Cryptoyear 2018: what’s going on in the industry?

January 21

CoinFly analysts knocked out the results of the past 2018. How did it turn out for the world of the blockchain and cryptocurrency?

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The year 2018 has been nailbiting for the crypto industry: currencies value once seeming to head to the Moon has suffered the tremendous drop. At the same time according to Google information, the “What is Bitcoin” search query gained the lead into a “What is?..” category, while “How to buy Ripple” ranked #4 amongst “How to” queries.

So, was this year good or bad? Let’s try to clarify that with analysts of the service for miners СoinFly.cc!

Old projects, new projects

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2018 has been marked by a bunch of joint project launches. Of the largest, there were: the deal between IBM and Stellar (regarding the future launch of the cross-border payment blockchain-based system), three Binance exchange deals: with Trust Wallet (enriching the product portfolio with the decentralized e-wallet), MSX PLC (joint digital trading platform for security tokens launch preparation) and TRON Foundation (charity work), the deal between TRON and BitTorrent (P2P protocol and torrent client acquisition), Dow Jones Media Group and Brave (future test of the blockchain-based content delivery system), Blockchain.com and Ledger (joint launch of the e-wallet), Litecoin Foundation and TokenPay (build-up of Litecoin integration into WEG Bank AG services) and three Coinbase exchange deals: with Earn.com (launch of the educational platform with token rewards), Paradex (decentralized exchange acquisition) and Circle (the joint stablecoin upcoming launch).

The experts await for the trend to joint projects launch to hold in the future - that was mentioned at the annual Stanford university Blockchain Conference.

As to new individual project launches, in 2018 there were a good few of them despite the depressed mood that dominated the market. The quiet conditions let the developers polish the planned project and launch them without the hustle and bustle. What is more, products and protocols able to lay the groundwork for the future crypto industry progress were brought to market, among them, Lightning Network scaling blockchain solutions, and Open Finance Ethereum infrastructure finally started shaping after Augur, Compound and dy/dx launches.

Interestingly, formerly staid financial marketeers turned to crypto industry: for instance, Cash App, Robinhood, and eToro invested millions into the crypto market while also launching own fiat crypto platforms. Ethereum principal competitors including EOS, Tezos, and TRON lanched their mainnets.

But 2018 turned out to be a wreck year for many ICOs, mainly with the efforts of USA regulatory authorities: Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC). As it happens, even musical producer Dj Khaled and boxer Floyd Mayweather faced charges in the USA in November for not the ICO promotion payments making public.

From fails to scams: many projects of 2018 turned out to be fraudulent. Some of the most odious are Fantasy Market porno startup, Benebit project, LitePay service, Kodak KashMiner, Ifan and Pincoin projects managed by Modern Tech company, Turcoin - “the first cryptocurrency”.

The case of the Upbit exchange from South Korea is not that clear yet: the creation of the largest South Korean messenger Kakao Talk denies charges of scam. That is yet one more reason to see how the gander hops in 2019.

Cryptocurrencies

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According to ShapeShift head Erik Voorhees, the vast amount of the scam startups is one of the major cryptocurrency industry problems, the rest being resource shortage and lack of breakthrough disruptors. Voorhees supposes virtual assets to replace fiat money in the not-too-distant future but it is necessary to attract more shareholders into the industry as well as to work against fraudulent activities more effectively.

Whatever the glittering future, cryptocurrencies faced fall in 2018. Apart from Bitcoin losing more than 84% of its value Ethereum (minus 94% of the value), Bitcoin Cash (minus 97%) and XRP alike (minus 93%) suffered from the tremendous drop.

Some currencies give cause for positive expectations: so, for example, the yet another Ethereum hard fork, Constantinople, is to provide for the transition to the proof-of-stake algorithm and to decline the currency inflation changing its blockchain. But some news is not so positive: mining rewards is to be reduced.

Bitcoin Cash has suffered the hard fork and now even its creator Roger Ver finds difficulty in making the forecast of the further course changes while certainly keeping a positive attitude.

XPR (Ripple) amid the descending tops struggles for the second position amongst cryptocurrencies - its competitor is Ethereum. Experts give their guarded prognosis but see the Ripple future more like positive.

As from December 2017, all the main cryptocurrencies lost more than three-quarters of their net value. All the ecosystem market-based evaluation has first reached its historic highs of more than half-trillion but then went down and currently is a shade over than $100 billion.

Mining

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Talking of the ecosystem. All the changes in mining processes are of prime importance for currencies that use the proof-of-work algorithm. The higher hashrate the more secure is the network due to 51% attack steep cost increase. Bitcoin hash rate in total has nearly doubled during this year but has suffered the drop at the end of November when the currency passed the $6000 psychological milestone.

The hash rate war unleashed in Bitcoin Cash network, triggered by the November hard fork dividing the currency into Bitcoin SV and Bitcoin ABC.

