The cryptocurrency market has experienced a massive selloff in 2018, bursting the bubble that reached a peak when Bitcoin's price hit near $20,000 per coin. Similarly to the burst of any bubble, the hysteria for cryptocurrencies has faded as the price declines - leaving many folks with painful losses and hurt feelings. To put it simply, the current investor sentiment is very negative.
Yet you wouldn't know that if you walked the halls of San Francisco Blockchain Week, a notable cryptocurrency and blockchain conference. There is continued effort and increasing excitement from those active in the industry and community. While others look only at price, cryptocurrency and blockchain projects are moving forward in executing their vision and building the future.
I attended San Francisco Blockchain Week and interviewed seven leaders in the space to find out where they are as an industry and to identify the trends that are important right now. This article highlights a few of the most important things happening in the blockchain and digital currency industries.
The importance of governance and decentralization
There is strong emphasis on governance since blockchain and digital currencies are built on the idea of decentralization. Who makes decisions? How do those decisions get made? How does a blockchain evolve over time?
Alison Mangiero, who works with Tezos, highlighted the importance of governance and proof-of-stake as ways to improve decentralization. "Liquid proof of stake allows more people to act as validators who keep the blockchain secure and formal governance allows the network to become less reliant on just one set of developers," she said.
Mangiero continued, "Allowing people to delegate their tokens means these validators need to look out for the interests of those who delegate to them and not just the interests of a small group of miners or large token holders. It aligns the interests of those with a small number of tokens with those who hold many of them."
The point for this approach is to achieve better decentralization and allow a blockchain to change over time, or with the changing interests of the token holders. It also achieves more democratization, as more people can get involved in delegation and staking - not just the minority of token holders that got in early.
Focus on providing real utility
Many of the entrepreneurs and creators in blockchain are focusing on creating competing currencies, exchanges or smart contract platforms. Since there are already a number of viable entities out there, smart investors and entrepreneurs are instead looking at ways to make other currencies, blockchains or technologies more effective or efficient.
"People should focus on usability and utility," said Loi Luu, founder of Kyber Network. Loi continued, "Instead of trying to compete with blockchains, find a way to make them better. Kyber, apart from facilitating decentralized token swaps, is empowering blockchains and projects by allowing them to accept any digital currency from customers and instantly convert digital currency X into digital currency Y. We are a bridge between all the chains, dApps and tokens."
Kyber Network is a great example for providing value via a technology that helps other cryptocurrency and blockchain projects perform and compete. At this point in the market cycle, entrepreneurs and businesses should focus on empowerment and less on competing with the biggest blockchains or exchanges.
Where is the usability?
The market saw massive expansion in 2016 and 2017, with hundreds of new currencies and projects coming forward at breakneck speeds. These projects touted the many ways they would change the world and promoted why they'd be successful. Yet very little of that has been realized.
"We're entering a phase where it's not enough to just say you'll create great technology or make an impact," says Aparna Krishnan, co-founder of Mechanism Labs, a blockchain research lab. She continued, "It's now time for projects to prove a path to usability and real adoption."
Too many projects in this space are simply touting the attributes of the blockchain technology itself, instead of building real sources of differentiation. There will be a hard awakening in 2019 when many of these projects encounter real barriers to achieving the user adoption they need.
Diversity is needed to build a new paradigm
We know that blockchain offers decentralization and democratization, yet how can a new system be truly decentralized and democratic if it's created and owned by the same group of people (men, and especially white men) that control our current technological and financial systems?
As co-founder of She(256), a movement dedicated to increasing diversity and breaking down barriers to entry in the blockchain space, Alexis Gauba is addressing this issue head on.
"Blockchain technology will shape our future financial and governance structures, and as such, it's crucial that the people building these systems are representative of the global, diverse population of people for which they are to serve," said Gauba. She continued, "Since this space is still in its infancy, there is a unique opportunity to set this culture and tone right now."
Blockchain is coming to your industry
One major theme was that blockchain technology can be, and likely will be, applied to a limitless number of industries and niches. While the first "killer apps" are in currencies and gaming, it's likely to expect that blockchain will disrupt or improve most industries.
"We are seeing the dawn of blockchain 2.0," said Tony Mugavero, co-founder of Ara Blocks, a company leveraging blockchain and P2P technology to power an entirely decentralized marketplace for digital content on the internet. He continued, "Blockchain solutions are expanding, into media, supply chain, real estate, art, healthcare, and more."
With companies like Starbucks, IBM, Boeing actively researching blockchain, it's reasonable to expect the trend to continue as more companies of all sizes explore the possibilities with blockchain.
There's value in the community
Two blockchain leaders I interviewed both highlighted the importance of another element of the industry that is starting to get more attention: the importance of community.
"We are dedicated to building a community of developers around the world," said Sa Wang, co-founder and CMO of IOST. She continued, "We want people discussing topics, having tough conversations around where the technology can go, and working together to drive real change."
Min Kim, founder of ICON, added his thoughts on the power of community, "The value of blockchain is in the human network, not just the technology."
It's easy to think the power and potential of blockchain is in the technology, but you can't overlook the power of the community. This is especially true when the technology is decentralized and open-source.
For some people, blockchain and cryptocurrencies are a fad. For others, they're the next wave of the internet. We don't know who will be right, but we know that the individuals who invest the time to understand the trends, opportunities and threats will maximize any potential that comes with this industry.