My Blockchain & Cryptocurrency Predictions for 2018
By Jed Grant, CEO & Founder, Peer Mountain
2017 was the year that we saw blockchain technology’s meteoric rise into the public consciousness. And just in time — in the same year, the flaws of centralized data systems led to massive breaches resulting in the exposure and theft of personal data belonging to hundreds of millions of individuals.
I expect 2018 to be the year that blockchain grows up. Naturally, there will be some growing pains, but as the wheat gets separated from the chaff in the field of decentralized applications (dApps), we’ll have digital experiences that are more secure, more private, and more convenient than ever.
Here are some of my predictions for blockchain and cryptocurrencies in 2018:
ICOs will be completely different by Q3 2018
In the third quarter of this year, we’ll see a totally different type of ICO compared with the third quarter of 2017. By the end of Q1 2018, we might start to see some real change in the regulatory environment.
The Securities and Exchange Commission (SEC) may move first in the United States. I fear that the SEC may crack down and say that ICOs are all security offerings. But then there will be a waterfall effect. What is the World of Warcraft currency? What are Amazon gift cards? These things are essentially tokens, even if they’re not specifically tying into a blockchain. Enacting blanket regulations would mean they’re going to have to deal with these kinds of problems. But a token that uses blockchain doesn’t mean it’s any different from any other token. So it’s far from simple to draw rigid distinctions.
The SEC, in inimitable American style, is probably going to move proactively, reflecting an attitude of: “We need something today so we’ll get it today, and we’ll fix it tomorrow. I think Europe is going to be a little bit more prudent. At the risk of upsetting some countries, I foresee there being a coordinated approach between European regulators with France and Germany for the most part, and possibly Britain somewhat.
The European Securities and Markets Association is going to announce what the European view on ICOs will be. They’re going to position that to counterbalance Switzerland and the US.
There will even be requirements for ICOs if they’re not securities. There will be strict anti-money laundering requirements. Maybe this will not come from the securities/market regulator, but instead from the central bank, financial intelligence units, and the like. After all, nobody wants money-laundering ICOs.
Interchain solutions will be huge
Blockchain’s biggest impact in 2018 will occur at a fundamental level. It’s going to be at the application layer where we talk about interactions in peer-to-peer environments. We’ll use cryptocurrencies to transact in these environments, but in a manner that is enterprise-friendly.
This is another area where Peer Mountain and its PeerchainTM protocol fits in. In our system, users can transmit digital assets across chains, and digital signatures recorded in one-on-one chains remain legally binding throughout the Peerchain™.
We’re already seeing some smaller projects where people are putting shipping manifests on a blockchain. We will see some more proofs-of-concept and use cases. But where I see interchain solutions really kicking off is where there’s a network effect. There are industries that have the potential to gain many individual users as they already have the proper architecture for a decentralized system.
The next level up from there consists of the services that will be available to all; this is going to lead to interchain solutions like Peer Mountain’s PeerchainTM protocol. Interchain is poised to be the biggest thing this year.
Data breaches will continue to grow in size and frequency
We saw some record data breaches in 2017, and we’ll continue to see more this year. In fact, I believe that hacking is going to get even worse in 2018, and will keep getting worse. It’s like the Wild West, and it’s not going to stop anytime soon. There’s such a huge market for personal information, and it’s highly profitable for criminal organisations, which are developing more efficient hacking and data theft systems.
I work in law enforcement, so I hear the stories about what they do. These criminals are incredibly organized — and decentralized. They’ll do things like organize hacks to access ATMs and run a “jackpot” scheme, where they give couriers maps and tell them to hit specific ATMs in a specific order to unload cash through malware that they’ve integrated into a bank’s system over a few months. There have been cases where thieves have used this method to steal $60M worth of cash in a weekend globally.
It’s not 15-year-old kids pulling these kinds of stunts any more. We’re talking about big-time villains, and they’re going to keep doing these because law enforcement is ineffective.
Decentralization will help protect our data and identities
Decentralizing our information will be a powerful means of preventing data and identity theft, and we’ll be able to execute this solution in 2018. Of course hackers will still be attempting to breach the transaction systems of large organisations and institutions, but that’s a different problem.
Decentralization will approach critical mass
I believe we’ll see the benefits of decentralization once we reach critical mass. Initially, the concept of owning one’s own data will pique curiosity, but Peer Mountain will help shift the consumer mindset to the critical mass that will be vital to further progress.
Our mobile app is positioned to be in use on at least one million Swiss citizen’s phones, thanks to one of our major partners. That number should quickly grow to three million in 2019.
Once we’ve built this Peer Mountain community, the benefits of decentralization will become clear. Our users will be able to complete processes that currently require paper documents and all the hassles they create (sending, receiving, storing, searching, certifying, etc.).
Peer Mountain encrypts information and enables it to be re-used without limits, so that individuals and organizations can automate paper-based verification processes. An example of how Peer Mountain could change the landscape is if we imagine a consumer interested in getting a credit card. Through an advertisement, she could use Peer Mountain to get that card on their phone in, say, just ten minutes, rather than having to wait a month to receive a piece of plastic in the mail.
