The First Decade of Bitcoin
It’s hard to believe that Bitcoin has turned 10 years this year. The “genesis block” was mined on January 3, 2009. This marked the first successful use of blockchain technology. It has started a revolution. The first 50 Bitcoin mined are still under control of “Satoshi Nakamoto”, who left the scene in 2010 to much intrigue. The lasting effects of blockchain technology are just starting to be felt outside of the community.
Many companies researching the technology are utilizing private blockchains, which are counter-intuitive to the technology. Blockchain was created to reduce centralized dependence, thereby regulatory concerns and centralized authority. The financial industry is looking at fintech to and expand and maintain their “advancements”, showing concern about their rivals. Studies show that consumers are less trusting of banks than ever before, particularly with the idea of sharing highly personal data.
Looking forward and being proactive about future developments is just as important as looking back. Cryptocurrency has suffered from many setbacks, such as security flaws, hacks, etc. Although many of these mistakes could be arraigned to a centralized bottleneck, are just minor growing pains for a technology that’s not going away anytime soon. Here’s some 2019 predictions for bitcoin and cryptocurrency:
Government Regulations are Becoming Clearer
The SEC appears to be slowly moving closer to deciding the fate of the “holy grail” of cryptocurrency securities, the Bitcoin correlated ETF. A brief history of the proposals can be found here.
Bitcoin’s rapid growth and decentralized nature makes it nearly impossible for governments to shut it down. The US government appears to have taken a do-no-harm stance on the actual cryptocurrencies, choosing rather to prosecute those who utilize it for nefarious purposes. There have already been many statements, including an investors warnings about ICOs on the official SEC website. It appears that the government is taking input from multiple agencies to produce comprehensive regulations.
However, the IRS has been slower to issue new specific rules about the taxation of cryptocurrencies. At this point, after almost a decade the IRS has issued a notice 2014-21 to describe how the current tax code applies to virtual currencies, such as Bitcoin. It is currently stated that Bitcoin should be considered property in terms of accounting, but multiple contradictions exist within the tax code that could complicate returns. Until clear rules are outlined and integrating into a CPA’s handbook, it could make taxes difficult for cryptocurrency traders, dissuading some investors. A common suggestion reported via a variety of sources calls to report certain cryptocurrency exchange accounts as foreign bank FBAR accounts.
Overtime, we imagine governments working closely with corporations to determine regulations, such as previously with banks. This could work to simplify accounting procedures, create a protocol for registering ICOs, and better input from community leaders.
Corporate Interest is Gaining
Despite the bear run for cryptocurrencies, large companies are investing in blockchain technologies. Corporate interest is not fading, as new fintech companies take the lead over major banks. PricewaterhouseCoopers has noted that corporate research investment on for blockchain base-technologies has increased 70% in 2018. The primary objectives for these companies could be:
- Protect Intellectual property
- Strategic planning for implementation (of new technologies)
- “Market participants will start to develop the processes that surround the transactional layer “
Greenwich Associates has estimated that $1.7 Billion has been invested into blockchain initiatives. Although this pales in comparison to the market cap of cryptocurrencies, which at time of writing is about $140 Billion, it’s nothing to shirk about. The demand is growing for these technologies and is likely to increase this year. Bloomberg reports that doubts of the overall market bull-run continuing through 2019 are increasing, it is unlikely that institutions will reduce blockchain initiatives. Research into these lucrative technologies could certainly increase revenues and reduce inefficiencies among companies in the coming decade.
Blockchain technologies have many advantages over traditional databases, but the thinking is that companies will become more efficient when the switch occurs. It is hard not to company this to the increasing automation and role that artificial intelligence has when affecting our society. This could lead to big changes.
2019 Will be Another Groundbreaking Year for Cryptocurrencies
Although Bitcoin’s market cap has lost ground to newer cryptocurrencies, it still maintains a majority. This has allowed it to be the most common intermediate for cryptocurrency exchanges., inflating volume. Regardless there are 3 driving factors for further development and integration of cryptocurrency and blockchain technologies into society:
Cryptocurrency Driving Forces
- Research and Development – “Killer App”
Consumer research is necessary to develop applications of use with calrity and simplicity. The monopolies Apple, Google, and Microsoft hold over users data are becoming increasing concerns for consumers. Blockchain technologies have the ability to divert these concerns.
- Clear Regulations – “Encourage new business/investment through regulation”
Regulations should not be overbearing and encourage the development of blockchain technologies. There is no reason why there needs to be two separate methods of exchange, ie: on chain and off chain.
- Transparent and Fair Exchanges
After a decade of bitcoin, the days of person to person transactions have gone the way of the dodo. Centralized exchanges are stockpiling assets and taking fees as the intermediary. At some point it wouldn’t be difficult to imagine a trusted decentralized exchange to allow these transactions to occur.
Blockchain technology will be the defining force of web 3.0 and web 4.0 advancements. Ever-present data collection is a part of our lives, data is being analyzed constantly. Blockchain technology has the power to protect humanity. It has the ability to harness massive amounts of computational energy to power the economy and processing of information. Bitcoin is inherently inefficient, converting electricity into computational power, then into a medium of financial exchange. The internet has allowed the economy to move faster than ever, but has outgrown the collection and privatization of this information.