The prices of bitcoin and ether rose this week, pushing the total market capitalization of the cryptocurrency space above US$150 billion, a capital injection of US$132 billion since the beginning of the year’s market cap of just US$17.89 billion.
According to Sergey Nazarov, the founder and CEO of SmartContract.com, a US$150 billion market capitalization is still “extremely conservative when you look at the back-end infrastructure that blockchain-based systems are set to replace or completely reform in the next five years.”
“What is the value of the systems that currently secure every institutional securities transaction, insurance transaction, and trade finance transaction worth? Much more than US$150 billion.
“The World Economic Forum arrived at its valuation of 10% global GDP by 2027 on blockchain-based systems, which is in the trillions, and many of those same global thought leaders now feel those projections were conservative.”
Bitcoin crossed US$4,280 on Wednesday, rising 3.5% this week, 53% since the beginning of the month, and over 640% year-to-date. This week’s bitcoin rally coincides with the activation of SegWit on the network, a software upgrade that fixes transaction malleability, and promises faster transactions and greater scalability of the network.
Ether, the cryptocurrency native to the Ethereum network and the second largest in the world by market capitalization, is trading at about US$325, a 55% increase this month and a 3,150% increase since the beginning of the year.
According to Daniel Zakrisson, co-founder of Cofound.it, a platform that connects startups with investors and experts for funding and advice, the cryptocurrency space is about to reach an inflection point that will mark the beginning of explosive growth.
“In all networked systems, there is a point when the value of being in the system becomes larger than what each individual participant puts in,” he said. “The crypto market cap reaching US$150 billion market today underlines the fact that we are quickly approaching this point; the number of crypto market participants is growing exponentially and the first use cases are reaching mainstream adoption.”
One of these use cases is early stage venture funding. Since the beginning of the year, the initial coin offering (ICO) frenzy has enabled blockchain startups to raise over US$1.48 billion. US$574.48 million was raised through token sales in July alone.
“This summer there has been more venture funding raised via blockchain token sales than via traditional early stage funding in the IT sector on a global level,” Zakrisson said. “This is a movement that has just started but that is already shifting the balance and structure of the incumbent venture capital ecosystem.”
Yesterday, Estonia’s e-Residency program managing director Kaspar Korjus unveiled estcoin, a proposal that could make the Republic of Estonia the first country in the world to run an ICO for a government-managed crypto token.