No, we are not going to talk about Ripple this week. We have a life and more important things to use our mental cycles on.
🔮 Gazing into the crypstal ball
The start of a calendar year is when lots of people start making bold predictions about how the industry will unfold. When it comes to crypto, a year is obviously an insanely long timeframe given the pace at which the industry moves. Many smart folks placed their bets and we have selected the most thought provoking amongst them, in no particular order, organized by theme.
Prices - The total market cap of blockchain-based digital assets will exceed $2 trillion U.S. dollars by January 1, 2019 - There will be a major correction in the ALTS - Most utility tokens, then, will go to zero, regardless of team quality and execution. - in 2018 volatility of the crypto market can increase even more, as the rapid capitalization growth of late 2017 was not yet accompanied by a similar growth of the number of crypto wallets - Most crypto funds will (net of fees) underperform vs. BTC and ETH as benchmarks
Fundamentals - Ethereum will continue to be the largest blockchain developer ecosystem in 2018 by many multiples - We start to see the permissionless blockchains (e.g. Filecoin) gain (possibly limited) traction in 2018.
Law & order - The first “pump-and-dump” ring will be arrested as organised crime - Not convinced that the well-intentioned SAFT is right for most tokenization projects - The IRS and their equivalents globally will be demanding their pound of flesh. - Now that the Coinbase precedent has been set with the IRS, expect Polo, Bittrex, and all other major exchanges with US customers to fork over trading records for clients above a certain trading threshold - We’ll see numerous kidnapping and blackmail cases where top personalities are extorted successfully. Expect to see more personal security details in 2018.
Hacks & cock ups - A major exchange will be hacked - We will see at least one traditional financial brokerage firm lose money and go out of business because of mismanagement with a derivatives product. - A bank run? What if all those gains in crypto, on exchange, in cold wallets, all of it… starts having a hard time getting to USD?
ICOs & Token models - Forks with airdrops will become the preferred alternative to ICOs - Crypto-securities aren’t really a thing yet, but they will be massive - We’ll see many of the best practice initiatives mature and take a sensible approach to involving regulators and protecting investors whilst maintaining the innovation that makes the ICO compelling - A bulge bracket bank blockchain-based stablecoin in 2018 if they can get it through compliance.
Conspiracy - Yes, Craig Wright could be (part of) Satoshi.
Legacy - I have no doubt Facebook is exploring cryptocurrency payments within the Facebook Messenger platform or some other token-related initiative. We may even see an acquisition attempt by Facebook. - Intranets were great training wheels, until the Internet was pervasive. The same trajectory will occur with permissioned blockchains in 2018 and beyond.
Personal lives - It won’t happen overnight, but many of the “winners” will end up deeply dissatisfied - Expect more people to renounce their citizenship in high tax countries, and more people to move their legal residences to lower tax states.
Stefano's personal prediction is that 2018 is the year it all comes crashing down. We are surely building the future and witnessing a revolution, but we’re doing so at the ground floor of the biggest casino ever invented and sometime soon it will close its doors and kick everyone out to go and build in their dusty garages.
So, I think that aside from BTC and ETH, all of the other TOP 10 coins will disappear into oblivion. Staked 10 ETH for charity with Ari on Twitter as he took the over. (BTW, if you can help us write a smart escrow contract for this, we’d be happy to donate a part of the 10 ETH to a charity of your choosing).
Yannick instead thinks we’re still at the very, very early days and the capital influx has just started.
Below the links to the posts where the predictions have been sourced from.
Since 2009 Zuck has started every calendar year by publicly taking on a new challenge, and this year he's going to go deep into studying to positives and negatives of the technologies that are leading the decentralization wave (namely crypto currencies and encryption). This is significant given Facebook is the epitome of centralization, and often criticized for the power it has gathered in the process.
The fact that David Marcus, Messenger's lead, has recently joined Coinbase Board of Directors could indeed suggest that Facebook have serious intentions to get into this space (as hinted by Don Tapscott in his 2018 predictions), or at the very least to get to know their enemy better...
The Ethereum foundation is getting serious about solving ETH's scaling problems.
Vitalik announced two different grant programs, both with varying amounts from $50k to $1M.
