Blockchain and Cryptocurrency Predictions 2019 – Vol. V

Opinion | December 23, 2018 By:

We continue our series of predictions from the industry’s thought leaders on what may happen in the coming year. 

By almost any measure, 2018 was a challenging year for the blockchain/cryptocurrency industries. Beyond the usual issues facing young businesses in hiring, marketing, technology and financing, companies were engaged in a crisis of confidence with investors, as the crypto markets lost 80 percent of their overall value from the beginning of the year.

Add to that the magic fountain of funding caused by the curtailing of initial coin offerings, increased government scrutiny and outright bans of certain activities, and the bitter battles between technology developers that caused market gyrations, and it’s amazing that any company survived such severe headwinds.

But heading into 2019, the survivors of this industry wide winter are showing faith in the underlying technology of blockchain and the continuing promise of cryptocurrency. They point out that institutional investors are still on the sidelines, and many retail backers are still not in the game in any huge way.

Add that to the continued interest of big businesses and the spirit of innovation shown by blockchain and crypto pioneers, and the story looks a lot brighter than mere numbers would suggest.

Block Tribune asked thought leaders in the industry for their takes on what may happen in the coming year. Now through the end of the month, we’ll spotlight their thoughts on what may happen in what all hope will be a happy and prosperous 2019.

Simon Barnby, CMO, Archax:

BLOCK TRIBUNE:  Where do you see Bitcoin heading in 2019 and why?

ANSWER: The general view from people I have spoken to at various conferences in the closing weeks of 2018 is that the wider crypto market is pretty much at its lowest point now. There seems to be consensus that Bitcoin stands the best chance of price stability and appreciation in the future, but serious questions remain unanswered regarding growth catalysts for alternative coins in the crypto space. One thing that is interesting though is the emergence of security tokens and an ecosystem to support those.  These regulated tokens backed by real-world assets have the capacity to bring significant new institutional money into the crypto world – potentially heralding in a new chapter in the crypto space in 2019.

BLOCK TRIBUNE:  Have recent crypto plunges affected your outlook and/or plans for 2019?

ANSWER: The recent crypto plunges certainly create uncertainty and make people a lot more cautious and conservative than they were before. However, at Archax we see this as a real opportunity. The weaker players get rooted out and it gives us breathing space to double down and really invest in development, so that when the inevitable upturn in the market occurs, we are perfectly placed to fully capitalise.

BLOCK TRIBUNE:  What role will stablecoins have in the market in 2019?

ANSWER: Stablecoins have performed, and continue to perform, an important role through providing a stable ‘exit’ into a representation of fiat currency on exchange venues. As venues legitimise and gain stronger banking relationships, the need for stablecoins reduces but does not entirely go away. The ability to transfer a representation of fiat currency wallet to wallet without having to go in and out of the traditional banking system will remain an important source of utility for these coins.

BLOCK TRIBUNE:  Which sectors – energy, e-commerce, gambling – do you think will have the biggest impact in the blockchain industry in 2019?  (Feel free to choose any other sectors)

ANSWER: The financial markets sector, in its broadest sense, is likely to have the most impact in the blockchain industry, as there is a wall of institutional money that wants to get involved in the crypto space. The advent of security tokens – regulated tokens backed by real-world assets – provides a new ‘use case’ for blockchain technology and one that is palatable to the institutional community. Having said that, tokens can be linked to a wide variety of underlying asset types, from traditional such as property, to alternative such as hedge funds and Andy Warhol paintings.

BLOCK TRIBUNE: What event would you like to see happen in 2019?

ANSWER: There has been an enormous number of events focussed on blockchain technology – arguably too many, with some good ones and others not so. Events focussed on specific ‘use cases’ for blockchain technology – such as security tokens – would be a welcome introduction.

BLOCK TRIBUNE: Is the ICO dead as an effective fundraiser?  Why or why not?

ANSWER: ICOs started out with great intention as a way for communities to get together and fund projects that they believed in and wanted to be a part of in the long term. But their image has become somewhat tarnished recently, due to a number of, including:

  • People jumping in and out of ICO project fund raises just to get short-term returns
  • Fraudulent schemes using ICOs as a way to raise money quickly and run
  • The collapse of many token prices and the drying up of liquidity this year
  • Lack of clarity on the regulatory stance for ICOs
  • Difficulty in valuing ICOs, as they are generally pure utility tokens that don’t have any intrinsic value and are basically just a potential promise for the future

I believe the future for raising funds with crypto lies in the use of tokens that have intrinsic value from being linked to real-world assets and with clear regulations – such as STOs. These may well have of course have a utility element to them too.

Michael Gasiorek, Founding Partner, Truth Cartel: 

BLOCK TRIBUNE:  Where do you see Bitcoin heading?

