Blockchain

Did 2019 Deliver on All That Was Promised for the Crypto Industry?

single-image

bitbond bitcoin lending

Disappointment isn’t always a bad thing. It can be a spur, motivating one to work harder to meet expectations and goals. It is in this spirit that Cointelegraph informally surveyed members of the crypto community about this past year’s unfulfilled industry promises. Here are some of 2019’s biggest disappointments:

Adoption missing?

Where are the giant blockchain or crypto projects — enterprises that seize the imagination, rivet the public’s attention, and quiet the crypto skeptics? As Nouriel Roubini noted last year, “[Blockchain] still has only one application: cryptocurrencies.” Many in the industry are still waiting. As Lanre Sarumi, CEO of crypto derivative exchange Level Trading Field, told Cointelegraph:

“The lack of a groundbreaking project that would have opened the eyes of skeptics is most disappointing. Libra came the closest with a lot of promise, but nothing else [in 2019] really popped.”

Not much comfort can be drawn, either, from Forbes’ list of the top 50 financial technology firms. Only five crypto and blockchain firms made the 2019 “Fintech 50” list: Coinbase, Ripple, Bitfury, Gemini and Circle — compared to 11 in 2018.

The industry is still looking for a flagship application. “People need a simple use case that makes the benefits of blockchain technology clear and straightforward, like email,” said Chris Hart of Civic Technologies in a recent report published by the Zage marketing platform.

Institutions are still scarce

Killer DApps, scalability and institutional adoption are often cited as three missing ingredients required for blockchain to reach the tipping point in public acceptance. With regard to institutions, some progress was made in 2019 with the entry of Fidelity and ICE’s Bakkt, among others. But is it enough?

“Failure to attract institutional investors was certainly a disappointment,” Sarumi told Cointelegraph. “The Bakkt futures contract was specifically designed to attract both institutional and retail and it got a lukewarm response. Ditto for the recently launched Eris [credit and interest rate] futures.”

Consumer adoption lags

Many experts agree that usability must improve before the wider public adopts crypto and blockchain networks. In Zage’s survey of 102 blockchain technology project leaders, 41% of respondents agreed that a seamless user experience was key to mass adoption. The blockchain DApp experience needs to be more like the web and mobile phone user experience. “Right now to use most blockchain and cryptocurrency products, you have to essentially be an expert,” said Kory Hoang, co-founder and CEO of the stablecoin platform, Stably.

Stephen Pair, CEO of Bitpay, would have liked to see more rapid progress in the consumer adoption of cryptocurrencies in 2019, “and more adoption because it got easier to use,” he told Cointelegraph, continuing:

“Like not having to deal with Bitcoin addresses directly. If we could just solve some simple problems like that, ideally in an industry standard way, that could make a difference.”

Pair was also disappointed in the mix of products being purchased with crypto at present: “I would like to see a healthier mix of everyday consumer items and services being sold, such as consumers paying their cell phone bill, or DirecTV bills [with cryptocurrency].”

Pair also believes that people tend to spend BTC when prices are high, he added, often purchasing expensive items, like Lamborghinis. Nothing wrong with that — but he’d like to see more everyday items too.

Compliance shortfalls

Regulatory compliance remains an afterthought in parts of the crypto/blockchain world.

In late November, security firm CipherTrace reported that roughly 65% of the top 120 crypto exchanges lacked strong Know Your Customer policies.

Moreover, compliance at 24% of the exchanges was “weak,” meaning those exchanges allowed CipherTrace researchers to withdraw at least 0.25 BTC daily with virtually no questions asked — the researchers didn’t even have to show ID verification.

65% of Top 120 Exchange Have Weak or Porous KYC

PwC Global Crypto Leader Hong Kong Henri Arslanian told Cointelegraph that, “Anyone who is launching a crypto exchange in 2019 with no regards to KYC or AML probably does not have the future of the crypto ecosystem at heart.” Regulatory noncompliance, especially around Anti-Money Laundering, remains a barrier on the road to mass acceptance of cryptocurrencies, continued Arslanian:

“A large AML or sanctions violation scandal today could erase years of hard work from the community which tried to show that crypto is much more than just the Silk Road or the dark web.”

The industry should not only comply with regulations, it should welcome them — at least if it wants to grow, as Lone Fønss Schrøder, CEO of the Concordium blockchain solution, told Cointelegraph: “I am certain that big companies will not go beyond the proof of concept stage on a chain that doesn’t enable the authorities to regulate.” Firms are going to need the validation that regulation grants.

Education for all

Misperceptions about cryptocurrencies and blockchain technology persist. When Nordea Bank banned its 31,500 employees from trading in Bitcoin or other cryptocurrencies — even in their own time — it said it was worried that its employees might “unwillingly get involved in activities that are unethical or outright illegal,” as the bank told Cointelegraph in December.

Related: No More Bitcoin for Nordea Bank Employees, Experts Question the Motive

“Most people still associate blockchain with volatile cryptocurrencies and IPO scams,” Schrøder noted, adding that, “In the blockchain space we have a shared responsibility to educate business leaders, not only about what blockchain is, but more importantly what it can do for businesses and institutions.”

