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Ajit Tripathi is a partner of ConsenSys, where he specialized in the development of the global financial services business and in the corporate venture strategy.
The following is an exclusive contribution for the 2018 year of CoinDesk under consideration.
A year ago, I wrote an article for CoinDesk in which I humbly argued that the price of ether did not count and what all the members of the blockchain community should focus on is the creation of useful applications.
I hate to say I told you, but … I did.
A few months later, the CryptoKitties were kicked out of the bears, the initial coin supply boom (ICO) had disappeared, and the euphoria of $ 1,000 ether and $ 20,000 bitcoin had been replaced by the terrible prognosis that the cryptography was "ded".
Below I analyze what I consider the main developments of 2018 and what awaits us in 2019. And at the risk of being accused of double spending, I quote freely from my previous article, because many of the points have been confirmed or repeated.
When you are #ODL and you know …
Until June 2018, convincing cryptographic engineers to work on any company product was difficult, very difficult. The call of tokens is rampant.
Most people in my dot-com generation have memorized until 10pm and burn their brains until 10pm. it's a little bit the only way. But which 24-year-old who can write a grammatically correct sentence with "token" and "moon" in the same breath wants to do it?
When the microcapsules of dot-com were booming, not even me. What exactly are these cash flows … duh! But, as I wrote a year ago:
"One day everyone in the crypt will have to generate income and profits in some way".
When most of the pawns subsequently crashed dramatically, the moon and the lambo quickly withdrew from social discourse and boring concepts of the middle class as corporate technology, real human users and a fiat salary returned to the human conversation.
Deja vu, deja vu …
The year of the regulation
I quote myself once again: "Managing the money of others will always be regulated".
In 2018, when people in the crypt were not talking about tank prices, we were talking about regulation or hoping it would go away. Well, it was not like that.
In February, President Christopher Giancarlo of the Commodity Futures Trading Commission supported a "non-harmful" approach to cryptography, referring to the US's old approach to the Internet.
The most clear and concise guide of a regulator came in February from the Swiss, who, to their credit, have been far-sighted in their recognition of the potential of blockchain technology so far. The Swiss Financial Market Supervisory Authority, or FINMA, has clearly outlined the various types of tokens and what makes a token a payment token or service token or security.
Both parties to the securities law debate were welcomed by the Securities and Exchange Commission's corporate finance director (SEC), William Hinman, when in June he stated that "the ethereum network and its decentralized structure, current offers and ether sales are not securities transactions. "
We Brits, we have maintained our classic scholar approach, studying and further studying the space and our credit, without doing any harm, both in support and in opposition to the cryptic space, while we asked for good behaviors and ways … yes, good manners for all this time.
On the policy front, the European Commission paved the way with a systematic approach to the involvement of the blockchain community through the EU Blockchain Observatory.
The year of the ICO "ded"
That said, the flow of news in 2018 was not dominated by hardworking engineers who built great technology, but traders and bankers who doze and do REKT things, as they do best.
Against the flow, while the Icos exploded, I thought …
"I suspect that half of the startups funded by the ICO of the previous year will die every year, if they do so for so long."
Well, they did not.
As reported by EY:
"The 86% is now below the quotation price, 30% has lost substantially all the value.An investor who bought a Class of 2017 ICOs portfolio on January 1, 2018 would have probably lost 66% of the own investment: Of the ICO start-ups we saw from The Class of 2017, only 29% (25) have products or prototypes working, up by just 13% compared to the end of last year. "
Forgive them because they do not know what they are talking about
Many people thought that since the ICOs were doing so badly and since most of the ICOs were launched on ethereum, ethereum must also be "ded". Well, then the price hunters were wrong and now they are wrong.
As I told CoinDesk editor Pete Rizzo in a video interview with Consensus 2018, "cryptocurrencies are online community resources".
Every token that has survived at least a boom or bust and has a thriving community (of people, not trolls and trading bots) has the potential to be used by many many more people in the next two decades with this mature technology and how these platforms ladder.
We have not yet scratched the tip of the iceberg with our ice skates. Moreover, ethereum is the leading platform today because of its ecosystem, which only seems to grow and accelerate …
The year of the ecosystem
Turns out, the price of ether is the least interesting feature of ethereum. I said then …
"Ethereum has momentum, adoption by the developers and a team that is willing to face technical limits even at risk for the price of the ether.This is why I'm making a big bet of the time on ethereum rather than a bet in money in crypts.It has people who take the vision of Web 3.0 seriously and solve real problems of consumption and business ".
At DevCon4, Joseph Lubin, the distinguished co-founder of ethereum, made his famous speech on the "killer ecosystem" ecosystem. The way I understand it is that we are so early in this technology that it is the quality and depth of the ecosystem that surrounds a blockchain platform that would define its long term success or failure.
