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The Current State of The Blockchain Industry and Future Crypto Trends

Since the launch of the first cryptocurrency more than ten years ago, the industry has exploded to life, bringing with it thousands of new cryptocurrencies as developers continue to get to grips with blockchain technology and identify ever more ambitious use cases for it. 

However, despite the initial hype and hysteria seen in the early days of the industry (and periodically since), the projects that make up the blockchain ecosystem are still very much in the experimentation and development phase. 

Nonetheless, though the current state of blockchain development can still be described as embryonic, growth and expansion are both occurring rapidly. Because of this, new industry trends are appearing at an ever-increasing rate, making the pace of change so fast that it can be difficult to keep up. 

In light of this, we think it’s time for a review of the current state of things, as well as a look ahead at what is in store for arguably one of the most promising innovations of the 20th century. 

 

DeFi Will Continue Gaining Momentum

Decentralized Finance or DeFi is an industry that is largely becoming synonymous with blockchain since this technology is a key enabler of DeFi.

DeFi is now one of the main reasons why many retail investors now invest in cryptocurrencies like Ethereum since some DeFi projects are able to offer yields that far exceed those possible with investment banks and peer-to-peer lending services - all with security that is automatically enforced by smart contracts. The safety of DeFi platforms has led to an explosion in interest, which has seen the number of DeFi wallets more than quintuple in 2019.

As further evidence for the rapidly growing DeFi industry, the amount of crypto assets locked up in DeFi smart contract platforms has massively increased in the last year. According to DeFi tracking platform DeFi Pulse, the total value locked (TVL) in decentralized finance has grown from $320 million at the start of 2019, to almost $700 million by December 01, 2019. 

As such, in 11 months, the total amount of ether locked in DeFi has more than doubled - the vast majority of which (almost 50%) is locked up in a platform known as Maker, which allows users to stake digital assets and receive a loan, or loan ether and receive interest. 

Part of the reason for this growth can be attributed to the rapidly gaining popularity of decentralized lending platforms, which see peer-to-peer loans automatically managed by smart contracts. Currently, just over two-thirds of all ETH locked in DeFi can be attributed to lending platforms like Maker, whereas the rest is associated with off-chain payment pools, wrapped tokens and other still growing DeFi use-cases. 

2020 Perspectives - Future Crypto Trends

As it stands, Ethereum is largely considered the backbone of decentralized finance, since the vast majority of DeFi projects use Ethereum smart contracts to help secure and distribute funds. However, with the industry rapidly gaining global recognition, a number of new players are beginning to enter the industry—some of which may have the potential to bring DeFi to an even wider audience. 

Among these projects, Augur (REP), EOS and Cosmos (ATOM) stand out as prominent candidates for growth in 2020, while the potential Bitcoin Taproot upgrade could see its smart contract capabilities expanded in the near future - potentially setting the stage for DeFi on Bitcoin. 

Beyond this, based on the current rate of growth, the amount of ether locked up in DeFi contracts looks set to pass $1 billion in 2020 - equivalent to more than 5% of all ETH in circulation. Similarly, it appears likely the distribution of DeFi funds will gradually begin to spread beyond just cryptocurrency lending applications, as the DeFi ecosystem develops to encompass additional frontiers. 

 

Cryptokitties

Dapps Move Beyond Gaming Applications

Although cryptocurrencies like Bitcoin (BTC) and Litecoin (LTC) were among the first use-cases for blockchain technology, and have gone from strength to strength in recent years, blockchain has also been explored for dozens of other applications - some of which are also rapidly growing in popularity. 

One of the best-known uses for blockchain is decentralized applications (Dapps), which are essentially digital applications that run on a smart contract-capable blockchain such as Ethereum, Tron, EOS or one of the myriad newly developed platforms designed to support massively scaling Dapps. 

For the most part, the most popular Dapps tend to be game applications that offer some kind of trading functionality - allowing users to purchase rare in-game items, characters and features, and trade these between one another. As it stands, out of the more than 2,800 Dapps tracked by DappRadar, the top three by the number of users are gaming applications, whereas there are also four gambling Dapps within the top ten. 

