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After years of semi-obscurity, 2017 saw explosive growth in the value of Bitcoin and other major cryptocurrencies. The price of Bitcoin alone surged by an incredible 1,400% in just 12 months.

Many other major cryptocurrencies have experienced price spikes that make Bitcoin’s remarkable performance seem modest by comparison. In 2017 alone, Ethereum’s value jumped an astounding 9,100%, making it the second-largest cryptocurrency after Bitcoin. Litecoin is up more than 5,600%, Bitcoin Cash is already valued at approximately $2,400, and DASH is currently valued at $1,103.

These striking trends have begun to draw significant attention by the media, including discussion by regulators, traditional financial organizations, corporations, the public at large and even some governments. 2017 has been a remarkable year for Bitcoin and other cryptos.

So what could happen in 2018? Who really knows!?

But here are 10 factors that we think could affect the popularity and value of cryptocurrencies in the coming 12 months:

Volatility

One obvious factor is the continuation of the extreme volatility that has characterized the market valuation of the top cryptocurrencies such as Bitcoin and Ethereum. In other words, the value of cryptocurrencies as measured in dollars (or other national currencies) is likely to swing wildly up and down throughout 2018.

For example, cryptocurrency entrepreneur Julian Hosp expects cryptocurrency exchange rates to be even more volatile in 2018. “I think we’re going to see Bitcoin hitting the $60,000 mark, but I also think we’re going to see Bitcoin hitting the $5,000 mark,” Hosp says, noting he’s not sure which milestone will be reached first next year.

Though this volatility is enjoyed by some savvy investors, it makes cryptocurrencies very intimidating and potentially risky for novices. Furthermore, it makes using digital currencies for transactions challenging, as the relative price is always changing.

Uphold has helped many members weather market volatility, as they can instantly move funds into traditional fiat currencies in order to shelter against volatility or hedge against risk.

Rising Rivals

At the beginning of 2017, Bitcoin made up nearly 90% of the money invested in cryptocurrencies. Currently, Bitcoin’s share has decreased to between 40-45% of the entire cryptocurrency market. The fast growth of Bitcoin’s competitors (including Ethereum, DASH, and Litecoin) indicates that 2018 will be a year for intense rivalry between established players and fresh upstarts in the crypto marketplace.

Who could emerge the winner? No one knows for sure, but there are a few things to watch for. Trust and leadership remain important even in the decentralized world of cryptocurrencies. Bitcoin’s growth has led to internal struggles within the community that have been interpreted as healthy or unstable depending on which analyst you ask. Meanwhile, expensive transaction costs and network slowdowns have plagued many cryptocurrencies, but younger entrants to the market might be quicker to adopt exciting new ways that blockchain technology can be deployed to fix these issues.

Crypto Consolidation

While dozens of new cryptocurrencies are likely to enter the market in 2018, only a few are likely to offer enough innovation and differentiation to thrive and challenge the popular incumbents. Many in the industry believe 2018 will see a period of crypto consolidation, in which a significant percentage of cryptocurrencies will fail or be culled from the herd by increasingly fierce competition.

Experts say most of new digital coins and tokens issued have almost no value and a some are even fraudulent. Conducting a token offering is very easy, but the number of ICOs will eventually decline, while the number of failed cryptocurrencies is likely to rise as people become more wary of betting money on worthless efforts or outright scams.

That said, those coins and tokens that serve a real and genuine purpose and that are adopted by users will continue to stabilize and grow. A good example of this is the Basic Attention Token (available on Uphold) from Brave, which is quickly establishing itself as a new way for making web browsing better.

Mainstream Adoption

As cryptocurrencies have become more popular, they have been praised as a technological innovation with revolutionary potential and derided as just another speculative bubble of doubtful underlying value. While this debate may rage on for years to come, the massive market capitalization cannot be ignored and greater mainstream adoption is likely to be one of the big cryptocurrency stories of 2018.

Mainstream adoption could take many forms. Conventional banks may start to accept bitcoin deposits along with related storage and financial services. If this happens, cryptocurrency derivatives will follow in short order—in fact, some financial players have already started testing the waters in this area.

