State of Crypto Development: December 2019
A Decade of Crypto
Almost exactly 10 years ago, the first Bitcoin transactions were made, kicking off a whole new industry, and launching a new technology ecosystem as significant as the printing press, industrial age, internet, and smart phone revolutions that came before. For most of the decade, basic infrastructure, plumbing, and exchanges were built to support it.
The crypto world was busy building bridges and paving roads for app developers to drive on, as in the early days of the internet. Developers were busy building email clients, Netscape and Internet Explorer, the JavaScript language, CSS, and HTML, before we could have web applications.
When the computing age was first founded, we needed Texas Instruments and Intel and Microsoft before we could get Excel or Fortnite.
As with both historical phases, technology was being built, but only a small percentage of the world had access to it. But the bridges and onramps are finally bringing things together. It’s time to introduce a new breed of apps to the world.
- 2008: Bitcoin white paper released.
- 2009: First Bitcoin transactions.
- 2013: BTC hits $1 Billion.
- 2014: Ethereum ICO.
- 2015: Ethereum launches.
- 2016: DAO hack leads to massive loss of funds. Ethereum split to ETH, ETC.
- 2017: Binance launches and quickly dominates exchange volume. EOS ICO launches. CryptoKitties jams Ethereum. BTC jumps 10x to almost $20k.
- 2018: Crypto winter. Crypto is hit by exit scams, failed projects and layoffs. A fork of BTC forks and splits. Already depressed prices fall off a cliff in November.
- 2019: Prices recover from the November crash in the spring. Survivors BUIDL!
Now that the technology and infrastructure has advanced significantly, we’re entering a phase of crypto evolution where all the amazing stuff we’ve built will start to get used by people who don’t do technology, banking, or investing for a living.
Crypto in 2019
2019 has been an epic year of building in the crypto ecosystem. Up until this moment, building a crypto project felt like paving the road you’re trying to drive on. Everywhere you looked, critical infrastructure, UX, and scaling problems got in the way of building real apps. But looking out at a fresh new, wide open decade, I’m more excited than ever. While the investment community is in a slump over price action, the energy in the developer community is electric. We can all feel it happening:
Mainstream apps are coming soon.
Maybe even sooner than I expected. In 2017 and 2018, I was warning people that many of the grand visions we see of our potential crypto future would likely be 7–10 years away, and the first big mainstream crypto apps were likely 3–7 years away.
But today, I’m looking at the road ahead, and seeing mainstream-ready UX landing in the most innovative projects, and app-specific side-chains to help app developers overcome short term scaling challenges. Critical components such as authentication, authorization, and crypto onramps are being elegantly solved.
In short, a whole lot of amazing developers have flocked into the crypto ecosystem and built a bunch of great stuff faster than I imagined possible.
Ethereum Strikes Back
One of the most interesting developments in 2019 was the revenge of Ethereum. When I wrote about top blockchain tech to watch in 2019, I speculated that Cardano or Waves could create a ripple after launching their smart contract networks.
Waves smart contracts went live at the end of last year, but so far have not picked up the momentum they would need in developer ecosystem or transaction volume to challenge Ethereum.
Cardano still has incredible transaction volume (comparable to Ethereum). But at the end of 2019, they still don’t have smart contracts working on mainnet, so it’s not a viable alternative today.
EOS and Tron have picked up some initial developer traction and investor interest, but EOS has been hobbled by both scaling and problematic governance issues. Many developers chose EOS to avoid the scaling issues on Ethereum, so finding out that the situation is even worse on EOS and no solutions in sight has caused several developers and block producers to leave the EOS ecosystem. Can they overcome the challenges ahead and catch up?
Tron volumes and developer traction are significantly lagging Ethereum.
Daily Active Users by On Chain Transactions
None of the would be Ethereum killers were able to make significant headway against Ethereum this year, and before you tell me, “no, look, EOS and Tron have lots of DApp users!” I’ll just drop a subtle reminder that one successful mainstream app would quickly dwarf the entire user community currently being tracked by DappRadar.
3k–10k Daily Active Users (DAUs)? In the software industry, we call that a promising start. Come back in 6 months and show me the growth. Except that there hasn’t been much growth (comparatively). It’s up from just under 1k when I wrote about this topic in December of last year. This is not how viral apps scale at this stage if they’re going to break out and go mainstream.