There are two focuses: 1) Sharding (eg. getting a subset of the nodes to validate a specific block or a specific transaction in a block). 2) Layer-2, or Lighting-like stuff. Plasma and Raiden fall in here.
Really great to see the Ethereum foundation use its firepower towards external teams developing solutions that could benefit the entire space.
It sure would be cool to have the same for Bitcoin.
A pretty objective snapshot of Ethereum's state of the nation by Evan from Consensys, as ETH price crosses $1k for the first time.
1. Ethereum hasn’t yet changed the world (though there is a big promise it can in ETH price tag) 2. Many people buying don’t really understand what they’re buying (Ripple!) 3. Demand is real (1.3m daily transactions!) 4. Scaling matters (a high price helps drawing attention and talent to it) 5. Time to get apps live!
The author's key points are that: 1) cryptopunks/kitties demonstrated to developers that money can be made building Dapps, a tipping point for the industry 2) value derives from a strong narrative + scarcity + ownership (i.e. how it makes you feel to own something), nor from functional utility.
Perhaps not so coincidentally, the early use cases for internet-based consumer applications were also in games (as well as porn and gambling).
The one on narrative is a great and prescient point. I walked in a philatelic shop earlier this week, didn't know they still existed. I own a large collection of old telephone cards back from when people called from phone boxes, some are 40+ years old. When I was a young teenager there was an vibrant market for used and new telephone cards, some of the rarest ones fetched very high prices at the time. The "narrative" was strong, there was scarcity as each edition had a finite run and owning them felt good.
I was curious to know if there is still a market for them now. I was feeling quite optimistic, in my mind now that no one makes them nor uses them anymore they must be even more valuable as rare collectibles. So I was a little surprised when the old shop owner told me that they aren't worth the plastic they are made of anymore. When I asked why, he said that the new generations don't even know what they are, let alone use them. Poof, the narrative was gone. Maybe a museum one day would take them for free and display them in the history of communication room.
This was not fun for all of the Xapo and similar card users (☝️ one here).
Wavecrest, the only issuing bank that was actually working with the crypto providers, got ordered by VISA to shut down all of its cards.
This could surely be a blow for crypto users, but in reality it just reinforces our vision of needing decentralization everywhere. VISA just showed us again what can happen when you have a centralized legacy financial system, and when you are never really in control.
Interest is gathering in the Ethereum development community around a potential new token standard aimed at improving on the ERC20 token. The Aragon team are considering it as the standard for tokens issued on their platform.
The key improvements seem to be the ability to trigger actions in smart contract when tokens are transferred, while reducing the risk of token losses by letting addresses/contracts whitelist which tokens can be received and allowing holders to de/authorise operators that can manager their tokens (e.g. exchanges).
We are not sure what took authorities so long, but finally someone sent a cease and desist order to BitConnect, one of the shadiest and most blatantly obvious examples of crypto scam.
The Texas Securities Commissioner took action as apparently there are sales agents on the State's street selling investment programs operated by BitConnect under a Ponzi-like commission structure, promising guaranteed returns and all that.
Their site, which does not list any team member, still promotes an ICO starting on January 10th giving no information whatsoever.
Lots of mixed news coming out of China, as usual. The latest seems to be that there will be no ban on bitcoin miners, but rather a crackdown on the preferential energy treatments that some benefit from in the local provinces. Some of the largest Chinese miners have already been launching overseas operations as a result of that.
With 2/3 of the bitcoin hashrate originating from China, this will probably lead to lower mining concentration and be healthy for Bitcoin.
Continuing on the trend of protocols appending a native fund, Russian blockchain company Waves is launching its own VC fund called The Basics Fund of $30 million to back blockchain startups and projects (presumably building on their own platform).
Projects that completed ICOs in the first part of 2017 or earlier and hedl on to their cryptos, are now sitting on inordinate piles of liquid assets. Investing in their ecosystem seems to be the most sensible thing to do, bar returning funds to investors.
If you follow David Sacks on Twitter you already know he's been into crypto even listing himself as a "crypto capitalist".
It turns out his next gig will be a VC-like one.
Axios reported that he's raising a $350M fund. "The investment strategy is to focus on early-stage opportunities in blockchain and other "Web 3.0" sorts of companies, with expectations of also doing a few incubations and later-stage deals."