Blockchain in 2019 and beyond: 5 predictions

After a year where cryptocurrencies lost 80% of their value, and the hype around blockchain as a panacea for business transaction problems has cooled, 2019 will be a year of building real-world solutions.

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In 2018, blockchain made headlines again and again – mostly through the tumultuous cryptocurrency marketplace, where bitcoin and other digital tokens lost as much as 80% of their value. The crash wasn't pretty, and threatened to undermine the distributed ledger technology (DLT) underpinning bitcoin and other cryptocurrency.

While the past year has seen blockchain deployed in highly publicized proofs of concept and pilot programs, DLT remains largely unproven in production environments.

But that doesn't mean it doesn't have the potential to turn a lot of transactional business processes on their heads.

In 2019 and the next several years beyond, blockchain is likely to evolve to include greater scalability and security, enabling applications such as mobile voting (as it did in West Virginia this November), and supply chain tracking (as it has in the international shipping, food and diamond industries).

With that backdrop, here are the top five predictions from venture capitalists, research labs, industry foundations, and leading analysts about where blockchain is going and how it's expected to evolve.

Wes Levitt, head of strategy at Theta Labs

"The first legitimate national cryptocurrency will be launched," said Theta Labs' Levitt, "and it will be linked to a fiat currency from a G-20 nation. This digital asset will be in high demand for combining the benefits of a digital asset with the stability of a government-backed currency. This is becoming a hot topic over the past couple of months as you're seeing a change of tone in national bank governors. There's been several that have actually come out and said they're evaluating it, such as the CBDC - the central bank digital currency.

"Mark Zuckerberg's 2018 New Year's resolution to "study cryptocurrencies" will result in one being integrated into Facebook for payments. The only question is whether they use an existing cryptocurrency or a new one created by Facebook. I know Facebook has been looking at this for while – to integrate cryptocurrency payments with its messenger app, for example. We know it's been done by other companies like in China with Alibaba having Alipay. I don't think means we will see bitcoin traded on Facebook; it's more likely, they'll take a lesson from [bitcoin] and create something within Facebook's control.

"The 'platform wars' between smart contract platforms like Ethereum, EOS, and Dfinity won't have a clear winner; development of inter-blockchain communications will change it from a winner-take-all situation to a shared marketplace. This is something our team has discussed at length as part of our development process. Are we risking, you know, jumping on board with Beta Max versus VHS? Our CTO talked with other groups about this and there has been a trend toward developing interoperability protocols, which in layman terms is a way for blockchain to talk to each other.

"Part of the problem is various blockchain specifications don't necessarily integrate with others. You can't have 500 different islands where they don't interact. It would be like having all these different internet service providers but you can only communicate with computers on the same ISP. That doesn't make for a national or global internet that works.

"What does that mean for smart contract platforms? Right now, it's a brutal platform world where you have this tribalism between people who support Ethereum against people who support EOS and they think it's 'our team has to win and the other has to lose.'

"Lastly, there have always been these cycles where everyone gets crazy about blockchain and crypto and then everyone gets over it and then there are a couple of years when everything gets quiet and people just build things. It's looking like 2019 will be one of those, so my hunch is you'll see fewer dramatic headlines in the press about cryptocurrency and blockchain...and it will be a quieter year where the actual work behind the scenes will get done."

Avivah Litan, a Gartner vice president and distinguished analyst

"By 2020, most permissioned blockchains will be anchored to public blockchains, using one of various technical methods — such as sidechains or virtual chains — but their scalability and operational effectiveness will not be widely proven until 2022," said Litan.

"Basically, in some sense public blockchain is much more secure than permissioned because it supports decentralized consensus. So, from that point of view, if you have 10,000 nodes that are participating and validating a transaction, you can be more sure the transaction really is what it says it is, then if you just have a couple people controlling the [permissioned blockchain].

