Banco Bilbao Vizcaya Argentaria : Seven predictions about the future of blockchain, ICO’s and cryptocurrencies

2018 figures to be a crucial year for the entire blockchain ecosystem and distributed ledger technologies (DLT). Beyond the speculative rage that cryptocurrencies have ignited, this year is expected to bring a certain maturity to the market. These are seven predictions from three BBVA experts with regard to the challenges of the new decentralized economy, featured in the specialized news source Criptonoticias.

Alicia Pertusa, Head of Transformation at BBVA Investment Bank

1. The time of productive solutions

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According to Alicia Pertusa, 2018 will be the inflection point for moving from pilot projects and concept tests to developing productive solutions and applications for blockchain technology and DLT in the financial sector, and others.

The new versions of platforms, like Hyperledger, Corda and Ethereum, in addition to others developed by fintechs or banks, have corrected the errors detected during these years of experimentation, and can already start working on productive solutions.

At the same time, all of the stakeholders, banks, fintechs and regulators have been able to acquire experience and work on the technology-related aspects, such as governance, operations, guarantees, standards of operation, among other aspects, which will allow being able to work with this technology in the coming years.

Some examples of this are ASX (Australia Stock Exchange, which will migrate its transaction platform from post-trade to blockchain), We.trade (a trade finance solution that will start being produced in mid-2018), and the application from Calypso Technologies for trade matching confirmation based on DLT technology, which is expected to be commercialized in 2018.

3. Institutional investors

Alicia Pertusa believes that in the disruptive world of cryptocurrencies in 2018, we'll see how institutional investors start jumping in and investing in these types of assets. Until now, Wall Street and investment banking have been a step behind the world of the public at large.

Currently, retail investment in cryptocurrencies like bitcoin, ether and litecoin is dominating the scene (approximately 90% versus 10% wholesale). However, next year, the weight of institutional investment may increase, thanks to new investment vehicles regarding bitcoin that are emerging, such as, for example, futures on bitcoin offered on the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME), the main futures market infrastructures in the US.

Alicia Pertusa, Head of Transformation at BBVA Investment Bank.

Javier Sebastián, Head of Digital Regulation of BBVA Research

3. Regulation for ICO's

In the world of ICO's, in 2018, the combination of the regulatory initiatives by the authorities and the push from industry in terms of standardization and defining the 'best practices' will solve the current legal void and will convert the ICO's into an alternative regulated mechanism of financing for emerging companies, according to Javier Sebastián.

4. Central banks

BBVA's expert on digital regulation also thinks that in 2018, we'll see new announcements of cryptocurrencies being issued by some central banks, as has already occurred in Venezuela, and probably in some significant country from the economic and political point of view, like Russia, which will intensify efforts to analyze this type of currencies in other countries.

Javier Sebastián, Head of Digital Regulation of BBVA Research

Carlos Kuchkovsky, CTO New Digital Business of BBVA

5. Scalability and new applications

According to Carlos Kuchkovsky, in the next year we're going to see how several platforms try to position themselves in the ecosystem by trying to solve scalability problems of the current decentralized networks. These platforms will compete with the current networks, like Ethereum and Bitcoin, to become the community of growth for developers and investors,

When the new decentralized protocols start to function in massive scale production, they will turn into the cement that companies, start-ups and communities employ to generate new decentralized applications, using one or several of these new protocols.

Carlos Kuchkovsky, CTO New Digital Business of BBVA

6. Explosion of the ICO's

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Kuchkovsky also believes this year we are going to see the results of the explosion of investment in ICO's in 2017. Most projects will fail during the execution of their 'white papers,' but the few that are able to implement new decentralized protocols or Dapps (decentralized applications) have many possibilities of capturing incoming users with the potential of generating powerful effects on the network.

7. New tokens

According to BBVA's expert, this year we lived through the creation of a new type of token, whether they are of use and access or like financial rights, which has contributed to unify the 'crypto' growth, both financial and functional. In 2018, the pace of this financial and functional combination is going to accelerate, and how much it accelerates will be determined by technology. Creating new types of tokens, and allowing them to be joined and interact among each other.