The major Chinese miners forced out of the country seem to have started the global buildout: BTC.top mining pool opened in Kanada, ViaBTC - in Island and USA, Bitmain (the investor of both) - in USA and Russia; this one, however, risk to get into trouble in case if it’s IPO request is not approved, as well as Canaan Creative and Ebang).

Nvidia after its drop in prices caused by the corresponding decrease in miners’ interest has finally put on record that it won’t now tilt toward crypto industry, the low yield being named the main reason.

AMD, in contrast, having entered the mining market in the last year is not going to leave it, the company announced the upcoming launch of as many as 8 devices in cooperation with other companies.

Sapphire has become a new mining player this year, as well.

Other vendors in 2018 kept supplying mining market: Bitmain presented several ASICs and WiFi mining routers, and we saw ASIC and mining TV from Canaan Creative. Interesting ASICs were presented by Innosilicon, Spondoolies Tech, GMO and Bitfury.

But some companies faced serious difficulties. Giga Watt declared bankruptcy, while Asus, Gygabite and several other Taiwanese manufacturers report of the severe drop in sales and the upcoming sales slowdown trend. According to the local sources, “miners sold by the kilo” has been the most popular search query on the main Chinese search engine Baidu for some time.

Braiins OS by Braiins Systems launch was a big story for the industry. The company itself is the operator of Slush Pool, the very first mining pool. Opensource OS is Linux-based and created to give users full hardware control and standardize its operational principles and cooperation with Slush Pool.

Technological advances are always followed by new risks. According to the last McAfee report, the coin miner malware threat has increased dramatically this year: total malware has grown almost 40 times. According to McAfee, IoT devices such as IP cameras are typically involved.

InfoWatch reports on illegal mining on Tesla resources: hackers gained manufacturer’s confidential access using Google Kubernetes exposure (the service is used for managing cloud applications). The intruders used low-level process utilization and specially designed software avoiding the direct connection to the mining pool to keep their actions in the dark for some time.

Crypto over the world

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Cryptoindustry has clearly become integral to the global financial ecosystem.

USA faces the rage of  Securities and Exchange Commission (SEC). The regulating authority hasn’t approved any of the applications for Bitcoin-ETF, either declining it directly or postponing the decision on the plea of inability to guarantee no market manipulations.

China continues its aggressive policy towards crypto industry. Bank of China placed on record plans to terminate airdrops, free-of-charge token distribution.

The Cyberspace Administration of China issued “The Regulation for Managing Blockchain Information Services” draft. The document is to stiffen the regulations for the blockchain providers, not least because these technologies were used for bypassing the “Great Firewall’. After receiving the public feedback the authority will proceed with the passage of the corresponding law.

Chinese judicial organs have passed some more progressive verdicts at the same time. First, the Beijing District Court recognized Chinese civil rights for free Bitcoin trading in exchange, then the Hangzhou Internet Court brought in a verdict that data stored by using the blockchain technologies is to be received in evidence in court.

South Korea seems to be encouraged by their neighbors stern measures. First the country’s authorities announced a ban on blind crypto brokering, then digital assets trading companies were excluded from venture business, then even announced the plans to tighten regulatory controls over the crypto market and to ban manipulations on the cryptocurrency stock exchanges in case of failing to meet safety requirements developed for the major financial institutions.

Japan is to join the strict policy of the Asian tiger countries: country banned the anonymous cryptocurrencies utterly, then the Financial Services Agency published unified hardened rules binding upon all the cryptocurrency providers.

Venezuela, on the contrary, goes on with the launch of national cryptocurrency petro despite the already imposed USA sanctions and the resisting of the National Assembly. Petro is a pretty controversial project: Venezuela citizen couldn’t buy this cryptocurrency for bolivar (country’s national currency), president Maduro’s statements on the project’s financial performance caused great doubts, but yet the Venezuelans’ retirement savings are already converted into petro, Venezuela is announced to trade in oil for petro only, and cryptocurrency can be officially purchased on public treasury or officially certified exchanges.

In Europe, crypto politics seem to be somewhat bitty. For instance, the General Data Protection Regulation (GDPR) adopted in May conflicts the implementation of the blockchain technologies that make any once entered data changes or removal impossible. European Parliament has also assumed measures to prevent anti-money laundering, increasing of cryptocurrencies countries.

The G20 final declaration proclaimed the necessity of cryptocurrencies regulations and creation of the unified tax for the digital system.

Cryptocurrencies regulation working party was created in France, and the country’s parliament rejected the legislation amendments relaxing the harsh taxation regime for cryptocurrencies owners.

Germany’s authorities, at the same time, made a decision not to impose VAT on purchases made with cryptocurrency, and the Federal Ministry of Finance dismissed an idea to regulate mining processes.

As to Russia, it is making the necessary preparations to pass the bill regulating crypto field, while “The digital rights bill”, the bill “On digital financial assets” and the bill “On attracting investments using investment platforms” have already been passed in a first reading. Various authorities including Central Bank and the Ministry of Communications and Mass Media sided for these initiatives.

Well, the year 2018 was challenging but exciting. What will crypto year 2019 bring? We can only state with certainty that it won’t be boring!

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