Here is a list of the various predictions we made in January 2020 and the results one year on.
1. With global debt at over $255 trillion, individuals, companies, and governments are massively leveraged as economies slow. Repayments become a challenge since governments cannot cut interest rates very much to stimulate economic growth. Look out for more bonds to be issued using Blockchain Technology.
Correct: We did indeed see Blockchain-powered platforms being used to issue bonds e.g. in Thailand.
2. Decline of the US$ and rise of Digital Currencies — geopolitical tensions mean an increased number of countries prefer to not use the US$ as a reserve currency. 2001 US$ accounted for 71% of banks reserves by in 2018 these had fallen to 62%. They accounted for Euro 20% Yen 5.2% Sterling 4.4%Renminbi of central bank reserves. The previous governor of the Bank of England, Mark Carney, predicted Digital Currency as a de-facto reserve describing it as a “synthetic hegemonic currency.”
Correct: The Invesco Deutsche Bank ETF (which represents a basket of currencies against the US$) reveals the fall in the $ over 2020.
Source:etfdb.com
3. Custody providers for Digital Assets (Fidelity, BNY Mellon, Northern Trust) needed to encourage institutions into Digital Assets in order to create and buy digital products. Look at BBVA, which has been issuing bonds on a Blockchain platform and sell 60% online. There is already now a tie-up with Amazon — look to see them selling more digital products online.
Correct: We have seen a number of well-known providers of custody services, as well as some new organisations, offer custody of Digital Assets e.g., BBVA, Northern Trust Standard Chartered, and Copper.
4. Digital share classes of assets, property, creating access for smaller investors offering different types of returns e.g., Shard, IP, Art and TPX (a new company coming to the market https://www.tpx-london.io)
Correct: We saw London-based Solid Block and Black Mantra Capital both launch tokenisation of Real Estate projects.
5. Increasing pressure from environmentalists e.g Bitcow in Argentina — $150 buys 10% of a cow; Irish Cattle Breeding Association to track cattle; genetics to produce better tasting meat, reducing the time to produce cattle from 700 days to 600 days; Zelp — belching cow’s methane converted into CO2 and H2O as well as knowing when they need milking.
Correct: Examples include legal tactics being used. In January 2020, Blackrock (one of the world’s biggest fund managers) announced how it was changing its investment strategy to focus on climate change.
6. Cyber security — 43% of cyber-attacks aimed at small businesses but only 14% of firms are prepared and, according to Accenture, by 2024 this will globally cost $5.2 trillion. Average cost $200,000 (according to Hiscox) therefore increased need for data to be held more securely and identity to be checked, hence the 5th AMLD.
Correct: Cyber-attacks in 2020 increased e.g 60% of business executives said that suspicious emails have increased over the past year, according to one survey by Munich Re.
7. 5th AMLD — gift cards worth €250 and transfers over €150 are now subject to KYC/AML regulations The fines for breaches are not insubstantial as, by only two-thirds of the way through 2019, there had been $8.07 billion worth of fines (which was over 4 times the amount in the same period of 2018). In 2019, the global cost will exceed $32 billion for firms to carry out KYC and AML checks. KPMG estimates that AML/KYC compliance costs could be cut by 35% since 80% of compliance resources are spent on checking documents and not on assessing risks. BIS Research, a US-based market intelligence firm, claims financial organisations can reduce administrative costs by 90% using Blockchain technology as part of KYC/AML compliance onboarding and then monitoring.
Correct: BnkToTheFuture has invested in and is using Blockpass’s Blockchain technology to help in KYC/AML checks and procedures.
8. Increased use of Digital Assets as a reward for loyalty or to tie clients into a brand. CryptoKicks from Nike‘s platform will also track the ownership and verify the authenticity of sneakers using the Blockchain-based system. CryptoKicks is a Digital Asset attached as a unique identifier of that shoe.
Correct: The Doctor Who cryptocard trading game.
9. Sustainability and environmental increased demand for Provenance — win, win, win! World Bank Blockchain initiative — Genevieve Leveille, CEO of AgriLedger, helping Haiti fruit farmers to get better prices for mangos, avocados, and pineapples. Provenance is also important for the Halal market, which is expected to grow from $2.1 in 2017 to $9.7 trillion in 2025 as the Muslin population set to increase from 0.18 billion to 3 billion.
Correct: In 2020 we saw the launch of the IBM Blockchain solution to track coffee whilst saving the habitat of orangutans.
10. More regulation globally to embrace Digital Assets following High Chancellor of UK, Judge Vos, stating smart contracts and Digital Assets to be lawfully approved in the UK (currently Digital Assets such as Bitcoin, if stolen, it could be potentially argued you have not lost anything). Judge Vos’s statement that crypto assets “have all of the indicia of property,” thus, gives cryptocurrencies a legal standing, similar to physical assets.
Correct: An example of this is the forthcoming MiCA regulations in the EU, but as Forbes points out, crypto legislation is on the rise globally.
11. Asset price correction to property equities global economic slowdown.
Wrong: While we witness the US market suffer its worst quarter (down 23%), equity markets have recovered, fueled by massive government borrowing and impressive price rises by the FANGs (Facebook, Apple, Netflix, and Google).