Beyond this, although Ethereum currently hosts by far the largest number of Dapps, other competitors including Tron, EOS, and Loom are beginning to catch up, with each recording a massive uptick in the number of Dapps in 2019. Likewise, the variety of the Dapps is also on the rise, as development groups begin to explore increasingly novel uses cases.

Among these, DLive - a blockchain-based live streaming platform has demonstrated the potential of decentralized social platforms, after clocking up almost 30,000 active users per day at its peak in 2019. Much of this popularity can be attributed to the fact that Felix Kjellberg, the individual behind Youtube’s second most popular channel began regularly streaming on the platform back in April 2019—demonstrating the influence that a single popular content creator can have on Dapp performance. 

 

2020 Perspectives - Future Crypto Trends

While decentralized applications have been lauded as the next big thing for blockchain for quite some time, the vast majority of current Dapps still have a limited number of users, while most tend to quickly lose steam and fall into obscurity after launch. 

In addition, there still remains significant transparency issues in the Dapp space, since it is difficult to track the exact performance of some Dapps due to the deliberate attempts to manipulate transaction volume and user counts - all with the goal to attract new users. Because of this, 2020 will likely see Dapp tracking platforms like DappRadar and State of the Dapps begin to crack down on offending Dapps, helping to restore trust in the industry. 

Meanwhile, recent game releases, including Gods Unchained and Tides of Magic look set to bring decentralized games to an even larger audience by allowing players to bring non-fungible tokens (NFTs) from other Dapps into the game. This collaborative spirit could see competition between Dapps die down in 2020, and could be just what is needed to bring to market a truly breakout Dapp that moves the industry forward.

 

Altcoins Definition

Increased Concentration Among Digital Assets

Since 2016, the cryptocurrency industry has seen an incredible surge in both the number and variety of digital assets available. Now, according to CoinGecko, the total number of cryptocurrencies sits at more than 6,000, though just a fraction of these is still being actively developed, traded or used. 

Although there are now more cryptocurrencies and crypto-assets than ever before, the money moving into the market is actually being shared between a gradually decreasing pool of cryptocurrencies. This appears to be a result of investors moving funds into what most would consider being more stable, battle-tested cryptocurrencies, while newer, less established crypto assets have been largely shirked. 

The cryptocurrencies seeing most of this capital influx are largely those in the top 20 by market capitalization, with Bitcoin (BTC) and Ethereum (ETH) being popular choices among retail investors. As a result, Bitcoin has seen its market dominance gradually improve throughout much of 2019 - climbing to a 2-year high of over 71% in September and hovering over 60% for more than half the year, while Ethereum secured its position as the second-largest cryptocurrency.

Likewise, stablecoins like Tether (USDT) and USD Coin (USDC) have seen their market capitalization swell in recent months as cryptocurrency traders look to opt-out of volatility but retain the ability to enter the market when opportune. As such, more than $2 billion in USDT was minted in 2019 alone, whereas the number of circulating USDC doubled over the same period. 

 

2020 Perspectives - Future Crypto Trends

With 2020 set to see a large uptick in the number of security token offerings, it is reasonable to expect that this could draw significant interest, and hence alter the money flow of the cryptocurrency industry - much like the ICO boom of 2017 and IEO craze in early 2019. Because of this, 2020 could see the rise of the first billion-dollar security token, while significant reordering of the market capitalization rankings is likely to occur. 

Beyond this, with the number of pump and dump scams remaining high in 2019, it appears likely that cryptocurrency investors will begin to seek more reliable information sources, helping to avoid scams and attempts at market manipulation. As such, more accurate measures of market dynamics, including volume-weighted market caps, social activity, on-chain transaction count and the Volume Weighted Average Price (VWAP) are likely to gain prominence in 2020.

