The anniversary year for the first cryptocurrency was not entirely festive. Since January the total capitalization of the crypto market has fallen about eightfold. However, if we do not compare the current market position with the anomalies witnessed in the end of 2017, and evaluate it as a very young, emerging industry, the conclusions will be much broader and more favorable than just a multi-billion dollar FUD. “I believe the disruption this technology will bring won’t be fully realized over the course of just one year,” says Max Kordek, CEO and co-founder of the Lisk cryptocurrency, noting that this area also needs many educational and research projects that will not be completed within one year. However, there are already some predictions for 2019. With the help of expert opinions DeCenter figured out which direction the crypto industry will develop in the upcoming year.
Another "Year of Stablecoins"
In the middle of 2018 founder of Havven, Kain Warwick, wrote that “every second project is a stablecoin”. According to a Blockchain survey published in late September, the number of stablecoins has increased significantly over the last 12 to 18 months, and more than a dozen different companies have announced plans to launch their own stablecoin by the end of this year. The development of this particular niche is associated with the expectations of Dmitry Lazarichev, co-founder and CEO of the Wirex crypto bank “Stablecoins will bring more liquidity, since they are practically not volatile relative to bitcoin and other altcoins and more comprehensible to institutional investors. In addition, with the development of these type of assets, we expect a new round of popularization of cryptocurrencies among merchants (online / offline sellers of goods and services), as calculations in stablecoins will avoid sharp jumps in rates that can lead to loss of profit in trade. In addition, stablecoins can bring new players to the market — individuals who previously never used digital assets, as stablecoins are easier to understand and are closer to fiat than bitcoin and other cryptocurrencies,” he shared his point of view with DeCenter.
Although by December 15th the former “second cryptocurrency” lost 94% of its January value and had come down to a third place in the top 10 cryptocurrencies by market capitalization, while new contenders for the title of “Ethereum killer” (i.e EOS which completed a $4 billion ICO) constantly appear, the Ethereum community is optimistic and believes that their network will be able to solve its internal problems, including issues of scalability and security. “As an Ethereum maximalist, I expect in the next year from Ethereum 2.0, first of all, great progress in second level solutions, such as sharding, PoS, Plasma. More than 10 teams are working in parallel only on the latter. For example, I wait from my friends from LeapDAO to launch a working network. I'm really looking forward to a normal solution with randomness (security issues when generating random numbers. DeCenter) next year. At DevCon4, the most memorable presentation was about this topic,” Anton Akentev, founder of Thetta, told DeCenter.
Ethereum is also focused on improving communication between developers and its community. After a major controversy erupted about the proposal to reimburse lost funds (primarily frozen Parity funds) and the departure of Yoichi Hirai, the Ethereum Code Editor, Vitalik Buterin held a meeting with developers noting that “the management mechanism of Ethereum is generally not so bad” and that, in his opinion, the main drawback lies not in the mechanism itself, but in how information is conveyed, and this, in turn, is the confusing part of the process that proposals go through before they are embedded in the actual code of the platform. “The impression that many members of the community “from the outside” got is that the EIP 867 (proposal to return the lost funds. DeCenter) is much closer to implementation than it actually is,” said Buterin then. Developer Greg Colvin, who is involved in improving the management of the Ethereum Foundation, noted that team members need to work harder to ensure that the nature of new projects is understood by the community. “In reality, there shouldn't be a huge debate on whether we should give this EIP number and call it a project. This is a technical, editorial question. It should not be so complicated and controversial,” said Colvin.
Other loud disputes within the Ethereum community were caused by another proposal to recover lost funds (EIP 999), as well as details of the planned Constantinople hard fork, which is scheduled for mid-January, 2019 and is designed to improve network performance and reduce commissions, thus preparing it for more ambitious scalability improvements, such as sharding and Casper. In both cases, there were rumors about possible hard fork of the network due to disagreements between the two leading Ethereum clients, as well as other developers. At the moment, however, the Ethereum community still manages to find a compromise on controversial issues, and there are no indications of a possibility for an “unplanned” network split: “I am very glad that Ethereum has finally chosen the “let's first think and then realize” approach, because hype has passed, and an opportunity appeared to think in peace and conduct qualitative research,” comments Aktentev.