12. Smart contracts could help as the global financial system is required to alter millions of contract terms from LIBOR (discredited after the 2008 crisis, due to fixing) to Sterling OverNight Index Average by the end of 2021. As of August 2019, there were $25 trillion of contracts that referenced LIBOR on the London Clearing House, globally $340 trillion. PPI costs UK banks £43 billion — it’s estimated the transfer cost for SOMIA is $1.8 billion to change all the contracts. Huge opportunity for machine learning, AI, and Smart contracts. Will this spur the derivates market to embrace Blockchain and we will start to see more derivatives being issued in a digital/ tokenised format? The size of derivatives markets $603 trillion according to the Bank International Settlement.
Correct: The fast-moving DeFi sector was not long in targeting the derivatives world in 2020.
13. Calls for recycling plastic e.g 5 trillion plastic bags p.a. produced globally. Initiatives to cut waste, e.g Vertical farming, Plastic bank, and SC Johnstone, all using tokens as an incentive and RIF tags and IoT to reward packaging recycling. Since 90.5% of plastic is not recycled, then Blockchain to track and trace waste to prevent illegal dumping.
Correct: Blockchain technology is helping supply chains, thus offering greater transparency in helping with recycling.
14. Gaming is estimated to bring $152.1 billion of revenue in 2019. Use of tokens, e.g selling credits and assets earned from less-developed countries to western markets playing the same game. World of Warcraft and EverQuest claim millions of players around the world. Virtual assets valued anywhere between $250 million and $900 million. Interestingly, eBay has decided to ban the sale of these virtual assets in its marketplace. Arguably, one of eBay’s longstanding rules already bans these types of trades, stating, “The seller [of digitally delivered goods] must be the owner of the underlying intellectual property, or authorized to distribute it by the intellectual property owner.” AVR and VR market set to grow from $10 billion in 2019 to $18 billion in 2020.
Correct: A range of ways in which the gaming industry is being transformed using Blockchain technology
15. Central Bank Digital Currency (CBDC) — Christine Lagarde and Mark Carney called for pressure for national CBDC, not a corporate Digital Currency such as Libra. IMF study pointed out that the introduction of CBDCs would facilitate a more rapid and secure settlement of cross-border financial transactions. Increasing awareness of the inequalities between low- and high-income households and, given CBDCs are potentially believed to be attractive for low-income households which tend to rely heavily on cash, this may prove to be a strong political driver for their adoption. Twitter’s Jack Dorsey has moved to Africa for four months from November 2019, wanting to get a personal understanding of the opportunities and challenges this Digital Asset offers, as he thinks Bitcoin has a role to play with the 1.2 billion Africans.
Correct: China launches trials for its own CBDC.
16. Re-election of Trump — Blockchain will help ‘weed out’ fake news potentially with overseas influencing. Will we see an extension of digital online voting i.e. not just for the forces? Yes, possible to alter a ballot paper, but only one at a time if electronic. How secure is the system as able to alter millions in one attack?
Wrong: Biden beat Trump.
17. Blockchain will impact healthcare — patient data, the provenance of genuine drugs, etc. According to WHO, 1 in 10 medical products in developing countries is falsified or substandard. The personal and public health tolls are huge, as is the economic burden — up to $200 billion annually. Over the last decade or so, 35,000 online pharmacies have appeared, many of them selling unapproved or counterfeit drugs. A staggering 96% of online pharmacies are not compliant (meaning they could arguably be selling medications of unknown quality and/or contamination). One pharmaceutical manufacturer reportedly discovered over 78 different counterfeit medications had infiltrated over 109 countries. That’s only one manufacturer and the fake medications it discovered! The problem is growing with the World Health Organisation concerned that over 50% of online medications could be fake. Falsified laboratory reports, unregulated storage facilities, and corruptible distribution channels. Provenance of secure records. Rise of obesity 250 million children globally by 2030 lack of information, lack of exercise and junk food — need carrot i.e. Nudge economics and stick taxes. A huge problem in S Africa 14.3% and China 12%.
Correct: As the publication of Medical Technology reported, there are numerous ways that Blockchain technology is impacting the healthcare sector.
18. Electric cars are set to increase. Ford announces it is to invest $11.5 billion in electric cars. The young not taking driving tests plus congestion charges to spread. People set to hire, not buy, cars according to Daimler Benz. Target is the hire market, not sales, charging people per mile (not one-off) currently making money on servicing, not sales. Combining blockchains with Digital Assets to improve fuel consumption/loyalty, to get traffic/road information, etc. A trend for driverless cars and also personal flying drones and aircraft from Airbus. Boeing testing pilot-less drones for humans using AI and IoT with Blockchain. Ford makes 10% selling a car, therefore the use of Blockchains to trace ownership, to finance and provide service record so to help improve the second-hand value of cars. Staggeringly, there are 2.5 million cars in the UK with altered mileage.
Correct: The Blockchain Council has highlighted a number of ways “how Blockchain technology can strengthen the electric vehicle ecosystem.”
Whilst we have been fortunate to be correct with some of the predictions from last year, 2021 is undoubtedly set to be a challenging one as the world recovers from the ravages of COVID-19 and comes to terms with the huge debt piles that have accumulated as a result. However, the pace of adoption and use of Blockchain technology is likely to gather pace as individuals and corporations talk less about the technology and more about how to use it.
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