What’s the Future of Blockchain? Learnings On Crypto Regulation, Scalability, and Identity
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At the Underscore VC Blockchain Core Summit, we had the honor of welcoming some of the best thinkers, doers, and builders who are leading the development of the future of blockchain technologies for a series of peer-to-peer roundtables in Boston. Through lots of discussion and debate of what we hope to see in the blockchain-enabled future, we learned an outstanding amount that we wanted to share back with the broader community. Each roundtable session covered the future of a certain aspect of blockchain, and we’ve highlighted the most prominent insights and takeaways from each one below:
The Future of Identity is likely to invert today’s current approach to data privacy, with blockchains shifting the paradigm of data sovereignty from companies that provide views of data on their servers to users who can self-custody their data and provide permission for apps to view it.
The Future of Scalability is consistently mentioned as one of the biggest barriers in the space, but one that nearly everyone expects to solve within the next 5 years. New consensus protocols, sharding, independent networks, and layer 2 channels are all taking angles on the challenge with the end result being likely a combination of these efforts — each making tradeoffs between decentralization and consistency to achieve scale.
The Future of Crypto Regulation is making it near impossible for entrepreneurs to navigate today’s moving waters with certainty — many are delaying productive hires and spending their runway instead on lawyers. Categorically binning crypto asset law into preexisting commodity or securities law will continue to further uncertainty; and geographies that have more favorable regulation will continue to see inflows of new entrepreneurs and investors alike. Messari (full disclosure: Underscore VC portfolio company) is a great example of a blockchain company that is promoting transparency and smarter decision making in the cryptoasset community.
The Future of Cryptoasset Custody remains a personal decision balancing rigor and convenience; with new approaches attempting to provide the benefits of both hot and cold wallets. Moreover, it’s clear that investors are getting more sophisticated in the space, with an increasingly significant institutional presence that is demanding (and willing to paying for) better solutions and even new products like insurance on crypto assets. CommonWealth Crypto (full disclosure: Underscore VC portfolio company) is specifically enabling traders to maintain custody of their coins while trading at centralized cryptocurrency exchanges, ensuring no one, not even a compromised or hacked exchange, has the power to take custody of a trader’s digital assets.
The Future of Crypto Exchanges is one of the most uncertain areas we discussed — but appears to be trending towards decentralized exchanges (which also comes with a tradeoff between the speed of execution), and at a minimum, towards a stronger connection of the centralized institutional exchanges. Moreover, many expect self-specialization of exchanges (or relayers) to emerge building “the global order book” for particular pairs of crypto assets in the short term.
The Future of Token Offerings show no signs of slowing down despite highly complex regulation, and ongoing conflicts between shareholders. Many expect more “blockbuster” ICOs raising more than 100M+ for even small teams with no product; others generally see a trend of the average raise being more realistic as the space becomes noisier and harder to get attention. The big trend however, is that funding decentralized technologies is becoming done in increasingly centralized ways.
The Future of Smart Contract Development has more and more people asking “do we need a blockchain for this?” and “where can I learn more about that?” as the platforms become more robust. Education that drives developer adoption will be a key tenet of those that will win the smart contract development wars.
The Future of Blockchain Academic Research will be increasingly funded in a decentralized way by leading crypto protocols looking to deploy new work that gives them an edge, increasing alignment between market needs and academic research. In Commonwealth Crypto, we’ve seen great research go from the lab into developing entrepreneurs who can build incredible companies. Sharon Goldberg and Ethan Heilman, the founders as well as two Boston University professors, are a great example of exceptional people we’re proud to back.
The Future of Oracles is fairly consistently going to be a decentralized service that brings off-chain data to smart contracts vs. a SaaS offering — with the killer application of course being prediction markets that are permissionless and staked (ensuring it costs more to break the system than maintain its integrity). SmartContract.com(full disclosure: Underscore VC portfolio company) and the associated LINK Network is a decentralized oracle that serves all off-chain → on-chain data needs, as a fully decentralized oracle network that smart contracts with data, bank payments and access to APIs.
These learnings fueled our excitement even more so in continuing to back entrepreneurs who are ready to dive in to the blockchain space, navigate these complex waters, and build a great company. If you’re a bold entreprepreneur with a new take on scalability, cryptoasset custody, or exchange don’t hesitate to reach out! We’re here specifically to support you in building the future of blockchain infrastructure.