For this article, the word cryptocurrency intends to cover all currencies, assets, and utility tokens built on blockchain systems. In the case of ClearCoin, we have a functional utility token that accesses advertising and media services.
In 2017, I have watched the cryptocurrency market capitalization (valuation) move between $17 billion and over $521 billion at the time of this writing. In 2013, I was at the 500 Startups global accelerator where I encountered a Bitcoin-focused startup. In the fall of 2013, the cryptocurrency market capitalization was below $10 billion and making news for crossing the $10 billion mark. The cryptocurrency market capitalization remained fairly flat until 2017 where we have seen a steep curve up. Mainstream adoption is fueling the sharp curve. Whether the current market capitalization represents a bubble is not today’s topic. Today’s topic is that blockchain and cryptocurrency are proving their use cases and adding new use cases.
Some experts say that the internet was about the exchange of information and blockchain is about the exchange of value. Cryptocurrencies using blockchain are bringing about a market of perfect liquidity for a variety of goods and services. Perhaps one day all goods and services will be tracked on a blockchain. In Adam Smith’s book The Wealth of Nations it is discussed that money substitutes having to trade bread for beer. One can use money to buy bread or beer without having to trade bread for beer directly. The cryptocurrency economy seems to be furnishing utility tokens for a variety of goods and services. Time will tell if every good and service needs its own token. ClearCoin’s use case of blockchain for the advertising industry calls for the ClearCoin (CLR) token to power its network.
Cryptocurrency has future use cases like interplanetary commerce and the ability for robots and artificial intelligence to transact in an accurate and secure way. Since the use case extends beyond just humans, the intrinsic value of cryptocurrencies increase (even though Warren Buffett may not see the intrinsic value yet). The cryptocurrency market capitalization added at least $500 billion in 2017 and the total number of initial coin offerings (ICO) and token sale fundraising is $3.7 billion.
The $3.7 billion of token sale fundraising is a drop in the ocean of the $500 billion market capitalization increase. Billionaire investor Michael Novogratz predicts a $5 trillion cryptocurrency market by 2022. Diversification of the crypto economy is fueling new use-cases for tokens and crypto assets. It’s even possible that one day the cryptocurrency economy will become the global economy. Other exotic use cases like interplanetary transactions or as a means to transact with robots and artificial intelligence remain possible.
I recently spoke to a company that completed a $100 million token sale with 30% of the proceeds coming from fiat currency. We have heard that Coinbase is the #1 app in Apple’s app store. These are signs of why the market capitalization of cryptocurrency continues to increase. People are placing their fiat currency into the cryptocurrency economy. People have an inherent belief in the technology.