3 Predictions for Digital Currencies In H2 2017 (Hint: It’s All To Do With ICOs)

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by Daniel Mark Harrison · 7 min read
3 Predictions for Digital Currencies In H2 2017 (Hint: It’s All To Do With ICOs)
The tokenisation of the wider world is about to push digital currencies skywards.

Following huge ICO raises, the second half of the year will pound the same theme. Daniel M. Harrison explains some overlooked consequences and opportunities.

With prices shooting skywards in many digital currencies, a question on the minds of many who are holding onto big gains in Ethereum and Bitcoin is: what happens next? Are we likely to see an implosion of the price growth that until now has been nothing short of spectacular? Or are more gains on the way?

There are a variety of reasons we can predict with fairly precise accuracy that digital currencies are here to stay for a while. The primary reason we should expect continued expansion without dramatic contraction is that this is a network-enabled value chain. We’ve never seen this before. (If you don’t understand what I mean by this go here and read about Blockchain value configurations first.)

Digital currencies, by virtue of taking into account a value network configuration in addition to being value chain units of supply-demand capacity, means the value chain properties (i.e. prices) are somewhat extraordinary in the early stages. Since Blockchain units are simultaneously a unit of value chain, value shop and value network configuration, that means their network properties are directly linked to their chain properties, thus creating enormous price rises in the underlying units as more users jump onto the networks. We’ve never seen a comparable innovation before, so we aren’t used to these price increases. But sure enough, as their networks expand in size, we should expect the units to increase many, many multiples.

We can be more specific than this however. Here are three predictions for the second half of 2017 then:

Ethereum Overtakes Bitcoin As The World’s Number 1 Digital Currency

Peercoin Gets Back Among Its Peers

Initial Token Offerings (ITOs) Become Dividend-Enhanced

Ethereum Overtakes Bitcoin As The World’s Number 1 Digital Currency

When Ethereum leaps up over $480-$550 (around there), there’s going to be a huge cross-over event: specifically, the world’s largest digital currency is no Bitcoin, but instead, it will be Ethereum.

For anyone who knows anything at all about what’s going on in the Blockchain development sphere, the question of whether or not Ethereum will overtake Bitcoin as the Number 1 digital currency by market capitalisation is not a question of speculative curiosity but rather a matter of fact. Ethereum employs most of the architecture for the Internet of Things economy that we’ve been talking about in the mainstream press for the best part of the past 3 years now. The smart properties of its network and the “unpacked” aspect of its value configuration vs. Bitcoin’s more tightly-knit Blockchain functionality means that if Bitcoin was to stay in top spot, then Bitcoin would be highly overvalued in terms of end-user and underlying technological functionality.

The only reason that Ethereum has traded at a discount thus far to Bitcoin is simply that Ethereum’s network is much more complex and much, much newer by design: naturally, there is a risk associated with both these properties. This risk commands a price discount relative to the risk of owning a fraction of the network growth going forward. Most of that risk now is disappearing however, as more engineers are engaged in maintaining and developing the Ethereum network in the form of both Ethereum developers and the multitudinous others brought onto the scene in the form of token developers and so forth.

Peercoin Gets Back Among Its Peers

Peercoin was one of the early digital currencies, and in fact it was the very first to employ a technical concept known as Proof of Stake (PoS) vs. Bitcoin’s Proof of Work (PoW) mining standard at the time.

Peercoin transactions are not anonymous, and that plus a few other more exciting innovations in the digital currency space among peers has meant that PPC has lagged well behind the rest of the digital currencies in terms of really climbing upwards in this year’s asset value rally.

But PPC is a solid, well-built, long-lasting unit of virtualised value that has stood the test of time. It’s lack of anonymity is really a very irrelevant consideration for many later-stage adopters, and the digital coin has many of the ideal properties for ICO issuance. Despite comprising a somewhat smaller share of the digital currency market than comparative peers such as DASH, it’s Beta (volatility) is much lower, making it a more reliable store of value consistently than other digital coins. That’s something that makes it a very attractive store of digital value for entrepreneurs engaged in ICOs, who need to simultaneously retain the value they raise at the point of ICO even as they work on generating more value for users.

Peercoin almost certainly belongs among the top 10 digital currency leaders, and at $50m market cap, is outrageously cheap right now. It has a faithful user community – which is vital for network propagation over the longer term – and volumes have remained consistently strong throughout the previous year. If it was back on the Top 10 digital currency leaderboard, it would be worth roughly 20 times as much as it is today, so there’s substantial price appreciation embedded in this little gem lying at the bottom of the deck for now.

Initial Coin Offerings (ICOs) Become Dividend-Enhanced

One of the things that is most striking about token issuances is that none of them have any underlying earnings. Instead, Initial Coin Offerings (or Initial Token Offerings as they are now known) are used exclusively right now to fund venture capital, seed-stage projects with little-to-no underlying history, performance or cashflows.

That’s all about to change. This prediction I suppose is a little bit of a cheat, since my own firm DMH&CO is actively leading the development of the very first income-backed ICO. The launch of that ICO will for sure rock the token market completely.

The reason for this is simple: imagine, when holding a single unit of Ethereum today at around $400, it suddenly paid out $80 in earnings into your wallet. What do you think would happen to the price of Ethereum all of a sudden? That’s exactly the way a dividend-enhanced token is designed to work. It’s ground-breaking, and seeing as these token issuances will issue dividends in digital currencies – which as I pointed out up above, will continue to rise aggressively in value as a result of the interconnection between their value network and value chain attributes – the dividends themselves will be in massively high demand among digital currency users since they will represent “free crypto”. What this means is that instead of mining new crypto, in many cases it will just make more sense for someone to leave that stuff to the heavy duty guys in China and the Philippines, and instead purchase high-yield dividend-enhanced tokens with a strong forecast Crypto payout trajectory.

What makes these tokens more difficult to put into circulation is the simple fact that first, you have to have cashflow-positive businesses to put underneath the tokens so that the dividends can materialize. But for firms like my own and for those of my partners, that’s an easy feat to handle, since pretty much all we have is cashflow-positive investment positions. Thus, the transformation of the token market into something resembling a hybrid stock market-digital currency trading market will begin to emerge by December 2017.

Summary: Token-Driven Growth

These are intuitive predictions – it doesn’t take that much to see how they make sense right now. Specifically, underlying them is a very central theme: the propagation of the digital token market, and by extension the ICO market as a whole. This is where you should expect to see the bang that moves the buck in the forthcoming half of this year.

Altcoin News, Bitcoin News, Blockchain News, Cryptocurrency News, Editor's Choice
Daniel Mark Harrison
Independent Author Daniel Mark Harrison

Daniel Mark Harrison is a Chairman & Chief Executive Officer of global investment company Daniel Mark Harrison & Co. (DMH&CO), a Family Office with offices and active operations in Singapore, Bangkok and Hong Kong. He is also Managing Partner of FinTech and blockchain venture capital firm Monkey Capital as well as the author of The Millennial Reincarnations, a novel published in 2015.

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