Lastly, Facebook’s Libra cryptocurrency is slated to launch in 2020, and will likely be the first cryptocurrency launched by a major corporation. Depending on its success, there is a good chance that it could quickly become one of the largest and most used cryptocurrencies, and could be used as a benchmark by other corporations with crypto ambitions. 

 

Increased Global Awareness

Although blockchain and cryptocurrencies are still largely niche industries, there have been huge strides made in both consumer awareness and investor education in recent years, thanks to initiatives designed to promote widespread awareness of blockchain and related technologies. 

These initiatives have also helped to inform both the general public and businesses about the potential benefits and pitfalls of the technologies, as well as the suitability of crypto-assets as investment vehicles. 

Recent research performed by YouGov indicates that more than 80% of Americans are familiar with at least one type of cryptocurrency, while around 35% of surveyed Millenials have made a cryptocurrency purchase in the last year. Moreover, a recent survey of 5,000 Americans by Crypto Radar found that around 10% are looking to purchase Bitcoin, whereas around 6.2% already own some. Scaling this up, this could mean that more than 30 million Americans plan to buy Bitcoin in the near future. Beyond this,

It isn’t just America that is seeing improved awareness and adoption either, since similar figures are seen when surveying many other countries, with 93% of those surveyed in the UK stating they had heard of Bitcoin, while more than 60% of European companies have now heard of blockchain - up from just 40% in 2017. 

Although dozens of blockchain companies have ramped up education efforts and are now doing what they can to advocate blockchain technology and cryptocurrencies, the recent endorsement of blockchain technology by Chinese President Xi Jinping may have been just the catalyst needed to help put blockchain and related technologies under the spotlight.

In fact, following President Xi Jinping’s announcement that China would be making a large-scale blockchain push, virtually all major crypto assets gained considerable value, indicating an influx of new capital and users - crucial to the long-term viability of the industry. 

 

2020 Perspectives - Future Crypto Trends

With China now looking to lead the way in blockchain development, it appears likely that the governments of other major economies will also look to ramp up efforts, to ensure they are not left behind if/when the technology is mature enough to be used as the backbone for government infrastructure and public services.

In light of this, major blockchain efforts by other governments could lead to further positive changes in cryptocurrency market dynamics—much like the 30% spike in Bitcoin price seen after China’s blockchain push announcement. 

Oceanic countries including Australia and New Zealand appear particularly primed to see the massive adoption of blockchain in the coming years, as New Zealand became the first country to legalize salary payments in cryptocurrency back in August 2019. Likewise, Australia recently made headlines after its two made blockchain advocacy groups, the Australian Digital Currency Association (ADCA) and Blockchain Australia (BA) announced a merger - forming into a unified voice for blockchain adoption in the country.

Beyond this, blockchain education efforts, including our own free ‘Introductory Course to Crypto and Blockchain’ course are helping to break down common industry misconceptions and provide the next generation of cryptocurrency owners and developers with the knowledge needed to get a head start in a burgeoning industry. 

 

Wellington Beehive

Adoption in Government Processes

When most people consider the utility of blockchain technology, the first thoughts that come to mind likely relate to community-developed projects such as most open-source cryptocurrencies and blockchain protocols. 

However, these might only be scratching the surface of what blockchain technology is capable of since many governments around the world are now looking into whether blockchain and similar distributed ledger technologies can be used to improve government infrastructure and public services. 

To this day, blockchain has already used by governments in dozens of countries. For example, In the US, the Defense Advanced Research Projects Agency (DARPA) is developing a blockchain-based secure communication system to will allow personnel to securely communicate and process transactions. Likewise, there are also efforts to use blockchain to improve the delivery of healthcare, track and verify prescription drugs and help secure long value chains.

The US isn’t alone in its blockchain ambitions either, the U.K.’s Food Standards Agency (FSA) recently completed a blockchain trial to track the distribution of meat in a cattle slaughterhouse and currently has multiple blockchain trials running, whereas China has several government-led blockchain projects, at least nine of which were launched in the rapidly developing Xiong'an New Area. 

