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Blockchain trends for 2017

CoinDesk recently published its 2017 State of Blockchain report, detailing a number of major trends in the blockchain world.

Guy Brandon
Guy Brandon
As an open, mass-adoption blockchain platform, all of these are relevant to Waves in one way or another. It’s worth a quick summary of the trends identified for 2016, pointing to what CoinDesk expects for the coming year before taking a look at the blockchain landscape from a Waves-centric perspective.

- Bitcoin’s true volume revealed. Following intervention from the People’s Bank of China, trading fees have been imposed on the major Chinese exchanges. The result is that China now accounts for around 35% of known trading volumes, not the apparent 94%.
- Enterprise incumbents move on blockchain. Banks and financial organisations, in particular, are starting to deploy enterprise-grade blockchain applications, rather than just proof-of-concepts.
- Token sales challenge traditional VC investment. 2016 saw a near-static $496 million of VC investment, whilst ICOs are rapidly growing at a total of $236 million (including The DAO).
- Consortia gain steam. Banking consortium startup R3CEV has released the code for its Corda platform, and Hyperledger has passed 100 members.
- The push for privacy continues. Monero continues to grow in transaction volumes and market cap, whilst Zcash made an impressive debut before moving into the background.
- Bitcoin volatility continues. This has been fuelled by scaling concerns as well as geopolitical developments.

Waves is in a unique position to know what’s going on in the blockchain industry. The platform was conceived of and is being developed in response to known requirements from businesses. Over the past year, we’ve been approached by and worked with many different businesses — partnering with some, advising others, all the time learning where the demand really is, not just where the buzz is among the hard-core crypto crowd. Here’s what we see as the key trends:

1. Blockchain tokens will go mainstream

Custom application tokens (CATs, as they’re called on Waves), AppCoins, AppTokens, assets — blockchain tokens are going to be big business. We’re already seeing major applications built on this functionality.

Tokens are about the simplest blockchain functionality there is: transferring value on the blockchain in the form of a digital asset. What that token represents can be incredibly diverse, since it’s enforced by the application/issuer. It could be a stake in a crowdfunded venture, a fiat-backed blockchain currency, a reward token, equity in a company, fuel for an online platform of one form or another, and much more. But it all starts with the ability to create and send blockchain tokens.

Platforms that offer what used to be called ‘2.0’ functionality will see increasing use over the coming year. Usability is key here: Waves isn’t the first platform that enables anyone to issue blockchain tokens, but it’s currently the most user-friendly. Both developers/businesses and end users have to be able to engage with these tokens as frictionlessly as possible. Clean, elegant user interfaces; powerful APIs; fast DEXs (decentralised exchanges); low issuance and transaction fees; a high degree of flexibility; massive scalability. In the Darwinian environment of the crypto marketplace, competition is fierce. The platforms that get it right will get the business. We believe Waves is currently leading in this space and stands a strong chance of gaining significant market share as a result.

2. ICOs will continue to grow

Powered by accessible blockchain tokens, blockchain-based crowdfunding will go from strength to strength.

Back in early 2014, the majority of new crypto tokens entailed the launch of a whole new blockchain — essentially, each was a new cryptocurrency coin network. With the advent of 2.0 platforms, it became possible to issue tokens without the technical overhead of bootstrapping yet another blockchain. Now that this technology has come of age, pretty much any enterprise can raise funds by selling a crowdfunding token.

That makes grassroots investment available to anyone with a convincing pitch. In an era when banks are unwilling to lend, more and more companies and individuals will take up this model. And it won’t just be crypto projects, or even tech companies. Crowdfunding is already a mainstream idea, thanks to Kickstarter and similar platforms. Blockchain just takes it to its logical conclusion by making it a global, low-cost endeavour.

We’ll see plenty more multi-million ICOs, but also a ‘long tail’ of four-, five- and six-figure projects that will probably account for 80% of the total. It won’t come as any surprise if ICO money eclipses VC investment by the end of the year.

3. Smart contracts will get street smart, not just college smart

There’s a lot of hype around smart contracts. Ethereum is gaining mainstream attention and business applications are being built on it. At the same time, the collapse of The DAO last year has raised concerns about the security implications of ‘code as law’. The issue was not that The DAO was hacked, but that a loophole was found, allowing the hacker to exploit its logic. The DAO functioned exactly as programmed.

Aside from tighter code audits, we’ll see smart contracts gain ground by taking a different approach — still offering extensive functionality and allowing a wide variety of applications to be built, but without the vulnerabilities that come with being so-called Turing complete. There are also scalability issues that need to be solved; having the entire network execute every contract is inefficient. You can read more about Waves’ approach to smart contracts here.

4. Privacy will go professional

It’s true that privacy-centric coins have gained a lot of ground, with Monero and Dash posting large increases in market cap and Zcash pioneering a new era of anonymity tech.

What this high-level trend observation misses is the significance of privacy for institutional blockchain users. The blockchain as implemented by Satoshi Nakamoto is transparent and pseudonymous. There is simply too much information available to casual observers. Whilst personal privacy is an issue that isn’t going to go away, it takes on a whole new level in a business context. Businesses aren’t just unhappy about the transparency of the blockchain: it’s a dealbreaker for many of them. It’s untenable that a financial organisation’s trades could be viewed by anyone, or that financial information mapping a business’s network of employees, customers, suppliers and consultants could be laid bare by an amateur sleuth with no more than an internet connection.

Alongside blockchain protocols that offer personal privacy, then, we will see enterprise-grade privacy built into blockchain platforms as a matter of necessity.

By Guy Brandon.
UK-based cryptocurrency writer and communicator since early 2014.
Editorial Director for @bitscanner.
Director of Communications for @Wavesplatform.

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