At the beginning of 2016, ConsenSys’ Head of Global Business Development, Andrew Keys, shared with the world his nostradamus-like visions of a decentralized reality for the upcoming year. Those working in the space have seen the surge of interest and development this year has brought to the technology. Before 2016 ends, here at ConsenSys, we chronicled major events within the past year, proving our in-house seer’s ability to predict the decentralized future.
1. The price of ether will be over $1.15 by February 29, 2016.
The first half of 2016 saw a rapid increase in the price of ether as it went over $1.15 (January 15th) and rose to $11.91 (March 30th) after Microsoft announced that it was joining the Ethereum blockchain; enabling millions of Microsoft developers to build Dapps. The price of ether continued an upward trend until mid June, when it reached nearly $20. Following this peak, a series of hacks (beginning with the DAO Heist) saw the price decrease for most of the second half of the year, dropping to below $7 after the Bo Shen Hack (December 6). By December 12th its strength appeared to return, as it reached back up past $8.
For a deeper analysis on the state of the Ethereum network and price of ether for 2016, you can read it here.
2. Scalability will take prominence as the holy grail of public blockchain technology. Ethereum will establish itself as the clear leader in this regard.
Through out the year the Ethereum Foundation regularly updated the community with their thoughts and comments on proof of stake, sharding, and the progress made on the scalability roadmap.
At the Blockchain India Summit 2016, Vitalik noted that the foundation is still in the process of writing the formal proof for Casper, and mentioned plans to roll out early versions of Casper on a test network possibly before the end of the year.
Casper intends to move the Ethereum public chain to a proof-of-stake consensus model, and the next major step on the roadmap is sharding, which is intended to boost simultaneous transaction throughput on the public Ethereum network.
3. The buzzwords of 2016 will be Smart Contract, Merkle Tree, and Proof-of-Stake.
In 2016, Blockchain broke into mainstream conversation, as it popped up all over the place (mostly in reference to FinTech). As most talk of blockchain included a discussion of Smart Contracts, Proof of Stake, and Merkle Tree these terms saw an uptick in usage amongst community members, but didn’t quite catch on a general level.
4. Private and public blockchains will co-exist. The idea of integrated private and semi-private (or consortium) blockchain solutions will grow in prominence.
An environment with multiple chains (private, consortium, and public) has started to exist, as institutions continued to test systems that would best complement their business models. The key focus is not which will reign supreme, but rather which platforms could assist with interoperability between the chains.
Watch this panel discussion in DevCon2 on where the trend of enterprise use is heading for private versus public blockchains here.
5. There will be further education that the Internet is broken. Inter-Planetary-File-System (IPFS) will begin to eat the world.
By September of 2016, IPFS officially migrated to the Ethereum network . And in October it added Filecoin as a storage medium on the network. INFURA launched with IPFS support delivering enterprise-grade scalable endpoints for developers and decentralized application users to access IPFS. And IPLD (also by the Protocol Labs Team) started to shine as a way to use IPFS for hash linking metadata.
While their approach and protocol continues to develop,there is no doubt IPFS played a pivotal role in the development of a number of Dapps, and that decentralized storage will be massive….and absolutely will eat the world.
6. 2016 will be the year of blockchain programming 101, Proof of Concept (PoC) and Minimal Viable Product (MVP) blockchain examples for Fortune 500 companies.
Blockchain PoC’s sprouted as Fortune 500 companies took an interest in exploring the technology further. ConsenSys partnered with John Hancock and Microsoft, while Deloitte launched a PoC around a Smart Identity. BHP Billiton built a production blockchain deployment, while IBM and J.P. Morgan started working on blockchain projects.
7. These aforementioned PoC’s / MVP’s will be housed through a Blockchain-as-a-Service on clouds like Microsoft Azure.
Companies leading the BaaS Revolution (Microsoft, IBM, & Deloitte) experimented with enterprise-grade projects in various sectors resulting in more than 1,000 projects built on BaaS by more than 130 companies in 14 countries around the world in the past year alone.
The UK government awarded Credits (by the Crown Commercial Service), a spot on their G-Cloud BaaS, enabling local entities to build & deploy DLT services to its constituents.
