What’s Ahead in 2020 for the Blockchain Ecosystem

By Joshua McDougall on ALTCOIN MAGAZINE

There is never a dull day in the world of crypto’ and each 365 of 2019 were no exceptions.

I normally prefer to go deep into a particular topic, but I’ll just hit as many thoughts as I can this time around and try to provide links to help the curious do their own digging.

Cyber Security… one day?

Despite their best efforts to steal all the cryptocurrency out there, thieves still have some work to do and won’t stop until they have.

Insurance agencies and regulators are driving this in the right direction. Locally in the U.S.A. Wyoming has worked with experts to define what it means to securely custody digital assets in their regions. While much of this is quite innovative, some aspects are even just catching up with the global landscape, such as Japan’s 2017 law which dictated plainly that exchanges “take security measures” to protect their systems. Insurance carriers everywhere will continue to work with their customers to understand what security measures are in place that should have an impact on how policies are structured — hopefully to the benefit of both insurers and the insured.

All of this, and it just being about darn time, means proactive security is getting its line on the 2020 budgets. Luckily C4’s CryptoCurrency Security Standard is moving into the next level with new appointees to the committee of industry leaders and certified auditors soon to join the workforce. The CCSS continues to provide a strong measuring stick for cryptocurrency and blockchain companies, regulators, insurers, and of course customers too.

As for those consumers, we all still need to stay vigilant but the tools continue to get better. If you’re looking to improve your personal security for 2020, consider investing in a password database (try 1Password or LastPass) and a hardware key by Yubico.

Regulation… every day.

Wyoming spent the year introducing dozens of new cryptocurrency and blockchain-friendly bills, excited to welcome businesses and individuals looking to innovate within their borders. Other states, including Colorado and Montana, have taken note and may not allow Wyoming to take all the talent and tax revenue so easily, so perhaps we’ll see them follow suit in 2020.

Will New York continue in the opposite direction with their hostility towards digital assets and blockchains? Or will they correct their path and recognize the loss of innovation they’ve already felt?

On a global scale, we’ve just recently witnessed Germany pass legislation to allow their banking sector to sell and store cryptocurrencies starting at the beginning of the decade, January 1st, 2020. Something that will likely feel so obvious in years to come but has not come without a fight.

KYC/AML requirements hit the industry swiftly not long ago. Many consumers have likely never heard the term “Travel Rule”, but expect the exchanges they use to be scrambling to meet these new requirements in a way that still respects the privacy of their users.

Maturing Tools

Are they maturing? Certainly! Are they mature, certainly not :(

Exchanges, initially designed by geeks, are now starting to appreciate the requirements of consumers and professionals alike. Reporting is improving and so are custody controls, but this is going to be a consistent fight throughout the next decade. Exchanges (centralized or not) who get this right will likely find themselves a loyal following of users, purely out of necessity.

From an investigator's standpoint, our tools are still rough. We’ve got great businesses out there doing their best, with an iceberg of data hiding below, but the interfaces still lack. Much of this is likely from cautious dances around regulations like GDPR to ensure consumer privacy, which is a feature, not a bug, but over time the tools will adapt to meet these requirements while still providing investigators the insight they need.

Accounting and Taxes! Holy $&%#, this sucks aggressively on a global scale. I legitimately don’t know how non-programmers are successfully calculating their taxes. I don’t know how funds are actually managing their portfolios. I’d also be surprised if e-commerce sites have an accurate picture of the cryptocurrencies they’ve earned. This is a problem. Either Intuit has to up their game or we need a new player in town that fully grasps the entire landscape of digital assets.

Networks

The Lightning Network continues to grow and mature into something that could, one day, solve the scaling crisis of the Bitcoin ecosystem. Beyond Bitcoin, it expects to make payments across any digital assets instantaneous and cost-effective. By no means, a trivial task, the smart people supporting this project will continue to build the next generation of payments networks.

The Ethereum community has struggled with their own scaling issues since CryptoKitties brought the network to an adorably frustrating crawl. Ethereum 2.0 has always been a logical next step for the community, even before the scaling problems hit, but they have certainly been top of mind as of late. The Ethereum community keeps working hard on their next generation of infrastructure that promises to deliver an aggressive improvement on transaction throughput without any hindrance of security and immutability. There is no doubt that if the DeFi movement is to continue growing, a new high-performance backbone will certainly help fuel that ecosystem.