Not looking to be left behind, Australia announced its national blockchain strategy in March 2019, which aims to better regulate and foster innovation and collaboration in the blockchain industry in Australia. Beyond this, Perth mint launched a gold-backed Ethereum token that is guaranteed by the government of Western Australia, whereas the South Australian government used blockchain technology to conduct a small-scale local election. 

The strong government interest in blockchain technology is also echoed by a research report from the GovChain Research Group, which shows Australia, Estonia, the European Union, Singapore, the UK, and the USA are all working to implement blockchain solutions in the public sector, whereas Thailand and France are described as “actively investigating” the potential of the technology. 

Despite this, almost all current government blockchain efforts can be considered proof of concepts that simply look to test the viability of the technology - though, this might change very soon. 

2020 Perspectives - Future Crypto Trends

2020 is also widely expected to be the year China releases its much-teased state-backed cryptocurrency, currently known as the Digital Currency Electronic Payment (DCEP). The DCEP will be pegged at a 1:1 ratio with China’s national currency, the RenMinBi (RMB), whereas all merchants that accept digital payments in the country will be forced to also accept DCEP. 

Because of this, China’s digital currency could quickly become the most widely used cryptocurrency in existence, prompting other countries to consider the possibility of digitizing their national currency. In light of this, New Zealand and many other countries are also likely to announce a national blockchain strategy in 2020, as the competition between countries heats up. 

Moreover, blockchain is being increasingly shown to be capable of securing large amounts of data and improving the transparency of many industries. As such, it is likely that efforts to use blockchain in voting systems, healthcare, and identity management will pick up in 2020, with the first major government application in these industries likely by the end of the year. 

 

ICO-Initial-Coin-Offering-Explained

ICOs and IEOs Lose Steam

Blockchain is widely expected to revolutionize practically every industry thanks to the sheer-variety of use-cases of the technology. As a blossoming technology, this has seen droves as talent flock to the industry, and a huge number of startups form with ambitions to develop the next big thing. 

As the number of hopeful startups in the industry grew, so too did the amount of capital necessary to sustain this growing blockchain startup culture. Out of this demand for funding, the initial coin offering (ICO) boom was born, which saw nascent blockchain projects raise funds with no regulatory hurdles and few limitations. 

These ICOs became extremely popular in late 2017 and throughout 2018, with more than $6 billion raised by 875 ICOs in 2017, and $7.8 billion raised by 1253 ICOs in 2018 - equivalent to a whopping 30% year-on-year growth. While several crypto assets formed during this time provided investors with incredible returns on their investments. 

However, according to data compiled by ICO analytics platform ICOdata, the amount of funds invested in ICOs has practically dropped off a cliff in 2019, as a lack of regulatory oversight led to a large number of exit scams, failed projects and stalled developments that severely damaged investor sentiment around the practice.

Nonetheless, though the number of successful ICOs fell to less than a tenth of the year prior, a new type of fundraising system rose to prominence - the Initial Exchange Offering or IEO. In brief, an IEO is very similar to an ICO, in that investors receive project tokens at a discounted rate in exchange for investment, however, these are conducted on cryptocurrency exchange platforms, which (claim to) perform stringent due diligence checks to filter out any bad eggs. 

This practice became extremely popular in early 2019, as many of the largest cryptocurrency exchanges began hosting IEOs. Likewise, some of the most successful IEOs generated investors substantial returns, while many others failed to gain sufficient funding or generate a positive return for investors. 

For the most part, these IEOs were more secure than the traditional ICOs. However, as smaller exchanges with more lax requirements entered the scene, fraudulent IEOs also began to appear - once again burning the hands of investors, and forcing the industry to look for a permanent solution to crowdfunding in the cryptocurrency space. 

 

2020 Perspectives - Future Crypto Trends

With the failure of the ICO and IEO framework for the funding of blockchain projects, blockchain startups have begun to look for ways to acquire funding in a regulated manner, while keeping the ease of access that made ICOs and IEOs so popular. 

