BLOCKCHAIN QUARTERLY | Q2 2019 | AS OF JUNE 15th, 2019
We have expressed the conclusions step by step, but to write in a few sentences the main points to retain from this study:
Regulations fears have eased but will come back, especially as G20 will work on concrete proposals from July on. Especially, ICOs will obtain frameworks, and KYC issues will continue to focus on requirements from officials.
There is clear technical progress, especially in terms of governance, scalability, with competition in the nature of solutions; next months will be technically very interesting
Individuals may not be keen to pour more cash into cryptos at it shall first stabilize and recover; banks and funds look to be cautious towards cryptos, not taking the relay. Ultimately, the global economic situation as it may evolve on its own will probably be the parameter with the most impact on DLT tokens valuations.
Ultimately, from an investment perspective, the next 12-18 months may be expected to offer limited or disappointing growth in DLT tokens; we may witness ups and downs maybe even more severe than the ones already experienced in 2018 already, with occasional rallies.
Section 1: Global Market Update
In January, February and March, we witnessed a typical financial market battle of opposing bulls and bears, especially in Bitcoin. Investors convinced that Bitcoin was bottoming and would go up in short to medium term, acted on their predictions that the next cycle was about to begin. On the opposing side, critics responded by saying that DLTs had failed miserably, and were yet to produce a single viable application.
Read more in the full section on Global Market Updates.
Section 2: Update on the regulatory policies
2018 opened with public announcements by commentators that “a storm of regulations [were] going to clamp down on cryptocurrencies.” More than a year later, it is time to analyze and provide feedback on what happened. Back in early 2018, various politicians (more or less technically knowledgeable, e.g., Bruno Lemaire) made repeated and strong statements calling for the regulation of Bitcoin and other cryptocurrencies. Reacting to crazy price increases, politicians felt the need to explain and then express some sort of position on cryptos, and they did what politicians do: claimed to be in control of what was going on. In effect, the reality has been much more nuanced when financial market authorities around the world were asked or decided, to look at the situation, most found that existing laws were very relevant and adequate in most cases.
Read more in the full section on Update on regulatory policies.
Section 3: Review of blockchain industry players
The viability of mining Bitcoin is tightly linked to the price, expressed in fiat currencies, which means that miners are considering their opportunity cost, regardless of their equipment amortization or a bet on the price of BTC. In other words, the dynamic of the amount of hash power joining or leaving the network has caught up with the economic incentive to participate in the consensus mechanism, as opposed to being motivated by enthusiasm for the business.
Read more in the full section on Review of blockchain industry players.
Section 4: Investment and use case by industry
One estimate has quoted potential savings, for the financial sector, of up to 50 billion euros, thanks to improved operational efficiencies, reduced human error, and streamlined compliance.
Read more in the full section on Investment and use case by industry.
Section 5: Trend By Crypto-Assets Class
When applying our original classification, A/I/F/O/P, to the cryptoassets that we assess as part of our in-depth analyses, we believe that using the functionality to classify crypto-assets is an appropriate approach. We have proved that the resulting groups of tokens are homogeneous, and the logic makes perfect sense. Irrespective of whether this classification gains acceptance, we will continue to base our analysis on it in future issues of Blockchain Quarterly.
However, in practice, we have recognized that we need to introduce a sixth functionality/characteristic to refine our classification of crypto assets: E vs Ē, which stands for “Execution environment”.
Read more in the full section on Trend by crypto-asset class.
Section 6: Latest Advancement In DLT Technology
Somehow, investment in purely distributed ledger technology occurred mainly in 2016-2017. The main projects with creative ideas have been generously funded by their ICOs and the appreciation of their tokens in the past few years; Cardano is a typical example. Furthermore, communities of developers are active in refining the protocols, and work mainly for the sake of making their “product” the best it can possibly be, now that there are sufficient proposals to confirm fundamental progress. Investment in recent times has been mainly in application projects. After the ICO funding phase, private equity and wealthy individual investors have regained some ground in this respect. And of course, large companies and consortiums back their own ventures and pilots, that they then try to roll out.
Read more in the full section on Latest advancement in DLT technology.
Section 7: Overview by country
Here is a country-by-country press-overview of what is happening (with special regulatory focus on what official authorities pretend to be doing).
Read more in the full section on Blockchain regulation overview by country.