16 Blockchain Technology Predictions of 2016
As 2015 comes to an end, I am extremely thankful for the pure education I’ve received from my colleagues at ConsenSys. Please enjoy my 16 predictions for the decentralized technologies sector in 2016.
- Many who used the terms “blockchain” or “distributed ledger”, may learn they actually meant Ethereum. Ethereum will begin to demonstrate its power as less effort is required on the protocol (given the successful version 1.0 release on July 31st, 2015), and more development is focused on decentralized applications. Moreover, Ethereum browsers like Meta Mask and Mist and the uPort wallet and self-sovereign Identity portal will be usable by the 99.5% of the world who aren’t computer programmers so the average user will not have to access Ethereum via command-line. The price of Ether will be over $1.15 by February 29, 2016.
- Scalability will take prominence as the holy grail of public blockchain technology. Ethereum will establish itself as the clear leader in this regard. Bitcoin has sidechains and lightning networks but both require deep protocol changes which could take a very long time to implement. Other systems, like Hyperledger, are more scalable but don’t have general decentralized smart contract capability. Ethereum has state channels and the Raiden network solution which are similar to and more flexible than lightning networks for off-blockchain transactions like micropayments. The only blockchain-based apparatus required to make these solutions work are smart contracts so these mechanisms will be available soon on Ethereum. Ethereum has been working for over a year on replacing the slow and wasteful proof of work consensus formation algorithm with a proof of stake system with many better features. Also for over a year Ethereum has been working on a solution for sharding address space enabling only subsets of transaction validators to process subsets of transactions in each time frame. So while Ethereum — which is presently capable of 25 transaction per second (TPS) — is not in danger of bumping up against difficult scaling issues soon, it will be able to handle many TPS with Ethereum version 2.0, levels commensurate with what the Visa and American Express networks. Once this occurs, we can expect technology giants like IBM to use Ethereum as the backbone to their Internet of Things platforms.
- Hopefully this year we learned what a blockchain is. The buzzwords of 2016 will be Smart Contract, Merkle Tree, and Proof-of-Stake.
- Private and public blockchains will co-exist. The idea of integrated private and semi-private (or consortium) blockchain solutions will grow in prominence. And business solutions will be splayed over these and the public Ethereum network.
- There will be further education that the Internet is broken. Inter-Planetary-File-System (IPFS) will begin to eat the world.
- 2016 will be the year of blockchain programming 101, Proof of Concept (PoC) and Minimal Viable Product (MVP) blockchain examples for Fortune 500 companies.
- These aforementioned PoC’s / MVP’s will be housed through a Blockchain-as-a-Service on clouds like Microsoft Azure. These clouds will provide a safe place for a developer to wrap their head around creating a smart contract and applying it to their corporation’s pain points. Enterprise will learn the value of the Haskell Client as the only truly scalable private / consortium solution.
- Regulators will come to understand blockchain technology is their new best friend. After the recent financial crisis, the CFTC and other regulators enacted collateral rules for uncleared swap transactions. These rules can be embedded into smart contracts with an automated collateral rebalancing system to ensure regulatory adherence and transparency. Imagine if the regulators had the ability to see all the swap positions across counter parties and the collateral supporting them in real-time during the crisis.
- Law firms will begin to write smart contracts in place of traditional contracts.
- We will learn what self sovereign digital identity is and how we should own our identity. This will be spearheaded by progressive thinkers like Joseph Lubin, Christian Lundkvist, and Vinay Gupta.
- Bitcoin will continue to be a relatively small currency although its price will continue to rise due to halving, and continued Chinese interest. Bitcoin will continue to be used as an excellent transfer of value protocol but not much else. Coinbase may become the first blockchain unicorn. The price of Bitcoin will be above $475 by February 29th, 2016.
- Banks will continue to file patents and build internally on their own even though they may be part of a consortium.
- Linux Foundation’s Open-Ledger Project will begin to facilitate the evolution of blockchain technology in the most efficient manner possible: open-sourced development.
- Governments will begin to realize the potential of blockchain technology and the wide use cases ranging from title registry to identity.
- Blockchain hype will not die. As people wrap their heads around the technology, they will begin to understand that it could disrupt … everything.
- All of us in the blockchain sector will learn that we are better off with a healthy dose of humility. CEO’s, bankers, accountants, and attorneys will learn there is much to digest with respect to technology while computer scientists will learn they may have to outsource legal, accounting, business development and executive skills. It is my hope that we learn from each other the art of comparative advantage, compromise, and interpersonal trust while building trust-less technology to expedite the next big thing.
Onward and Upward,
All predictions and opinions are my own, and not necessarily that of ConsenSys.