Expectation for Blockchain In 2019

2 Jan, 2019 09:29
source: 香港奇点财经Singularity Financial

Author:Senior Research Fellow of Hong Kong New Economics International Institute Tony

In 2018, the development of the blockchain industry has experienced major rises and downs, and gone forever the days when a white paper or even an idea could attract hundreds of millions of financing. Lessons from the past teach that the time when bubbles burst and tides recede is the beginning of the healthy development of this industry.

In fact, as far as the I am concerned, expect for the cryptocurrencies with the Bitcoin as the representative, up to the end of 2018, all the blockchain landing application can be replaced by alternative technologies. However, in spite of this fact, the blockchain technology is not insignificant. Instead, it means that the update of technology requires the devotion of time and energy. Based on my observation on the blockchain industry, I boldly proclaim that there will be some new developments for the blockchain industry by 2009.

First and foremost, the Consortium blockchain will be made public. Blockchains are highly redundant, with all the nodes used for the same purpose. Therefore, for a decentralized system, the operating costs will multiply. If the cost were jointly covered by one or several enterprises, it would be low-efficient and will lose the decentralization nature of the blockchain. The nature of the Consortium blockchain is a distributed database and since its nodes are certificated, there is no need for encryption. In this way, the future of the Consortium blockchain is to be superseded by the public blockchain on the one hand, and to match and integrate with the public blockchain on the other, which is called the cross-chain integration.

Secondly, the development of stable cryptocurrencies deserves our attention. Currently, the market’s largest stable cryptocurrency is the USDT, issued by Tether. Tether claims that they honor their commitment of 1:1 cash deposit, which means that every one USDT issued, there will be 1 US dollar secured funding and users can convert the USDT with the dollar by 1:1 ratio at any time. On the platform of cryptocurrency exchanges, the market value of the stable cryptocurrency is millions of dollar at least and more than one billion at most. However, some stable cryptocurrency accounts aren’t transparent, coupled with unauthorized supervision, leading to trust risk. At present, in addition to the USDT, other three “mainstream” stable cryptocurrencies claim that their benchmark is also the US dollar.

Thirdly, the phenomenal Dapp may show up. Dapp means the decentralized app, which can be understood as an app operated on the node of public blockchain. At the application level, the user experience is not very different from current APPs, but at the technical level, it does not depend on any centralized server. The code has open sources and is self-managed; records and data are stored in the blockchain; the encrypted token is used as the exchange media; and it rewards users for verifying transactions or provides services on the network. However, currently, the number of transactions that the mainstream public blockchains such as Eth can handle in one second is too small, which limits the generation and development of Dapp. However, the industry’s call for breakthroughs for this bottleneck and the technical exploration have never been stopped. In 2019, the phenomenal Dapp will probably make its appearance.

Fourthly, verification mechanisms such as POW (Proof of Work), POS (Proof of Stake), and DPOS (Delegated Proof of Stake) will coexist for a long time. The POW mechanism relies on the mathematical operations conducted by the machine hash-rate to obtain the billing right. The algorithm is simple and easy to implement, but it wastes energy and is prone to generate divergence and double spend attack. The POS mechanism no longer requires a lot of energy-consuming mining, but it still requires mining accounting. The DPOS node elects a number of agents, who are responsible for verifying and billing, and the coin holders will vote in a certain number of super nodes. It can be said that the existence of Bitcoin means that some people still recognize the POW consensus; the existence of Eth means that people still recognize POS (Proof of Stake); and the existence of EOS means that people still recognize DPOS.

Fifthly, the cryptocurrency exchange will embrace supervision and regulation. At present, the world’s mainstream cryptocurrency exchanges, such as bitfinex, Binance and Huobi, still have a lot of alternative transaction cryptocurrencies, which are with better liquidity, more trading methods, and faster withdrawal. Although it was affected by the sharp drop in the price of the cryptocurrency, it’s still functioning normally. At present, various countries and regions including Hong Kong have issued a series of cryptocurrency trading policies. These policies will be further extended in 2019. Only by embracing the supervision and compliance can the upstream exchanges develop healthily.

Looking back on 2018, many early predictions of the blockchain industry ended in failure. Since this industry is small in size and changing rapidly. I don’t expect my predictions to be accurate. My only expectation is that there will be no “puffery and slander” to this emerging blockchain industry in the outside world, and that there will be more legal policy guidance and a enabling development environment so that the blockchain can create more value for mankind.