2019
Sue me for not making my 2019 predictions until after the start of the year. Proscribed by my ethnicity from ever running on time, I just finally got around to putting up my new calendar. Anyway, here’s Your Humble Correspondent’s forecast for the next 363 days in all things blockchain-adjacent.
For the record, this isn’t the calendar I just hanged on my fridge. 1902 Justus van Lieberg Trade Card Calendar front. Source: David Berry.
When other investments turn sour, crypto will taste sweeter and sweeter. You heard a lot about the stock market’s losing year, but it was really just a regression to the mean after 2017’s profit party. So I think the indices will track upward this year — slowly, measuredly upward. Stocks will be boring. Bonds might be more interesting, but that’s not a compliment. As yield curves flatten and perhaps invert, there’ll be a disincentive to fund long-term projects, which is economic kryptonite. Prediction: Money will flow into crypto as a hedge on the bigger money that flows into cash.
Vocabulary will improve. Malta’s regulators distinguish between cryptocurrencies, security tokens and utility tokens. Other regulators will catch up. And the industry will then catch up to the regulators because what gets measured gets done. Everyone will be scrupulous to define what it is they’re trying to do with their ICO or STO.
Regulation will move forward, but un-regulation will move forwarder. Sovereign governments would be committing malpractice if they didn’t monitor the crypto space for KYC, AML, ATF and (especially) tax evasion concerns. So exchanges like Coinbase, which scrupulously adhere to all these standards, will continue to thrive by being a safe haven for institutional investors and other solid citizens who want to be — or at least appear — completely aboveboard with their crypto transactions. But let’s remember that “crypto” means “hidden,” and it was the whole Austrian-school, libertarian, borderline anarchical sentiment that fueled its adoption. Some people will still want to buy heroin straight from the poppy farmer. Others will want to transfer money to family in countries that don’t play nice with others. And still others will say it’s none of anyone’s goddamn business what I do with my money — it’s my money. For them, decentralized exchanges which offer enhanced privacy at the risk of running afoul of regulators will grow vigorously in offshore havens. Those who want to demonstrate compliance will, but those who don’t won’t.
Putting paid to credit cards. Visa, MasterCard and American Express aren’t going anywhere, but they’re in for some competition via blockchain. Decentralized credit will emerge as a major use case for the technology. This will lower the cost per transaction at just the time when Lightning Network improves bandwidth enough to handle all the processing required. Credit card issuers won’t be measurably hurt by blockchain workarounds in the short term, but they will have to respond somehow.
Money will relocate. It’s getting harder to make a living in financial services in London or Zurich. This isn’t just a cryptocurrency issue, although British and Swiss regulatory missteps and political ill will have been revealed in this space more starkly than elsewhere. Such digital asset-friendly venues as Malta, Singapore and the United Arab Emirates are likely to benefit from Old Money enclaves’ inability to keep up.
Technology remains unpredictable. So I won’t attempt to predict it. What I’m confident in, though, is this: Blockchain will converge with gaming, machine learning and virtual/augmented reality to provide offerings by the end of the year that are unforeseeable at the beginning; meanwhile, the energy requirements of mining will spur improvements in efficiency and renewable sourcing.
China has been sandbagging all this time, and that’s about to end. China will finally put an end to the charade that it has any reservations about crypto. Beijing would’ve ideally liked to keep the game going for a while longer, but the trade war — which it’s losing (I’m no Trump partisan, but a fact’s a fact) — is forcing its hand. By the end of the year, China will have legal centralized exchanges, tolerated offshore exchanges, more DLT patents than any other country, blockchain integrated into its currently sketchy and inefficient debt market, crypto pay options on all its leading e-commerce sites and maybe-just-maybe its own central bank digital currency (possibly developed by GXChain).
Feel free to have a laugh at all this a year from now, but be sure to give me a couple days’ grace time.
