As another year in crypto comes to a close, I thought packaging ideas I have about a variety of
Note: Because explicit predictions without quantification is poorly looked upon by others, I've tried to quantify this with a % confidence, where 100% is a lock and 10% is a Hail Mary long shot.
At least one major exchange will launch a Lightning Network hub for their users as confidence in the stability and security of the network grows over 2019 (50% confidence). If this occurs, my money is on Binance given their iteration speed/product chops or Coinbase (due to increased focus on adoption/"usage" of cryptocurrencies).
Lightning Network growth will continue in 2019. I predict the # of Lightning nodes will be ≥ 20,000 from ~5,000 now (60% confidence) due to the proliferation of node hardware and hosted solutions like Nodl.it or CasaHODL's and easy-to-deploy GUIs like Pierre Rochard's node launcher. I predict network capacity goes up even more from ~$2m notional to ≥ $25m+ notional (75% confidence) with the maximum channel limits lifted, dual-funded channels, etc.
A working implementation of Schnorr signatures, for which Pieter Wuille released a draft BIP in July, will be make its way into Bitcoin via soft work by the end of 2019 with ≥ 5% node adoption (75% confidence).
Low volatility and lower prices always attracts concern trolls and people who believe they can "change" Bitcoin for the better. The last 2y have seen a lot of forks where the codebase is changed but the UTXO set is kept intact. In 2019, I expect to see the opposite: forks with the technology kept intact (to merge future upstream changes) where the monetary policy or UTXO set is modified. I predict 2019 will see a major fork proposal from Bitcoin OGs "fixing" post-block reward fee market sustainability either by re-appropriating Satoshi's Bitcoin (e.g. my tongue-in-cheek tweet-proposal for "Bitcoin Freedom") or by adding predictable, low inflation in favor of the fee market (50% confidence).
2018 was a big year for Bitcoin privacy/fungibility R&D with proposals for Taproot and Graftroot from Gregory Maxwell in Q1, a draft BIP for the Dandelion protocol in May, and an emergent path for a soft-work upgrade to Schnorr-based signatures. By the end of 2019, there will be a clear roadmap for "good enough" fungibility and privacy on Bitcoin's "base layer" across a meaningful set of trade-offs (i.e., speed, confidence level, etc.) (50% confidence).
2018 saw plenty of promising experiments building products around, with, and on-top-off Lightning. While hard to quantify, I predict 2019 will see significantly improved developer experience, e.g. web3-like JS wrappers, hosted node servers, better docs/tutorials, which makes me very excited about potential new products leveraging new capabilities.
"DeFi" and "Open Finance," the narratives of Ethereum in 2018 will face real regulatory scrutiny in the US (70% confidence), which will test the runaway killer app of Ethereum (regulatory arbitrage, first with the offering of unregistered securities offerings and now with quasi-legal structured derivatives).
Augur, whose launch everyone awaited with bated breath, seems to have gained little traction (outside of niche markets around the election), I suspect it will be the breakout dApp of 2019, leaping from ~$1.5-2m notional at stake to ≥ $10m (70% confidence). My bullishness is due to (1) a full year with a working product (2) improved UX/choice of clients (3) increased brand awareness (4) demand in the market for a non-custodial prediction market (5) ERC-20 price-stable assets (5) better market-making/liquidity provisioning.
The "crypto-collectibles" narrative which gained major steam in Q1/Q2 (peaking in March's $12m raise for Cryptokitties) will lose traction despite the orthogonal interest for in-game items. While collectibles are interesting, they feel like a solution looking for a problem (though worth noting: I'm not a tastemaker) and gamer adoption feels like a pipe-dream as companies are unlikely to eschew existing monopolies. I suspect many of 2018's niche "X-for-Y" Cryptokitties imitators that are less well-funded will shut down next year (85% confidence).
Despite the hype going into the new year, consumer adoption of decentralized exchanges (DEXs) have materially lagged expectations. 0x, viewed by many as the best exchange protocol, has < $2m notional traded most days in 2018. I predict December 2019's aggregate volume on 0x will lag a single day's volume from Coinbase (90% confidence). The big problem with DEX adoption in 2018 is that it's been unclear who the target user is. While non-custodial trading feels like a boon, the trade-offs presented, e.g. in matching/execution speed, the potential for front-running, decreased privacy, the difficulty of accounting, etc. all make it an unappealing product for institutional investors (not even considering the difficulty of the UX). Whether retail investor participation will be sufficient for long-term sustainability remains to be seen. In addition, many DEX protocols with fee-based tokens will see their tokens get forked (like 0x has by their top relayer), though I predict we'll see a surge in cross-chain swaps and similar non-custodial trading options sans token.
A lot of early prominent projects promised new types of markets, e.g. for computation or storage. Along with the "utility token" narrative, demand for these solutions appears dead, as it's unclear (1) whether demand for un-censorable XYZ is compelling enough given increased cost relative to centralized alternatives (2) whether any of these new marketplaces will be sufficiently bootstrapped to hit the economies of scale necessary for their adoption. I predict not one of the new decentralizing marketplaces promising to marshal resources poses a threat to AWS, Microsoft, Dropbox, etc. (90% confidence).
12) A major Ethereum fork will be proposed ahead of any transition to a full Proof of Stake model preserving delaying the difficulty bomb and threatening the existence of Ethereum Classic (which gained minimal developer interest in 2018)
14) Full SHASPER / roadmap will be ______________