Crypto is ten years old now, but how significantly has its underlying technology changed since its birth? At the most basic and abstract level, things are still fundamentally the same, in that (real) cryptocurrencies still rely on distributed and cryptographically secured consensus networks to confirm transactions.
However, in terms of the specific protocols used in these networks, and in terms of all the technology surrounding this basic layer, things have been steadily evolving since 2009. Tweaks have been made to the original Bitcoin protocol, new cryptocurrencies with new features have been developed, and new second-layer technologies and platforms are being designed to sit on top of existing coins.
2020 will be no different in this regard, bringing technical advancements that help push crypto that bit closer to widespread adoption. And regardless of whether it will be interoperability standards, layer-2 scaling solutions or entirely new virtual currencies, these will all play their role in making the overall crypto ecosystem more attractive to potential users.
2019: what happened this year?
How accurate were Cryptonews.com‘s technology predictions for 2019? One of our main forecasts was that the outgoing year would witness a rise in platforms that are faster and more scalable than their predecessors, particularly platforms used by enterprises, financial institutions and governments.
This prediction was true to an extent, insofar as a raft of businesses and banks announced blockchains that could be used at scale. Facebook, Salesforce, Kodak, Turkcell, UAE Bank (and the Dubai government), JPMorgan, and Swift were among the numerous companies to announce blockchain-based platforms that could be used at the enterprise level, indicating a growing trend for more scalable (although not necessarily decentralized) blockchain technology.
At the same time, industry observers also made the very specific prediction that 2019 would be defined by a growth in cryptocurrencies using mimblewimble, a privacy protocol that obscures the total amount of money being sent in a crypto transaction. Well, even though January saw the launch of two currencies that use mimblewimble – Beam (BEAM) and Grin (GRIN) – while Litecoin (LTC) is planning to integrate it, no other significant coin was launched in 2019 that used the protocol.
2020: a wave of consumer crypto platforms
For 2020, certain experts are predicting an increase in consumer crypto platforms that harness advances in scalable technology.
“The next great wave of consumer crypto platforms and apps will be built,” says Mark Jeffrey, founder of the Guardian Circle emergency response platform. “Specifically, I think NEO (NEO) 3.0 and the Lynx (LYNX) fork of EOS (EOS) show the most promise as platforms. But both need a healthy smattering of decentralized apps (not gambling) to arrive with them. Those will require some time to arrive, so I expect most of 2020 to be quiet on this front as they are built. But make no mistake: the next great companies will get their start in 2019 or 2020 during this ‘down’ period.”
More generally, most experts are predicting the gradual evolution of crypto technologies, rather than the development of anything radically new.
“In terms of protocols, we are likely to see an evolution of existing protocols following their respective roadmaps more so than the development of entirely new ones,” predicts Filipe Castro, co-founder and CIO of crypto payments platform Utrust.
“In the case of purely permissionless scenarios (and the scalability tradeoffs involved), this will rely on the continued use of layer 2 solutions.”
With regards to layer-2 solutions, the gradual evolution and deployment of the Lightning Network reveals that Bitcoin (BTC) will become more usable as a means of payment in the coming years, with Bitfinex introducing payments using the Network in December, for instance. (Learn more: ‘Bitcoin is a Constantly Evolving Suite of Protocols’)
At the same time, new coins will emerge. However, rather than competing directly, experts believe that they will increasingly co-exist and offer complementary advantages.
“As speed, scalability and decentralization are part of the blockchain trade-offs trilemma, it’s unlikely that there will ever be a one-size-fits-all protocol, but rather the coexistence of different ones focused on a particular optimization,” Filipe Castro tells Cryptonews.com.
Other commentators agree. Also speaking to Cryptonews.com, the founder and CEO of market prediction platform CloseCross, Vaibhav Kadikar, suggests that existing coins and platforms may emphasize and focus on their individual technical strengths in order to thrive within a growing ecosystem.
“New tokens and protocols trying to break into the market will need to prove their worth and demonstrate a very clear use-case,” he says.
“In addition, rather than seeing several new protocols enter into the mix, we will see co-dependence between existing players in a concerted attempt to support each other to survive.”
Indeed, one theme of 2020 and beyond may be the growth in interoperability, as new platforms emerge that enable people to cross-use multiple blockchains.
“Usability will be a major advancement in 2020, fuelled by increased interoperability across blockchains,” says David Gold, the CEO of inter-wallet platform Dapix. “Currently some blockchains do have the construct of metadata that can be utilised on the blockchain: ie, notes and other information about the transaction. But each blockchain handles it differently and some blockchains don’t have that at all. Efforts to standardise this will enhance wallet functionality that will spur mainstream adoption.”
Beyond 2020: a gradual evolution
When looking at the coming decade as a whole, most experts expect that there will be significant technological change, albeit of a gradual nature.
“With strong foundations already in place, we will see a gradual evolution of existing chains at the top level, with additional layers, products and services built on top,” says Filipe Castro.
“Core protocols will optimize a specific product-market-fit, with many coexisting and complementing each other, rather than displacing themselves.”
At the same time, Castro suspects that stablecoins may witness significant developments over the coming years, providing a significant advance over fiat currencies.
“Algorithmic-based, purely decentralized stablecoins, akin to an algorithmic central bank would be an exciting breakthrough,” he says. “While we will have such protocols in approximately a decade, the complexity, incentive alignment and technological challenges involved are substantial and require further extensive development. After those obstacles are overcome, wider adoption will follow at the usability and product layer.”