Welcome to the 22nd edition of crypto roundup brought to you by HEAT.
Crypto Markets and Bitcoin's Role
When we left off last time, we talked about crypto-asset prices (and also the entire market value) rising shartply. Well, this time around, the market remains even more exuberant.
As of this writing, the Bitcoin domination index is down to 44.4%, i.e. Bitcoin only accounts for 44.4% of the total crypto-asset market capitalization. This is fairly unprecedented in the short-but-really-interesting crypto history (yes, we predict crypto-history will be a real thing not too many years from now, because everything in the space ages in super-accelerated dog years!)
Even a brief crash towards the end of May was reversed fairly quickly, and the market reaches new highs. Here's the YTD market for all the crypto-assets excluding Bitcoin -
And here is the domination index of Bitcoin and rest of the crypto-assets. Notice the sharp drop in Bitcoin domination from the beginning of the year. As we said, fairly unprecedented.
As of this writing, the total market capitalization of the crypto-asset industry is $92 billion, fast approaching the magical $100 billion mark.
Bitcoin's role is diminishing fairly rapidly. It remains to be seen if Bitcoin is able to get its crown and glory days back, but we wouldn't hold our collective breaths for it to rebound to its historical domination index, especially with all the drama around the block size increase going on right now.
We won't go into too much detail, but Bitcoin is on track for a "UASF" (User Activated Soft Fork) to activate SegWit, which would allow better scaling now and in the future, while also allowing layer-2 solutions to be built more easily. However, the way the soft fork is designed currently, with an end date of August 1st in mind, can cause a serious chain split if the miners don't get on board. We'll see how this plays out, since it could affect the entire space, not just Bitcoin.
The Rise of 'Meta-Tokens'
Lost in the chaos around Bitcoin is the fact that many of the crypto-assets today are meta-tokens instead of their own blockchain. This is a trend that is fast emerging and becoming dominant in the nascent 'token economy' in the crypto space.
As expected, Ethereum remains the dominant platform on which to launch your tokens, especially via Initial Coin Offerings (ICOs). However, other platforms, including Waves, Lisk, NXT, Counterparty and our very own HEAT are all alternative platforms. Each one has its own special advantages and disadvantages. For instance, HEAT use the sidechain model that greatly help with scalability. This will likely become a factor down the road when traditional phase-1 blockchains show poor scaling for global use-cases.
This graph really shows how the rise of Ethereum has contributed to meta-tokens and their rapid rise.
ICO Mania Shows No Sign of Slowing
The ICO mania continues on, with a serious debate in the community on how best to manage these. The problem with ICOs is there is a real sense of FOMO (Fear of Missing Out) on the next big thing, so everyone wants to 'invest' without even doing basic research on the economics and financial aspects of the token. This causes many issues, like projects raising way more than they want to. If they cap the sale, it is finished in a few minutes with the supply going to big whales instead of everyday users.
Brendan Eich's Basic Attention Token (BAT) suffered form the latter. The ICO sold out in just 2 blocks! That was $35 million raised in 24 seconds, perhaps the fastest rate of money flow into a new project without a working product in history! This was the whale distribution -
In this market, it is hard not to raise so much capital. No wonder sites like ICO Alert list scores of ICOs ongoing right now.
Beyond the Hype - What HEAT is Working on
Let's take a step back from fancy graphs and crazy money and focus on the bigger picture of blockchains, crypto-assets, and its potential to change the world. The community and users are really, really small. Many of them have just come into the scene over the last few months, and are mostly speculators instead of avid researchers or investors.
So how do blockchains behave in a world where instead of a few hundred thousand people using them, it is perhaps billions?
Firstly, we need better risk management for crypto-asset exchanges. This is a must, because you're talking about serious money flowing into the space. If a few million people can cause the market to reach close to $100 billion, imagine what the next 1000x increase in usage could bring.
Decentralized exchanges are in a nascent stage, but they are showing growth. Here's a graph of the transaction volume on HEAT for example, recently exceeding $1 million -
Another is scalable architectures built for the majority of programmers in the world who could leverage their existing knowledge and know-how to build applications on blockchains instead of siloed servers.
To that end, HEAT is building out a Microservices architecture as an alternative to traditional smart contracts. This provides developers with far more flexibility - basically, these are Java programs that can run on the blockchain while retaining their ability to connect to legacy systems. This is powerful stuff, and we'll likely see a greater interest going forward. If you want to learn more, read the monstrous Github readme.