After attending a good number of Blockchain conferences and events this year, I was still surprised by the size & scope of this massive event, with thousands of attendees and a vast variety of topics being covered such as AI, Internet of Things and of course my favorite Blockchain! Thus, I would like to thank Ian Johnson and Mark Boyle for inviting me to this fantastic event! And after 2 days of information overload and potentially thousands of calories burned running from panels to lectures to stands, here are my 7 main takeaways from 2017 Blockchain Expo:
1. The current state of the market:
Currently, we live in a market where 30% or more ICOs are a scam! Nevertheless, we see the volume of ICOs growing from $20M USD in 2016 to over $3B USD in 2017 (as of the date of the publishing of this article). Although a globally exploding industry, so far the only the only country who has legalized ICOs is the beautiful British Overseas Territory and headland, on Spain’s south coast Gibraltar, which brings us to our 2nd takeaway…
2. Government Regulations:
A prevailing thesis to explain why governments hate Blockchain, Bitcoin and related subjects, is based on the fact that cryptocurrencies (and the most famous Bitcoin) have stolen the government’s power to be the sole issuers of currencies. Moreover, Ethereum is posed to fix the flaws in transactions by involving a machine that, unlike many humans, would never steal or cheat! Thus, the Ethereum Virtual Machine and it’s smart contracts a major threat to many consolidated global legal entities and governmental judicial agencies. This idea of this threat is best illustrated by the Chinese government’s actions of banning Bitcoin and ICOs. However, when the Chinese government decided to ban this globally exploding Cryptocurrency market, all it really did was to create the best FREE PR possible for Cryptocurrencies and ICOs! Not only did the global volume of Bitcoin transactions had a significant decrease, but also this action created a massive amount of interest from Chinese people about this new crypto asset class that was being banned. As we know, many Chinese love to gamble, and an ICO in China is a new and exciting way to gamble in a country where gambling is officially illegal! On the other hand, we have countries like Dubai, who is integrating Blockchain into the government’s systems and operations in hopes of vastly improving efficiencies, as well as, betting on the fact that a machine is a more objective and trustworthy mediator and solution provider than the majority of humans. This seems to be part of a trend of people not trusting other people, nor it’s governments and therefore viewing a machine as a more trustworthy alternative. Aside from governmental innovation, I also noticed at this Expo a good number of innovative solutions coming from companies that are solving complex regulations.
3. Innovation vs Regulation:
Although we continue to see companies pushing the envelope to deliver real-world transaction resolutions based on Blockchain technology, we still see a “hold-back” on the development of solutions for security ICOs trying to be properly regulated. As we know, one of the main benefits of having a security is the asset can bring liquidity to the security holder. Thus, as we know, by definition this security asset (or Crypto-asset) needs to be regulated and listed in a regulated marketplace in order to be exchanged. Therefore, companies such as Spice VC, tZero, The Gibraltar Exchange, Bancor, and Waves as well as my local StartEngine are all working hard to bring liquidity solutions to security token holders. Moreover, a solution does not seem to be very far off, as the London based, Chainstarter is working on bringing liquidity to security ICOs in the UK through a fully regulated securities exchange in 2018! I am therefore really excited about the advances I saw at the Expo who are working to bring liquidity to security ICOs. However – I keep thinking about the question “ What are the real benefits of Blockchain to the average consumer?” which leads us to my 4th point…
4. Massive Adoption of Blockchain:
It seems to me that the primary benefit Blockchain would bring for the general public, would be through its impact on financial services such as making banking services become cheaper due to the technological advances and improved operational efficiencies. When a bank’s back office becomes cheaper to run, this will make banking as a service much more competitive and hopefully, these savings will be passed along to the consumer. Currently, banking back-office costs, are estimated to be around $1B USD annually! If these costs can be greatly reduced, and hopefully passed along to end users, I believe this force massive adoption of the Blockchain technology by retail banks and related financial service providers. However, it is important to understand how massive technological changes have been adopted over the history of the Internet. I do not believe that the changes mentioned above will happen overnight, just as we saw the 1st email being sent in 1971, it will take a few years to get everyone on the Blockchain bandwagon! So then, what does the near future look like for Fintech?
5. Fintech Ahead:
As upper-level management in high profile financial institutions begins to understand how Blockchain technology will impact their entire industry, and how it might restructure the competitive landscape, it seems that a good solution would be for Fintech players to collaborate among themselves to overcome industry challenges. Despite JP Morgan’s CEO’s downgrading comments about Bitcoin, this financial giant is already making moves, as JP Morgan released its own Blockchain, a fork out of the Erhereum platform to develop and named it Quorum, which apparently does not require a consensus mechanism such as proof-of-work or proof-of-stake. Consequently, I strongly believe that Fintech companies, large financial institutions, and governments should not look at one problem for one firm, but instead should try to work together in order to integrate Blockchain into the global financial industry. So how do we see this interaction between Fintech, large institutions and government playing out?
6. The Regulatory Environment:
For many experts, 2016 was the year that Blockchain technology proved itself, 2017 was the year where business value was proven, and 2018 will be the year that regulatory solutions and compliance will be the main focus. An example of this is the continuous discussion we see surrounding the always-evolving SAFT (Simple Agreement for Future Token). A model many ICOs try to follow by issuing a SAFT coin in hopes to be considered an Utility Token. It is important to note here that for a SAFT to be done correctly and to be considered a true Utility Token, the issuing company needs to deliver a token that can be spent by the token holder on the 1st day of the launch of the related platform. Just like airline miles or bonus points at your neighborhood coffee shop, a SAFT ICO should deliver a Utility Token that can be used for consumption of products and services on DAY 1 of its related platform! As we continue to see the SAFT model evolve, we shall also see the entire industry evolve, which brings us to my final and 7th point…
7. The Future of Crypto:\
What then does the future look like? In the short-term, we see many developing countries with low energy costs and weak currencies fully embracing cryptocurrencies. A good example of one of those countries is North Korea! Moreover, as we see countries like Russia issuing a CryptoRuble as a potential solution to their weak FIAT currency (RUB), it is clear to me that innovation will come out of collaboratively efforts between governmental and private sectors, along with regulatory bodies in order to establish global best practices and solutions. Unfortunately, as we know and understand from our own current American government, by default, innovation seems to not be coming out of the USA anytime soon!
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Chief Strategist at 7MarketingMedia