As retail stores and other businesses begin to accept crypto payments, it’s possible that some cryptocurrencies could be used as transactional currencies rather than for speculative gain—although several pain points must be addressed first. Volatile currencies don’t make useful transactional currencies, as the value must be relatively stable to be accepted by the mainstream. Reducing the transaction costs and transit time are also crucial factors. This type of future isn’t as far away as some think: some retailers who already accept Bitcoin include Expedia, Microsoft, Overstock.com, and Subway.

A recent series of announcements from the Chicago Board Options Exchange, Chicago Mercantile Exchange and Nasdaq has indicated that cryptocurrency futures contracts will be one of the hot new trends of 2018. If this trend continues, the most trusted cryptocurrencies are likely to begin playing a role in strategic reserves and asset allocation models around the world.

Government Involvement

The creation of futures and other derivative markets relating to Bitcoin and cryptocurrencies means that government regulators will be supervising some aspect of the market for the first time ever. The only question is how much will governments get involved in a community that is odds with centralized control.

This year, the U.S. Commodity Futures Trading Commission approved a swap execution facility for cryptocurrencies as prerequisite to the establishment of a futures marketplace. The top securities regulator in the state of Massachusetts issued an advisory cautioning investors about the risks associated with investing in cryptocurrencies.

Other governments have also begun to take an interest in crypto. The South Korean government has proposed legislation that would limit how conventional banks interact with Bitcoin, prohibit South Korean companies from providing settlement services for cryptocurrency transactions, levy a capital gains tax on cryptocurrency income, and stop the anonymous sale of all digital coins. Government involvement of this kind is expected hand-in-hand with broader mainstream acceptance of cryptocurrency.

Power Bottlenecks

The most difficult challenge many cryptocurrencies will face in 2018 has to do with energy consumption. By some estimates, the Bitcoin network alone already consumes as much electricity as the nation of Denmark.

How can this be? The answer lies in Bitcoin mining, which is the way new bitcoins are generated while maintaining the network’s shared transaction ledger (also known as the “blockchain”). Bitcoin miners with powerful computers compete to maintain the blockchain, adding blocks roughly every ten minutes. All of this computation requires substantial amounts of energy.

Bitcoin’s incredible growth has led to equally stunning levels of electricity consumption. This has caused concerns about sustainability. Meteorologist Eric Holthaus has demonstrated that if the current exponential growth rates continue, cryptocurrency mining will consume as much energy in 2020 as the entire world does today.

To avoid running up against these very real physical and environmental limitations, cryptocurrency miners will have to develop solutions that reduce their energy consumption. Standard crypto-mining algorithms are based on computing a supermassive number of cryptographic hash functions.

However, newer cryptocurrencies have been experimenting with alternatives. Bitcoin Gold is a great example. Bitcoin Gold miners use what’s known as a “memory-hard” mining algorithm that appears to be much more energy efficient. In 2018, the killer app for cryptocurrencies may prove to be mining algorithms that could dramatically reduce power consumption.

Start-ups Jumping on the Crypto Bandwagon

As 2018 begins, many new startup companies rush to capitalize on the frenzy around cryptocurrencies. Entrepreneurs are founding startups specifically to develop blockchain technology. Many existing startups, such as the biotech firm Bioptix and the beverage company Long Island Iced Tea, are pivoting hard into crypto, changing their missions and even their names to relate directly to cryptocurrencies and blockchain technology.

Many of these blockchain-based business will use existing currencies such as Ethereum to support their own coin offerings, services and transactions.

Hype and Doom

No one can expect to know what’s coming next with one hundred percent accuracy, but we can make a decent guess by looking at factors that affect cryptocurrency historically and today. One thing about the cryptocurrency marketplace in 2018 is for certain: pundits will offer up plenty of hype and a generous helping of doom as well.

Jerry Brito described Bitcoin as being nearly as revolutionary as the internet in terms of connecting the world in new ways. Others have gone further, claiming that blockchain technology will upend society and civilization as we know it. Meanwhile, skeptics have claimed that Bitcoin is a bubble, and cryptocurrencies are comparable to the Dot Com fad of the late 1990s, or even the “Tulip Mania” of the 1630s.

As is often the case, the truth is probably somewhere in between. Sorting out the reality from all the hype and doom is the responsibility of any sober observer of the cryptocurrency marketplace in 2018. As we enter the new year, keep your eyes open as cryptocurrency continues to surprise and innovate.

Important Note:

The above content should not be considered investment advice or used as the basis for any cryptocurrency investment decision.