Hu Liang, co founder and CEO of Omniex and former Senior Vice-President of State Street, believes that cryptocurrencies should go beyond retail in 2019 “to create a crypto ecosystem that allows institutional investors to participate in the crypto and blockchain revolution.” “Let’s not forget that crypto is the only asset class in history that didn’t start from the institutional front, and as a retail-first phenomenon we’ve been left with an ecosystem devoid of institutional infrastructure,” writes Liang, noting that all the prerequisites for changing this are already available. 2018 has also shown that crypto and blockchain have clearly caught the attention of financial institutions. With crypto moving beyond the retail market, companies like Fidelity, ICE (parent of NYSE), NASDAQ, Microsoft, Starbucks and a host of Ivy League endowment funds have all either started initiatives or already invested in the industry. Along with global regulators, this concerted effort is now laying down all the appropriate functions and a solid foundation for institutional fund managers to enter the space.”
“The two biggest areas we’re seeing interest from enterprises in applying blockchain are finance and supply chain. We’re already seeing strong progress there in the form of Hyperledger, Ethereum Enterprise Alliance, and Corda. It can be expected that in 2019, corporations will invest additional time and resources in determining how to optimize portions of their businesses through the decentralization and transparency that blockchain offers,” noted Luka Horvat, head of the development vertical at Toptal.
Gary Gensler, former chairman of the United States Commodity Futures Trading Commission (CFTC) and senior adviser at the Massachusetts Institute of Technology (MIT) media laboratory as part of a cryptocurrency initiative also reflects on the place of institutional players in the blockchain industry, noting the potential of corporate private blockchains (such as Quorum or projects being developed as part of the Hyperledger consortium): “So, while Satoshi Nakamoto’s bitcoin has survived a decade of trials, the question still remains, “What does it mean for 2019 and beyond?”. Central intermediaries remain a real part of our economies. The financial sector is exploring permissioned private blockchain applications rather than cryptocurrencies. Will commercial economy-wide use cases be found where the benefits of lower verification and networking costs are truly greater than the expenses, challenges and complexity of blockchain technology? Will smaller concepts flourish and provide a bridge for further development and acceptance?”
Regarding public blockchains and their native tokens, Gensler notes that current difficult period on the market can help unleash their true potential (or lack thereof): “What about open blockchain projects and crypto tokens? Will users find real economic value in the native crypto tokens associated with such projects? With the break in the crypto markets, we just might start to find out. As Warren Buffet famously wrote in his Chairman’s letter in 2002 after major losses at Berkshire Hathaway: “After all, you only find out who is swimming naked when the tide goes out.”
Improving The Quality of Projects
Many experts expect an increase in the quality of blockchain projects due to "natural selection", as projects may become smaller, not everyone will be able to survive, but they must become stronger as the "self awareness" of the industry as a whole grows.
“The token model is going through a change. Companies are beginning to realize that not all projects need tokens, and STOs with real reinforcement of assets will become dominant,” comments Atsushi Hisatsumi, founder of the Extravaganza marketing agency for blockchain projects.
Hu Liang also noted that “an important area of improvement in 2019 is a wider adoption of decentralized networks at the protocol level.” “New opportunities are invitations to startups. The important thing to remember is that startups don’t all succeed. Despite the setback of the ICO boom, as true innovations succeeds in garnering wider adoption, the true intrinsic value of crypto will be realized – and that moment will be a great one.”
Some crypto enthusiasts believe that the era of everyday cryptocurrency payments and p2p economy will come very soon. Dmitry Lazarichev believes that an increase in the number of holders of crypto assets among individuals (expected due to the convenience of stablecoins) will lead to an increase in the number of p2p transfers and settlements in cryptocurrency in stores.
Co founder and CEO of Monax, Casey Kuhlman, believes that the industry will soon focus on real problems that blockchains can solve, and not on “an obsession with success or failure of individual coins or ups and downs of the market.” “In 2019, I hope we will apply the technology in a huge number of industries that can and should benefit from transparency, speed, efficiency and reliability of the blockchain.”