2020 brings us the beginning of a replacement decade, and with it comes the gradual maturation of blockchain technology, bringing it down from the stratosphere to tangible impact on real-world problems. We could also be a turning point for the industry.
These seven trends are bellwethers for the industry’s health that i will be able to be tracking in 2020, as we move from experimentation to implementation:
1. Blockchain, naturally
A challenge I even have found over the past several years of teaching blockchain entrepreneurs in over 130 countries in my work on MIT and University of Oxford is that the need for more compelling use cases. Not just any use case, not just any scenario where distributed ledgers could be applicable, but natural uses cases where blockchain is clearly a superior platform versus other database technologies. i’m hopeful that 2020 will bring a more acute perspective from the industry on where blockchain is best used and scaled.
2. Games people play
The $300 billion videogame industry and therefore the $94 billion online gambling world (near-term projected growth) represent interesting application areas for blockchain.
John D’Agostino, founding father of Digital Assets working party, says, “Gaming and commodification of the gaming experience” is what’s certain 2020. He goes on to state that he sees opportunity in “combining the theoretical fungibility, transparency and security of blockchain databases along side the convenience and portability of tokens to make new markets for digitally native assets and experiences like online gaming.”
(What’s out, asserts D’Agostino, is “blaming securities laws for your bad business model.”)
3. Bitcoin is back (or it never left?)
Bitcoin remains the foremost financially successful blockchain project so far, with a market capitalisation of quite $130 billion at this writing. For the longest time, heeding the words of my collaborator Meltem Demirors, i might tell folks that you’ll train a mediocre bitcoin developer during a year or a competent ethereum developer during a month.
Bitcoin is idiosyncratic, a hack of hacks, an enormous kludge that outgrew itself an extended time ago. Ethereum and other newer protocols were developed more self-consciously with third-party development in mind. And yet. bitcoin is suddenly top-of-mind again, and that i have anecdotally been hearing of varied bitcoin-protocol projects under way.
Jack Dorsey, because it happens, is moving to Africa for several months, and in reference to that views bitcoin within the African continent as a game changer. Indeed, Michelle Chivunga, advisor to the African Union, says, “With the Africa trade Area agreement in line to rework the continent, Africa is in strong position to play a number one role within the digital revolution tapping into key technologies like blockchain. Africa’s time is now.”
4. China giveth and China taketh away
The People’s Republic of China, during a matter of weeks, announced a warm embrace of blockchain on the one hand, and commenced aggressive enforcement actions against crypto companies on the opposite.
Tracking price movements of bitcoin recently has given me whiplash. I even have long told people I don’t speculate for my very own account, because I can’t predict the worth movements of crypto tolerably to form money, and November may be a exemplar on why. I also note that in some regards bitcoin represents a competitor for the newly announced RMB financial institution digital currency, therefore the Chinese government features a vested interest in talking down the worth.
5. financial institution digital currencies (CBDCs) at center stage
For the past several years I even have been spending increasing amounts of your time with governments and multi-governmental bodies, discussing the way to shape innovation policy that supports fintech and blockchain. My colleagues and that i are seeing rising interest in financial institution digital currencies (CBDCs), not only with China and Venezuela, but during a sort of nations, large and little.
Simon Chantry, co-founder of Bitt.com, tells me:
“In 2019 we saw many Central Banks investigating and in some cases testing various blockchains and distributed networks to be used within the economic system. While initially hesitant to maneuver efforts forward past the test phase, the emergence of competition within the sort of private sector digital currencies and ‘stablecoins’ has prompted Central Banks worldwide to evolve their own technology strategies. i think we’ll see more tangible progress on Central Bank-issued digital currencies in 2020, as Central Banks seek to leverage many of the technological advancements that have taken place over the past decade to supply their countries and economies with advanced, secure, and efficient payment systems.”
Chantry should know. Bitt.com is credited by many insiders as originating the primary blockchain-based CBDC in 2016.
We expect more CBDCs to be announced in 2020, and with them a greater specialise in cross-border interoperability.
6. ‘Custody is king’
Sometimes the “plumbing” of the economic system, while less glamorous than token offerings or a replacement ewallet, is important for any of the opposite great ideas proposed around blockchain to function. One such area is custody, the physical or electronic holding of assets for safekeeping, and a gating condition for serious institutional investment in digital tokens and cryptocurrencies.
“Absent robust custody standards the industry can never scale,” consistent with SALT chairman Ben Yablon. “Single founders disappearing with many many dollars in value shouldn’t and won’t be allowable if the space is ever getting to reach its potential.”
The industry goes to figure out better standards and practices around custody in 2020 – or risk another Cotten.
The Government of Mauritius, gateway to the African continent, has planted its flag within the sands of digital asset custody. It’s not such a dumb bet. State Street’s $32 trillion empire is made on custody of securities.
7. Cybersecurity? What’s that?
I never cease to marvel at the very fact that cryptocurrencies, developed by cryptographers and sometimes (often) held by highly (and healthily) paranoid people that seek ultimate security for his or her money (not even trusting central banks), have persisted in serious cybersecurity inefficiencies.
A few years ago, I had the privilege of lecture 30 of the highest cybersecurity experts within the world as we put together MIT’s cybersecurity book. The blockchain world, because it seems, isn’t notably better than anybody else at cyber-protection – and in some cases is worse.
2019 saw possibly $200 million or more stolen from various exchanges, and maybe more unreported hacks occurred also. i’m hopeful that 2020 will see better cyber-hygiene and cyber-practices. you’ll be hearing more from me on this subject within the months ahead.