December 2017 was a month of euphoria. The cryptocurrency market was constantly in the green and no matter what your portfolio consisted, the rising tide lifts all boats. Bitcoin hit its all-time high of USD 20,089 on 17th December 2018.
As we entered into 2018, the bear began to take over. Fast forward to earlier this month (3 December 2018), Bitcoin is just below USD 4,000. It’s an approximate 80% drop in the value of Bitcoin.
In terms of market cap (which by the way, I don’t believe is an accurate representation of the value of the cryptocurrency market), it has dropped from more than USD 850 billion to about USD 130 billion today, an approximate 85% drop.
It’s clear to anyone that the market is in a decline, the news outlets have made it painfully obvious. Be it government bans, regulation, manipulation, or just the plain failure of the technology, these are just speculations. The value of these currencies are determined by demand and supply (not entirely, Over-The-Counter trades [OTC] are not factored into exchange prices) and it’s simple to manipulate the retail investor. However, I’m not going to spend any more time talking about possible reasons for the decline. The reasons I like 2018 so far are related to the state of development of Distributed Ledger Technology (DLT) solutions in the past year, as well as the maturing technology infrastucture for DLT, which has garnered little interest due to the decline in price.
Here are some examples of actual large-scale adoption of the technology with governments or large enterprises.
Ukraine’s government is legalising/regulating cryptocurrencies within three years. Cryptocurrencies and digital assets first, then crypto wallets and custodial services. Posted October 28, 2018.
Docusign, a company that uses technology for digital signatures of contracts and other documents that require signatures, joins the Ethereum Enterprise Alliance. I first found out on 16 October 2018.
Singapore’s very own Singapore Power group launched a platform to sell green energy (Currently open only to small firms). Posted 29 October 2018.
Korean food giant Nongshim’s subsidiary is using a blockchain solution for end-to-end traceability of beef. By simply scanning a QR code using a smartphone, consumers will be able to access details such as the specific cow, its origin, the veterinarian’s health check of the meat, and the transportation conditions of the product. In this way, the location, quality, and temperature of Korea’s finest beef can effectively be monitored. Posted 9 October 2018.
These are just a few examples of DLT’s progress that directly counter opinions that it is a solution looking for a problem to solve.
Maturing Technology Infrastructure
Besides actual real world adoption, as a member of a global software consultancy (ThoughtWorks), let me also share how far the different distributed ledger technologies (DLTs) have matured. In our Technology Radar, a bi-annual document that sets out the changes that we think are currently interesting in software development, we have identified some DLT/Blockchain technologies that we have found to be of value. You will find that some of these technologies have progressed up to a “trial” rung in our radar, which is an indication of successful application of the technology and ready for wider use. The different rungs represent the following in a nutshell:
Adopt : Proven and mature.
Trial : Use on a trial basis, but not 100% proven.
Assess : Worth looking at closely.
Hold : Not yet (or just no).
Let’s look at a company that mainly focuses on development on Ethereum. Consensys has grown by 136% in terms of headcount in the past year from 408 in Dec 2017 to 963 in Dec 2018 (source: LinkedIn.com). All this throughout the year of the bear.
Incidentally, I was also at Blockshow Asia in Singapore on 29 November 2018. The turnout was excellent, and I managed to dialog with various attendees. There were still your suspicious ICOs there on display, but significantly less. While I was there, I took the opportunity to get a general sense of the sentiment of the speakers and other attendees actually working within the industry.
While I didn’t spot any major breakthroughs in the space, the resolve and commitment to continue development was unmistakable in their voices. From those conversations, there was a pattern in what they think we can expect in 2019. There is more buckling down on government regulations, allowing more institutions to participate to a greater degree in the development of the technology, think reverse ICOs. There will be less hype, although stablecoins might continue to be in the spotlight (I will reserve my personal opinion on this topic). And of course, more progress and more solutions being launched, other than the ones mentioned above.
2018 has been the year of the bear in terms of the price of cryptocurrencies, will the bear tire out and stop it’s year-long run? While the price drop is demoralizing and actually hurts legitimate projects that have raised funds via ICOs (Initial Coin Offerings), my outlook and opinion of the technology has not changed. In fact, we've seen projects mature and governments starting to embrace it, without the distraction of the hype of the prices. Will regulation and institutional participation bring stability to this space in 2019? Let’s find out.