The cryptocurrency market will strengthen but it will only happen after bitcoin alternatives that lack essence exit the scene, according to Charles Hoskinson, a co-founder of Ethereum.
“My personal opinion is that we’re going to see a consolidation after a crash,” Hoskinson told CNBC, voicing concern about “unrealistic” cryptocurrency projects entering the space.
“What’s going to occur is a lot of these ventures that don’t have strong fundamentals, don’t have good tech, or just unrealistic projects, they will eventually run into some major wall they can’t quite overcome. They will fracture up and you will see a lot of them are certain to fail,” he said.
In an interview, Hoskinson, a former Ethereum CEO who now runs a now runs a blockchain research firm, however added that many of the new cryptocurrency projects might not fail any time soon as they have enough funding behind them to sustain themselves.
“The problem is a lot of them have a lot of money,” Hoskinson said, according to a report carried by CNBC on its website.
“It’s really hard to fail when your burn rate is 5 million or 10 million dollars a year, and you have one billion of capital.”
The comments came as a number of alternative cryptocurrencies rallied substantially in recent weeks as investors looked beyond the most prominent unit — the bitcoin.
Bitcoin was looking weak at the beginning of 2018, with the unit getting overshadowed by altcoins such as Ripple.
Lots of lesser-known crypto-tokens, such as ‘dogecoin’, have surged substantially, while a growing list of businesses is trying to get on board of the crypto craze by adding ‘blockchain’ to their name and announcing initial coin offering (ICO) plans.
Hoskinson warned of risks arising from unrealistic cryptocurrency projects, predicting a market crash at some point in time.
But once the weaker tokens that lack substance fail and fade out, he believes the crypto market will only get stronger.
Hoskinson now runs blockchain research firm IOHK, which manages cryptocurrencies such as Cardano’s ADA token.
The year 2017 saw a tremendous growth of cryptocurrencies’ value, driven by a rush of capital into the market.
That has pushed total market capitalization of all crypto-tokens to over US$727 billion as of Jan. 10, with bitcoin accounting for a third, according to Coinmarketcap.com.
Cryptocurrency fans, meanwhile, had some other good news this week, with Bloomberg reporting that Tokyo-based Line Corp is working to integrate cryptocurrencies into its messaging platform.
Citing sources with knowledge of the matter, the report said that Line is in discussions with multiple companies on using cryptocurrencies for payment services including Line Pay.
A rumor on Monday also said the Japanese company was looking to partner with South Korean bitcoin exchange Upbit.
The news comes after Facebook CEO Mark Zuckerberg recently expressed interest in ‘studying’ cryptocurrency, sparking speculation about the potential for adopting blockchain technology on Facebook’s platform.
In other news, privacy-focused chat app Telegram is reported to be planning a multi-billion dollar ICO for issuing its own cryptocurrency.
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