It’s been over ten years now since Satoshi Nakamoto published the Bitcoin whitepaper. In that time, blockchain technology has made significant strides, affecting thousands, if not millions, of people around the world.
As we wind down 2019, let’s take a look back and reminisce on the top blockchain trends we saw this year.
- 1. The cryptocurrency market showed some life.
- 2. DeFi dominated the decentralized app landscape.
- 3. Enterprise adoption continued to soar through BaaS.
- 4. Countries began differentiating themselves through regulation.
- 5. Tokenization moved past ICOs to IEOs, STOs, and others.
- 6. Big-name companies formed blockchain task forces.
- 7. Blockchain funding slowed down significantly.
- 8. Onwards and Upwards in 2020
The cryptocurrency market showed some life.
Since cryptocurrency’s infamous 2017 bull run, the market has been disappointing, to say the least. In 2018, the crypto market lost a collective $700 billion in value, with the Bitcoin price falling more than 75 percent.
Fortunately, 2019 gave us a bit of a turnaround. The overall market demonstrated consistent growth through June, during which it more than tripled to a peak of almost $400 billion.
The second half of the year wasn’t as bountiful, though, as the market slowly fell to about $200 billion as of this writing. However, this figure is still over 60 percent higher than where it was at the start of the year, so overall we’d call that result a win.
The cryptocurrency market finally started showing signs of life in 2019 after an abysmal 2018. | Source: CoinMarketCap
Bitcoin was the main contributor to this market growth. Out of the top five cryptocurrencies (by market cap), Bitcoin was the only one to experience a significant rise in price, effectively doubling on the year. It outperformed the rest of the market so significantly that it’s dominance skyrocketed from around 50 percent of the market in January to well over 60 by December.
DeFi dominated the decentralized app landscape.
In 2019, decentralized apps (dapps) also began to show some traction outside of the games and gambling dapps we’d seen in years past. However, it was really only one sector of dapps that led the way – decentralized finance (or DeFi, for short).
Projects such as MakerDAO opened the opportunity for blockchain-based collateralization. And the concept quickly caught on among users. In the past week alone, MakerDAO processed more than 35,000 ETH (over 5,000,000 USD) in transactions.
Additionally, BlockFi, Celcius Network, Dharma, and many other DeFi lending companies garnered traction this year. These companies utilize blockchain technology (typically Ethereum) to provide cryptocurrency borrowing and lending options with interest rates substantially better than their traditional finance counterparts.
The DeFi sector expands beyond simple borrowing and lending, though. It also includes stablecoins, payment networks, decentralized exchanges, and liquidity networks. Anything that exists in traditional finance, blockchain projects are working to decentralize it.
In addition to those services, DeFi also contains numerous types of token-based investments, but we’ll wait to cover those in more detail below.
Enterprise adoption continued to soar through BaaS.
Pushed forward by Blockchain-as-a-Service (BasS) heavyweights like IBM, Microsoft, and Amazon, blockchain adoption among enterprise companies kept steam throughout 2019.
At the start of the year, Deloitte surveyed around 1,400 global enterprises on their view of blockchain and how it fits within their organizations. Eighty percent of those organizations stated that, in 2019, blockchain is an important strategic priority (and over 50 percent viewed it as a top-five action item).
Although blockchain implementation fell in priority for some enterprises, it gained more importance for a more considerable amount. | Source: Deloitte Insights
This figure is substantially higher than last year’s survey, in which only 72 percent saw blockchain technology as a priority. The increase shows that even in a mediocre cryptocurrency market, enterprises are still interested in the underlying blockchain technology.
Moving into 2020, we’ll likely see more and more stories of enterprise blockchain news creep into mainstream media. Already, Walmart is implementing blockchain technology across its food supply chains. Major healthcare companies like Aetna, Anthem, and Healthcare Service Corporation are partnering up to improve medical data sharing via blockchain. And, numerous banks worldwide are creating solutions of their own.
Countries began differentiating themselves through regulation.
This year, several countries finally drew some clear-cut regulatory lines regarding blockchain, cryptocurrency, and the new digital landscape.