Out of this need, a regulated way of raising funds known as a security token offering (STO) was formed. In brief, STOs are crowdfunding campaigns that provide investors with security tokens in exchange for funding. These security tokens can be back by a variety of assets, such as commodities, equities and debt instruments. 

However, launching an STO is a complicated process, since involved companies need to ensure they are compliant with local securities laws. Because of this, only a few platforms are licensed to host STOs, but a huge surge in interest has led many platforms to seek licenses. 

As such, 2020 will likely bring with it a wave of STOs - though these will mostly only be offered to accredited investors while the regulation is ironed out, or a legal workaround is discovered. 

 

IMAGE SOURCE: online-casino-laws.info

Regulation Changes and Clarification

2019 has been an important year for the cryptocurrency industry as a whole since the regulatory landscape has become much more defined in recent months as several countries clarified their stance on crypto assets. 

Among the most significant milestones of the year came in November 2019, when the German Parliament passed a bill that allows German banks to both store cryptocurrencies, and sell them to individuals, businesses and institutional clients. This recent development is widely considered to be a bullish event since it could give investors a way to safely enter the industry by dealing with a familiar, regulated financial institution. 

As it stands, practically every developed country has concluded that cryptocurrencies are considered property or another asset type (but not money) and have issued advice on how cryptocurrencies are treated for tax purposes. For the vast majority of cases, simply purchasing cryptocurrencies is not considered a taxable event, whereas selling or disposing of them could be considered taxable - but usually only if generates a net profit.

Nonetheless, 2019 has seen several countries provide additional clarification on how cryptocurrencies are treated under the law, making the industry much less difficult for crypto companies to navigate while making the industry much more accessible to institutional investors. 

Beyond simple guidance on taxation policy, regulatory bodies around the world are also beginning to shelve the ‘one size fits all’ approach to cryptocurrencies, and instead begin to recognize the fact that there are various classes of crypto assets - each of which could require a different distinction in regulatory policies. According to a recent report by The University of Cambridge, three main categories of crypto assets are beginning to emerge out of this process: payment tokens, utility tokens, and security tokens. 

 

2020 Perspectives - Future Crypto Trends

As we can see, the vast majority of countries are trending towards favourable regulations for cryptocurrencies, and many are actively investigating the dynamics of the cryptocurrency industry to ensure upcoming regulations are cover as much ground as possible. 

Beyond this, countries with a positive stance on cryptocurrencies will likely continue to refine and update their regulations, to better accommodate the fast-changing cryptocurrency landscape. Among these, the United States is reportedly considering a bill known as the ‘Cryptocurrency Act of 2020’, which would see crypto assets split into three separate categories: cryptocurrencies, crypto-commodities and crypto-securities - each of which are regulated by a different agency, including a proposed 'Federal Crypto Regulator.'

With that said, several countries, are still yet to explicitly clarify their position on the legality of Bitcoin and other cryptocurrencies, with Argentina, Peru, Colombia, and Malaysia being among those lacking clear regulations on crypto assets. 

 

The Elaboration of New Investment Products

In the past two years, bearish cryptocurrency market conditions have heavily affected most blockchain-based projects as well as the way investors are spending their funds. In line with this, the crash that occurred throughout 2018 and early 2019 devastated most low market cap cryptocurrencies, while severely hampering even some larger projects. 

As a result, high risk, high reward investments are gradually falling out of favour with many investors, and instead, demand for low-risk alternatives is on the rise. This changing investor mentality partly explains the recent push for security token offerings, since investors are now looking for safer ways to gain exposure to cryptocurrencies. 

Beyond this, the last few years have seen the elaboration of a huge number of cryptocurrency derivatives trading platforms and products. This has also helped to flesh out the cryptocurrency trading ecosystem, since investors now have a range of derivatives, including futures, options and perpetual swaps to choose from - in addition spot markets.

