Ten years on from the emergence of Bitcoin, there is no doubt that crypto and blockchain technology have made a massive impact. However, many forward-thinking observers still believe that digital tokens and the processes behind them have a long way to go. New systems and ways of doing things are emerging all the time, and this year, there are plenty of developments on the cusp of debuting online.
A greater public awareness and more widespread adoption is on the cards, with the world of established financial institutions continuing to make moves and government-level discussions about the future of crypto also taking place.
With many insiders predicting a wide range of ground-breaking tech advances appearing this year, both coins and platforms could become more appealing by upping their usability and scalability. As the entire crypto sector is such a popular area for many CFD traders, the most likely developments are obviously going to be of interest to anyone working out when to take a position and which markets might be the best for success.
Estimates show that there are currently more than 2,000 cryptocurrencies, and it is doubtful that all of them will survive and develop. Bitcoin Core Developer Jimmy Song commented: “Technical development-wise, I see a lot of coins simply stopping technical development altogether.”
He added: “A ton of projects got off the ground and had built-in assumptions about their coin going up in value forever, which was never sustainable. The only projects really doing anything interesting technically are Bitcoin, Ethereum, Monero, ZCash and Decred.”
Unsurprisingly, Song also believes that Bitcoin is the most likely to prosper, saying that because it already has a real user base and a proven case as a store of value, it is in the best position to capitalise on new developments.
“It’s getting faster with Lightning and scales well on that layer. I’m anticipating Lightning to get easier and faster to develop on with the new Segwit v1 upgrade coming in the next year or two. I also expect more services to develop around Lightning and more of the ecosystem to build out,” he explained.
A development called Schnorr signatures will enable greater scalability, as it allows for the compression of many signatures into the space of one. The potential for making transactions smaller is not only under Bitcoin’s consideration, as its rivals are also planning upgrades
Ethereum is in the late planning stages for its Constantinople fork. This has been in the works for some time, and discussion about it took place at the Devcon4 conference held at the end of October last year. Essentially, it will mean the introduction of “off-chain” state channels that will give Ethereum’s own blockchain much more scalability.
Bitcoin Core Developer Bryan Bishop has talked about the rise of a new tech solution that will not be under the restriction of his own digital token: the strangely named Mimblewimble. The name comes from a spell used in the Harry Potter universe, and its aim is to mix transactions together to make them untraceable. The process uses “blinding factors” and encrypts the sum of crypto sent from one party to another.
“We’re going to see the rise of Mimblewimble, which offers privacy and confidentiality,” Bishop said. “We might even see a Bitcoin sidechain offering Mimblewimble.”
A new privacy coin, Beam, already uses the protocol and allows users to choose “which information will be available and to which parties, having complete control over [their] personal data in accordance to [their] will and applicable laws.”
Of course, blockchain tech has the potential for use in far more areas than just cryptocurrencies, and this means that CFD forex traders who are familiar with the general concepts have transferable knowledge that could be put to use in other markets as developments roll out.
PricewaterhouseCoopers Blockchain Leader Steve Davies explained: “We are likely to see two major trends. The first is the further evolution of platforms that are faster and more secure than in the past.”
He added: “Secondly, after a lot of hype last year, especially in the crypto space, this is a year for everyone to get their heads down and focus on delivery. We are likely to see more practical applications being rolled out – in fact, this is already happening; for example, birth certificates in India.”
The Indian government’s documentation struggles with its huge population is a perfect problem whose solution could well exist in blockchain tech. Last December, the first birth certificates in India was issued using an ID platform based on the Ethereum blockchain. As well as developments such as this, more traditional financial sector delivery methods are undergoing transformation in other countries. Towards the end of 2018, the Bank of America patented blockchain tech for its ATMs.
Focus on crypto
Although some exciting developments for blockchain tech are just around the corner and will undoubtedly lead to greater public awareness of the whole concept, cryptocurrencies themselves are also receiving a push forward. Intel recently patented a new method that makes Bitcoin mining more energy-efficient, and there are new angles and approaches used by the many digital coins and tokens making their debut every day.
For CFD traders, this means that dealing in cryptocurrencies as underlying assets and the development of blockchain tech will not only influence forex markets. All signs show that the processes behind Bitcoin and its rivals will become far more widespread this year.