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Crypto Theses for 2019

Traders Magazine Online News, January 10, 2019

Arjun Balaji

As another year wraps up, I started writing an email to close friends and investors on the “state of crypto” and my forecasts. As it got longer, it turned into this sprawling post. A few notes:

  • This write up contains wide-ranging theses and obvious biases (my own) and is by no means authoritative. Please don’t nitpick.
  • Where I make predictions, I try to be as specific as possible (inspired by SlateStarCodex’s format). Not all predictions are quantifiable. Some will be off and many will likely be directionally incorrect. That’s OK.
  • Unless otherwise specified, my criteria for a liquid, actively-traded project “dying” is either (1) < $100k volume/$20m market cap or (2) primary development abandoned, whichever comes first.
  • None of these predictions are normative; in many cases I see momentum in products or approaches I consider fundamentally flawed. C’est la vie—this is an attempt at a descriptive 2019 outlook.


  • Bitcoin
  • Ethereum
  • Other Tokens
  • Private Projects
  • Stablecoins
  • Crypto-funds
  • Product Potpourri
  • Crypto Companies
  • Regulation
  • Closing thoughts on prices and adoption


1) After a strong launch in 2018, I see Lightning Network growth continuing into 2019. I predict the number of Lightning nodes with channels will be ≥ 10,000 from ~2,100 now (60% confidence) due to the proliferation of node hardware and hosted solutions (e.g. Nodl.itCasaHODL) and easy-to-deploy GUIs like Pierre Rochard’s node launcher. I predict network capacity will increase even more from ~$2m notional to ≥ $25m+ notional (75% confidence) due to the lifting of maximum channel limits, dual-funded channels, etc.

2) At least one major exchange will launch a Lightning Network hub for their users as confidence in the stability and security of the network grows over 2019 (50% confidence). If this occurs, my money is on Binance given their iteration speed and product chops or Coinbase, due to increased focus on adoption and “usage” of cryptocurrencies. I’m particularly excited about Cash App’s potential here given 1) they’re a business that understands Bitcoin 2) Jack sees Bitcoin as a path to “financial inclusion” and 3) Jack’s investment inLightning Labs’ 2018 seed round.

3) A working implementation of Schnorr signatures, for which Pieter Wuille released a draft BIP in July, will make its way into Bitcoin via soft fork by the end of 2019 with ≥ 5% node adoption (75% confidence).

4) Low volatility and lower prices always attracts concern trolls and people who believe they can “change” Bitcoin for the better. The last two years have seen a lot of forks where the codebase is changed but the UTXO set is kept intact. In 2019, I expect to see the opposite: forks with technology kept intact (to merge future upstream changes) where the monetary policy or UTXO set is modified; an example being the Zclassic team forking Zcash to remove the Founder’s Reward). I predict 2019 will see a major fork proposal from Bitcoin OGs “fixing” post-block reward fee market sustainability either by re-appropriating Satoshi’s Bitcoin (e.g. my tongue-in-cheek tweet-proposal for “Bitcoin Freedom”) or by adding predictable, low inflation in favor of the fee-market (50% confidence).

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