Sean Stein Smith is an assistant professor at Lehman College and a member of the Wall Street Blockchain Alliance advisory board.
If 2017 was the year when the blockchain entered the mainstream media and business through the dramatic rise of bitcoin and other cryptocurrencies, 2018 was the year in which – for lack of a better word – the average blockchain bubble started to burst. Some projects that had been introduced with great fanfare have touched the drop of 80 percent of the price of bitcoins compared to the historical highs reached in December 2017. This, however, is only a part of the history connected to the blockchain, and as the blockchain is evolving from an emerging technology to more than a traditional instrument.
Next year seems ready to mark a break from previous iterations and blockchain related news, and even if the crystal ball is never 100% accurate, let's look at three trends that will probably shape the conversation blockchain and cryptocurrency in 2019.
Blockchain will become boring
This is perhaps the most controversial statement that was discussed and analyzed in 2018 in 2019; the blockchain will not always be scintillating or always worthy of news as it may have been in the past. Cryptocurrencies like bitcoins are based on blockchain, but blockchain applications for logistics, health care, food security and transportation, and real estate registrations are already becoming mainstream. While not always a headline worthy of news about the new cryptocurrency millionaires, these "back offices" and the underlying applications are what will make the blockchain a truly mainstream technology. Accounting companies are already experimenting with blockchain control information and as more data is stored on different blockchains, the importance of back office support systems will only increase.
Cryptocurrency will become more mainstream
Although this may seem contradictory to the first prediction mentioned above, cryptocurrencies will be more widely accepted and more commonly used in the next year. Toward the end of 2018, Ohio made a leap by announcing that the residents would be able to pay the bitcoin state taxes. Interesting from a news point of view, to be sure, this is also a significant step forward towards cryptocurrencies that could be used as currency. One of the main obstacles to the adoption of consumer cryptocurrency is that they are taxed as if they were properties; in other words, every time you move a cryptocurrency it's a payment of the income tax that is owed. Being able to pay off debts, including taxes, is one of the most important criteria for items such as currency and not being taxed every time they change ownership. Continuing to develop at the federal level, the regulation that would allow bitcoins and others to be used as "regular" currency is trying to make these articles more widely accepted.
Just like the winter, regulation for the blockchain and cryptocurrency space is coming. Before the end of 2018, most conversations related to corporate blockchain applications began to rotate towards greater regulation and standardization. Whether it is the launch of an institutional cryptocurrency platform of Fidelity, the granting of bank custody licenses to Coinbase, research and publications by professional associations or congressional hearings with representatives of regulators and industry leaders, the trend it's clear. In an interesting series of events, some of the most active participants in space are in favor of greater regulation and clarification; more consistency and transparency will help to create blockchain as a mainstream technology. New York, home to the BitLicense regulation – considered by many to be the strongest in the country – is currently launching a task force to revisit and reassess any changes that should be made in light of market progress. It seems reasonable to assume that the new from the regulatory point of view could be just as important or exciting for blockchain organizations as the new products and services currently being developed.
2019 is about to start, but many of the blockchain's implications remain in a work in progress. Whether your organization or your clients are based in New Jersey, or elsewhere in the country, the chain effects of the changes that come into space will surely be felt throughout the year. No predictions are perfect and may need to be revisited throughout the year, but based on my experience these seem solid candidates for key issues this year.
Dr. Sean Stein Smith, CPA, is an assistant professor at the City University of New York (Lehman College) and a member of the advisory board of the Wall Street Blockchain Alliance. Consult the AICPA and other leading educational education associations on blockchain, cryptocurrency and other emerging technologies. He is a member of numerous NJCPA committees, including the Emerging Technology Task Force, and has written and presented about these issues in dozens of locations across the country.