As 2018 walks slowly towards the exit door, I’d like to consider some of the trends that I’ve noticed this year, along with personal reflections.
I’m still not convinced of the doomy warnings of bear markets throughout the year. Yes of course we saw some fairly amazing rises and falls in the markets, but I’m still of the opinion that what is really happening is a slow and steady ‘normalizing’ as crypto becomes ever more useful as a real tool of transaction, rather than merely a spectacular (and unreliable) form of investment.
What’s clear is that there are way too many different forms of coin out there, especially virtually worthless utility tokens which only have any value within their own very small ecosystem. For utility tokens to have intrinsic value, they must be backed by tangible assets, and not just promises. I would have hoped for some clearing out of the ‘dead wood’ during the year, but as yet markets still have too many near-valueless coins floating around.
Which brings me onto stablecoins, which were a growing trend during 2018. The fact that in some cases stablecoins are backed by cryptocurrencies — the yo-yoing of which they’re supposed to be protecting against! — has been one of the great mysteries of the year for me. There is a place for stablecoins, but as a means to safely store wealth, rather than to attempt to absorb the shocks of volatility of the markets. And if you look at the models, some of them are unconvincing: The algorithmic approach might seem to be smart, but we have no real idea what will happen if markets decide to ‘jump off a cliff’ one day. We have every right to be suspicious of algorithms generated by algorithms, which may be out of sync with ‘reality’. So far we haven’t seen any catastrophes, but the past disasters of High Frequency Trading in banking should be enough to approach algo stablecoins with caution.
During the year I circled the globe and met with many wonderful people at a wide variety of venues and events. The best of these was the World Blockchain Summit in Dubai, a really well-organized conference which ran smoothly and provided a wealth of networking opportunities. This should be the template for all blockchain and crypto events, bringing a highly professional approach to meetings. There were over 800 delegates in Dubai, with an exhibition of around 50 booths, and I was interested to see the way ‘East’ and ‘West’ met together. Of course it’s a huge generalization to split the world into just two halves, but there are clearly cultural, language and business differences between the American/European approach, and the rest of the world. The mood in Dubai was optimistic, and a lot of networking went on, particularly at the C-level, as the meeting was attended by a lot of CEOs and founders. Well done to the organizers, the Indian company Trescon!
The form of the Dubai meet was professional, and elsewhere I observed very different demographics of people coming to conferences, mixing ‘pro’ investors, with ‘civilians’. For instance in Dallas, at the Future of Blockchain conference there was a strong showing of citizens who were interested in the whole subject of the cryptoverse, and were eager to learn more. They were keen to attend the introductory ‘Blockchain 101’ education sessions each day, and this is a feature that I hope many more meetings will adopt to help ‘spread the word’ about blockchain and the cryptoverse. The mainstream media often got their stories wrong in 2018, hyping up ‘scams’ and failures, so it’s great when citizens can be invited into the process to help with their education.
In Dallas I also observed that local government was becoming interested in how blockchain can be used to provide better services. For example, the Dallas Public Library was represented, both as an active participant in blockchain, and as a seeker of new ideas and applications. That’s something to be welcomed.
I saw a similar thing in Amsterdam, where city representatives were on fact-finding missions at the World Blockchain Summit, eager to catch up and learn from the many professionals there. The representatives of a large and important European city could have been rather proud, but in fact they were really humble in their desire to get useful advice.
A few days after that I was in Hungary, speaking at the Blockchain Budapest meeting, also attended by keynote speaker Nick Szabo, who many have suggested — myself included — might be a certain creator of Bitcoin…
Earlier in the year I’d been part of a panel discussion in Vilnius where the mood was very much focused on startups and ensuring the success of tokenized offerings — a mood shared at the London World Blockchain Forum in September, where some 700 attendees were involved in both pitching new enterprises, and reporting on progress so far. This has been a trend throughout the year: that companies which have successfully pitched their ICO are now returning to meetings s to tell investors how they are doing. I welcome this sort of feedback process — it shows that startups are not just interested in raising the funding, but are in it for the long run.
A new trend that I saw at BlockCon in Santa Monica was that some enterprises are now offering Equity Tokens — not something that’s caught on yet in Europe, but wait and see! It seemed to me that this was a mark of what I regard as ‘healthy realism’, and is another indication of the increasingly corporate approach of many ICOs. At BlockCon there was a strong showing from VCs and Pro investors, making up about 40% of the attendees, with the addition of a lot of large legal firms. When the big Venture Capitalists and the big Legal firms start getting interested, you can be sure that the cryptoverse is here to stay!
Everywhere I travelled during 2018, I was particularly interested in ICOs and STOs which are offering real solutions to real-world problems. This was one of the trends of the year — that there seems to be an increasing focus on solutions, rather than merely ‘opportunities’. In other words, there’s an increasing move towards not just raising the cash from an ICO, but then delivering the project. It may seem an obvious thing, but just a few years ago many entrepreneurs were more focused on their own bank balance, rather than the longterm results of their offering.
Despite this there was still plenty of shouting about ‘scams’ during the year. My view is that there are only a tiny number of enterprises which deliberately set out to con investors, but there are a massive amount of businesses which are launching before they are ready, or have properly thought through their offering. At some of the conferences I attended there were presentations by about-to-launch ICOs, including a round of the ‘Startup World Cup Regional Final’ in Dubai. This is a very useful and challenging exercise for a company, but with only a few exceptions most presentations tried to cram in waaay too much information which was not coherent, well-told, or even well-rehearsed. Throughout the year I continued to talk to my clients about the need to carefully follow my ‘6 Steps’ approach, and to ensure that they have a very ‘shiny’ story. Unfortunately many of the startup presentations I saw in Dubai and elsewhere had not even begun to address these issues.
So there are several strands to what I’ve seen during a lively year: That many young enterprises are launching without proper preparation, particularly in their marketing approach, and this is one of the factors which results in failure (and the resulting shouts of ‘scam’). At the opposite end of the scale, there is also increasing professionalism entering the cryptoverse, as VCs, Pro investors, banks and law firms find the possibilities more and more interesting.
Regulation has been an important part of the story too, with a whole range of responses across the globe, ranging from outright crypto bans in some countries, to very positive encouragement in others. The creation and development of ‘Crypto Valley’ in the town of Zug in Switzerland is an example of this forward-looking approach, where the city council say, ‘Zug offers a robust platform for global growth due to its pro-business philosophy and the openness and easy accessibility of its local government.’ That sounds about right to me.
During the year, partly as a result of doing so much travelling and meeting people, I came to realize that my own offering had to change somewhat. My team and I have been geared to the corporate, ‘One stop shop’ approach, where large ICOs can find everything they need in the way of marketing strategies and delivery, all under one roof. This works well for the more well set up enterprises, but it has become increasingly clear that not everyone wants, or can afford, to be supported every step of the way. We have therefore done work to develop a more ‘pick and mix’ approach, allowing SMEs to find the right level of services at any given time. It could well be that during the life of the enterprise they will in fact use all of the steps that we offer, but not necessarily all at once. I’m excited by this new approach, and the possibilities of encouraging smaller startups which have great offerings, and which deserve support.
I’ve also commented during the year on the beginnings of moves to help the ‘unbanked’ people of the world via the blockchain and cryptocurrencies, but as this falls more into the ‘future’ category, I’ll leave it until next week, when I’ll take a look into my crystal ball and make some predictions for 2019. In the meantime, my whole team and I offer you seasonal best wishes, wherever you are in the world, and whatever your beliefs.
We hope this year has been kind to you, and that the next will be even better!