If 2018 was the year of the so-called stablecoin, or price-pegged cryptocurrency, then what will the new year bring? While it’s impossible to predict the future with absolute certainty, here are five hypotheses based on The Ledger’s own expert tasseomancy. (Okay, we’ll admit we got this one wrong.)
Below are our 5 predictions for 2019. (This is not investment advice, yada, yada.)
1. Tether loses traction. For years questions have swirled about the solvency of Tether, historically one of the most popular stablecoin projects. Expect rival stablecoins from the likes of Circle, Coinbase, Gemini, and others to eat away at the monopoly Tether once enjoyed. Even if Tether doesn’t go the way of Basis, which shuttered at the tail end of 2018, its prominence will likely wane as investors flock to surer vaults.
2. Facebook mints WhatsApp coin. Facebook has been interested in payments at least since it poached David Marcus from PayPal in 2014. Formerly head of messaging products, Marcus spearheaded the media giant’s secretive blockchain initiative last year. Recent chatter suggests he is gearing up to release a WhatsApp-based remittances product in India. After a rough 2018, the company could use a win right about now.
3. Regulators slap a big kahuna. The Securities and Exchange Commission will take swings at bigger targets this year. Perhaps it will deem XRP, the world’s second-most valuable cryptocurrency by market capitalization, to be an unregistered security, in which case it will surely whack Ripple, the coin’s purveyor, with fines. Or maybe the SEC will bring down the hammer on a cryptocurrency exchange for failing to adhere to anti-money laundering and know your customer laws. We’ll bet there are penalties in store for more celebrities who pumped “initial coin offerings” too. #BlessUp
4. Bitcoin ETF wins approval. As the industry matures, conditions are ripening for a Bitcoin-based exchange traded fund, or ETF. Cooler heads are prevailing among retail investors, post-bubble. Bakkt, a financial firm brought to you by the folks behind the New York Stock Exchange, is preparing for the debut of a physically settled Bitcoin futures market, improving liquidity. At least one SEC commissioner, Hester Pierce, has agitated to green-light a Bitcoin ETF. Speaking of which, keep an eye on next month’s decision regarding VanEck’s application.
5. The hangover will last. Cryptocurrency prices will not reclaim their 2017 highs anytime soon. Global geopolitical tensions, volatile equity markets, and talk of a looming economic recession dampen the investment prospects for such a risky asset class, at least in the near-term. It’s worth noting that there is disagreement within The Ledger’s ranks here. My colleague Jeff Roberts thinks the price could rebound sooner. I believe we haven’t seen the bottom yet.
How are you placing your bets in the new year? Do you agree with our hunches? Disagree? Send us your thoughts, opinions, predictions. We will highlight the best submissions in a newsletter to come.
Thanks, as ever, for reading.
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Balancing The Ledger is back with its first episode of 2019 featuring Cameron and Tyler Winklevoss, proprietors of the New York-based cryptocurrency exchange Gemini. The Olympian twins joined Jeff Roberts and Jen Wieczner to discuss their pervasive, new advertising campaign which plasters New York City, the prospects for a Bitcoin ETF, and the ultimate question: which brother owns more Bitcoin? (Tyler claims he has more.)
BUBBLE-O-METER
An uphill slog. McKinsey published a report evaluating blockchain technology's progress and potential as expectations of revolution collide with reality. The consulting firm found that corporate experiments are struggling to mature past the "pioneering" phase, where prototypes are tested, to the "growth" phase, where real products emerge. The authors write: "rather than following the classic upward curve of the industry lifecycle, blockchain appears to be stalled in the bottom left-hand corner of the X-Y graph."
Here's that graph.
Chart from McKinsey's report on "Blockchain's Occam problem."
McKinsey advises companies to follow Occam's Razor: pursue blockchains only when they are the simplest solution available. Interestingly, the authors see greater opportunity for blockchains in data access, automation, and supply chain-tracking than in financial services.
MEMES AND MUMBLES
Bon appétit. An artist who goes by the moniker "cryptograffiti" photoshopped the front page of a decade-old edition of The Times—an important one in cryptocurrency history—for Bitcoin's 10th anniversary. Adjusting for inflation, the artist revised the price of dinner in an advertisement to £6.58 from £5 in 2009, when Bitcoin launched. (The amusing part is obscured in the image below, so you'll have to click out to see the images.)
The British pound ain't what it used to be.
FOMO NO MO'
Don't miss out: Chris Dixon, an investor at Andreessen Horowitz's cryptocurrency-focused venture capital fund and a board member at Coinbase, wrote an op-ed for Wired about the long term vision for blockchain technology. He says these databases, and the cryptocurrencies they enable, "will wrest the Internet from corporations grasp." Dixon believes blockchains represent the next wave of the open source software movement. To see the impact of this trend, look no further than the IT world's transition from proprietary Microsoft Windows software in the '90s to today's pervasive Linux-based Android operating system powering billions of phones.
Here's an excerpt from Dixon's column.
As the Internet has evolved over its 35-year lifespan, control over its most important services has gradually shifted from open source protocols maintained by non-profit communities to proprietary services operated by large tech companies. As a result, billions of people got access to amazing, free technologies. But that shift also created serious problems.
Millions of users have had their private data misused or stolen. Creators and businesses that rely on internet platforms are subject to sudden rule changes that take away their audiences and profits. But there is a growing movement—emerging from the blockchain and cryptocurrency world—to build new internet services that combine the power of modern, centralized services with the community-led ethos of the original internet. We should embrace it.
