The following is an exclusive contribution to CoinDesk’s 2018 Year in Review.
In 2018, I thought about two anniversaries.
The first, we’re all familiar with. By the end of this year, it will have been a decade since Satoshi Nakamoto created bitcoin and launched a new industry.
The second anniversary is a personal one. After launching the Deloitte blockchain practice with two friends in 2012, I moderated a panel at Money/2020 in 2013. This space was so new, we did not have a name for blockchain yet; rather, the panel I led was called “Bitcoin 2.0.” Yet, we knew more would come from the technology.
There, Charlie Lee, David Johnson and Taariq Lewis talked about self-governing organizations, digitized commodities and decentralized business models. You could tell most of the room was completely lost.
As we close 2018, one of the key lessons is that the most important stories in cryptocurrency aren’t always the ones with the loudest headlines. While the “crypto winter” was at the center of many discussions, it was not, to me, the key story of the year. What do I think was more important?
First, the rise of the “other” tokens – security tokens, non-fungible tokens, stablecoins and equity tokens, all of which demonstrated the continued vitality of the blockchain community. That a single year – and a tough year at that – saw so many diverse and innovative products proves the enduring value of the blockchain.
Second, significant investments in crypto and blockchain infrastructure from traditional financial institutions and new technology companies mean we have much stronger foundations to build on: wallets, trading technologies, custodian solutions, exchanges, broker solutions and more.
Finally, our regulatory environment. While, to a certain strain of crypto enthusiast, regulation sounds a death knell for blockchain, I think this viewpoint is misguided on two counts.
First, regulation removes and discourages the bad actors who have done such harm to blockchain’s reputation. Second, regulation proves that blockchain is here to stay. There’s no need to regulate a fad; it will expire well before a bill reaches committee.
An enduring new asset, however, needs a place in a legal framework. Legislators have decided that blockchain is growing, not evaporating.
What do I expect to see in 2019? Given the speed and volatility of cryptocurrency, you’ll have to allow me some margin of error, but here’s what I see coming in the next 12 months:
- Investing at the bottom: If we haven’t reached the solstice of the crypto winter yet, we’re very close; brighter and warmer days are coming soon. The early days of 2019 are the time to make bets on the best tokens and the best teams. I call it the new Rockefeller moment.
- A new Howey test: The SEC’s increased scrutiny of blockchain has meant that blockchain proponents have had to learn about SEC v. W.J. Howey Co., the 1946 Supreme Court case that defined securities in U.S. law. I expect the courts to promulgate a new test for blockchain, which will let investors place their money with greater confidence.
- Better core tech: It may have taken a bear market to drive this point home to some, but blockchain is not about getting rich tomorrow. We need to pay more attention to improvements in performance and scalability and pay less attention to new projects. #BUIDL is the new #HODL.
- Decentralized business models: This may be the hardest of my predictions to imagine. In 2019, we will see the rise of decentralized businesses in banking, capital markets, payments, insurance, supply chain and other fields. The next Google or Amazon could make its appearance, but they’ll be very different: They won’t be looking for a place on Nasdaq, because they’ll be generating network value more than equity value.
- A killer consumer app: While blockchain conferences were the killer app of 2018, we’re still looking for the product that will bring blockchain’s value to the non-tech, non-business consumer audience. I’ve tried a few apps that purported to be killer apps, but the experience was so bad I wonder if the developers thought killer apps were supposed to kill their users. I survived, and I’m hoping for more and better next year.
To return again to that long-ago Money 2020 conference: it’s rare to be talking to a single visionary, much less three. Most of the ideas that Charlie, David and Tariq discussed that day were so forward-looking that they were, at the time, dismissed as impossible or ignored as incomprehensible.
Today, many of their ideas have become implementations. Tomorrow, more will follow.
I’m beginning to wonder if those pie-in-the-sky predictions for 2020 were, in fact, too conservative. Who knows what we’ll see next year? Sometimes, good ideas arrive too early. Time and again, I’ve seen that the difference between genius and stupidity, between a project that will succeed versus one that is premature, is 18 months.
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