Growth of the cryptocurrency market and the potential of BlockchainWe have all seen the news reports of Bitcoin and other cryptocurrencies, as the price zoomed upwards, then drops down a bit, and the hysteria of bubbles and so on. But what is the real story behind the hype, hysteria and often, misinformation, that mainstream news seems to fixate on?Today there are many cryptocurrencies in existence, some more successful than others, but it is the first one, Bitcoin, launched in 2009, that not only set the structure for those that followed, but that has really become the definition of what most people understand as a digital currency. While the value of Bitcoin has made headlines as each new high appeared over the last year or so, to understand why that growth is occurring needs a closer examination, both of Bitcoin and other cryptocurrencies themselves, and the underlying technology that drives the, blockchain.The rise of BitcoinThere have been much publicized and dramatic rises in cryptocurrency values recently that have had a significant effect on awareness of the concept of digital currencies and led to huge market growth of in particular Bitcoin and Ethereum. However, there are have been several, less publicized periods of growth before this, and understanding the driving force behind that can help us see where the strength of cryptocurrencies lie.Since its 2009 launch, Bitcoin has grown into a global asset that now has its own futures market, but to get to this position has not been straightforward. In fact, there has been a driving force behind most of the growth Bitcoin has seen throughout its life, and it has been the same across multiple continents. In Greece during economically turbulent times as government debt threatened to bankrupt the country, the state introduced fiscal controls that restricted the amount of money people were able to take in cash from their own bank accounts to just €60 a day, while money transfers from personal bank accounts out of the country were also halted. Bitcoin enjoyed an 80% increase in use in just a few weeks during this time, as Greeks switched to Bitcoin to avoid those fiscal controls.The rush to Bitcoin in Venezuela was even more stark as rampant inflation and currency devaluation took hold, and the government imposed ever more drastic controls on the population, with trading volume going from 9 Billion to over 40 Billion Venezuelan Bolivars within months. Two other areas where Bitcoin enjoyed huge growth were China and Russia, and in both cases, overcoming government control of capital movement had a significant effect.In other words, digital currencies have seen growth where problems with the fiat monetary system have appeared, whether that be significant collapse or state imposed restrictions. For many, this was a period where digital currencies were met with significant skepticism, and it took such events for people to overcome their fears and use the platform. That has seen Bitcoin itself grow to the point that it became something that was making inroads into the public awareness, and from there, things have progressed rapidly.The Cryptocurrency BoomWhile that initial growth from a very niche idea in 2009 to a global currency asset took years, at some point in late 2016 or early 2017 a tipping point was reached, where the idea of cryptocurrencies became generally accepted. The rapid price growth, not just of Bitcoin, but Ethereum and many other smaller currencies, has created a snowball like effect, as people profited from simply owning cryptocurrencies, so more and more people got involved, and prices were driven ever higher, and so on.This resulted in perhaps the seminal moment for cryptocurrencies at the end of 2017 when the CME group, the world’s largest futures exchange, launched a futures market for Bitcoin itself. This did two things, firstly it established the cryptocurrency concept, not just Bitcoin, as a genuine financial instrument for mainstream investment. That legitimacy is of course well deserved, but was also hard won, and it does represent a significant step for the entire cryptocurrency industry. However, it also opens Bitcoin up to speculation, and there have been some large price fluctuations since that may be a result of the influence of large scale investors through the futures market, only over time will we be able to see the full effect on Bitcoin.While Bitcoin is of course the headline maker, all kinds of cryptocurrencies have seen significant growth in the last 12 months, and the overall market growth has been nothing short of phenomenal. On January 1st, 2017, the entire cryptocurrency market cap was US$18 Billion, but on December 31st, that figure had grown to over US$300 Billion, a rise of more than 1600%. As Bitcoin led the way with rapidly increasing value, and the media scrambled for stories of people who had made huge sums just through ownership, so more people looked for opportunity in cryptocurrencies. This has seen huge growth in the so-called Altcoin market, that is cryptocurrencies that are not Bitcoin, as speculators and investors looked to grab a piece of the next big thing. This has seen several other cryptocurrencies rapidly gain value and market growth, notably Ethereum and Litecoin. One thing that really stands out in all this growth though, is that so far, cryptocurrencies are behaving as an asset, that is a wealth store, rather than a medium for exchange, that is a currency. Long term, this should change, as prices eventually stabilize, then speculators and investors will look to do something with those cryptocurrencies. It would seem for now, the infrastructure to use them as currency is still playing catch-up to their use as an asset.ICOs take holdBut rising prices for existing cryptocurrencies is not the whole story when it comes to growth, the other cryptocurrency innovation to really make an impact in the last 12 months has been the ICO. ICO stands for Initial Coin Offering, and is a concept that is designed to help