By September of 2016, BaaS entered the Chinese market with BlockApps
partnering with major Chinese cloud services, priming the country to become the biggest blockchain market service in the world.
8. Regulators will come to understand blockchain technology is their new best friend.
The central banks of more than 60 nations began exploring blockchain technology in 2016. The Swiss Government wrote regulations permitting “crypto-banks,” allowing more blockchain companies to be based in the nation. The central bank of Singapore entered into partnerships with the governments of India and South Korea, aiming to explore digital payments and data management. Simultaneously, the Russian Central Bank began to test transactions on an ethereum prototype. The US Federal Reserve published a working paper that will be hugely informative and valuable for policy making around distributed ledger technology.
9. Law firms will begin to write smart contracts in place of traditional contracts.
While law firms may not have adapted the advanced use of blockchain technology as far as we had predicted, 2016 saw many firms spending time learning on how to deal and advise on actions around dealing with smart contracts, securities, commodities, data privacy, money transmission, and gaming on the blockchain.
Before the year’s end, Coinbase released a Blockchain Token Securities Law Framework.
For further reading from our in-house counsel:
Blockchain Technology and the Law Are Allies, Not Enemies
10. 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.
After ID2020, the UN announced , in collaboration with Blockstack Labs and uPort, that it will work on building a self-sovereign blockchain based identity system, potentially enfranchising 2 billion people with trusted digital citizenship & identities. Earlier this year uPort, co-founded by Christian Lundvkist, won the prestigious recognition as “Best Blockchain Application for 2016” in the International Blockchain Summit held in Shanghai, China. At the same time the European Union parliament revamped its 20 year old Data Protection service with GPDR, to help manage the personal data of EU citizens on the blockchain.
11. The price of Bitcoin will be above $475 by February 29th, 2016.
By May 28, 2016, bitcoin reached $475 and never looked back, rising to the mid $700’s by December.
12. Banks will continue to file patents and build internally on their own even though they may be part of a consortium.
2016 brewed a looming war of blockchain patents, as popular banks such as Bank of America, Morgan Stanley, Goldman Sachs, and JP Morgan appeared on hundreds of blockchain patent applications in the past year.
13. Linux Foundation’s Open-Ledger Project will begin to facilitate the evolution of blockchain technology in the most efficient manner possible: open-sourced development.
This year, we saw the push for open source consortium blockchain solutions come to fruition with R3’s Corda Ledger Platform and JP Morgan’s Quorom.
14. Governments will begin to realize the potential of blockchain technology and the wide use cases ranging from title registry to identity.
2016 saw sovereign governments recognize the potential the technology had as a governance tool, and they began funneling more funds into blockchain research. The U.S. Department of Homeland Security granted $600k to government related blockchain start-ups. Sweden, Ghana, Honduras, and the UAE are a few of the nations leading the development blockchain based land registries, while Estonia launched its e-residency program, a transnational digital identity available to anyone in the world.
15. Blockchain hype will not die. As people wrap their heads around the technology, they will begin to understand that it could disrupt … everything.
According to WEF, blockchain technology will undoubtedly transform financial services with the expectation that at least 10% of the global GDP will be stored on blockchain platforms by 2025.
This year we saw the adaptation of the technology in various economic sectors including real estate, art, financial services, supply chain management, healthcare, peer-to-peer markets, cloud storage, and governance.
16. 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.
The events highlighted above acknowledged the reasonability of the “blockchain fomo”, as companies realized the high stakes involved in keeping up with this emerging technology. The more people are working on blockchains in general, whether it is in the private or public context, the more likely that the development of the technology will accelerate. We saw this with the launch of Zcash earlier in the year and in the efforts of scores of blockchain production studios, consortiums, and companies around the world.
As our founder, Joseph Lubin would always say “It’s in our best interest, and in our mission, to help with the adoption of Ethereum in all its different forms — public, private, consortium — bringing us closer to the ultimate goal of building a globally scalable, configurable, private, infrastructure for economic social, and political systems for the entire planet.”
This article was a collaborative piece worked on by ConsenSys members who shared their valuable personal insights & work experiences in the blockchain space. Thank you to those that have contributed.
Update[December 24,2016]: “Andrew Key’s 2017 Blockchain Predictions” is now available and up for your reading pleasure!
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