Wild speculations fill the cryptocurrency market. Some would argue that most of the value from the cryptocurrency market is derived from the speculation of cryptocurrency’s future. This argument cast a very generic perspective on the matter but does contain some truth. In the traditional financial markets, both speculation and fundamentals such as earnings and actual demand for different usage influence the value of a stock or commodity. In stark contrast, most cryptocurrency projects are ideas pursued with funds raised from activities such as ICOs after releasing the project’s native cryptocurrency tokens into the market at a valuation. These projects have no revenue due to their recent existence as technology start-ups and the time needed to complete development. Still, the speculation of demand for future utility and increase in price influence their value.
However, to say that speculation is the only source of valuation would be inaccurate as well. For the reason, despite popular belief, some cryptocurrencies have established adoption albeit from a niche group of audience or use case. Bitcoin has a history of being used on the dark web and as a store of value. Ethereum’s network was used extensively during the 2017 Bull Run as a platform to build other blockchain projects. Ripple has expanded its network by secured numerous partnerships with financial institutions. These examples are among the many cryptocurrency projects that have seen the utility and found their place in the market.
The future of cryptocurrency is heavily dependent on real-world applications. Most, if not all, noteworthy cryptocurrency projects are developing a solution to solve a real-world problem. If these solutions come into fruition, the potential will fill the future.