startups avoid the restrictions and surrounding venture capital or bank finance, and fund the project through direct investment. Here a company will launch their own cryptocurrency, often called tokens during the ICO, and provide those tokens in return for investment in the new idea, either in fiat or other cryptocurrency payments. The business issues a finite number of tokens, some are retained, others are used for raising funds, and they can be thought of as a similar concept to buying a share in a company sold at an IPO offering. The idea is that the business raises the funds to launch the idea or project, while investors look to gain if the project is successful and the cryptocurrency increases in value as a result.One of the first of these kinds of offers was Ethereum, and investors in the ICO paid just $0.40 for each Ethereum in the offering. At the time of writing, Ethereum is trading at over $1000 just two years later. Of course, not every ICO will be such a success, but the rise in such offerings have added to that increasing overall market cap just through sheer numbers, and their popularity shows no sign of slowing. However, there are concerns regarding the unregulated nature of these offerings, China has banned ICOs in its country, while elsewhere governments are looking at ways of controlling risk for investors through legislation. This could see a slowdown in the volume of ICOs coming to market, but if it leaves higher quality offerings, then perhaps that is not the issue some may believe it is.The BlockchainWhile the focus throughout has been on currency values and the market growth it has, and continues, to power, perhaps the most important aspect of digital currencies, the underlying technology that enables it all, the Blockchain, has taken a back seat so far, at least as far as public awareness. However, many within the industry believe that it is Blockchain, rather than the cryptocurrencies it supports, that will be the ultimate in disruptive technology and the one to really change the world.A distributed ledger, Blockchain technology has already attracted millions in research investment from some of the biggest companies on the planet. This includes giants such as Walmart, who are looking at supply chain applications for Blockchain technology, while several banks are several years into development of insurance and financial operations that are claimed will transform intra-bank transactions.But for all the talk, so far, we have seen very little, and while many in the industry repeat the mantra of the potential of Blockchain, few go further than that. The thing is, Blockchain really does have the potential to transform many industries, but how can it do this?Essentially, the distributed ledger of Blockchain is a global spreadsheet, running on vast numbers of computers spread right across the world. It uses state of the art cartographic security, but is also transparent. Because it is open source, any of us can view the spreadsheet, and see exactly what is going on with the data inside it. While for cryptocurrencies that spreadsheet records transactions, the true power of Blockchain is that it can record almost any set of structured information we want.Instead of transactions, what if it recorded each item on a pallet, and each pallet on a boat, who owns it, what the destination for each item is, and so on? You then have an unhackable, immutable database of all items in a shipment, a permanent record of everything being transported. That could transform not just the shipping industry, but streamline customs processes and so on.What if instead of Bitcoin transactions, Blockchain used an integrated app for music playing? Musicians could take back control of their own music, receiving payments directly while controlling the files in the app, significantly reducing piracy and cutting out record companies in one move. In fact, this example is something actually in development, and really could change the music industry beyond recognition. Both of these examples show how Blockchain could disrupt an industry, but they are also the tip of the iceberg when it comes to the potential of Blockchain. We have not even looked towards the financial services industry yet, where one use could be end-to-end payments that cut out the expense of intermediaries would make cross border payments more streamlined and dramatically reduce costs. All of these are just examples though, and it is the adaptability of Blockchain that it is the true potential. For every idea here, you can probably think of a dozen more, and so can everyone else. There really is no limit to the potential of the technology, and with Ethereum, things moved on even further.Ethereum is not just another cryptocurrency, it also introduced the idea of smart contracts to Blockchain, that is contracts embedded into the system. Whether that is payments, data records, music or anything else, this adds another dimension to the capabilities of the technology. The FuturePredicting the future is never a good move, who really knows what is over the horizon, however there are some things that are sure. As the number of ICOs continues to rise, so the cryptocurrency market will continue to grow, and despite the rapid gains recently, many believe that cryptocurrencies remain undervalued even today.Much of that unrealized value is in the Blockchain itself, and as that potential becomes reality, for cryptocurrencies such as Ethereum, which has integrated itself into the process of many new applications for Blockchain and smart contracts, then value will grow. Indeed, it could be argued that the price of any cryptocurrency is a distraction from where the real growth will come, and that is as Blockchain projects reach maturity and are pushed to market and accepted by the general public.It is there, when the disruptive nature of Blockchain has tangible benefits to the consumer, that we could see the real cryptocurrency boom, one that makes the last 12 months look like a small blip.