Outlook 2020: One coin to rule them all
Plotting the dollar standard's downfall?
The hype bubble around cryptocurrency, Bitcoin and, to a lesser extent, blockchain, continued to deflate in 2019 and a healthy dose of scepticism and realism broke out.
The idea that you can come late to the crypto party, buy a handful of tokens from start-ups with nothing more to show for themselves than a white paper and make thousands of percent profit has all but vanished.
Likewise, Bitcoin's sheen of invincibility has lost its lustre as question marks around the lack of scalability and influence of whale investors and mining pools controlled from China have grown.
While blockchain is making headway as a technology for cutting out clunky middle parties and admin, it is increasingly seen as distributed ledger technology (DLT) v1.
In other words, blockchain is one of a number of DLTs, and while blockchain was the first it is looking less likely to prove the best solution.
But there is one area where senior mainstream figures have hinted at a true crypto future, although it is little more than conjecture for now.
Namely, as the replacement for the US dollar in the event of a new global monetary system.
Back in August, Bank of England Governor Mark Carney said the world should prepare for the end of the dollar standard on which the world monetary system has operated since 1971 and suggested some form of global encrypted digital reserve currency could be the answer.
It could be backed by gold, as the dollar standard was until 1971, or by an IMF basket of national currencies - the IMF uses the dollar, euro, renminbi, yen and sterling for special drawing rights.
Of course, there is no chance if such a coin came into existence that it would look like Bitcoin, which is 'trustless and permissionless'.
It would look more like Facebook's Libra coin - proposed earlier this year and already fading away as backers pull out - but controlled by central banks.
My prediction for 2020 is the much-touted Libra will lose more ground as nations and pan-national organisations vie to dominate the crypto market.
If the rumours are true, China and Russia, among others, are already planning for the end of the dollar as the global reserve currency, and next year, I expect China's central bank to issue its own cryptocurrency, referred to as DCEP.
There is a race to control global finance and centralised cryptocurrency is seen as the way to do it.
However, I expect Bitcoin to survive and develop further in 2020. If central banks are taking their currency onto the blockchain, Bitcoin is likely to find more, not less, advocates looking for freedom from government financial control.
I also expect all the other thousands of cryptos that have appeared over the past three-plus years to be squeezed and vanish in 2020.
There is some interesting tech on which they are based but Bitcoin has proven to be the only crypto (for now) that works as money.
There are one or two competitors that could make the leap (Monero, Dash), but I expect 2020 to be the year when we start to move from dodgy get-rich-quick-schemes to a mainstream battle for crypto market dominance.
Matthew Morris is a director at Carr Consulting & Communications
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