The New Face of Crypto

By: Tiana Laurence, Investor, Founder & Author of Blockchain For Dummies

“Bitcoin is dead.”

Is that headline from December 2018 or is it from summer 2017? Or maybe even further back, such as the so-called crypto crash of 2014? With the crypto market hitting historic lows, it’s no surprise that the crypto industry is seeing such headlines. But if 2018 was the so-called Year of the Blockchain, does that mean that 2019 is the winter of crypto discontent?

2014 saw a similar dip in crypto value, and the phenomenon — known in the industry as cryptowinters — is unpredictable and full of struggle, much like the winters in Game of Thrones. Wild swings have taken place before, with values often rebounding at multiple times over. It’s hard to maintain hope in the middle of these stretches, but the resolution shows that things stabilize and ultimately become profitable. Here are some examples over the course of the past decade:

? 2011: BTC fell from $30 to $2 ~93%; Rebound from 2011 to 2013 ~55,000%

? 2014/13: BTC fell from $1,100 to $177 ~84%; Rebound from 2013 to 2017 ~1,700%

? 2017/18 – BTC fell from $19,700 to $3,300 ~83%; Rebound from 2018 to circa 2020?

Do these peaks and valleys mean anything? From a pure value perspective, it’s a bit of a market correction, particularly in a market as volatile as crypto. However, these events also wind up riding alongside waves of innovation. This innovation often branches off into new and unexpected ways that push the industry to further heights — once the volatility stabilizes. “We have learned in innovation cycles when you are building things as profound as the commercialization of blockchain networks, you do things differently with hindsight,” says entrepreneur and investor Matt Roszak. “Overspending, fear and greed, these characteristics of innovation are all super important. This is not pet food and women’s shoes.”

Telling investors to “ride out the wave” due to the fact that the industry is in an innovation cycle may be a hard thing to swallow. In fact, as we approach 2019 and with markets at lows, many investors appear disheartened at the losses, even wondering if a bright side truly exists.

The answer: yes, absolutely.

The Next Wave Of Blockchain Innovation

The current state of the blockchain industry demonstrates new ways of deployment. We have seen the industry move away from the Ethereum ERC20 ICOs standard to regulatory compliant offers, such as Polymath and tZero. At the end of 2018 and the emergence of several new stable coin offerings both by governments elements such as the Petro and compliant ones like the Gemini dollar. The result? The industries involved in trade save a tremendous amount of resources clearing and settling assets. Assets clear and settle nearly instantly as they are bought and sold. Blockchain software in the background is a self-clearing and settling system that acts as the middleman keeping all parties honest. It has gained efficiency in itself and is enough to drive new interest in investments maybe once deemed too risky. These innovations show that the blockchain is at a critical growth juncture in its life cycle. We are seeing it move from proof of concept to the creation of new legitimate assets. When developers and investors are looking beyond just the core functions (e.g. cryptocurrencies) and considering putting energy and money into things like easier scalability. This is critical, as these types of developments power widespread adoption. Organizations such as B3i, a new reinsurance consortium are home-cooked initiatives from MunichRe. B3i has used blockchain software developed by R3 to save a tremendous amount of money settling assets; these types of projects positively change the bottom line, saving companies millions of dollars and should occupy much of the blockchain discussion this year.

Another powerful trend to keep on your radar this year, will be the tokenization of real-world assets and other Tethered assets of value. The Universal Protocol Alliance, a coalition of leading blockchain organizations (which also includes Brave and Blockchain at Berkeley), recently announced the Universal Dollar (UPUSD) stablecoin. UPUSD is to be collateralized on a one-for-one basis with the USD and held at U.S. domiciled, FDIC-insured banks. This grounds the token in something tangible, which solves the problem behind much investor hesitation simply by creating an element of stability. “The appeal for many of the tokenized networks was not the tokenization of real-world assets itself, but how that will become a focus because institution understands these types of assets,” says Roszak. “They are a gateway for institutions to onboard and have training wheels.”

As for Bitcoin this year? Simply put, Bitcoin is like the phoenix: it always rises from the ashes. However, each crash has a purifying effect, cleaning out the useless and vain. The result is a more fortified group which gives the industry a stronger foundation moving forward.

Comparing the crypto craze and blockchain bonanza of the last few years, it looks a lot like other technology cycles. We are witnessing the birth of a new evolution in global trustless communication. The last great shift was the advent of the internet itself, giving us all a voice and a gateway to knowledge. It birthed things like Facebook and Twitter, but it took events like the doc.com bust of 2001 where Nasdaq Composite lost 78% of its value to create the room for the new giants such as Facebook and Twitter to grow. The crypto and blockchain crash is making room for more mature business.

Smart creators will keep their heads down and build as fast as they can, as the next boom in the blockchain cycle is projected to only be two years away — and with it, many new competitors. The most exciting things this year, will likely be the marriages of blockchain to other big buzzwords like artificial intelligence (AI) and the Internet of Things (IoT).

All of this illustrates a trend in bringing the blockchain into more and more user-friendly products. As the average person interacts with blockchain technology in a meaningful way, its impact will grow beyond simply the financial sector. In fact, the possibilities are limitless. The reason? In the next few years, blockchains won’t just be used as a way of keeping track of cryptocurrency; they will become the backbone for data itself — and from there, the possibilities are limitless. One example is Decentraland, a place for digital creatives to live and work online in an all-encompassing virtual blockchain world. Brave Browser is another interesting application, it gives users their privacy back online as they search. Brave already has over 3 million active users a month and has quickly pushed to the top ten free communication apps. It’s clear that users now don’t just want more sovereignty in the money they use, but also more control over their privacy and communication. Blockchain software offers a solution to this dilemma of privacy vs. user-friendly applications.

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