20 predictions affecting the blockchain and cryptocurrency industry for 2020

The last two years have seen the emergence of the number of applications linked to cryptocurrency and blockchain technology, however, this technology is not yet a dominant trend. Armanino, an independent consultancy linked to Moore Global, presents its 20 industry forecasts for 2020.

1. Year in, year out, there seems to be one event that defines the year, as the list below shows. Gone are the days of furious PEC madness and “ubiquitous blockchain”, certainly, new forms of life are emerging from the graveyard of antiquated, over-mediatized technologies.
   2016 – The omnipresence of blockchain
   2017 – PEC
   2018 – The stable cryptocurrency
   2019 – Decentralized finance
   2020 – Government-issued cryptocurrency and enterprise-issued cryptocurrency.
2. China plans to soft-launch its Digital Currency Electronic Payment (DCEP), also known as RMB Coin, in 2020. This initiative will greatly accelerate the adoption of TRD payments in China, creating a Sputnik moment for Washington and Brussels and kicking off the blockchain technology race. Many other governments will follow suit and create their own cryptocurrencies using components of blockchain technology.
3. From this technology race will emerge a regulatory sandbox for cryptocurrency issuance. This will be followed by further experimentation with US-issued cryptocurrencies in compliance with US legislation.
4. We’ll see the implementation of at least five more large-scale enterprise-issued cryptocurrency projects powered by one or more Global 100 named companies. However, unlike Libra, these projects will not be advertised or reviewed. Some corporate-issued cryptocurrencies will be launched.
5. Most of these government- and corporate-issued cryptocurrencies will leverage fiat currency fixing processes to regulate prices.
6. Stable cryptocurrencies will also see significant proliferation, given innovation in decentralized finance and corporate-led testing scenarios. More and more cryptocurrencies backed by gold (as well as precious metals and other minerals) will emerge.
7. A trend towards greater transparency and third-party approval of stabilization mechanisms will be needed as a multitude of new stablecoin projects emerge. What’s more, rather than collapsing, projects that deviate from the mainstream, whether deliberately or not, will tend to be marginalized. So why accept a risk that offers no return? Real-time verification reports will become the reference standard.
8. Decentralized finance will gain in popularity and creativity, but at what price? A smart contract involving a large financial stake in a decentralized financial system will fail, sparking the biggest panic in the Ethereum ecosystem since The DAO project. On the other hand, rather than calling the technology into question, this failure will curb some speculative activity and confirm interest in third-party approvals and verification reports.
9. Programming tools and blockchain design are improving and becoming more user-friendly. These advances will pave the way for further experimentation, to the benefit of end-user applications. We won’t be discussing how blockchains work, but rather what they accomplish, finally!
10. Over the coming year, more and more corporate use cases will come under the microscope. The noose will tighten around R&D budgets for blockchain projects that offer no tangible scope for improvement compared to conventional database technology. Any attempt to mobilize blockchain technology in a situation where decentralization is not essential will not stand the test of time.
11. The infrastructure will continue to grow, but perhaps not fast enough. One thing leads to another, and we’ll be continuing to provide solutions to increase the scalability and processing speed of existing popular channels. Nevertheless, the latest generation of blockchains will surpass the transformation efforts deployed by existing projects, due in part to their outdated governance models. In most cases, this will encourage developers, users and ultimately investors to migrate to the new channels rather than attempt to recreate the old ones (with the exception of the digital gold use case).
12. Ethereum is a good example of this phenomenon, as this platform is still being criticized for its lack of improvement. Binance (Binance Chain and Binance DEX), as well as other companies of this type, will tarnish ETH’s leading role in intelligent contracting.
13. The conversion of “real-world” assets into cryptocurrency will continue gradually as individual business cases demonstrate that this solution delivers convertible value compared to fiat-valued assets. But there’s still no excellent product to suit this market. Cryptocurrency will be the subject of a growing number of experiments involving various asset classes, particularly in the potential synthetic asset class: options, credit default swaps and asset-backed securities.
14. The year 2020 will see a huge and extremely impactful “CryptoKitties” moment: this is an application with great potential to enjoy huge popularity worldwide, but currently relies on use case as opposed to speculation. Of course, this situation brings to mind the Brave navigator.
15. The privacy-focused cryptocurrency will gain in popularity as a counterweight to the rise in censorship-resistant, privacy-preserving digital assets.
16. Competition will intensify in the foreign exchange market. Lower transaction fees and new free services, such as interest participation, are expected to become industry standards.
17. Federal tax authorities will continue their efforts to access data on off-blockchain transactions, and will increasingly rely on historical blockchain data. It’s important to note that blockchains are also used for tax evasion prosecutions in the future.
18. Although the interest earned from the cryptocurrency economy will diminish, it will remain at least three times higher than that earned from the non-cryptocurrency economy.
19. The Ligthing Network and new revenue-generating products from decentralized finance will raise a number of accounting and tax withholding issues. (These issues will not be resolved in 2020. It is best to consult a professional).
20. As the number of investors looking to make the most of digital gold grows, demand for Bitcoin (BTC) will continue to be strong. We can also expect upward pressure from mining premiums, increased adoption of the Lightning Network and growth in the total volume of non-speculative transactions. The inability of any of BTC’s offshoots to maintain total transaction value and volume is testament to BTC’s strength and durability.

In light of these predictions, will blockchain and cryptocurrency become mainstream in 2020?

This article was written by Andries Verschelden, partner at Armanino LLP, an independent firm linked to Moore Global Network.

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