2019 in the Cryptocurrency Market
The CfC St. Moritz is the world’s most exclusive investor conference on cryptocurrencies and blockchain investments. CfC St. Moritz’ trusted partner M&A PR reviewed the most notable events and developments of 2019 to highlight projects and companies worth following in the year to come.
Specific criteria varies by area, but generally we’ve been looking for such qualities such as: effects on the market, consumer adoption, speed of iteration, new products launched (by the companies themselves and the communities building on their foundation), overall influence on the blockchain and cryptocurrency ecosystem, and perception among the developers and consumers, which we consider the primary metric.
The Most Notable Exchange
Binance is the most innovative exchange of 2019 due to the pace at which it’s been executing and building financial services on top of its platform.
The company has been laying the groundwork for some time. In 2018, Binance launched Binance Chain, a centerpiece of their open finance strategy, creating a public blockchain for Binance Coin (BNB) that was upgraded from an average centralized exchange-owned token to a native coin. Binance Chain’s primary use was the transfer and trading of blockchain assets. Binance is offering developers grants to port open finance protocols to Binance Chain today and will likely utilize its other products, such as the Trust Wallet, to build a cohesive ecosystem incentivizing users to stay in its orbit.
Binance also launched Binance Labs in 2018, a venture fund and accelerator, to incubate, invest and empower blockchain and cryptocurrency projects. It’s invested in 13 companies since. Binance Labs debuted Launchpad, a token launch platform for conducting proper Initial Exchange Offerings (IEO), as well. This turned Binance into an investment bank for open finance. A lot of other major exchanges have followed and launched an IEO product.
In recent months, Binance has launched a dozen of major initiatives, each dramatically increasing its networks effects and enabling new products verticals. This progress comes as faster pace than all of the other major exchanges, including Coinbase, Kraken, Bitfinex, Poloniex, Bittrex, etc.
In all, Binance has built a unified ecosystem that offers margin trading, lending, futures and options and is bound to be a major platform for decentralized finance. This opens up all kinds of possibilities: traders utilizing balances held in their Binance accounts to maintain collateral requirements across futures, options, and margin trading; Binance automatically staking users’ assets on their behalf and distributing the yield; the company incentivizing users to keep assets custodied on Binance; and more. Binance is creating new kinds of network effects that have never before existed.
The Most Notable Trend
Decentralized finance has undoubtedly been the most notable and popular trend in crypto in 2019. The idea behind decentralized or open finance is simple: turn basic financial instruments into code running on a decentralized ledger. Then, almost anyone can build more complex products on top, combining and integrating them in a unique way — and at a pace unknown by common financial institutions.
Making older concepts of stocks, bonds, real estate ownership, and currencies themselves programmable brings myriad new decentralized products to capital markets, in turn making them more efficient and accessible to everyone on the planet. Anyone is able to build local businesses on top of decentralized protocols.
You can set up a local business providing services to the unbanked population, for example. Obviously people wouldn’t use the protocols, just like they don’t directly use SWIFT. Instead, it’s up to businesses to build solutions and actually serve customers.
To this end, crypto exchanges have been steadily expanding their purview. Most started by trading spot assets. Then, they added more advanced trading features such as lending, margin trading, and futures. While these products are very much in the purview of traditional exchange businesses, crypto exchanges have also launched new business lines, including:
0x, an open protocol that enables the peer-to-peer exchange of assets on the Ethereum blockchain.
Maker Protocol, originally created to sustain the Dai algorithmic stablecoin. Now, its newer version, Multi Collateral Dai (MCD), enables collateralized assets.
Augur, a decentralized oracle and prediction market protocol built on the Ethereum blockchain, that allows anyone to forecast events and be rewarded for correct predictions.
And here are just a couple of examples of projects built on top of them.
Flux Market is a trading platform for derivatives on startups, built on Augur, 0x, and Maker.
BlitzPredict is a betting exchange focused on sports, esports and politics, built on Augur and 0x.
The Most Notable News
We’re seeing more and more signs of strengthening regulatory pressure, including some on the most notable cryptocurrency-related projects in 2019.
Telegram, one of the largest token offerings of all times, which raised over $1.7 billion in 2018, is facing a legal battle with the U.S. Securities and Exchange Commission (SEC). The SEC filed an emergency action and received a restraining order for the planned offering. Originally, Telegram promised to deliver tokens to purchasers by no later than October 31, 2019 but delayed the distribution because of the case.
In its announcement of the court action, SEC Division of Enforcement co-director Steven Peikin said:
“We have repeatedly stated that issuers cannot avoid the federal securities laws just by labeling their product a cryptocurrency or a digital token. Telegram seeks to obtain the benefits of a public offering without complying with the long-established disclosure responsibilities designed to protect the investing public.”
The SEC also asked the High Court of England and Wales to obtain testimony and documents from John Hyman, a former investment banker with Morgan Stanley and Renaissance Capital. He resides in the U.K.
In June 2018, Facebook announced Libra, a cryptocurrency which would let people buy things or send money to others with nearly zero fees. But it faced a lot of pressure from governments and regulators, resulting in multiple members of the Libra Association leaving (including Visa, MasterCard, Visa, eBay, and Stripe).
European Union members announced a ban on the launch of global stablecoins such as Facebook Libra in the region until they find a common approach to regulation. The European Council and Commission wrote that “no global ‘stablecoin’ arrangement should begin operation in the European Union until the legal, regulatory and oversight challenges and risks have been adequately identified and addressed.”
Also, just a couple of months ago Kik Interactive CEO Ted Livingston announced that the company would shut down Kik Messenger to focus on its cryptocurrency Kin, the target of a lawsuit filed by the SEC after its $100 million ICO raise.
It’s clear the market has changed drastically in just a couple of years. Recently, EOS raised $4 billion for its ICO; then its maker Block.One paid the penalty of $24 million for conducting an unregistered securities sale to the SEC — a mere 0.58% of the originally raised figure.
Even more important: the SEC then granted Block.one a waiver under which it was not subjected to certain ongoing restrictions that would usually apply for such settlements.
The Most Notable Project
Helium is a network meant to help IoT devices like e-scooters, simple sensors, and pet trackers get low-volume data to the Internet quickly and at a very low cost. With a Helium Hotspot, anyone can earn cryptocurrency by building a wireless network in their city and creating a more connected future.
Hotspots also act as miners on the Helium Blockchain so owners can earn a new cryptocurrency, Helium (HNT), for building the network and transferring IoT device data. In November, Helium launched in New York City and San Francisco Now, it’s operating in over 425 cities and has over 1,500 hotspots throughout the U.S.
Helium has raised over $53 million in funding from some of the most prominent VC firms in the world, including Khosla Ventures, FirstMark Capital, GV (formerly Google Ventures), and others.
It’s a great example of a company building an open, permissionless, and decentralized technology infrastructure with real-world applications.
→ Article provided by CfC St. Moritz’ trusted partner M&A PR.