"The emerging solutions for [public blockchain scalability] include:

"Layer 2 'off chain' protocols, which are still largely in beta (Lightning Network for Bitcoin, Plasma, Raiden Network or Liquidity Network for Ethereum, State Channels, TrueBit, and others). These off-chain solutions generally move transactions off the main chain to a second-layer messaging system that is unencumbered by main chain consensus protocols and data structures. For example, with Bitcoin cryptocurrency, a user can move funds off chain to a stored value account on the Lightning Network, which then uses a separate protocol to move funds to other peers. Once the user closes his or her Lightning channel, the funds revert back to the main chain.

"Sidechains — Blockchains that handle assets off of the main blockchain and are able to return them to the main blockchain at a future date. Sidechains, still largely under development, can benefit from the security of the root chain either through verification (in the case of Polkadot, for example), or through enforced smart contract rules that guarantee a user can pull their 'child' chain tokens out at any point (as in the case of Ethereum Plasma's 'child chains'). Sidechains can update their state at any point on the root chain, to ensure transaction immutability at that point. They can also, theoretically, enable transaction reversal only on the sidechain, as appropriate per user requirements, before the state is updated on the root chain.

"So basically (public) blockchain is on the road to become more scalable. Once that happens – we will see permissioned/private transactions flowing through the (main public) blockchains.

"By 2023, technical, scalable public and permissioned blockchains will be merged at the infrastructure level and will support either public or private transactions flowing through them."

Jonathan Johnson, president of Medici Ventures and an board member

"Digital remote voting will be more widely adopted," said Johnson, who runs Medici ventures. "After a successful pilot program in West Virginia of the Voatz digital remote voting application, which allowed overseas voters to vote in the November election in a secure way, more states will look to re-enfranchise their overseas voters.

"Other states may use it to make accommodations for disabled voters. But, as people get comfortable with it, there will be an outcry for it from the voting citizenry. If I can vote overseas using it, then why can't I use it when I'm here [in country]?

"Look for lots of supply chain applications to debut, providing more surety by both sellers and purchasers of the providence of goods. What Israel-based company VinX is doing in the wine business and GrainChain in the grain business, others will do in a variety of industries.

"There are two ways for blockchain to get traction in supply chain. Horizontally, a large company or consortium uses it across the board or manufacturer-to-consumer, such as farm to table; that's going to take Walmart or IBM or IBM and Maersk working together, so I know that will happen.

"Fintech will continue to be a major focus for blockchain use cases. Some will finally get into production and begin to revolutionize the ways securities trade. Because blockchain was first the killer app for [cryptocurrency], there has always been a focus from the financial world on blockchain. I've always thought fintech was the most ripe for disruption because of that. The financial services industry is also full of middlemen, which creates friction. Blockchain removes that.

"Blockchain will continue to be hyped as a panacea. Companies caught in this hype will waste money trying to use blockchain where a good old-fashioned database does just fine."

Dawn Song, CEO of Oasis Labs and a MacArthur Genius Grant winner

(Song's comments were provided by Method Communications, a PR firm representing Oasis Labs.)

"While 2018 was focused on scalability, 2019 will be focused on privacy: We have seen an unfortunate and consistent pattern of misuse, abuse and attacks of sensitive user information.

"We will come to a tipping point in 2019 where customers begin to 'vote with their data' and look for applications that won't violate their privacy. This will push advancements in privacy-preserving techniques for blockchain [and] will usher in a new era of privacy-first applications, providing unprecedented transparency and control for users and fostering the development of new data-driven applications that put user privacy first."

Bruce Fenton, founder and managing director of Atlantic Financial, board member of the Bitcoin Foundation

(Fenton's comments were provided by Method Communications, a PR firm representing Atlantic Financial.)

"I think that the main trend will be securities tokens. The combination of the power of a distributed ledger with more standardized securities will open lots of doors in capital creation. Privacy will continue to be important. There will be an increasing gap between those with solid technology and those with weak, captive networks.

Copyright © 2018 IDG Communications, Inc.

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