January 7, 2020
An exercise in crypto trend-spotting
At work this week we’re having an offsite retreat to plan our direction for the year. We’re working with a facilitator who will guide us in a strategic foresight exercise and has asked everyone on the team to come prepared with a list of trends that they are observing in the world relevant to our work. Here are some of the trends that I think are important:
- Congress is next to irrelevant and will be for the foreseeable future. By that I mean that we can expect almost no consequential legislation aside from spending bills to pass both chambers, and that means very low likelihood that any crypto-related bills become law. If you want to understand the structural dysfunction at root, read this seminal article by Yuval Levin. Power today and for the foreseeable future resides at the executive branch agencies.
- Sanctions continue to be the U.S.’s top foreign policy lever short of military action and it has been leaning on it to a remarkable extent. Just consider that as of last month the U.S. is using sanctions to stop its ally Germany from connecting (stupidly in my view) to the Nord Stream 2 natural gas pipeline from Russia. I don’t understand why more people don’t seem to find this remarkable. It’s increasingly not just “rogue states” but allies that are growing frustrated and seeking alternatives to U.S. financial hegemony and are increasingly seeking to build alternatives.
- Bitcoin is recovering its dominance. After taking a steep dive to just 38% of the crypto market at the height of the ICO boom in 2017, it has steadily climbed back to 69% today. I expect it to go much higher signaling its fundamental value, especially relative to the long tail of alts.
- The global revolt of the public shows no signs of abating. The ability of elites and institutions to control narratives is being destroyed by the Internet creating a crisis of authority. The people are increasingly getting a good look at their betters and they disdain what they see and don’t believe what they say. The consequence is often reactive rage without much of an alternative program. Perhaps more important will be the reaction of the elites, which to date has been confusion but could turn serious.
- Finally, an anti-trend. A lot of the end-of-years prediction lists I’ve seen have stablecoins and central bank digital currencies (CBDCs) as trends to watch in 2020. I think they are both overhyped. Stablecoins have some interesting potential and pose some very interesting questions, but unless those questions get goos answers I think they’ll remain a niche product. CBDCs, including China’s planned DCEP, will be of much less significance than many imagine.
In writing down this list I had to resist the temptation to write a blog post about each item, so maybe I will. I’m looking forward to seeing what other trends the team has flagged and what ideas will spring forth from putting them together.
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