2018 was a year of transitions for both the enterprise and cryptocurrency sides of the blockchain technology market. For those of us in the technology ecosystem — I’m the CEO of a company based on open-source blockchain tech — this year provided us with very strong signals that cryptocurrency technology is certainly here to stay.
On the enterprise side of the blockchain technology ecosystem, we saw proofs of concepts moving into pilots and early production deployment across a range of use cases such as trade finance and supply chain, among many others. For example, in Europe, a consortium of the biggest banks joined together to create a new trade finance platform in order to help support the payment process of small and midsize companies across countries.
Supply chain saw monumental progress as well. One of the biggest multinational retailers, Walmart, used blockchain technology to track its supply of leafy green vegetables to help improve food safety. The process to track down food sources used to be lengthy, but with this new platform, Walmart can find the source within seconds. This means that as any issues arise, the tainted products can easily be identified and quickly taken off store shelves.
On the crypto side of the blockchain technology ecosystem, it was also a year of maturation. The previously in-vogue mechanism of crowdfunding, called initial coin offerings (or ICOs), exhibited significantly decreased volume over the course of the year, while we also saw enforcement by the SEC intensify. Together, these signals point toward the fact that the “Wild West” days of cryptocurrency’s evolution are rapidly coming to an end.
People who are looking to build software that will have impacts in the real world with “normal” users have a different risk threshold than the earliest adopters of cryptocurrency. In other words, these individuals need to make sure they are more adherent to regulations. What 2018 revealed is that if we are going to have a mature ecosystem in which digital and blockchain-based assets coexist as equals among other traditional asset classes, then it follows that they will be subject to various levels of regulatory scrutiny. Put another way, if regulators saw this technology as a fad, they would not have the incentive to move forward with increased scrutiny and rules and regulations. The increase in regulatory enforcement is one of the clearest data points that the ecosystem around blockchain technology is rapidly maturing.
As we look to 2019, there will be four key trends worthy of watching:
We will see the beginning of meta-blockchain protocols that connect individual blockchains together. These are vital to building bigger ecosystems for providing blockchain solutions, scaling the technology and building systems that can have increased flexibility for platform makers. What meta-blockchain protocols give us are systems that start to look how the current internet actually looks. The current internet is basically a routing layer on top of a series of extranets or internal clusters. In these extranets, the software behind applications actually runs, and then the very “top” level of that application is exposed to routing over the internet. Similarly, the meta-blockchain protocols will allow for the evolution of individual “zones” that will be similar in nature to extranets and will be able to route transactions, events and information between and across zones.
There will be an increased convergence between the enterprise and the crypto sides of the industry. This merging means enterprises will utilize public blockchains more and permissioned blockchains will increasingly open up and look like public blockchains. In addition, the beginnings of this convergence will be heavily influenced by the development of meta-blockchain protocols, which we will see start to come online in 2019.
The discussion around blockchain will continue to move away from the price of any particular asset and toward how various blockchain-based assets are actually being used. Instead of an emphasis on the pure value of tokens, I believe the dynamic will shift dramatically toward solving practical needs of everyday users. This brings us to my last, and most significant, prediction.
There will be a further increase in users leveraging blockchain solutions to solve their real-world needs. I believe that this is where we will see the biggest change.
The crypto market has gained momentum in the past two years, with 2018 being a transformative year. This has laid the foundation for the industry to further mature in 2019, with processes being further streamlined through the thoughtful, thorough and regulatory-abiding implementation of blockchain platforms.
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Casey is also a member of the Forbes Technology Council - see this blog for more details.