Networks focused on privacy have certainly had quite a bit of interest, failures, and successes throughout 2019. ZCash continues to innovate despite some community concerns on governance. Monero is still a fan favorite to many, despite it being a usability problem-child that needs a network effect to succeed. MimbleWimble, the ridiculously named privacy mechanism that dropped into the communities hands (much like how Satoshi bestowed Bitcoin upon the world) has also had an incredible introductory year, spawning projects such as Beam and Grin. They may not be the largest projects by market cap, but the innovation being developed within each of them will drive the larger players to act and evolve. We’re already seeing this take place with Litecoin, the 6th largest cryptocurrency, looking to implement the same privacy protections found in MimbleWimble into the much larger project for all their users to use as they feel necessary.

Looking for another interesting next-gen blockchain network? Check out Cosmos. The Cosmos SDK would be my top choice right now if I was starting a new blockchain-powered project.

Use Cases

The only phrase uttered more than “Bitcoin is dead” may very well be that blockchains are “a technology looking for a use-case.” Just as the first is certainly far from reality, 2019 has shown the answer to the latter is found down the rabbit hole of one simple hashtag: #DeFi

The first example of Decentralized Finance (“DeFi”) is actually Bitcoin itself. A new currency that brought the world “Value Over IP “ or “VOIP”, a way to send value person to person over the internet.

Note: VOIP is actually “Voice over IP”, think Facetime, Skype, or Facebook Messenger. That was an attempt at a joke that I hoped would make the technology familiar and more easily understood. Hilarious and educational.

In 2019, the DeFi experience has exploded to include securities issued on-top of blockchains, decentralized asset exchanges, the issuance of stablecoins, and peer to peer lending to list only a few. In the Ethereum network, this has translated into over 1% of all ETH being currently “locked up” in various DeFi platforms and projects.

The use of blockchains for video games is also just beginning, but with some big names now involved. If the youth are the easy route to adoption, this adaption of their worlds makes quite a bit of sense. While we shouldn’t expect kids to know what a blockchain is, as time goes on they may develop an expectation that games include features like true asset ownership for items earned and cross-platform recognition of assets from other worlds for use in their current adventure.

Call for Support

The CryptoCurrency Certification Consortium, better known as C4, is a nonprofit I’m proud to a part of. They help define standards in our space, provide strong measuring sticks for personnel certifications, and develop incredible training programs.

To put their work into perspective, more often than not each of the individual regions looking to pass innovative laws has looked to one particular document to craft their custody requirements and that is the open source CryptoCurrency Security Standard (“CCSS”). Wyoming, Gibraltar, Bermuda, and all the users that find their assets custodied in these regions, have all benefited from the work put into standards by C4.

This year we hosted our second Blockchain Training Conference (“BTC2019”), which was an incredible success in all aspects aside from monetarily. C4 has no interested in building a war chest, but we do strive to repeat these successes until everyone has the knowledge needed at their fingertips to succeed in this incredible new world of self-sovereignty. As we release the videos from BTC2019, if you find value in them and you’d like to help us continue our mission, please reach out to us at ed@cryptoconsortium.org.

C4 means a huge amount to me, but it also means so much to those who learn from our training initiatives, prove themselves throughout certifications, and architect themselves to meet our standards.

About Me

Everything above comes from my experience helping businesses be secure with the CCSS, drilling deep into the trails lefts during thefts of cryptocurrency assets to assist investigations, my training sessions given to colleagues, litigators, banks, receivers, insurance carriers, agents of various TLAs, fellow blockchain game designers, and so many more amazing and curious people.

I’ve spent the last year (or two, or ten?) on an airplane (that’s where I’m writing this actually!). I’ve witnessed first hand what this technology empowers, both gloriously good and infuriatingly bad, superficial nonsense and deeply motivational societal changes. We have so far to go still, but what an exciting time we have ahead.

Disclaimer

I do hold some assets discussed in this article, and I beg you not to use anything I’ve said as investment advice — unless you are investing in the most valuable asset of all: education.