Bitcoin surged a mind-blowing 1,500% last year, leading many experts to call for the "end of bitcoin." But this rally isn’t over yet. This isn't the end; it's only "the end of the beginning" for cryptocurrency markets. Everyone has heard of bitcoin, but few people own it – and even fewer understand it. That's going to change in 2018.

Author Malcolm Gladwell defines "the tipping point" as "the moment of critical mass, the threshold, the boiling point" in which "ideas and products and messages and behaviors spread like viruses." Crypto assets reached this tipping point in 2017. Bellwether crypto bitcoin surged nearly 1,500%, and total market cap of the crypto space surged from $18 billion at the start of the year to over $600 billion. 

Chart courtesy of TradingView.

The Crypto Game Has Changed

In just nine years, crypto assets have ballooned from a tiny project among libertarian-minded cryptography experts to a global phenomenon.  Corporations and governments are hiring blockchain experts to figure out how to integrate this new technology into their existing businesses. Expectations for the future of this new asset class range from the Holy Grail that replaces all middlemen on transactions (including banks and governments) to the world's greatest Ponzi scheme orchestrated by state-sponsored actors in North Korea. 

However, I believe that investing in bitcoin in 2018 is actually a safer bet than it was two years ago. While the same astronomical returns might not repeat, the risk of total loss has been dramatically reduced.

Easier Trading

One of the keys to opening up growth in this sector is simplifying access to new investors. Apps such as Coinbase make buying and selling bitcoin much easier than before. Coinbase replaced YouTube as the most downloaded app on iTunes. With a few swipes and taps, investors can now swap their dollars for bitcoin, ethereum, bitcoin cash and litecoin. You can buy bitcoin from the comfort of your couch or while watching your eight-year-old's soccer game. The market is open 24/7/365.

Globally, there are roughly 30 million bitcoin wallets open. However, many crypto investors own more than a few wallets, so the number of people who actually own bitcoin is likely closer to 10 million. While there has been rampant growth in wallets in recent months, investors have not emptied out their savings and brokerage accounts into the crypto universe. Out of those 30 million wallets, only 3 million contain more than $1,000 in bitcoin, and only 1 million contain more than $10,000 in bitcoin.

Source: bitinfocharts.com.

It is important to keep in mind that the total crypto market cap at $800 billion is just 0.3% of $215 trillion in total assets globally. There is still ample room for this market to grow as more investors open accounts. No speculative mania has ever been easier for everyone in the world to participate in than the crypto markets, yet this would qualify as the most under-owned, concentrated bubble in history.

Beating Wall Street

Main Street investors have been watching from the sidelines during too many great opportunities while Wall Street and the investing elite have prospered. Take the case of Facebook, Inc. (FB). While shares of Facebook have risen 355% since its 2012 IPO, early-stage investors were sitting on gains of up to 60,000% before shares reached public hands. 

Similarly, Uber Technologies Inc. now commands a $48 billion private market valuation. This is 12,000 times higher than its original valuation of $4 million, but not one cent of this increase in value has reached the public. Instead, all the gains have been accrued by Silicon Valley insiders and large institutions.  

This is not the same with crypto, where everyone has an equal shot of finding the next Uber, Amazon.com, Inc. (AMZN) or Google. Wall Street is just now starting to get involved. CBOE and CME Group Inc. (CME) launched bitcoin futures in December, which should help the markets function. Meanwhile, The Goldman Sachs Group, Inc. (GS) is launching an institutional crypto trading desk.

These are all signs that cryptocurrencies are here to stay, and there is still plenty of money waiting on the sidelines to jump in. 

The End of the Beginning

In the past few months, bitcoin and the rest of the crypto world went mainstream. The barriers to entry are gone, and savvy investors now see the potential of this new investment class. And since institutional money is still en route, this market – and the gains – will likely increase. 

That's why I say that this marks the "end of the beginning." The question is no longer whether bitcoin will be essential to a diversified portfolio – it is now a matter of what percentage you want to own, and what other crypto assets are your best bets.

For more information on crypto investing, please visit our site.

Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.

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