The following article is an exclusive contribution to ‘s 2017 in Review.
Notwithstanding our admonition in “Blockchain Revolution” that “the future is not something to be predicted but something to be achieved,” a year ago my son Alex Tapscott and I made some predictions for 2017.
A key theme was the issue of governance. As we wrote in our submission for ‘s 2016 in Review, “In 2017, we need to get our act together. Decentralization is critical to this technology and to the future of civilization. But decentralization does not mean disorganization. So, we resolve to focus on governance in the new year.”
We also said that, “Investment (in proprietary blockchains) will continue in 2017, but the pendulum will swing back somewhat to the public blockchain space. If the bitcoin community can get its act together and solve some basic governance issues (like scaling), investors will again see it as an attractive play – and with good reason. Bitcoin is still the biggest, most secure, most liquid blockchain to date.”
“Bitcoin bad, blockchain good” was heard a lot less in 2017 than in 2016. And for good reason. Business-leaders awoke to the reality that the most ground-breaking innovation in this industry is happening in the permissionless open-source blockchain world, including in bitcoin, but also ethereum, Cosmos, Tezos, Eos and other new platforms. As for bitcoin, there were improvements in governance, and a temporary resolution of the scaling debate acted as one of a few big catalysts enabling bitcoin to resume its upward trajectory.
Prediction: “Bitcoin will hit $2,000 (that’s right: one bitcoin will be worth $2,000). Ethereum will not collapse, post-DAO, but will become a dominant platform for new apps and new business models.”
What happened: We were ridiculed for forecasting that bitcoin would triple in value. “You guys are nuts,” was a popular tweet.
However, only in the wild world of cryptocurrencies can you set a one-year price target implying a 200 percent return, and miss the mark by a factor of nearly 10! As for ethereum, the fork happened and ethereum kept on chugging away, became the de-facto platform for the ICO boom that launched a thousand dapps, from distributed file storage and prediction markets to collectible kittens.
Prediction: “A major central bank will live test a digital fiat currency and it will work, very well, leading to broader adoption.”
What happened: While some central banks did explore and test the concept of a digital fiat currency, none was able to take the next step and implement it in production and at scale. Indeed, most central bank chatter in 2017 was about bitcoin-mania, with many (India, France, Russia, China, New Zealand, etc.) calling it a speculative asset and some even a bubble.
We think this analysis misses the mark. To be sure, bitcoin is hot, but its bigger importance is what it represents: An emerging alternative to central-bank-issued currencies, governed not by a centralized authority but by a combination of math, consensus and clever code. Central bank governors would be wise to better understand what bitcoin represents and what seismic economic and social shifts are driving it, rather than just its price (the same too could be said for all the HODLers out there).
Perhaps the most remarkable response was from Christine Lagarde, managing director of the IMF, who said in a speech in February that that cryptocurrencies could, among other things, improve financial stability, inclusion and provide better value than traditional fiat currencies, particularly in less developed countries and warned central bankers to ignore them at their peril
Prediction: “Large banks will begin shifting large amounts of over-the-counter (OTC) transactions to real-time settlement on private distributed ledgers. Look for JPMorgan, Goldman Sachs, Barclays and Santander to lead the charge.”
What happened: Even though the chief executive officer of JPMorgan, Jamie Dimon, asserted that bitcoin is a “fraud,” JPMorgan is one of the most active and innovative banks in this area. It partnered with zcash, a distributed and anonymous cryptocurrency network, to pioneer anonymous transactions in other financial assets like stocks and bonds. It uses the awkwardly named but potentially transformational technology called zk-snarks. JPMorgan was also a co-founder of the Enterprise Ethereum Alliance, with more than 100 other big firms.
As the sun set on 2017, the Australian Securities Exchange (ASX) announced that securities trading would migrate to a blockchain infrastructure being developed by Digital Asset (run by Blythe Masters). Expect more to follow. As for Jamie Dimon, he doth protest too much.
Prediction: “Incumbent companies in every industry will begin developing a blockchain strategy, hiring key IT talent and launching pilots – for sure, insurers, healthcare providers, music labels, defense contractors and others.”
What happened: Yes! This happened. Our Blockchain Research Institute is documenting this development in 70 projects in 10 industry sectors.
Prediction: “A new round of startups will enter this space in virtually every industry, particularly a new class of platform and middleware companies. From what we’ve seen, the innovation may well be stunning.”
What happened: Check!
Prediction: “The crisis of legitimacy of democracy (as evidence by the recent U.S. election) will accelerate the development and sandboxing of new e-voting systems and new platforms for accountable democracy emphasizing the use of smart contracts.”
What happened: As with the internet’s first era, governments are slow to embrace change. There is experimentation with blockchain for improving operations and some governments (such as Dubai, Estonia, Georgia) are doing large deployments. But when it comes to building new models of democracy based on transparency, accountability, public deliberation and active citizenship through blockchain e-voting, smart votes, and new collaborative tools, most politicians are oblivious.
It is no surprise that trust in governments continues to plummet. In the U.S., we see tax changes favoring wealthy individuals and large corporations. The rollback of healthcare, increasing mass gun violence, attacks on consumer and environmental laws, and looming cuts to social services, will undermine prosperity for the vast majority of citizens. Opposition candidates in the 2018 mid-terms must demonstrate that technology can counter fake news, thwart the voter suppression of 2016 and rebuild trust for the digital age.
Prediction: “‘Blockchain Revolution’ will continue to be a global best-seller, in multiple languages, and make the New York Times non-fiction list.”
What happened: Well, we didn’t make the NYT non-fiction list (yet), but the book is still the best-selling book on blockchain ever, and already translated into over a dozen languages. The book has led to the launch of the Blockchain Research Institute. It is conducting the definitive investigation into the strategic issues in blockchain. The multi-million program includes 70 projects across 10 industry verticals, including government as well as projects on how blockchain changes the way we manage our companies.