Whether or not you are a believer in cryptocurrencies or agree with their current valuation, there is one thing both sides of the debate can agree on; 2017 was the year of blockchain. What began as a nine page white paper by the pseudonymous Satoshi Nakamoto in 2009 has transformed into a movement that has made global headlines and fortunes for early investors. For better or worse, much of the focus on blockchain has centered on the explosion of ICO's and the meteoric rise of cryptocurrency market caps - the total sum of which is roughly $670 BUSD at the publishing of this article. The sudden rise of a new digital asset class has been controversial and sparked debate across global forums, some of which is useful and constructive, some of which is decidedly not. Holdouts and conservative investors have been perfectly happy to scream "bubble" at anyone that will listen until they are blue in the face, while early investors and believers steadfastly (and, it can be argued, somewhat smugly) maintain the idea that crypto's detractors "simply do not understand." In a recent podcast with Tim Ferris, Nick Szabo, designer of Bit Gold, correctly pointed out that only in cryptos can you see scientists and respected leaders calling each other nasty names over LinkedIn over belief differences.
This article will not address whether or not cryptocurrencies are a bubble or attempt to prescribe a method of valuation to the burgeoning asset class. In all the excitement that has surrounded the rise of cryptocurrencies, it seems that not enough attention is being directed towards industries that the underlying technology has the potential to disrupt. Regardless of whether or not you believe that the current valuation of cryptocurrencies is justified, it would be difficult to make the argument that token prices will continue to increase at the rate they will. Indeed, if cryptocurrencies grow at the same rate in 2018 as they did in 2017 the total market cap will exceed $27 trillion dollars - a stretch even for a die-hard believer. Instead, I believe that we will see the space mature - possibly through token consolidation, but more importantly for the future of this movement I am hoping we will see a shift towards the impact that blockchain as a technology will have.
Outside of cryptocurrencies, business leaders across several fields are beginning to take note of the revolutionary technology. Already, several industry leaders in sectors widely considered to be within the path of disruption have quietly begun to make preparations. Recently, UPS announced that it would join the Blockchain in Trucking Alliance, or BiTA. Based on a conversation with BiTA founder and current president Chris Burress and Craig Fuller, Stifel analyst John Larkin wrote that he expects three logistics giants to "invest enough in technology to drive consolidation of the industry around (blockchain's) core transformational technologies." The players he expects to make the investment? UPS, XPO Logistics and C.H. Robinson Worldwide.
Outside of logistics, the financial sector has been somewhat bi-polar on the subject of blockchain. Jamie Dimon, CEO of J.P. Morgan Chase, has famously derided bitcoin as "a fraud" and "worthless" while simultaneously developing his own blockchain-based payment system. Proponents of crytpocurrencies have made the argument that Dimon's criticism is defensive because he sees blockchain for what it is, namely a replacement for his firm. Critics would say his comments stem from bitcoin's sky-high valuation. Whether positive or negative, one 2015 survey conducted by Greenwich Associates best sums up Wall Street's attitude on blockchain when it found that 94% of respondents indicated that blockchain would play an important role in finance.
Goldman Sachs it would seem is of the same opinion as the survey respondents. The Wall Street behemoth announced in December of 2017 that it would be setting up a cryptocurrency trading desk. It would seem that at least one bastion of the old financial order is open to the prospect of cashing in on the new. To those who are surprised by this news, followers of Goldman's might point out that as far back as 2016 the firm was predicting a big future for blockchain. Below is a summary of the verticals Goldman Sachs is predicting will be impacted, streamlined, or even created by the implementation of blockchain.
A few days ago, Vitalik Buterin announced that the crypto community needed to grow up and "differentiate between getting hundreds of billions of dollars of digital paper wealth sloshing around and actually achieving something meaningful in society." In 2018, I hope we see less emphasis on sky-rocketing altcoin prices and more on the technology that has the potential to improve our world. To enfranchise over 2 billion people who are currently excluded from the global financial system. To allow millions of emigrants to transmit remittances for a fraction of the cost that they do now. To allow people more secure control over their land and wealth. These are the true drivers of blockchain's value, and if its investors and believers want the movement to continue in the right direction, these are the values to which it has to return.