Blockchain saw tremendous growth in 2017, but not in an expected way. At the start of 2017, many predicted that it would be the year that blockchain moved into production from proof-of-concepts. In this regard, there were some notable successes.
Ripple became a fully operational platform. It has more than 100 members, and its payment volumes are in the billions. Some industries started to develop blockchain business networks. An example is the Digital Trade Chain consortium (DTC) in trade finance.
Overall, its anticipated that there will be more that will “go live”. But on the other hand, this unprecedented growth in the market capitalization of cryptocurrencies or the related ICO boom was unexpected.
So, what will be in the new year? Despite the apparent perils when making predictions, we’ll see the following:
- Blockchain solutions will still come into production as the “low-hanging fruit” are addressed
- Cryptocurrencies will carry on growing. The traditional asset management players and techniques are what fuels this growth.
- Companies will focus on the changing of business models, as blockchain starts to transform market structures.
- New ecosystems that have smart contract technology will arise as integration platforms between the existing industries.
- The ICO will become “professionalized”, and it will turn into IPO 2.0.
- Performance and scalability of blockchains will become a crucial issue. There’ll be exciting new approaches.
- People will recognize more and more that local blockchain ecosystems are an important success factor.
Now for more details
This year, even though it was quieter than anticipated, there is the belief that we’ll continue to see blockchain solutions which come into production as the enterprises begin to address the “low-hanging fruit” by digitizing businesses and uses cases where blockchain can have the most impact.
With Fintech, payments are still the most promising uses. This is where the potential savings are $50-60 billion. Trade finance could save around $15 billion.
Like we saw with payments in 2017, the belief is that we will see trade finance start to go live on blockchain in 2018. With payments, the momentum will increase, and the volumes will grow as the larger banks get into the act. The advantages of blockchain could tempt regarding real-time processing, lower costs, transparency, and lower risk profiles.
In many industries, the blockchain can prove to have many uses, by demonstrating that there are better alternatives to the status quo.
It is somewhat surprising, maybe even pleasantly, how well the cryptocurrencies did as a speculative asset in 2017. Indeed, the growth was speculative, with the asset class increasing from $14 billion in December 2016 to more than $450 billion in December 2017 in terms of market capitalization.
The growth is expected to continue to be fueled by traditional asset management approaches, which includes crypto hedge funds, bitcoin futures, etc., all of which will bump up the demand for cryptocurrencies and tokens.
New business models
As the blockchain continues to change the market structures, companies will focus more and more on changing business models.
The morphing of ICOs
With startups raising more than $3.5 billion in ICOs, it is clear that 2017 was the year of the token launch.
While the ICO boom is significant, not necessarily due to the amounts that were raised, but since we’re starting to see the beginning of the democratization of venture capital. The real change will come in 2018 to the world of ICOs as more traditional players get involved.
During the coming 12-18 months, we should see people with expertise and experience in the IPO world start to embrace tokenization as a technical platform. The whole business will be professionalized, with startup evaluation, booking building, price, etc. happening along the more traditional lines.
Since we have already started to see it, it will become harder to get funding just on the back of a white paper. Investors will demand high sound levels of transparency and sound business plans, with all that it entails.
Scalability and ecosystems
One of the primary challenges with the existing blockchain technology. It’s predicted that next year we will see alternatives to the current blockchain technologies that will become faster, more scalable, and will minimize energy consumption.
IOTA is an example of a project to watch in this regard. Lately, IOTA has gained a fair amount of traction.
People will find more and more than the local blockchain ecosystems, where the critical services are co-located in one geographical area, are essential to the success factors for blockchain projects.