Blockchain Post-2018 Crash — What’s Next?
2018 has been a fun year in blockchain, amirite?
All kidding/crying myself to sleep aside, we would all likely agree that 2018 has been an eye-opener after the over-exuberance of 2017. So what have we learned?
- ICOs are risky for all involved — projects face regulatory risks and fickle markets while token buyers need to worry about scams and poor business models.
- It’s hard to get traction for your tokenized dApp.
- Big tech companies like Amazon and Asus are making moves into blockchain technology.
- Private blockchain is gaining momentum as more and more enterprises and governments start deploying projects.
Assessing the current situation
Where we are today is similar to when the internet was the “information superhighway” in the 90s — everyone was dreaming of what it could do, but the infrastructure was still not strong enough to support anything complex or truly engaging. Bill Gates realized this and made accessing internet in a user-friendly way central to Microsoft’s product strategy with the release of Windows 95 and Internet Explorer 1.0.
In the early days of the internet, the companies that succeeded were the ones which catered to an uninitiated market and made the most of immature technology. These companies went on to become industry giants like AOL, RealNetworks, Craigslist and Yahoo!.
2018 has hopefully given us the perspective needed to create our industry’s own AOLs and Craigslists — the first wave of successful blockchain projects. As we move past the “inflated expectations” stage and transition into the “trough of disillusionment,” it’s time to get to work on finding real product-market fit.
Blockchain and crypto in 2019
So what does this mean in practice? Here are some thoughts on how the industry could evolve based on the aforementioned realities and new trends in the space.
VCs replace ICOs as the biggest source of funding
Crowdfunding has dried up along with the bear market and developers are increasingly going the more traditional route of venture capital. Expect this trend to continue since 1) this is where the money is and 2) blockchain technology is becoming seen more as mainstream tech.
Lots of Proof-of-Concepts (POC)
According to PWC 84% of companies are dabbling in blockchain. The feedback we’re getting from the enterprise sector is that everyone is very busy with blockchain projects at the moment. The result will be many POCs, mostly on private blockchains enabling these businesses to get involved and learn what the technology could mean for them in a low-risk environment. Enterprises testing private blockchain is great news since it’s the first step to large-scale public blockchain deployments.
Better-suited business models
The first attempt to make crypto work was simply to take an existing product, copy it and give it a token. Expect the next wave of dApps to be better-suited to blockchain and cryptocurrency, with a focus on games and data. The key factor here is that businesses will increasingly look for the places where the technology makes sense and not anyplace a token could theoretically exist.
The rise of the minimum desirable product
2017 and 2018 were full of new projects raising funds and beginning development — now all of these projects will need to show some output — us included :). There will be lots of product launches and maturation for both infrastructure and dApps and a lot of work on getting initial traction.
More deal making
2018 is on pace for almost 150 mergers and acquisitions and 2019 should have even more. Companies that sold tokens in 2017 and 2018 now have large quantities of cash on hand and tokens in reserve. Acquiring promising technology is cheaper than developing in-house, has a positive impact on the acquirers brand and generates buzz. We’re already seeing some larger acquisitions, such as ConsenSys’ purchase of Planetary Resources.
Whenever there is a big downturn in an industry, there are many people who simply cannot imagine things improving. I’d expect to see more articles calling the underlying blockchain technology into question. Once there are a few successes, we can expect more mainstream optimism, though this will cycle along with the growth period.
Making the most of 2019
As 2019 begins, it’s a good time to take observe where the industry is at the moment and how to succeed in it.
The days of moonshots and unlimited funds seem to be at least temporarily over. Now is the time to make blockchain and crypto user-friendly and a more convenient alternative to centralized platforms and applications for specific types of applications. This might mean stripping down your app to work with existing infrastructures or a novice market with an eye for much bigger things down the road.
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