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Last week, statements by Binance CEO Changpeng Zhao (aka CZ) and co-creator of Ethereum Vitalik Buterin urged the community to speculate about the possibility that the cryptographic market will achieve a yield of 1,000 over the long term.
On September 8, Buterin stated with the awareness of the cryptocurrencies of the general public and the mainstream that peaked at the end of 2017, it is not realistic for the evaluation of the encrypted market to increase one billion times from its value current of $ 200 billion. [19659002] A thousand-fold increase from $ 200 billion is $ 200 trillion, which is 70% of global wealth that includes gold, reserve currencies and other traditional assets that are used as asset management products.
"The blockchain space is coming to the point where there is a ceiling in sight." If you talk to the average educated person at this point, they probably heard about blockchain at least once. Opportunities for a further 1,000-fold growth in anything in space. "
Misreporting on the initial declaration of Buterin
Considering the context and the Buterin declaration on the growth of Crypto awareness, the claim of the co-creator of Ethereum was rather simple. While it is possible that decentralized systems and applications (DApp) achieve millennial growth in activity and in the user base, it is unrealistic to expect cryptocurrency evaluation to exceed $ 200 trillion at any time.
However, sensationalized titles and off – the – post posts on social media wrongly misled many members of the cryptocurrency community to misunderstand Buterin 's statement as a pessimism on the growth rate of the cryptocurrency industry.
As a growing number of people began to question Buterin's motive in his rather simple affirmation, he published a explanation of follow-up on social media reaffirming that, although efforts are made to see cryptographic market valuation reaching $ 200 trillion, an exponential growth in the use of DApp and blockchain protocols is possible. [19659004] "To be clear, I never said that there is" space for growth "in the cryptosystem, I said that there is no room for increases of 1000 times. price of 1000 times from today means 200 trillion dollars in crypts or a whole 70% of today's global wealth in the crypt.What I have actually said is that, since vast portions of the population have already heard of crypts, a further growth of the crypt must in any case derive from the depth (ie from actual use) and no longer attract attention. "
Buterin's view of long-term growth in the cryptocurrency market is reasonable, since it would undoubtedly be difficult for cryptocurrencies to represent the vast majority of world wealth. It would ask the banks that manage the offshore banking sector $ 30 trillion dollars and investors to hold wealth in traditional stores of value such as gold to switch to cryptocurrencies as the main reserve of value
Instead of expecting an unrealistic return, Buterin noted that it is important to focus on the growth of DApp and protocols to accelerate the process of increasing the use of systems based on blockchain and cryptocurrencies.
At present, most people – in both the cryptocurrency markets developed, such as the United States and Japan, and restricted markets, such as India and China – are already aware of the cryptocurrencies and protocols of blockchain. The next phase of blockchain technology may require a shift from centralized platforms to decentralized alternatives, which could be difficult given the efficiency discrepancy between centralized and decentralized services.
CZ deems possible a 1,000-fold increase
Changpeng Zhao, the chief executive of the largest cryptocurrency exchange in the world, Binance, better known to the community as CZ, stated that a return of thousands of times from the current market valuation is "absolutely" possible, offering an extremely optimistic forecast on the future trend of market prices.
CZ stated that $ 200 trillion could seem unrealistically large when compared to the traditional financial market. But, analogous to the comparison between the taxi industry and the size of the Uber market, CZ explained that it is not correct to measure the cryptographic market's potential based on the size of the traditional financial market.
"I still do not agree." I will say "Crypto will grow absolutely 1000 times and more!" Only achieving the USD market capitalization will make it close to 1000x, (it's just a currency with a d & # 39; severely limited use), and the derivatives market is much larger.
"Furthermore, it is not possible to use the traditional market size to measure the potential of new technologies or industries. If you've used (and people have) the size of the taxi market to estimate the potential of Uber, you'd be out of quite a bit.
There is merit in the CZ argument that the potential of cryptocurrencies can not be measured by the size of the traditional financial market. But, in the last year, the biggest companies in cryptography, like Coinbase, Gemini and BitGo, have worked to establish custody solutions to bring institutional investors into space, while investors have waited a lot for the debut of the funds traded on the stock exchange (ETF) and all kinds of publicly tradable tools around cryptography.
So, with most investors in the encrypted market anticipating an influx of investors from the traditional financial sector, investors must to a certain extent explore the financial market to measure the size of the potential market in the crypt.
In addition, as ShapeShift CEO Erik Voorhees said, global finance is further integrating with encrypted finance and as the cryptocurrency industry continues to build bridges linking the two markets, both markets will continue to intertwine and they will influence each other, either positively or negatively.
As CZ stated, it is also important to recognize that money is a single application of the blockchain technology that is best demonstrated by Bitcoin. Venture capital companies and prominent investors such as Ben Horowitz generally consider blockchain technology and smart blockchain protocols such as Ethereum as new global computing systems.
Bitcoin, Ether and other major cryptocurrencies that have started to be adopted as value deposits have alternative use cases. Ether acts as a gas that feeds the Ethereum intelligent contract blockchain protocol, which – with sufficient scalability through shard and plasma implementation – could compete against long-term centralized web servers and computing platforms.