Let’s see what happens in 2020.
Will Cardano launch smart contracts? Will EOS solve its scaling and governance problems? Will Ethereum encounter more roadblocks as it rolls out changes in preparation for the switch to Proof of Stake (PoS)? Will it run into similar governance and incentive gaming problems that have plagued other PoS systems like EOS? Will any other layer 1 blockchain attract enough miners or stakers to provide a secure alternative to Bitcoin or Ethereum? Time will tell.
If you’re working on a layer 1 competitor to Ethereum and you still haven’t launched scalable smart contracts on mainnet, time is quickly running out.
From where I’m sitting today, as it has been with Bitcoin for a decade:
It looks like the next Ethereum might be Ethereum.
Ethereum’s 2nd Killer App: DeFi
Ethereum’s first killer app was fundraising for crypto ventures. The ICO boom in 2017 and early 2018 raised billions of dollars for crypto projects — an arrival announcement that was heard around the globe. It kicked off the programmable money race, launching the crypto application ecosystem we have today.
The 2nd killer app is DeFi (Decentralized Finance), and it’s a tsunami that will transform the banking and personal finance landscape. It’s still just getting started, but the early traction for DeFi loans is phenomenal. The growth has been startling — over half a billion dollars currently locked, and this is even before we have big mainstream apps in the hands of consumers.
Most of this action is happening on Ethereum.
2019 Crypto Data Points
The following is a log scale graph comparing network transaction volumes. I’d use linear but then only ETH and ADA are visible. Keep in mind that a small distance on the chart can represent 10x larger volumes. E.g., ADA and Ethereum transaction volumes are 100x larger than Tron, and about 10x larger than Waves.
- Square Cash App has over 10M Android downloads — users can buy, sell, send and receive Bitcoin in a simple app with great UX.
- Coinbase has over 10M Android downloads.
- Mainstream browser support is here! Thanks to Fortmatic, many of the most popular Ethereum DApps now work in mainstream browsers., e.g., Cent, Zerion, Bancor, OpenSea, SuperRare, etc. (Where are you, Compound? Come join the party!)
- Value locked in DeFi loans ($660 million — up from $145 million in September)
- Brave launched built-in Ethereum wallet and went from 8.7 million monthly active users in October to 10.4 million MAU at the end of November.
- DeFi community groups are popping up around the globe, and exploding online on Telegram and Discord.
- Multicolateral DAI launched — decentralized USD on the blockchain.
- Waves launched smart contract support and a great DEX experience. Needs growth in developer traction and transaction volume.
- Cardano transaction volume is huge relative to TRX and EOS. Comparable to ETH. No dev ecosystem yet because smart contracts are still not operational. Missed Q3 2019 target. Cardano has the most promising programming language, if they can bring it to market.
- Sliver.tv on Theta — 5million+ users, 60k member discord chat. Theta is a streaming network that allows users to earn crypto while they watch espots streamers play games. They can use the earned crypto to buy things in the Sliver.tv store.
- DLive is now using Theta and they’re targeting the Twitch crowd. DLive has 5 million users.
- NFTs will be HUGE. Digital items in general is $10B+ industry today. Fortnite earned $1B in 2018 selling in game items from $2.4B in total Fortnite revenues. The ability to buy and sell things like artwork and video game items on the open market is one of the most exciting innovations in the crypto space.
2020 might be the year we see several noteworthy mainstream apps incorporate wallet auth and crypto transactions.
Prediction: The line between DApps and traditional mainstream apps is about to get really blurry — and that’s a very good thing for everybody.
Enjoy your holidays. See you in the next decade!
Eric Elliott is the author of the books, “Composing Software” and “Programming JavaScript Applications”. As co-founder of EricElliottJS.com and DevAnywhere.io, he teaches developers essential software development skills. He builds and advises development teams for crypto projects, and has contributed to software experiences for Adobe Systems, Zumba Fitness, The Wall Street Journal, ESPN, BBC, and top recording artists including Usher, Frank Ocean, Metallica, and many more.
He enjoys a remote lifestyle with the most beautiful woman in the world.
