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What Are The New Trends In Cryptocurrencies?

The world of digital currencies has seen remarkable growth since the emergence of Bitcoin in 2008. Data by Statista shows that Bitcoin’s market capitalization rose from $1.12 billion in 2013 to over $205.49 billion in the first quarter of 2019. Blockchain’s market, the technology behind cryptocurrencies is predicted to reach a market cap of $7.32 by 2015. 

This rise will be fuelled by a compound annual growth rate of 5.5% between 2019 and 2025. This remarkable growth is riding on the increased use of blockchain technology in various service sectors. Multiple forms of cryptocurrency crowdfunding models have brought in the much-needed capital that has led to a rise in blockchain innovations.

The decline of ICOs

The initial coin offering (ICO) model of crowdfunding took the world by storm in 2017 and 2018, raising funds for multiple crypto projects. New projects use the ICO to raise capital through the sale of tokens. The ICO is in many ways similar to the IPO, with the major difference being that an IPO gives its investors public shareholding status. In 2017, ICOs raised $6,226,689,449 from 875 projects. The following year the crowdfunding model raised, $7,812,150,041, from 1253 projects. 

ICO projects are, however, classified as unregulated securities in traditional markets. This disadvantage has led to the abuse of the crypto funding model, with many project teams raising more funds than are required to run a project. Other projects have used the ICO to take money from their investors fraudulently. The ensuing uproar has brought in regulators such as the US Securities and Exchange Commission (SEC). Regulators have tightened laws around crypto funding projects, which have partly led to the decline of the ICO. As an illustration, ICOs have only raised a paltry $346,089,025 from 88 projects in 2019.

Decentralized exchanges and STOs

Analysts, however, say that downturn in the market is not a sign of the death of the crowdfunding process, but its maturation. The market is instead returning to normal after massive projects fuelled by hype and FOMO came to a disappointing end. Today, only tokens whose projects have a genuine use case will gather the investor attention they need to make a profitable ICO.

The excessive regulation has encouraged a newer form of crowdfunding known as the security token offering (STO). The STO is a cryptographic representation of real-world assets. The security token market will be worth over $10 trillion by 2020 as businesses develop use cases that require a token to function. One of the pillars of cryptocurrencies nonetheless is decentralization and STOs are too regulated for the average cryptocurrency investor. 

This is the reason why Binance, the world’s largest cryptocurrency exchange by trading volumes, launched the Binance DEX. The Decentralized trading service complements the Binance exchange and allows a trader the opportunity to trade from their wallet with other traders. There DEX trading is less cumbersome, in that there is no need of transferring tokens to an exchange’s hot wallet to trade. According to Binance, DEX trading is also faster.

What’s the next cryptocurrency trend? 

Besides the proliferation of STOs and expected growth of decentralized exchanges, the future of cryptocurrencies is also hinged on an improved crypto exchange ecosystem. There will be more educational resources on blockchain and cryptocurrencies to guide the masses into the burgeoning market. There also will a proliferation of cryptocurrency trading bots to aid high-frequency trading strategies. The initial exchange offering is also taking center place as a crypto funding model. In 2019, the year of the IEO has raised an astounding $ 2,811,143,577.

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