Along these lines, in late December 2019, Concordium announced the formation of the Blockchain Academy Network, a collaboration between Concordium and academia to foster the use of blockchain within businesses.

The industry needs to do a better job reaching out to the non-crypto public, including through the conferences, added Nick Saponaro, co-founder and chief information officer of The Divi Project, in an email to Cointelegraph:

“I’m disappointed educators and conferences are failing to attract newcomers, instead opting for the creation of an echo chamber. High prices and luxurious venues are keeping out the people who will benefit most from this technology.”

Crypto crime persists

CipherTrace reported a significant reduction in cryptocurrency crime in the third quarter of 2019, good news “after two years of large, high-profile exchange hacks and exit scams.” That said, “2019 still experienced a massive spate of crypto crimes — more than $4.4 billion to date,” and a big jump from 2018.

Thefts, Hacks and Scams by Year

The security firm detailed several large exit scams and misappropriation of funds in 2019: Plus Token at $2.9 billion, QuadrigaCX at $192 million, and the Bitfinex misappropriation of $851 million. PlusToken, a Chinese Ponzi scheme, particularly had the potential to rile crypto markets, Chainalysis reported on Dec. 16, which stated:

“We believe that the criminals behind the PlusToken Ponzi scheme could be driving down the price of Bitcoin when they liquidate their stolen funds via OTC brokers.”

In fact, soon after the Chainalysis report, Ether dropped 10% within minutes — which some attributed to a PlusToken dump. The ETH price then went on to face even more selling pressure on Dec. 19 as several large transactions that were associated with PlusToken disturbed traders, as reported by Cointelegraph. The industry evidently needs more self-policing. “As a community, we need to do a better job in calling out the bad apples,” commented Arslanian.

Integrity matters

According to Saponaro, the most disappointing thing for him in 2019 was the lack of integrity, “Exit scams, Ponzi schemes, pump and dumps, and extortionist tactics are still abundant throughout the space.”

The continued lack of integrity — or the perception of such — sullies the reputation of the crypto/blockchain community, said PwC’s Arslanian. “We are always as strong as the weakest member of our community.”

Cutting corners is a bad business strategy, too, according to Felix Hartmann, managing partner at Hartmann Capital, who said: “Whoever is willing to play the long game, both in terms of creating a community-first, integrity-driven business/network model, as well as putting technology and usability first, will see success.”

A lost year?

Instead of citing a single disappointment in 2019, or even a series of unfulfilled promises, Vinny Lingham, co-founder and CEO of Civic Inc., has opted to look at the year as a whole. As he told Cointelegraph:

“When the crypto community looks back at 2019, it will be remembered as the lost year. This is not unexpected because 2017 was such a milestone year. I like to say that the bigger the party, the bigger the hangover. We’re still dealing with the hangover.”

Sarumi also saw a year marked by unfulfilled potential:

“After the crypto winter, the general thinking was that the departure of the rent seekers and easy money worshippers would allow the true believers to roll up their sleeves and fulfill the true potential of blockchain/crypto. Well, the true believers probably have long arms and/or long sleeves because they are still rolling up.”

It’s possible, however, that one could be underestimating the amount of progress made this year. It’s like an iceberg, as one industry executive told Cointelegraph; the greatest volume is below the waterline, unseen. But once these blockchain network projects achieve a certain scale, those watching will begin to see the power that has been created — “in the next three to five years it will be huge.”

“Maybe it needs more time, but the sound of crickets in the realm of groundbreaking projects to me was the most disappointing,” concluded Sarumi. “Hopefully a few emerge in 2020.”





Source

Leave a Reply

avatar
  Subscribe  
Notify of

You may also like

Blockchain

South African National Blockchain Alliance Holds Online Launch

single-image

bitbond bitcoin lending

The South African National Blockchain Alliance carried out an online livestream launch while the country is in the midst of a 21-day lockdown to curb the spread of the coronavirus pandemic. The organization was due to be launched at the beginning of April in Johannesburg but had to be taken online as South Africa and the world tackles a global health crisis.

The launch happened during a livestream on YouTube on April 3, which included a panel of speakers elaborating on how SANBA will help nurture blockchain-focused startups and companies that are developing capabilities using the technology.

Bringing parties together

SANBA has been set up by the Council for Scientific and Industrial Research and its subsidiary, the Office for Digital Advantage. These bodies fall under the jurisdiction of the Department of Science and Innovation.

Akhona Damane heads up the project and said that…


View More Article
Blockchain

150-Year-Old Chinese Gas Company Ramps Up Blockchain Adoption

single-image

bitbond bitcoin lending

Chinese energy company, Shanghai Gas, announced an expansion of its blockchain efforts following a successful trial partnership with supply chain management blockchain firm, VeChain (VET), on March 31.

