In 2017, blockchain became as hot a topic as AI. But where was the blockchain going in 2018? Here are 12 predictions for the year ahead.
First, some of the lightest projects may fade. Ripple’s business is strong, but it doesn’t actually need a protocol token. Many other protocols, even those with high market caps, don’t require tokens either. These will be gradually weeded out by the market. Ripple might remain a valuable company because of its services, but the protocol itself won’t hold much value. The multiple on the protocol is much higher, though.
Next, the Lightning Network will face a major test. If it works, Bitcoin could regain its position as the default digital currency. If it fails, Bitcoin could drop significantly and just become another currency. In that case, Bitcoin Cash might take over as the real Bitcoin. It's all about probability.
Privacy wars are about to start. As people realize the difference between pseudonymity and true anonymity, competition among privacy-focused currencies will intensify. Zcash was the first permissionless cryptocurrency. Monero uses RingCT for enhanced anonymity, making it popular in dark networks. Dash has strong marketing, but faces other challenges. PIVX is interesting, with a responsive trading system that can integrate with platforms like Slack. I predict one or two of these coins will gain mainstream attention as the next generation of Bitcoin. It depends on which offers better security, but only time will tell.
The data access interface market is set to grow. Companies like Aragon, Colony, 0x, and DAOStack are leading the way. They’ll soon introduce proof-of-concept interfaces. Metrics such as user base, activity, and performance will be key indicators. There are huge opportunities here, even if the vision is ahead of current tech. If around 50 legal projects launch in 2018, the industry could see rapid growth.
More scattered AI startups will emerge. Last month, SingularityNet, a blockchain-based AI startup, raised $36 million through an ICO in just 60 seconds. After receiving a $360 million investment request, they capped their raise at $36 million. More such ICOs will follow. As investors chase returns, we may see many professionals leave high-paying AI roles at companies like Google and Facebook to invest in encrypted AI protocols instead. Expect at least 10 encrypted AI ICOs, each raising over $50 million.
Ethereum’s future as a standard remains uncertain. CryptoKitties caused Ethereum to crash, and Vitalik Buterin is well aware of the challenges. While his praise may be overstated, he and developers like Vlad Zamfir show deep thinking and openness. Scaling Ethereum is tough, but they have the talent and humility to make it happen. Other blockchains like NEM, QTUM, EOS, or AION may not surpass Ethereum, but they could narrow the gap. If any of them host over 100 projects, they could challenge Ethereum. Otherwise, Ethereum will stay on top.
Interoperability protocols are still immature. Projects like Polkadot, Cosmos, Lamden, and Metronome aim to enable cross-chain transactions. However, they’ll take time to mature. In the long run, they could create a multi-chain world. But in the short term, they’ll increase the load on Ethereum and Bitcoin, so these communities may not support them much. Let’s hope they stay low-key for now.
New blockchain non-profit organizations will emerge beyond "Crypto Valley." I visit Zug, Switzerland, every quarter and am part of the Crypto Explorers Association. Countries like Oman and Panama are reaching out, wanting to establish their own crypto valleys. They want to replicate what Zug did in driving innovation and creating jobs. This shows how second- and third-tier governments view blockchain as a way to leapfrog traditional economies, similar to Estonia’s digital transformation. Some of these places, like Bratislava, Florianópolis, or Muscat, could become new crypto hubs.
Encryption will become a general trend. Top U.S. retail brokers may soon allow customers to buy 1–5 cryptocurrencies directly from their websites, just like stocks and funds today. Coinbase is currently the most popular crypto exchange, but it only supports four currencies. To maintain its edge, it needs to expand its infrastructure and plan for growth.
ICO will become more mainstream. By February or March, the first legal ICO will appear on Indiegogo. Throughout 2018, we can expect at least nine more, bringing the total to 10. Reverse ICOs will also rise. Kik launched the first reverse ICO, and YouNow is about to follow. I expect at least 15–20 reverse ICOs this year. Unlike traditional ICOs, reverse ICOs decentralize existing companies and issue tokens to members, stimulating a circular economy. This will create demand for token-based consultants.
Regulation will become stricter. I’m cautiously optimistic. U.S. authorities are likely to be tolerant to avoid stifling innovation, but those who deceive investors will face consequences. ICOs must comply with KYC/AML policies. SEC Chairman Jay Clayton has emphasized the importance of innovation while addressing decentralized projects. It’s a healthy balance.
If 2017 was wild, 2018 could be even more dramatic. The blockchain movement is just beginning. Stay tuned for more changes.
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