Waiting for a killer app is a silly task because killer apps do not tell you in advance that they are killer apps. The way to access a whole range of killer apps is to free the creative power of developers, businesses, investors and other agents in society.
To date it has been the singular success of Ethereum.
The week before, Joe received a memorable reception in Sibos, the largest conference in the banking sector. Sibos has presented business platforms such as komgo, Adhara and Trustology as well as DAH, Hyperledger, Corda and Ripple solutions and has lectured for a crowded corporate audience.
At the end of Sibos, the most common refrain of the participants was … "blockchain is here to stay".
In fact, the crux fleece ecosystem has just begun to merge with the seeds business ecosystem
The year of #buidl
I'm unbearable … I quote myself again:
"The question is: what have we solved, improved or achieved that will make individuals, companies or governments more productive, more efficient, or more their lives and their relationships?"
In my book, the crowning of the year for the entire corporate blockchain community, and not just for the ethereum community, was the production version of VAKT, a platform for trading physical assets and komgo, a commercial commodity finance platform that seamlessly interacts with VAKT. These two platforms were built from the beginning to the end by 2018 on ethereum and marked the arrival of the company team in the use of real production.
The most beautiful piece of the kit produced by the company blockchain in 2019 was Kaleido. Built by former IBM engineers at ConsenSys, Kaleido has enabled one-click industrial-level deployment and support for ethereum-based business applications. This is a much bigger deal than it seems.
The development is probably less than 20 percent of the effort for the duration of any business application. The distribution and support are 80 percent more. Kaleido has removed 80% of the effort from 80%.
The most valuable piece of blockchain engineering was Open Law which allowed the creation of intelligent contracts whose execution is demonstrably compliant with the underlying legal contracts. Basically, Open Law put the contract back into "smart contracts" and opened a wide range of real-world applications in the markets of financial and non-financial assets.
The most readable blockchain news was "This Week in Ethereum" by Evan Van Ness, a newsletter focused on BUIDL that was a source of perspective through the amusing hysteria and paranoia of the #crypto investor community.
The tokens of the year came to businesses
While no one was looking, the tokens came to the financial services of companies like Euronext and other ecosystem partners went to pilot on Liquidshare, a consortium that re-engineers the interaction between the post-trade parts using blockchain technology and developing a new infrastructure for small and medium-sized enterprises (SMEs) in Europe.
In June, the South African Central Bank. working on Project Khokha, it has been shown that a new wholesale payment system built on ethereum can process one day of interbank payments in less than two hours, even with total confidentiality and purpose.
The Monetary Authority of Singapore and SGX, the stock exchange of the city-state, announced in September that it had successfully developed the payment against payment (DvP) functions for the liquidation of tokenized resources through various blockchain platforms.
The public blockchain space has begun to create enterprise-level (and -unfriendly) fiat tokens in step. As reported by CoinInsider, 45 stablecoin projects had raised $ 350 million in funding by November.
The jokes on a stablecoin that went to the moon suddenly no longer sounded jokes.
2019 … The year of corporate tokens
When you follow the news from the market too closely, it's hard not to be blinded by the obvious. So what's really going on?
It turns out that the first internet killer app was not email. It was the ridiculously simple web page. The first blockchain killer app is the incredibly simple token.
A token is a simple smart contract that encompasses the rules that regulate the exchange of an asset. Once this contract can be generated by an underlying legal contract and proved to be executed in line with the legal contract, regulated and legally valid blockchain applications become possible. This is a big problem.
It turns out that all economic activity, micro or macro is built on the basis of legal contracts. Unfortunately, due to information asymmetries, the cost of execution, the risk of litigation and uncertainty in legal systems, the cost of bargaining over too many transactions may exceed the benefit of the transaction.
Smart contracts executed in accordance with legal contracts provide on-chain status tests and mailed with dispute resolution systems can drastically reduce contracting costs and the cost of application, unlocking economic activity in all sectors and economies.
All this in a small sign …
Ok, so I should buy? SODL? Hödl?
I quote again
"Does that mean you should buy ether today? I can not and do not offer investment advice."
In 2019, tokens will invade the company in full force. The disassembly of more energetic systems and the banking companies that create VAKT and komgo will accelerate exponentially through applications such as games, securities markets, commercial finance, intellectual property, digital collector's items, patents and licenses, real estate and many more, and by 2020, start showing that all the hustle and bustle around the blockchain was really all around.
More importantly, the boundary between public and private networks will begin to disappear as resources on a network need to be exchanged with resources on another network. Ethereum is the unique position to grow from this phenomenon.
To conclude, grant me when I mention one last time:
"When we're dead, it's not what matters to us or HODL or SODL, it's what we BUIDL."
Rebirth image via Shutterstock.
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