The total crypto currency market cap has dropped 109 billion in 21 days. 53 billion have been wiped out since the SCE’s announcement that it will delay the CBOE ETF to September 30. The news sped up the selling of altcoins and a sense of panic set in. The media and major banking figures believe the bubble has finally burst. Some are going as far as calling it an extinction level event. Yet, despite the eruption of fear and FUD, Bitcoin refuses to disappear. Instead it maintains 53% dominance on the market. And the question is what keeps it from falling apart?
Bitcoin has always inspired a new generation of dreamers and produced champions who defend the idea against its critics. In March 21, 2018, Jack Dorsey, CEO of Square and Twitter stated that “Bitcoin would become the world’s single currency in ten years.” He doubled down on his convictions by taking part in a $2.1 million financing of Lighting Labs, the developers behind Bitcoin’s Lighting Network. In May 12, 2018, billionaire Michael Novogratz called it “Almost irresponsible not to invest in Bitcoin.” Two month earlier, he raised $250 million to finance the launch of Galaxy Digital, a crypto currency bank that will go public in Canada.
The Winklevos brothers shook up the rejection of their Gemini Bitcoin ETF and stated that “the vast majority of Wall Street firms are not participating in Bitcoin, but this will change over time.” And today, Pantera Capital’s CEO Dan Morehead called cryptocurrencies “A superior form of currency.” All of these financial leaders’ optimism is puzzling but somewhat supported by certain factors.
Dan Morehead cited the blockchain as the “final piece” that will complete the internet’s ability to move funds efficiently and cheaper. The blockchain in fact offers a number of improvements in security and information management over existing financial structures. The ability to manage information over a distributed network assures security by separating the information in nodes instead of a single, vulnerable, central database. A standard global blockchain network would make international money transfers infinitely easier than current cumbersome conversion systems. For example, the Asian remittance market is a gauntlet composed of different policies, incompatible software, and currencies. However, OmiseGo is an open payment platform that promises interoperability among all South East Asian nations; making it easier to transfer money among their banks.
The Lightning Network is also improving the scalability of Bitcoin through payment channels and privacy. Recently SatoshiTweets became the first company to accomplish micropayments using the lighting network. And now Bolt (Basic of Lighting Technologies) promises to make Bitcoin transfers through the Lightning Network private. Artificial intelligence is also fast becoming a new technology merging with the blockchain and used to forecast the market through crowdsourcing and information aggregates. And lastly, cloud mining and improved ASIC hardware is making mining profitable despite the bear market.
The interest in crypto currency has attracted an unprecedented wave of capital into the space. By the end of June 2018, 537 ICOs raised $13.7 billion. The number of crypto funds has reached 466 with $7.1 billion under management. Of these, approximately $248.4 million represent fresh new capital invested in 2018. And approximately $1.3 billion has been raised in new exchanges, start-ups, wallets, artificial intelligence, and blockchain projects. This figure expands daily as new partnerships raise capital for a variety of projects. For example, Yesterday, Goldman Sachs and JP Morgan announced yet another partnership to develop a new blockchain project called Axoni. The project is based on the Ethereum blockchain and raised $32 million.
At the end of the day, the existence and prevalent growth of Bitcoin is mostly derived from faith. Faith in the potential for global financial change and profits. The blockchain has proven such a good idea that dozens of partnerships and national projects strive to develop their own permissioned DLT. Bitcoin has open possibilities for an infinite number of applications, derivative markets and technological innovation. Venture capital investors see these opportunities and instead of fading, they are expanding the development of the custody infrastructure. Regardless of the condition of the market, Bitcoin is not only likely to survive but thrive propelled by imagination and desire of its believers.