Shanghai Gas, founded in 1865, is owned by utility services company, Shenergy Group — which claims to occupy more than 90% of Shanghai’s gas market. The firm has an annual supply of over 8 billion cubic meters.

Shanghai Gas expands blockchain adoption

Shanghai Gas’ trial used distributed ledger technology, or DLT, provided by VeChain to comprehensively monitor its supply chain and identify opportunities for efficiency savings and reduced operational costs.

The expanded partnership will see Shanghai Gas build “a trust-free ‘Energy-as-a-Service’ ecosystem” in partnership with VeChain and electricity provider ENN Energy Holdings.

ENN generates electricity for 17 provinces, more than 16 million residential dwellings, and…


View More Article
Bitcoin

Crypto Traders Allegedly Involved in a $35m Ponzi Scheme

single-image

bitbond bitcoin lending

Three alleged cryptocurrency traders ran a Ponzi scheme which scammed more than 100 investors for over $35 million, according to a lawsuit filed by an entity formed by the victims in a federal court of Florida, United States.

According to an announcement published on April 2, Q3 Investment Recovery Vehicle, who represents defrauded investors, accused the trio of alleged crypto traders of cheating victims by promising them a winning trading formula. 

Former NYSE and Wells Fargo workers among the accused 

The federal securities fraud case names three individuals as the primary perpetrators of the scheme. They include James Seijas, who worked as a financial advisor for Wells Fargo until March 2019, Quan Tran, a surgeon, and Michael Ackerman, who was a New York Stock Exchange institutional broker. These three are thought to…


View More Article
Blockchain

As Malta Delays Regulatory Clarity, Fewer Firms Remain on ‘Blockchain Island’

single-image

bitbond bitcoin lending

It seems that Malta is becoming both less popular among and less populated with crypto firms. The European Union country attracted dozens of industry players in 2018 on the back of the “blockchain island” agenda championed by the local government, but the relevant framework has not yet proven to be effective. Meanwhile, the official rhetoric apparently started to shift away from the blockchain sector, as the government now aims to consolidate it with “other niche sectors.”

Meanwhile, the Malta Financial Services Authority, continues to pluck out non-registered crypto agents — be it the world’s top crypto exchange or smaller startups. But in reality, no businesses have been licensed under the blockchain framework yet, despite it being released in the summer of 2018. As a result, a number of companies have decided to leave the island over the past months. So, who is currently…


View More Article
Bitcoin

Bitcoin Bulls Can Take BTC Price to $8K Amid Report $10 Oil Inevitable

single-image

bitbond bitcoin lending

Bitcoin (BTC) was pushing to flip $7,000 resistance to support on April 3 amid warnings that oil markets really will hit $10 a barrel this month.

Cryptocurrency market daily overview. Source: Coin360

Cryptocurrency market daily overview. Source: Coin360

Media: $10 oil could last the whole Q2

Data from Coin360 and Cointelegraph Markets tracked multiple attempts by Bitcoin bulls to push the market definitively over the $7,000 mark on Thursday and Friday.

At press time, all those attempts had failed to deliver support, with BTC/USD in each case falling back to the high $6,000 range.

Bitcoin 1-day price chart. Source: Coin360

Bitcoin 1-day price chart. Source: Coin360

Bitcoin surged higher earlier on…

View More Article
Blockchain

Bail Bloc Founder Says How Monero Mining Can Help ICE Detainees

single-image

bitbond bitcoin lending

One cryptocurrency project is using Monero (XMR) to give undocumented immigrants a better shot at a fair treatment in the United States judicial system.

The Bail Bloc project collects cryptocurrency to help people get out of pretrial incarceration for cases with the United States Immigration and Customs Enforcement (ICE). Unlike conventional charities, Bail Bloc doesn’t want your money — it wants your computer processing power.

Cointelegraph reached out to Bail Bloc co-creator Grayson Earle for deeper insight into the initiative.

Detainees make bail with Monero

Users download a special app that uses between 10% and 50% of their overall processor capacity— the user can set the rate — to mine the privacy-oriented cryptocurrency Monero.

Bail Bloc trades its XMR for U.S. dollars every month and then donates the sum on a rotating basis to the bail funds in…


View More Article
Bitcoin

Coronavirus Pandemic Reminds Us That Security Is Important During the Zoom Boom

single-image

bitbond bitcoin lending

Even with all the looming uncertainty surrounding the global COVID-19 pandemic, system security needs to remain at the forefront of companies’ planning. 

Businesses around the world are shutting down under local, state or national decrees as COVID-19 fears bring caution regarding public gatherings. Unsurprisingly, hackers have used the unprecedented opportunity of chaos and panic to probe weaknesses in information technology systems. One of those systems happened to be the United States Department of Health and Human Services, making the act even more egregious, considering the circumstances.

But the problem extends beyond hackers and threats to companies and individuals. During times of crisis, civil liberties also come under threat, and cryptography often provides a shield against unwarranted encroaches by the government.

So, whether you’re a business worried about paying server and security costs during this economic turmoil or…


View More Article