When mainstream media report about the cryptocurrency industry, they mostly focus on the turbulent prices and markets. Why not? Numbers make for a bigger impression on readers and better headlines. Also for currencies, as cryptocurrencies are intended to be, they are too turbulent to make payments with, some even with high wait time and higher fees.
Still the technology is fairly new and is constantly improving. Cryptocurrency teams are becoming larger and better with experts from all around the world joining on the cause. It’s a fact that there is a long road ahead and many problems to be fixed. Nevertheless there are a lot of experienced people who are working hard to solve them and come up with new innovative upgrades.
This year we can expect many existing problems to be fixed. Opinions are becoming more optimistic and there are many upcoming technology improvements and features. Heading into 2018 we may finally see a balanced blockchain user experience.
Privacy and security improvements
Blockchain technology offers many security features over existing systems. However the privacy aspect has still a long road ahead to perfection. A lot of blockchain projects focus on the marketing side and the Initial Coin Offerings of their cryptocurrency. Doing so, they often neglect their promise for security. The market leaders usually have better security features but there is room for improvement.
Blockchain technology is still fairly young and as existing technology matures, many flaws and imperfections will be addressed. There are cryptocurrencies that are centered on the user’s privacy, like Monero and ZCash. Monero gives you full anonymity and ZCash uses a protocol called zk-snark that is a type of zero-knowledge proof. In 2018 Monero will be implementing “bulletproofs” feature, which can cut fees up to 80%. ZCash is steadily reinforcing its security in preparation for a big upgrade.
About the advances in zero-knowledge proof, Ethereum’s co-founder, Vitalik Buterin has called it “the single most under-hyped thing in cryptography right now”. In cryptography, zero-knowledge proof or zero-knowledge protocol is a method in which one party can prove to another that a given statement is true, without conveying any information except the fact that the statement is really true. This protocol requires interaction between individuals proving their knowledge and the individual validating the proof. It hides information without risking the validity of transactions.
The implementation of these protocols is becoming cheaper and easier. A little part of it has already been adapted to Ethereum. This could encourage new startups to test out private smart contracts in new and innovative ways. The zero-knowledge protocol is still in its early stages and better versions will eventually come out. 2018 could be the year that this innovation will bring an exciting impact to the cryptocurrency industry.
In 2017, cryptocurrency exchanges saw a flood of new users some even struggled with the large volumes of incoming adopters. Currently there are a lot of projects that are developing “decentralized exchanges”. The concept behind them is a software that users can use to trade cryptocurrencies with one another, without the need for a central entity. As of now, the hardware wallet Ledger has integrated with decentralized exchange Radar Relay to allow users to exchange with trust tokens on the Ethereum blockchain.
The efforts of creating a decentralized exchange will accelerate this year. In 2017 there were plenty of projects for new decentralized exchanges like Prism, OmiseGo, Kyber, 0x and more. For now they are not as flexible as the other exchanges, because they are only supported by few Ethereum-based wallets. Never the less the cryptocurrency community sees them as technology advancements and have their reasons to be excited about.
In 2018 we could see blockchain transactions without using the blockchain at all. The idea is from 2015 and is most associated with Bitcoin’s Lightning Network. The idea is about off-blockchain payment channels. They would allow two people to send and receive small amounts of cryptocurrencies back and forth without using the blockchain.
This will give more options to the user and will make using the blockchain optional and only when necessary. This idea will have a big impact on the whole industry this year. Ethereum developers are working on making the same technology. They have unveiled successful tests for their version of the off-blockchain channels, called the Raiden Network. Vitalik Buterin, the co-founder of Ethereum, released a working draft for a more ambitious version, called Plasma project.
In 2018 we will be able to make more and cheaper transactions. The developers of Bitcoin’s Lightning Network have said that the technology is ready and has successful tests. Going into 2018 more and more exchanges will adopt the Lightning Network, thus reducing fees dramatically.
One of the many flaws of Blockchain technology is the electricity required to sustain the network. The consensus protocol, proof-of-work, which Bitcoin uses and miners actually do is an electricity-hungry process. There many reports about this and a lot of concerns were raised about the effects it will have on the environment.
There is another concept, called proof-of-stake. It is consensus by vote and the concept is implemented but at a small scale for now. However Ethereum intends to implement this at a larger scale to reap all the benefits it can bring. There is an Ethereum project long in the making called Casper. There are early versions coming up but we can expect a lot of progress to be made this year.
On New Year’s one version of Casper was released and was reported to be functional. The leading developer behind the technology, Karl Floersch, said that the code was working fine. This early version of Casper will be adapted and implemented across Ethereum’s clients. Vitalik Buterin said that he expects this technology to be tested and compared with proof-of-work.
- Security Token Offering (STO) Guide: Everything you need to know about STOs - Feb 28, 2019
- Coinbase Pro is adding Ripple (XRP) support for trading - Feb 27, 2019
- Top ICOs of 2018: Initial Coin Offerings that beat the Crypto Bear’s market - Feb 26, 2019
- Ethereum hard forks Constantinople and St. Petersburg scheduled by the end of the week - Feb 25, 2019
- Ethereum founder and CEO, Vitalik Buterin revealed his non-Ether holdings and revenue sources - Feb 22, 2019
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