2017 will go down, perhaps in history, as the turning point for cryptocurrencies, in which their staying power and legitimacy was proven, again and again, bitcoin leading the way with its mostly uninterrupted climb on the market for the past few months.
Along with the growing popularity and success, however, has also been growing concern about speculative bubbles becoming an issue. Hard numbers are needed in order to provide a clear picture to quiet the critics of cryptocurrencies. Elementus is an organization that was founded with the sole purpose of providing more transparency in the crypto-market, with their stated mission that “Blockchains are not designed with human readability in mind.” They focus some of their efforts on filling in important information gaps that exist between official and unofficial information that is reported. For instance, they provide analysis of why there seems to be a sizeable gap in the data when it comes to the total dollar amount generated via Initial Coin Offerings (ICOs): the numbers show a range of between $3.5 billion to $4.5 billion.
This interactive chart lays out the fluctuation numbers of various cryptocurrencies over the past 4 years, including their valuation bubbles. They report a total of $6.4 billion in ICOs from January 2014 to November 2017. Another graph tracks Google searches of bitcoin in relation to its performance over the years.
The relationship between bitcoin's price and Google searches for "bitcoin" pic.twitter.com/6FXBaKyvsf— Elementus (@elementus_io) 26 november 2017
Given the fact that cryptocurrencies have gained most of their momentum only in the last 5 years, this data is valuable for two important reasons. Firstly, it can be used for tracking purposes, as well as providing insights about perhaps why some digital currencies seem to have performed better than others. Another reason is that because opinions about the origins and successful performance of cryptocurrencies seem to vary so greatly, having quantifiable information becomes more valuable.
Moreover, the fact that currency transactions are largely untraceable is a double-edged sword: on the one hand, this is seen as one of the most compelling selling points for investors as it provides more anonymity, yet on the other hand, it puts investors at a greater risk of becoming part of a speculative bubble.
"This is a dangerous speculative bubble by any shadow or stretch of the imagination," economist Stephen Roach said of bitcoin this month in an interview, adding, "Like all bubbles, they burst...and the one who's made the last investment gets hurt the most, there's no question about it." The lesson here is that people who are getting swept up in the recent frenzy of cryptocurrencies stand to lose the month, which is why checking the data is so crucial.
Though many of us are greeting the developments of digital currencies with excitement and anticipation, and some of us investing our time, money and patience into its success, it is also very necessary to have watchdog groups like Elementus who take the initiative to compile data: in the end it will ensure that investors have the necessary information to play the market wisely as well as protect their assets.