However, despite this need for variety, the launch of the first physically-settled Bitcoin futures platform initially failed to impress—though Bakkt did begin to pick up the pace in November and December 2019, indicating increased institutional interest in Bitcoin. 

Cryptocurrency index funds also rose to prominence in 2018 and 2019, since they both offer exposure to a variety of cryptocurrencies and convenience compared to manually trading spot and derivatives platforms. Likewise, unlike traditional index funds, many cryptocurrency index funds have few to accreditation requirements and offer far lower minimum investment amounts. 

Meanwhile, besides the rise of security tokens, direct equity offers by companies working in the blockchain sector are becoming increasingly commonplace. For example, Crossgate Capital Limited is currently running an equity offering, allowing investors to purchase ordinary shares in the company and own a part of a diverse cryptocurrency portfolio designed to achieve strong long-term returns. 

 

2020 Perspectives - Future Crypto Trends

Traditional investments are increasingly becoming less attractive to younger generations since the barrier to entry is often set extremely high, while returns are often limited. As such, 2020 will likely bring with it an increased range of cryptocurrency investment products designed around accessibility and aversion to risk. 

Among these options, cryptocurrency lending and staking platforms will likely continue to gain prominence in 2020, while index funds, cryptocurrency baskets and personal hedge funds are set to multiply in both number and size in the coming years as convenience and security take centre stage. 

Lastly, 2020 could see the first regulated Bitcoin exchange-traded fund (ETF) approved by the US securities and exchange commission (SEC) - potentially opening the flood gates to institutional and corporate investors. 

 

Change The World

Big Changes to Major Projects

The vast majority of blockchain projects are capable of an iteration process, which sees new features, fixes, and changes to the underlying protocol add through a procedure known as a fork. This can either be a minor change, through what is known as a soft fork or a more significant change that prevents backward compatibility and requires a hard fork. 

Now, most major projects can no longer be considered experimental, as many have demonstrated the ability to perform their intended functions and cope with rapidly growing demand. However, this hasn’t been without near-constant innovation, community input and sometimes controversy - as projects implement the changes needed to maintain relevancy and a competitive advantage in 2020 and beyond. 

Bitcoin Cash is one of the largest blockchains to undergo major changes in 2019 after developers implemented a fix that makes transaction malleability nearly impossible, as well as improved the way Schnorr signatures are handled. Support for Schnorr signatures was added earlier in 2019, in a much-anticipated upgrade designed to improve transaction efficiency and hence help Bitcoin Cash scale better.

2019 also saw Ethereum complete arguably its largest network upgrade ever after the Instanbul update went live in December. The Istanbul upgrade implements six Ethereum Improvement Proposals (EIPs) including those that improve interoperability between Ethereum and Zcash, reduce gas costs, enhance security and build on two previous updates the same year to help ready the network for the major changes that lie ahead. 

 

2020 Perspectives - Future Crypto Trends

One project that will likely be undergoing major changes through 2020 is Ethereum, and this might start as soon as January with the launch of a new proof of stake (POS) chain known as the ‘Beacon Chain’, which will operate alongside the current proof of work (POW) chain for a time until the latter is gradually phased out with the Ethereum 2.0 rollout. 

Although Proof-of-Stake has been around since 2012, the technology has been largely limited to newer projects such as EOS and Tezos (XTZ). However, with Ethereum adopting proof of stake, this will be its biggest test yet and could be used to settle the debate whether the consensus mechanism is better than the proof of work used by Bitcoin.

The debates between POW and POS proponents will also be further fueled in 2020 when Cardano finally launches the Shelley upgrade on the mainnet, bringing with it a unique proof of stake consensus system and transaction throughput 30 times larger than bitcoin - according to Cardano co-founder Charles Hoskinson. 

Nonetheless, Bitcoin isn’t likely to be left in the dust any time soon, as developers are currently working on a variety of Bitcoin Improvement Proposals (BIPs) that could alter the way the Bitcoin blockchain works. Among these, the Taproot and Schnorr signatures proposals are widely ripped to be added in 2020. 

