Blockchain had a good run in 2016 with a lot going on, including over $1.5 bln invested in startups, Bitcoin breaking out of the $700 resistance level and the likes of IBM and Microsoft betting the shop on this new pervasive technology.
We saw Barclays Bank’s first live commercial banking transaction, Hyperledger’s very promising Corda technology coming of age and, of course, more attacks requiring more forks. In addition, the Scaling Conference in Milan showcased some amazing projects that bode well for Blockchain’s amazing future.
So what does 2017 hold for the Bitcoin Blockchain?
On par with gold
Bitcoin will continue its rise from its three-year high to reach parity with gold, continuing the trend post the devaluation of the yuan, the withdrawal of large Indian notes, as well as the Trump and Brexit effect.
As 2016 was the year of the Proof of Concept, 2017 will be the year when Blockchain breaks out of the lab and into production environments.
Ethereum will continue to fork under constant attacks and will get stronger as Casper comes of age. Furthermore, Ether will continue to struggle to break through the $1 bln market capitalization.
Banks will try to make Smart Contracts - smart and legally binding software code - and will continue to be slow adopters of the technology as they try to stay within regulatory boundaries.
The Bitcoin community is divided regarding Segregated Witness and the scaling issue could drive another split in the community. Then there is Lightning – bring it on.
Bitcoin will become a safe haven asset for people struggling with geopolitical changes, currency volatility in their country and/or where banks in countries such as India have started to withdraw large notes. It may also fulfill this role in nations that have continually devalued their savings following the devaluation of the yuan and recent fluctuations in the African and Latin American economies.
As Western central banks, BoE and the Fed dither and withhold their crypto position, Asian and MENA banks will commit further. The first sovereign government to issue debt on Blockchain will be Asia.
Western governments will try to influence cryptocurrencies by seeking insight and control (e.g. recent Coinbase IRS), not realizing that the market will simply shift to more accommodating economies.
The strongest adopters and evangelists of Blockchain will be supply chain, insurance and reinsurance. Although healthcare, banking and government want to embrace it, they will be beaten back by bureaucracy and regulation.
Investment slowed in the second half of 2016. VC and PE decline is explained by investors having not grasped the fundamentals - they see Blockchain more as a bubble to pile in and ride the wave. In 2017, organizations will invest more in Blockchain businesses directly as with FinTech.