The year of 2019 has been a wild ride for the blockchain industry. The looming ban on cryptocurrencies by the Indian government and the leak of a draft bill that proposes a 10 year jail term. The long awaited end of crypto winter with bitcoin reaching a high of $13,000 and hovering around $10,000 as of this writing. The announcement of a “cryptocurrency” by Facebook and their plans to make it a global stable digital coin.
These all might seem like unrelated events but they all point to one thing, the blockchain and cryptocurrencies ecosystem has reached a level of maturity that big tech companies and democratic governments around the world are not only taking notice but are taking proactive steps to adopt and regulate the industry.
Andreas M. Antonopoulos lists out three elements to success in this industry: Market, Timing and Sequencing.
Market: At this point we can all agree there is a market for cryptocurrencies and gaps in the financial system that bitcoin and others fill.
Timing: After the 2008 stock market crash and the Nov 2016 demonetisation by the Indian government, people are seeing the frailty of the traditional financial systems and their faith that their money is safe is diminishing.
Sequencing/Prerequisites: Andreas describes this as having density of adoption of the underlying technology. In the case of internet, layer 2 solutions like Facebook and Google where possible only because email drove the adoption of the internet to the point where everyone had to have email for work. This insured there were enough users already on the internet, the infrastructure was already laid out and people had the technical skills to navigate the internet.
🔗 Currency is the email of blockchain
Here I’ll try and describe how the latest circumstances will help accelerate the adoption of the blockchain technologies.
First, the Indian governments proposed draft bill blanket banning the use and holding of cryptocurrencies of any kind. This might seem to be disengaging for the use and spread of cryptocurrency within the Indian economy but unlike the ban by china after which much of the draft bill is modeled after, the Indian government does not have neither the judicial right to block any p2p network traffic nor the technical infrastructure to implement anything similar to the Great Firewall of China. Rather the unintended effect of the proposal and approval of this bill will be Streisand effect. Where the fact that the government is going out of their way to block and ban a neural technology. Disallowing it’s use to the people will spark interest and widespread awareness about this topic and what probable cause or justification the government might have to ban such a technology.
The bill will take away any last hope of businesses and startups working on anything even close to cryptocurrencies and blockchains in India and in the process lose any strategic and technological superiority against other countries. Though the government with its limited resources and knowledge about the blockchain technology and its use cases will not be able to prevent the p2p and decentralized use of the technology, which are precisely the requirements that bitcoin and others aim to fulfill. Albeit many business will not be to accept bitcoin upfront and do not anyways do so due to its currently limited transactional throughput capabilities, people will not cease to buy and invest in what they will see as an excellent store of value akin to digital gold and few will even continue to trade.
The government in its draft bill has effectively proposed a ban on the flow and storage of information where anyone holding 12 words on a piece of paper representing their digital wallets private keys will be prosecuted and sentenced to a possible of 10 years in jail. This is nothing short of a surveillance state trying their best to siphon and hold onto any control and power they can, withstanding the title of the worlds largest democracy.
Second, the announcement and launch of libra and calibra by Facebook which is their own cryptocurrency described as a global digital coin pegged to a basket of fiat currencies. A lot of people have rightly said Facebook’s libra is not a blockchain with none of the characteristics and principals that govern a cryptocurrency like bitcoin. But Facebook’s libra is close enough to maybe fools regulators and governments and if they are successful in launching libra, it will bring positive regulations for cryptocurrencies by complying with the governments KYC and AML requirements from a wallets point of view but having no such requirements or restrictions on the protocol or the libra association level.
Facebook’s libra plans to operate in a grey area where it complies with traditional laws on the surface but also has enough cracks for people to slip into the system through its “on and off ramps” that might not be as well regulated as Facebook’s own wallet outside the U.S. Even if we say for arguments sake that all the “on and off ramps” will be properly regulated, people will still be able to transact in a p2p manner using non-custodial wallets which will be possible going by the libra’s testnet software release.
Facebook knows it too big to be banned by any one government and who knows their current plans may change in the future where they might pull a bait and switch with the regulators by moving from a permissioned system to a permissionless system described as part of their roadmap on their site. If that happens they will no longer be able to exert any definite control on their currency outside of their wallet.
This is obviously good for the adoption of cryptocurrencies and hence blockchains as a whole. With Libra Facebook will introduce possibly all of their 2.4 billion users to the world of cryptocurrencies even though it is not exactly a cryptocurrency at this time, similar to how AOL introduced people to a permissioned/walled version of internet.
Third, the continued development and launch of more performant and scalable blockchains, iterating and innovating on the technology first described in the bitcoin white paper including the Bitcoin Lightning Network and Ethereum 2.0 will provide the infrastructure to support the influx of more users and drive the adoption as well as the development, discovery and use of 2nd layer blockchain solutions, bringing the open and decentralized nature of blockchains and the decentralized internet to different industries and use cases.
The above events concluding in a scenario with even the slightest similarity might just result in 2020 being the year of blockchain.