Fortunately, most countries are in favor of the advancement of blockchain tech. Even China, which has been notoriously tough on cryptocurrency, removed plans to crack down on bitcoin mining this year, and President Xi Jinping pushed for accelerated blockchain innovation in October.
India, on the other hand, moved against the grain, placing a complete ban on non-sovereign cryptocurrency at the start of the year.
Potentially the most significant update this year, though, comes from the Financial Action Task Force (FATF), a monetary-focused coalition of over 30 of the world’s most influential countries. In June, the group released updated requirements on how companies need to collect and transfer customer data for transactions. And by 2020, the FATF plans to release a complete set of guidelines regarding cryptocurrency.
Unfortunately, the FATF guidelines have so far only worked to stifle innovation, forcing many blockchain and cryptocurrency companies to build out customer tracking infrastructure that they otherwise wouldn’t have. The new set of guidelines in 2020 could continue to hinder blockchain advancements in all of the countries involved.
Tokenization moved past ICOs to IEOs, STOs, and others.
ICOs may have died in 2018, but other types of token offerings have quickly taken their spots. Initial exchange offerings (IEOs) and security token offerings (STOs) bubbled to popularity in 2019, adding a regulatory spin on the traditional ICO model.
As countries continued to crack down on unregulated securities offerings (i.e., ICOs) this year, the majority of new blockchain projects opted to play it safe. Without going into too much detail, IEOs, STOs, and other types of regulated token offerings are effectively the same as ICOs from a functional standpoint. However, they additionally collect personal information from investors to comply with each country’s Know-Your-Customer (KYC) and Anti-Money Laundering (AML) laws.
In 2019, IEOs raked in billions of dollars with Bitfinex’s LEO offering bringing in a billion dollars on its own.
STOs became more popular as well, but not to the same extent. According to a BlockState study, the number of STOs through the first half of 2019 had already surpassed 2018 figures by almost 60 percent. But during that same period, STOs raised less than half of a billion dollars.
Besides a boom in regulated token offerings, 2019 also ushered in a new wave of tokenization, giving the average Joe the ability to take part ownership in almost anything. Sports contracts, real estate, even shoes – token versions of every type of asset are quickly becoming the norm.
Big-name companies formed blockchain task forces.
Although we may have heard some rumblings in the past, 2019 was the year that many large-scale companies made their specialized blockchain teams public.
In March, Square CEO Jack Dorsey announced the formation of Square Crypto, an open-source initiative to improve Bitcoin adoption.
And not to be outdone, Facebook, along with 20 other founding companies, made its Libra project public in June.
Perhaps most notably, though, the Intercontinental Exchange (better known as the company behind the New York Stock Exchange) finally launched Bakkt, a comprehensive platform for digital asset trading, custodial services, and merchant tools.
Blockchain funding slowed down significantly.
Unfortunately, the market growth, leaps in innovation, and improved interest by notable companies couldn’t shake the doubts of blockchain investors following the 2018 downturn. According to CB Insights, venture capital firm investments into blockchain-focused companies fell to an estimated $1.6 billion this year – a number significantly less than the $4.1 billion of investment in 2018.
Venture capital investments into blockchain technology have fallen to pre-2017 levels. | Source: CB Insights
Corporate investment into external blockchain technology fell in 2019, as well. CB Insights estimates that the number of blockchain deals involving corporations will only reach around 65 percent of the total from 2018.
Not all hope is lost, though. It appears that while few companies are making external blockchain investments, several of them are placing bets in-house. A recent Deloitte survey revealed that 95 percent of corporate respondents had plans to invest at least somewhat in blockchain technology throughout 2019. And over one-third of the respondents approximated they would spend over $5 million on the technology.
Onwards and Upwards in 2020
If 2017 was the year of unhinged growth, and 2018 was the bubble, 2019 was the beginning of sustainable adoption through practical blockchain applications. Like a phoenix from the ashes, the blockchain industry is beginning to unfurl its wings and, over the next few years, will take flight stronger than it ever has before. Here’s to a spectacular 2020!