Providing trust will create new opportunities to generate revenue
But that’s only a third of the trinity of what Peer Mountain delivers — the consumer benefit. Peer Mountain also delivers a huge enterprise benefit. Trust providers can actually play a coherent role in our ecosystem. At the moment, their role is all ad hoc. Peer Mountain is establishing an ecosystem in which trust providers (which anyone can be) will play a valuable role that can open up new revenue streams.
Let’s say I’m the most trustworthy person in town and everyone knows knows this, and I give you a certificate that says “I trust you”. Then you go to someone else and say, “I’d like to do business with you.” and that person asks, “Who are you?” You say, “Well, Jed trusts me and everyone in the town trusts Jed”. The certificate I gave you has a certain value and, in this example, I represent the way the Peer Mountain system works in this ecosystem. Every time you use that super trustworthy certificate, I get paid. So the ecosystem pays me to be trustworthy.
Blockchain will play a key role in helping deliver efficient GDPR solutions
Concentrated data silos are a hacker’s paradise. With initiatives such as the EU’s General Data Protection Regulation (GDPR), we’ll see tighter controls on these silos. However, the silos themselves are the real problem — as long as companies are using centralized data storage, processing, and transmission systems, they’re putting their customers’ personal information at risk.
GDPR and similar directives will impact startups, banks and fintechs in different ways. One thing’s for certain: we’re in for more paperwork and more tick boxes on forms. So these directives are actually just going to make the user experience more cumbersome in the short term.
By the end of this year, Peer Mountain will help resolve this issue with its decentralized trust, ID protection, and compliance system. In fact, the way we’re leveraging blockchain will make much of this directive irrelevant. That said, GDPR is necessary, as it will push organizations towards decentralizing data to protect consumers while simultaneously ensuring that consumers truly own their personal information.
Blockchain will disrupt marketing
In the near future, Peer Mountain will be a powerful marketing tool. Marketers will be able to create campaigns that use QR codes and links that invite consumers to their clients’ Peer Mountain instances. This will give marketers and their clients traceability and provenance that provide a clear indication of the effectiveness of their marketing campaigns, and show them where their leads are coming from.
Scalability: local blockchain solutions will succeed where global solutions fail
We’re at the dawn of blockchain/crypto technology. It will take 10 years to get it to where we want it to be. In five years, it will be pretty widespread, but there will still be some kinks in it. I can’t predict what the specific failures will be, but I think we’ll see some issues with regard to scalability. There will be some disillusionment with the idea of a global blockchain. Look at the Ethereum network — it’s a great thing, but to have that running efficiently globally means spanning the latency between one side of the planet and the other. When you try to solve this problem, physics gets in the way.
So we’re going to see local solutions. Big international blockchain platforms are going to fail and small local systems are going to work. The design assumption of the PeerchainTM system delivers a local solution. There will be Peer Mountain instances and ranges that will interact with each other. Each one can run at its own high speed, with low latency so that information is transmitted at the speed of light. The meters between Peer Mountain instances will determine and minimize latency.
Bitcoin will be remain highly volatile, but is likely to increase in value
I won’t predict the price of Bitcoin. It could crash tremendously. It could quadruple. In the longer term, 2019 and beyond, I think it will be higher than where it is today. But that’s not guaranteed for 2018. It could be a turbulent year. Bitcoin is incredibly volatile. But looking at how much cash it has attracted, and can still attract, the fact that the number of coins is limited, and the number of people on the planet who will want it, I think its price will be higher than it is today, unless of course there’s a black swan event involving Bitcoin, or a stronger currency challenges it, which is kind of what Ethereum is doing. I’m actually more bullish on Ether than Bitcoin. But Bitcoin is like the gold of cryptocurrencies today. It’s the main stake.
Ether will be more useful as a transactional currency
Bitcoin is a hoarding (or HODLing) currency. People buy Bitcoin as a store of value and they don’t want to sell it, at least not for a long time. So in the long term it will gain greater value.
Ether has more potential to be something people actually transact with. With Ether, we’ll see more purchases of high-priced durables and services, and even real estate. It will not, and I believe will never, become a small item consumer purchase crypto. That throne will go to a coin we don’t have yet. Still, I can very easily imagine a car dealership that allows you to pay for a vehicle in Ether online. They run a smart contract, with a web page on the front, you buy online in Ether, and pick up the keys, or they deliver your new car to you. Ethereum has a better chance to do things like that right now.
Advice for CIOs in 2018: look at Peer Mountain
Here’s some advice to enterprise CIOs thinking about blockchain in 2018: take a look at Peer Mountain. We’ve designed this business solution to deliver your services to your customers simply and swiftly, while ensuring your company complies with data protection directives.
If you haven’t already done a proof-of-concept and found a use case, don’t just create a blockchain use case for the sake of doing a proof-of-concept. Find a use case where there are multiple stakeholders, where you can share information on various chains, across those stakeholders — not just in your company. If this is all done in your data centre you don’t need a blockchain. But if you’re doing something with one of your partners, say one of your key suppliers, you can run a proof-of-concept if you haven’t already.
If you want to run a proof-of-concept for a service and bring suppliers in, Peer Mountain would be the architecture to look at.
