Cryptocurrency prices climbed this week, with the sector's total market capitalization breaking through the $150 billion barrier. That figure represents a $132 billion injection of capital since Janua
Cryptocurrency prices climbed this week, with the sector's total market capitalization breaking through the $150 billion barrier. That figure represents a $132 billion injection of capital since January 1, when the entire cryptocurrency market stood at $17.89 billion.
Sergey Nazarov, founder and CEO of SmartContract.com, views the $150 billion mark as "extremely conservative when you look at the back-end infrastructure that blockchain-based systems are set to replace or completely reform in the next five years." The financial systems securing institutional securities trading, insurance, and trade finance exceed this sum many times over. "What is the value of the systems that currently secure every institutional securities transaction, insurance transaction, and trade finance transaction worth?" he asks. "Much more than $150 billion." He points to World Economic Forum projections that blockchain systems could represent 10% of global GDP by 2027, "which is in the trillions, and many of those same global thought leaders now feel those projections were conservative."
Bitcoin hit $4,280 on Wednesday, up 3.5% for the week, 53% for the month, and 640% for the year. The rally coincided with activation of SegWit, a software upgrade addressing transaction malleability while enabling faster transactions and improved network scalability.
Ether, the Ethereum network's native cryptocurrency and second-largest by market cap, trades at roughly $325, up 55% this month and 3,150% since the start of the year.
Daniel Zakrisson, co-founder of Cofound.it, a platform connecting startups with investors and advisors, sees the market approaching a critical threshold. "In all networked systems, there is a point when the value of being in the system becomes larger than what each individual participant puts in," he said. "The crypto market cap reaching $150 billion market today underlines the fact that we are quickly approaching this point; the number of crypto market participants is growing exponentially and the first use cases are reaching mainstream adoption."
Initial coin offerings have emerged as a dominant funding mechanism for blockchain startups. Since January, token sales have raised $1.48 billion, with July alone accounting for $574.48 million. Zakrisson described the shift: "This summer there has been more venture funding raised via blockchain token sales than via traditional early stage funding in the IT sector on a global level. This is a movement that has just started but that is already shifting the balance and structure of the incumbent venture capital ecosystem."
Yesterday, Estonia's e-Residency program managing director Kaspar Korjus proposed estcoin, which could make Estonia the first nation to conduct an ICO for a government-managed cryptocurrency. China and Russia have explored launching their own digital currencies.
