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VeradiVerdict - 2019 Crypto Predictions -Issue #18

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Hi, I am Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional
 
January 1 · Issue #18 · View online
VeradiVerdict
Hi, I am Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing into blockchain companies and cryptocurrencies. I focus on early investments and want to share my thoughts and what’s going on in the industry in this weekly newsletter.
If you were forwarded this email, you can click here to subscribe.

Editorials
2018 has been a long, eventful year for crypto and while prices have dropped significantly since the start of the year, there have been strides made in the company building side that give hope for 2019.
As we head into the new year, one of the most common questions I get asked is what I see upcoming for the next year. While I don’t like predicting crypto price, I think it would be fun to think about a few upcoming trends and see if they shake out in the next year.
Enjoy and Happy New Year to everyone! To a great 2019 for crypto!
Crypto Predictions for 2019
Consolidation - This year we’ve already seen two of the largest acquisitions in the space with Bitstamp getting acquired by NXMH and Chain getting acquired by Stellar in addition to others like Earn and Paradex. Coinbase hired Emilie Choi to head up BD and corporate development and other established crypto companies are looking at both investing into early stage startups or acquiring. Traditional tech startups are even spending more resources on figuring out their blockchain strategy, as Facebook has hired more employees for its blockchain team and is rumored to be developing a stablecoin for payments in Whatsapp. In 2019, I see a ramp-up in acquisitions by established players like Coinbase, Circle, and Bitmain but also a major significant acquisition by a traditional tech giant.
STOs - Security tokens have been one of the hottest topics of the year. With regulations becoming more of a focus, projects are treating their tokens as if they are securities. As infrastructure is being built for institutions to speculate on non-security tokens, there is a belief that they are more likely to speculate on security tokens, asset-backed tokens that could represent ownership/profits in art, REITs, funds, etc. Recently, Harbor, launched the first institutional-grade security token offering by offering an investment opportunity into a student housing real-estate property owned by DRW. In 2019, I think that STOs (security-token offerings) will gain traction through issuance platforms but will fail to meet expectations in becoming a largely traded asset class as it will take some time for this sector to take off due to education, regulation, and infrastructure.
Death of ICOs - Over $20B has been raised using initial coin offerings in the past 2 years, and we are likely to see a high-percentage of them fail due to not being able to execute because of regulations and/or operational capital. The latter reason could be attributed to the project not actually needing a token, mismanagement of treasury, or just not being able to achieve product-market fit. Recently, we’ve seen Basis shutdown due to regulatory hurdles. In 2019, I think that a lot of the ICOs that came to market early or in early 2018 will shut down and some of those will be very high-profile.
Institutional Capital - This year we’ve seen some pretty sizable and high profile funding rounds for infrastructure that will help onboard institutional investors into the space. On the custodian side, Bakkt, Anchor, and Bitgo have raised rounds. On the trading execution side, Omniex, Tagomi, and Lumina have raised rounds. In 2019, while the infrastructure is being built, it will take some more time for institutions to get comfortable around risk and regulations and therefore 2019 won’t be the year that they come in a big way.
Scalability - This year, we’ve seen a ton of projects focused on scalability and most of the capital into tokens this year by Pantera has been surrounding projects tackling this. Coda, Algorand, Dfinity, Thunder, Oasis, etc have raised significant rounds on the Layer 1 side. Celer, Lightning, and Bloxroute have raised significant rounds on the Layer 2 side. In 2019, I believe we’ll see launches of most of these scalability projects and at least one of them to get gain solid traction to compete as a next-level platform for smart contracts.
Digests
The Most Essential Crypto Long Reads 2018 – Nathaniel Whittemore – Medium
Most Influential 2018 Archives - CoinDesk
Why Bitcoin Matters for Freedom | Time
Bitcoin in 2019: Analysts See Institutional Investors Wading into Crypto
News
Ledger: Recently Discovered Wallet Vulnerabilities Not Critical
Hackers pocketed $878,000 from cryptocurrency bug bounties in 2018
Chinese Survey Finds Nearly 40 Percent of Respondents Would Invest in Crypto
In the Tweets
Pomp 🌪
There is a non-zero chance that Bitcoin will become the global reserve currency. Probably the most incredible risk/reward opportunity many of us will see in our lifetimes. What a time to be alive. 🙏🏽
6:17 PM - 18 Dec 2018
Jameson Lopp
The number of Bitcoin ATMs doubled to 4,000 in 2018, continuing a 3 year trend of 100% year over year growth. https://t.co/mfYDxxkT1l
11:25 AM - 29 Dec 2018
Electrum
There is an ongoing phishing attack against Electrum users. Our official website is https://t.co/aHiZIZH54e Do not download Electrum from any other source. More on the attack here: https://t.co/x5mPVspKfO
7:57 AM - 27 Dec 2018
Peter McCormack [Jan/3➞₿ 🔑∎]
1/ So here is a thread on how I turned $32,000 into $1.2m and back to pretty much zero (once taxes are paid). Just note, I am not bitter or salty in any way at all, the last 2 years have been an amazing ride - travelled the world, been wealthy, been poor.
4:43 AM - 13 Dec 2018
Regulations
Mainstream Crypto Adoption: A Possible Tax Nightmare
Wall Street Quietly Shelves Its Bitcoin Dreams - Bloomberg
New Indian Governmental Committee Favors Legalizing Cryptocurrencies, Media Reports
New Products and Hot Deals
Samsung Seeks UK Trademark For Cryptocurrency Wallet | Cointelegraph
Bakkt Raises $182.5M From Microsoft And Other Big-Name Investors - Bitcoinist.com
Announcing EnjinX: Ad-Free, User-Friendly Ethereum Blockchain Explorer
Meet with Me
Los Angeles, January 11
Let me know if you are in the area and would like to meetup.
Additional Info
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