The world of blockchain found itself in turmoil in 2017. We saw the peak of the ICO frenzy, the mind-boggling Bitcoin price shifts, the introduction of a new, potentially transformative technology (i.e., decentralized exchanges) and, of course, a few notable instances of blockchain hacking.
But what does the future hold for decentralized ledgers? Will 2018 be the year when blockchain technology reaches a critical point of adoption? This post, which is the first part of a series on the future of blockchain technology, will aim to shed some light on those questions.
The Hype Around Ripple
For those not aware, Ripple’s token (XRP) was worth $0.0060 at the start of 2017. Now, its price hovers around $1.00.
The cryptocurrency shot up in price by more than 1,000% in the month of December. But it seemed that dramatic rise was the result of a rumor. Some crypto enthusiasts speculated that Coinbase, one of the largest crypto exchanges in the world, was about to list the token and enable its seamless exchange for fiat currencies. There were even images and videos circling around the space that supposedly proved the claim. However, as it turned out later, these materials were fake.
What happened next was something typical for the blockchain space: Uneducated investors came in droves to buy the “promising” token without understanding clearly if there’s any utility to it.
I believe XPR is a “centralized” cryptocurrency. Ripple Labs, the company behind it, does not try to target common people with its marketing efforts. Instead, Ripple is meant to be a technology stack for banks and large enterprises that enables them to transfer assets (any assets, not just cryptocurrencies) in a timely manner. Until recently, it was mostly ignored by the crypto community as a platform that is not in line with the original Satoshi Nakamoto vision (getting rid of banks, not siding with those responsible for the economic crash) and overall decentralization philosophy.
One of the Ripple co-founders, Jed McCaleb left Ripple Labs in 2013 and went on to develop Stellar — a hybrid blockchain. Initially, Stellar was a fork of Ripple, but upon testing it, Stellar Development Foundation prompted concerns about the integrity of the platform’s consensus protocol. In a nutshell, it expressed doubts as to Ripple’s ability to survive attacks as, according to them, no one had tested at scale what would happen to the network if it ever faced malicious activities. Stellar completely re-architected its consensus protocol and now has a completely different byzantine fault-tolerant blockchain of its own.
I must say I don’t necessarily condemn Ripple. It’s a company with its own functioning software that, from a bank’s perspective, can be quite beneficial. I do, however, take issue with speculative bubbles (i.e., people driving prices artificially for the wrong reasons).
Tron, And Why Blockchain Education Is Crucial In 2018
Tron, a $14 billion ICO that, as of now, has no working product, is also an example as to how speculations can affect the cryptosphere.
Having nothing but a whitepaper and an ETH token, Tron managed to make TRX skyrocket 3,650% in just one month. This phenomenal breakthrough happened due to some brilliant marketing by Tron founder Justin Sun, who was mentioned in Forbes’ 30 under 30 on two separate occasions, and also because of John McAfee, who praised the coin on Twitter, covertly advertising it to his 500,000 followers. Soon after that tweet, the price of TRX raised from $0.04 to nearly $0.29, and the coin made it to the list of top 10 cryptocurrencies.
A few days later, however, Tron received tons of negative press as people started spotting copied text in its whitepaper, and the price of TRX plummeted back to under $0.10. Once again, lots of people lost a lot of money.
I believe (and hope sincerely) that such scenarios won’t happen again — that the Ripple and Tron situations will become our rock bottom and a final lesson.