 

Future Crypto Trends - scalability

Tackling an Old Issue

The blockchain scaling issue has been met with much debate over the past several years, as cryptocurrency users, blockchain developers, and decentralized systems experts bang their head against what is arguably one of the most pressing challenges facing the blockchain industry,

The problem is simple, due to bottlenecks in the way that blockchains typically achieve consensus, they are only able to process a limited number of transactions per second, with this figure being termed the ‘transaction throughput’ of a blockchain. For most first-generation blockchains like Bitcoin and Ethereum, this is widely considered to be around 5-20 transactions per second (tps). However, to achieve the scale needed to operate as a truly global payment system, many experts believe that blockchains will need to be capable of a transaction throughput that rivals the VISA payment system - which has been estimated to be at least 30,000 tps. As such, it is clear that there is a staggering difference between the actual capacity of current blockchains, to what is necessary to achieve global scaling. 

The limited transaction capacity of blockchains has caused issues several times in the past, when suddenly increased demand temporarily stressed a blockchain and rendered it almost unusable for some time. For example, with the wildly successful launch of CryptoKitties in 2017, the Ethereum blockchain almost ground to a halt as the huge number of transactions linked with the game completely overwhelmed the network. Likewise, massively increased demand for Bitcoin in late 2017 saw the blockchain pushed to its limits while driving up the average transaction fee to over $50 as competition for block space reached ridiculous levels. 

In order to tackle this issue, developers have proposed and begun working on a variety of potential solutions—though there still remains no clear consensus which, if any of these fixes, can push blockchains to throughput needed for global adoption. Nonetheless, a second-layer scaling solution known as the Lightning Network has grown to become arguably the best hope after seeing explosive growth in 2019. 

Back in September 2019, the Bitcoin Lightning Network reached an all-time high of 10,000 active nodes, while the network capacity has, at times, exceeded the $10 million mark. These numbers represent more than 1,000% improvement in the course of a year—an incredible rate of growth by any measure.

Despite this, there are several camps that believe off-chain scaling solutions like the Lightning Network are not the way forward since the risks could outweigh the benefits. As such, the scaling issue is also being attacked from a variety of other angles, one of which, is the development of more efficient consensus algorithms. 

Among these, the Delegated proof of stake (DPoS) consensus has gained popularity in recent years and has been adopted by several prominent blockchains, including EOS and Tron - both of which have reportedly achieved throughputs in excess of 1,000 tps. Likewise, VeChain’s Proof of Authority consensus algorithm is also designed to directly address scaling concerns, and (theoretically) handle more than 10,000 tps. 

 

2020 Perspectives - Future Crypto Trends

Though there have been numerous attempts to resolve the scaling problem and several projects have demonstrated promising results under test conditions, there still remains no clear cut best solution. 

As 2020 progress, current attempts to finally resolve this long-standing issue will continue to be battle-tested, while several major projects will undergo protocol changes with the hopes of improving efficiency. Among the most significant of these is Ethereum’s putative sharding upgrade, which would see the blockchain operate as several parallel ‘shards’ in order to multiply the number of transactions it can handle. 

Beyond this, several so-called ‘scaling projects’ will launch their mainnet in 2020, including SKALE—a sidechain scaling solution built for the Ethereum blockchain, whereas Bitcoin SV will complete its Genesis hard fork in February 2020—doubling its network capacity.

 


About the author:

After initially entering the fields of anti-ageing research, Daniel pivoted to the frontier field of blockchain technology. Daniel has been bullish on Bitcoin since before it was cool and continues to be so despite all evidence to the contrary. In addition to contributing his expertise to CoinDiligent as a writer, he is also the co-founder of BlockBoost — a cryptocurrency PR firm.

Disclaimer:

The above references an opinion and is for informational purposes only. Do not take this as personalised financial advice or investment advice. The views expressed by the author do not necessarily represent the opinion of BitPrime.

Last updated: 25/12/2019

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