an ICO frenzy and beginnings of thousands of exciting new projects. There are reasons to believe that 2018 will even be better for the crypto world, when the seeds that were sown during 2017 come to fruition. Now let’s look at some of the trends that will develop over the next year and try to make tentative predictions of what’s to come for cryptocurrencies and the blockchain technology.

Widespread acceptance of cryptocurrencies will continue. Financial institutions will adopt digital assets.

It is very likely that, amid all the crypto hype, new institutions, like pension funds, asset managers, and payment providers will enter the market. The trend for more mainstream acceptance of cryptocurrencies (mainly Bitcoin) will continue, with more exchanges trading in Bitcoin futures. According to Peter Smith, the CEO of Blockchain.info, central banks will start holding digital currencies in reserve in 2018.

However, there will be a number of hurdles to overcome. The issue of governance that has plagued Bitcoin over the years and resulted in a number of forks will persist. It may become a problem for new players willing to enter the market as it raises the question of increased risk. Another major issue is lack of clear regulations in the area of cryptocurrencies from country to country. While China and South Korea downright banned trading in cryptocurrencies, Japan, Philippines and, more recently, Belarus signed laws promoting the use of cryptocurrencies and ICOs, there are many countries without clear policies on how to regulate digital assets. 2018 will surely become the year when some of these countries will come forward with such regulations. Legislation on ICOs and cryptocurrency trading is already underway in the United States and Russia.

The price of Bitcoin will continue to rise

There are many optimistic predictions concerning the rise of altcoins, however, Bitcoin has proven to be the most resilient currency and weathered many storms. Expects, like Julian Hosp of TenX, concur that the market will eventually sort out all coins and assets with little value and invest only in those assets that really deliver value, back new technologies and are really being used by people. Bitcoin checks all these boxes. 2018 will see many ups and downs for the first cryptocurrency, however, at the end of the day, by December 2018 Bitcoin may reach $50,000 to $60,000.

On the downside, however, there is a danger that Bitcoin may end up being seen as the means for storage of value than the actual means of payment. With more and more investors becoming HODLers, there’s chance that the network will stop developing when the users are all hoarding their coins and not interacting with each other.

Cross-chain solutions will emerge

With countless new currencies launched and traded every day, blockchain interoperability remains a burning issue. 2017 saw some developments in this regard: Raiden, the Ethereum ERC20 token interoperability solution, was launched in September, while the Interledger Protocol connected seven blockchains including Bitcoin, Ethereum and Ripple, in May. The first Bitcoin to Litecoin transaction was completed in the end of November.

We expect similar solutions to proliferate in 2018. In an ideal world, it shouldn’t matter if you hold your assets in BTC, ETH, LTC or any other coin – you should be able to switch between them easily and effortlessly.

Ethereum is going to be huge in 2018

Despite its widespread adoption, Bitcoin’s scalability and transaction fees will remain an issue. It remains to be seen how the long-awaited Lightning Network implementation will fare for Bitcoin. Ethereum is widely regarded as a more flexible and more technologically advanced alternative to Bitcoin. A major advantage of Ethereum is the system of smart contracts and decentralized applications. Ethereum could become the operating system for finance and commerce and is just waiting for its “killer app” to arrive. 2017 demonstrated that Ethereum can be used not only to launch ICOs, but that it has a variety of real world applications, from decentralized lending to gaming and tokenization of goods.

In 2018 Ethereum developers are going to work on the scalability issue (Raiden, Casper forks) and improve confidentiality by introducing zkSNARK.

Hybrid blockchains will appear

Until recently, there were public and private blockchains (Hyperledger Fabric) only. Hybrid blockchains will combine the best features of the two varieties. A good use case a mini-blockchain instead of an Ethereum smart contract or a token tailored to suit the product being launched. Features like decentralization, functionality, rate of upgrade and stability could be customized.

The second installment of our 2018 Forecast series will focus on ICO and how it is going to evolve over the next year.

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