The ability of blockchain technology to operate as a computing system on top of a form of money could add more value and, as CZ said, in the sense that blockchain technology is not limited to money, it can be argued that comparison between cryptography and financial sector is only one aspect
Coinbase's first investor sees explosive growth for crypt
Garry Tan, a leading venture capitalist and the first investor in Coinbase and Instacart, who has financed more than 100 startups worth $ 20 billion, said it is possible for the cryptography market to reach hundreds of trillions of dollars in market valuation.
While a millimeter return is difficult to imagine Ine, Tan said that the possibility of explosive growth in the cryptocurrency sector can not be ruled out. He pointed out that the cryptography market will not suffer the trend expected by most of the speculators in the sector. Tan told Cointelegraph:
"My general sense is that it is possible but unlikely to be 1000x. Even if it arrives, we would assume the securitization using security tokens, which is not exactly what speculators have in mind when they are hoping for more than 1000x situations, they are generally thinking that their useless altcoins are somehow worth 1000x and security tokens will simply represent property in real assets.It is a strange nuance, but it is worth mentioning. "
After nine years, Tan said that the cryptocurrency market is mostly dominated by retail investors and individual traders. A significant amount of capital is controlled by the institutions and the entry of institutional investors – such as pensions, donations and sovereign wealth funds – could very well lead to an exponential increase in the evaluation of the crypt.
For institutional investors engaging in an 'activity, for example Bitcoin, a specific type of infrastructure is needed to facilitate the transfer of funds. Custody solutions in the cryptographic market have not existed for more than two months, with the first trusted custody solution released by Coinbase in July.
So it may take months or years for institutional investors to engage in the encrypted market. But, echoing the point of view of billionaire investor Mike Novogratz, Tan said that once institutions find their way into cryptography, the market will see a difference in volume and value, as Novogratz said: [19659003] "I think that if you start seeing institutional LPs [limited partnerships] – as endowment funds, foundations, pension plans and sovereign funds put capital into cryptocurrencies – you'll see a turning point where a percentage of global wealth begins. Novogratz talks about the coming hordes, and I think it's right, Crypto is still extremely driven by retail investors, but it's amazing how much money is stuck in the institutions. "
As seen in the chart below, the volume of the market cryptography peaked at the end of 2017, as the prices of cryptocurrencies reached their historical peak
. But in recent months the volume of the crypto-market has started to recover, after a decline in March and April. In July, the volume of Bitcoin decreased to more than 500,000 BTC, but since August, apart from the first week of September, the volume of the cryptographic market has generally improved.
In general, crypto is still in its early stages of development, like the Internet in 1994. Institutions are just getting ready to get involved and market infrastructures have started to improve rapidly from mid-2017. As such, it is too early to discuss the possibility of encrypting in competition with reserve currencies and central banks. Tan said the next 18 months could be crucial for cryptography, as it will define the long-term trajectory of the market, adding:
"Central banks are another level and I really do not know if and when they could decide that it is something that [will] uses as reserve currency It would be very far in the future, [in] my sense.We have to move from the infrastructure phase [the] to the application phase [the] and I think this is the main story for the the next 18 months.It is still the Internet in 1994. "
Mike Novogratz sees FOMO among institutions
In June, Novogratz stated that the cryptography market will look like a bubble when it reaches $ 20 trillion, after experiencing an increase a hundred times from the current price range
At the time, Novogratz explained that the upcoming crypt rally will be fueled by the institutions entering the cryptographic market , triggering the FOMO (fear of losing) among other institutional investors.
"[Cryptocurrency] is a global revolution.The internet bubble was only one thing in the United States.The citizens of the United States who participated were wealthy [Cryptocurrency] is global.There are children in Bangladesh who buy coins. monstrous in Tokyo, South Korea, China, India and Russia.We have a global market and a global craze.This will look like a bubble when we are at $ 20 trillion. "
Last month, as reported by Cointelegraph , Citigroup, Morgan Stanley and Goldman Sachs – three of the largest investment banks in the United States – have publicly released their plans to facilitate the growing demand for Bitcoin from institutional investors.
It is said that Morgan Stanley has already established a system to develop funds from the traditional financial sector in the encrypted market and is currently awaiting an internal procedure to launch the encryption. [19659002] Novogratz stated:
"It will not go there [$20 trillion] right away." What will happen is that one of these intrepid retirement funds – someone who is a market leader – is going to say, "You know what? we have custody, Goldman Sachs is involved, [and] Bloomberg has an index on which I can keep track of my performance "and they are going to buy." And suddenly, the second guy buys, the same FOMO you saw in the retail [will be demonstrated by institutional investors]. "
The implementation of cryptocurrency solutions by regulated financial institutions and the strengthening of the infrastructure around crypto will increase the likelihood that institutional investors will commit to cryptocurrencies, the which could increase the chances of the crypto market potentially reaching hundreds of trillions of dollars in valuation.
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