January marked the formal arrival of Liechtenstein’s Blockchain Act, one of the world's most advanced regulatory regimes for the industry
With blockchain and cryptocurrency tipped for big growth in the coming years, 2020 could be a big moment for both technologies. Stephen Stonberg, COO at crypto exchange Bittrex Global, explores what the next 12 months could look like.
If a week is a long time in politics, then a year in blockchain can produce generational levels of change.
When technology, investor sentiment and the political environment are fluctuating so rapidly, it’s a market that can quickly outgrow forecasts and predictions.
Survey the market just now and you could find reason to be either optimistic or gloomy about blockchain’s prospects heading into 2020.
On the one hand, continued rapid growth seems assured. According to market researcher WinterGreen, the global market for blockchain products and services will almost triple next year, from just over $5bn to north of $15bn – and on the way to a projected $60bn by 2024.
Yet some doubt blockchain’s ability to move from potential to performance in the near term.
Notably, leading analyst Gartner is urging caution in the next year, plotting blockchain – in its totality – close to the “trough of disillusionment” on its famous “Hype Cycle” of emerging technologies, and estimating a 2-5 year period for it to reach maturity.
While uncertainty remains, as we look towards a new decade there are some underlying themes which appear to be fundamental.
From our perspective as a digital asset exchange, supporting both new and established blockchains, here are our predictions for the industry in 2020.
Blockchain and cryptocurrency 2020 trends
Digital assets will diversify
For much of its history, blockchain has been synonymous with cryptocurrency, the most prevalent and prominent use case of distributed ledger technology.
There is a significant growth runway for cryptocurrencies in their own right, but they are not the beginning and end of the emerging digital asset economy.
In 2020, we expect to start seeing more of the next stage – towards digital tokens as vehicles for a wider range of underlying assets, from property to equities.
Over time, the advantages of digital asset trading – in cost, speed and efficiency – have the potential to convert those who might not initially believe a physical asset can be safely transacted via a digital token.
This is a shift that can only happen gradually, but a near-term catalyst should be the more robust regulation that is starting to surround the industry, an essential step to building consumer confidence and trust, and an aid to innovation.
In Liechtenstein, new regulation has made the once legally-complex process of tokenising assets much more straightforward: an early indicator of the opportunities regulation can unlock in the industry.
The gap between regulated and unregulated will grow
Regulation in its own right is likely to be one of the prevailing blockchain trends in 2020.
January marked the formal arrival of Liechtenstein’s Blockchain Act, one of the most advanced regulatory regimes for the industry in the world – one that balances support for innovation with importance advances in customer and asset protection.
Where Liechtenstein is leading, others are set to eventually follow.
And this will mark the shift of the blockchain, and specifically cryptocurrency, market from an unregulated one which has attracted a justifiably poor reputation in some corners, to the kind of regulated industry that can provide a stable home for investor capital.
Next year is when we expect this trend to accelerate, and the gap between regulated and unregulated exchanges to become much more distinct.
Institutional involvement will clarify
2019 was a year in which institutional involvement in blockchain has started to grow.
We are seeing a combination of opportunism – from companies like Facebook and governments like China – and caution, with the industry under growing political scrutiny.
This year we have seen questions raised – is big tech the right vehicle for cryptocurrency, how can governments best regulate an emerging industry, what will the role of central banks be?
In 2020, we can expect more answers, and greater clarity about how state and corporate institutions intend to approach both the opportunities and challenges of the token economy and blockchain technology.
Where blockchain and cryptocurrency technologies are heading
The common thread running through these predictions is that an early-stage industry is increasingly maturing into one that can be a legitimate part of mainstream financial markets.
We have a way to go but for blockchain and cryptocurrency, 2020 is set to mark another significant step in the evolution of a regulated, investor-friendly market that can attract capital at scale.