ANSWER: Though this isn’t the year Bitcoin becomes the new global reserve currency, I expect we’ll see growing consumer interest as well as substantial experimentation with Bitcoin and blockchain technologies by governments and businesses, which should be reflected in greater demand for BTC, thus increasing the price. With Ohio accepting BTC for tax payments and countries from Estionia to Malta fighting to become the crypto haven, political adoption is growing, as is regulatory certainty in the United States. Though I don’t expect any federal adoption in the United States, I expect US financial regulators to continue laying the groundwork for a regulated crypto market, which will increase industry confidence to get involved.

I predict more favorable policies to come at the state level, while other growing economies in Europe, Asia, and Africa trial cryptocurrencies for regular use. In the meantime, with more industries – especially in finance (like Fidelity), telecom (like Cisco and Samsung), logistics, and possibly in energy – moving from proofs of concept to partnerships and active investing, we’re likely to see positive halo effects on BTC price from the adoption of blockchain technology in business. Last, as blockchain technology moves from the infrastructure to deployment stages and we collectively start to break through the scalability trilemmas with off-chain transcations and sharding, many of the walls to daily crypto use will start coming down, hopefully driving consumer adoption and, again, demand.

BLOCK TRIBUNE:  Have recent crypto plunges affected your outlook and/or plan?

ANSWER: They haven’t. If you base your plans on the movements of the market, you become incapable of any sort of long term vision. My focus is the same as it has always been: to increase blockchain adoption by helping technologists get their projects to market, to capture value by focusing my work on offering shovels and pickaxes versus trying to time the gold rush, and to have a little fun with it all by exploring crypto-inspired, non-technical ideas like physical products, media, and events. As decentralization isn’t just a financial or technical movement, but also a cultural one, giving everyone a chance to participate in our memes – to be informed and entertained through blockchain’s culture, even without having anything to give back yet – is key to mass adoption. Though market cycles can increase or decrease public interest in crypto – what we call hype – no crash to date has killed public curiosity. If anything, it has cleared the market of self-interested scam artists.

BLOCK TRIBUNE: What will be the impact of stablecoins in 2019?

ANSWER: Stablecoins are to the finance industry what a good protocol is to a new dApp – that is, a necessary infrastructure layer to doing business. I expect the rise of stablecoins to have three effects. First, it’ll allow financial institutions to engage with the crypto market and capture some of the benefits of cryptocurrencies without as much exposure to crypto’s volatility, which should make institutions more comfortable with crypto long term. Second, stablecoins will act as a necessary tool for tokenizing real world assets like commodities and real estate, a la TrustToken, which have historically been slow to jump on the blockchain bandwagon when pegged to highly volatile cryptocurrencies. Last, stablecoins are a likely party to guide the first wave of compliance of security tokens as – being less volatile and usually asset-backed – present a simpler starting point for regulators than many other cryptocurrency projects.

BLOCK TRIBUNE:  Which sectors – energy, e-commerce, gambling – do you think will have the biggest impact in the blockchain industry in 2019?

ANSWER: Though I expect logistics, blockchain infrastructure, and finance to remain the driving industry actors, I think 3 more industries will join the roster as “big for blockchain.” First, gaming, which covers gambling, collectibles (through non-fungible tokens), and enabling technologies (like scalability solution – because the promise of entertainment always tends to increase incentives for technical adoption. Next, real estate and commodities, which will be exposed to tokenization and increased liquidity, enabled by the rise of stablecoins. Last, decentralized internet infrastructure, let by projects like Akash, which will begin to fulfill the promise of a truly decentralized internet. Though I was excited to add energy to this list, the difficulty in moving a good that usually depends on decrepit, physical energy grids not optimized for transaction (but rather one-way delivery) makes this a hard proposition.

BLOCK TRIBUNE: What event would you like to see happen in 2019?

ANSWER: I’d like to see legitimate blockchain founders and technologists be given the chance to educate government officials and the CEOs of established legacy businesses on ways blockchain might be applied to their industries. We need to teach the existing power brokers on what’s coming and how they can get involved – or get out of the way – versus seeking to purely compete or circumvent them.

BLOCK TRIBUNE: Is the ICO dead as an effective fundraiser?  Why or why not?

ANSWER: Not dead, just different. Good blockchain projects have reacted to new compliance requirements, a decrease in hype that used to drive mass market investment, and a more educated investor class. They haven’t abandoned ICOs, but often, simply restructured their offering into a security token or coupled equity purchases with token disbursements that are now distributed through private placements that look a lot more like venture fundraising than crowdfunding. The primary innovation of an ICO was the presale of assets that can be consumed in exchange for eventual utility, offering high liquidity – versus equity, which is generally the sale of an asset tied to a company’s cashflow, with very low liquidity. We haven’t seen the end of the ICO – nor the end of its evolution.