Our 2019 crypto predictions
TL;DR The rollercoaster won’t stop anytime soon, we’re going to focus much more on cryptography and far less on the “currency” part (for now…).
Prediction 1: The crypto part of "crypto" becomes much more important than the asset or currency part
Continuing the trend from last year, I predict we'll see fewer headlines about "using blockchain" and much more of people happening to use privacy preserving crypto. Projects that use crypto to get multiple parties to agree a state is still true.
Vitalik made this point on Blockchain Insider Episode 76:
You could sign a transaction or message before blockchain, but you couldn't prove it was still true as of right now
Crypto networks prove data is valid, that many parties agree it's the same and that it's still valid right now. Otherwise, there would be a new transaction appended. This is huge for all kinds of industries and software and I think when the mainstream groks that, the game changes. Whether that needs a currency or not I don't really care.
Prediction 2: DLT makes a comeback
DLT never really went away, it just got a lot less airtime because it wasn't a mainstream phenomenon that every taxi driver and person in the pub was talking about. Quietly, many of those POCs have been progressing. Corporates move in 7-year increments, and if you check your flux capacitor, it's soon to be 4 years since 2015 and the year of DLT mega-hype. Where we're going, we don't need coins.
Back to the Future references aside, DLT is starting to get really real. It's in production, and volume is coming. Whether that's in syndicated loans, trade finance or cross-border payments. This stuff is getting real.
What really excites me is where FX meets central banks. This could really happen people, and nobody is watching. Just the sort of progress I love. "Smart team works hard and eventually gets there" doesn't make a great headline but I love it.
Prediction 3: Institutions dip a toe in the water as infrastructure build-out hardens
There are a few narratives out there about "Bitcoin being the new sound money" or "the institutions are coming" as the reasons why crypto makes a come back in 2019, but if you look at the 2018 price predictions for these people they're frankly bonkers.
The amount of attention being paid by big banks to crypto is massively overblown. Yes, they evaluated and continue to watch the space, but the reality is it's incredibly small compared to global markets. If they moved in they'd move the market with one trade.
I think you will see much smaller specialists buy-side firms professionalise crypto and start to even out some of the volatility, and long-term that's a very good thing.
Prediction 4: Regulatory clarity comes at last
Regulators gonna regulate. If 2018 saw the beginning of ICOs being fined and their proprietors being arrested, then it also saw a very clear line in the sand from regulators and policymakers. Governments find themselves in a challenging position. My read is that many see huge value in crypto networks to make markets more efficient, transparent and fair but they're wrestling with a real increase in criminal activity using crypto assets on the dark web. It's no longer the case that "doing KYC" is enough. If you're going to raise $20m, you should expect that people would ask questions like where is the money coming from and what do they get in return. What we're seeing in the death of the ICO is not entirely surprising through that lens.
I'm concerned we've thrown the baby out with the bath water. If we replace ICOs with securities offerings, where the process is in paper and looks exactly like it does today, but with tokens instead of share certificates. What did we achieve?
Prediction 5: New projects are born that go on to be household names in the next decade
This one is my wildcard. I mean, why not? It's when markets are down that amazing things happen. What happens next is really anyone's guess.
So there you have it! Never a dull year in crypto. What are your predictions?