The trouble with this article is that the author doesn't seem to know what Bitcoin is for.
Notice the vague treatment of actual cryptocurrency applications. There are lots of predictions about startup activity, "flippenings" and venture capital, but little about the goods and services customers will actually be buying, or what specifically startups will be building.
It's this kind of thinking that leads people into the dark thicket that is "tokens": digital instruments bought and sold largely for speculative purposes. It's understandable. The ability to print money is a fantasy of many people from a young age.
The last two years have seem a solid refutation of this notion. Almost every token has lost value against Bitcoin. It seems reasonable to conclude that the carnage will continue.
So the money printing press ship has sailed. It's going to come as a shock for many people (some with economics degrees), but bootstrapping censorship-resistant money is a one-time deal. Any attempt to profit from the undertaking harms the credibility of the founders. Only the genuine scammers are left to continue the exercise.
Here's a vision for the future of Bitcoin. Bitcoin will extend its role as a refuge from the growing foreign and domestic militarization of money. It will become an indispensable weapon against civil asset forfeiture, international sanctions, deplatforming, and mass surveillance.
That's your application for Bitcoin in the '20s. And it's a doozy. It places Bitcoin on the side of personal freedom and on a collision course with some of the world's biggest governments, including the US. There will be many attempts to "ban" Bitcoin.
Startups will play a marginal role at best because their ultimate aim of monopolization flies in the face of what Bitcoin was designed to do.
It's not, the majority of hash power is in China. That means the Chinese government could start censoring bitcoin transactions in a week if they wanted to - by orphaning non-compliant blocks.
Regardless of anything else, this centralization alone makes bitcoin a failed experiment.
This is literally the first comment on Hacker News I've seen that seems to actually understand the implications of decentralization. It's apparent to me that many people who are trying to profit on it don't actually understand why decentralization is desirable for some people. It's a foreign concept to many that there are motivations other than financial gain. Many attempts to "innovate" with Bitcoin are constantly trying to do things that are already solved with centralized systems, and end up working around decentralization.
> Startups will play a marginal role at best because their ultimate aim of monopolization flies in the face of what Bitcoin was designed to do.
I'd go further with this and say that decentralization is an active impediment to startups trying to create monopolies in the crypto space.
I think there's still room for development, but it will be hard for it to be motivated by profit. Particularly, a better-executed namecoin could be revolutionary if people started building infrastructure around it (i.e. as usernames, or a DNS replacement).
> It places Bitcoin on the side of personal freedom and on a collision course with some of the world's biggest governments, including the US.
And until and unless you can use it to purchase the goods and services needed for daily life, and the military and police forces needed to secure the supplies lines of those, it will be at best a theoretical form of personal freedom.
Even if Bitcoin doesn't rely on trust, the rest of the functions of human society do.
I find it hilarious you think Coinbase CEO Brian Armstrong doesn't "know what Bitcoin is for."
Maybe you don't know what it is for. People that are sane like Mr. Armstrong and Satoshi Nakamoto intended it to be used as a currency. If Satoshi is still alive I'm sure he was quite disappointed when Bitcoin decided to not scale past its blistering 7 transactions per second.
"Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost. It never really hits a scale ceiling." -Satoshi Nakamoto
Bitcoin is for wealthy Chinese people to evade currency controls and get their wealth out to politically safer countries. Buy mining hardware and electricity with Renminbi, get Bitcoins, sell in a foreign country for hard currency.
Your comment sounds like a priest delivering a sermon. No sources to back your argument up and also you missed a large fact that Bitcoin just doesn't scale for any of the applications you've outlined.
Completely agree. I thought I posted on the other thread about 2020s predictions but apparently I didn't hit the reply button:
Bitcoin will definitely singularly emerge as the new common 'numéraire' in the near to mid-term (5 to 10 years). I love that you specifically call out the omnipresent crypto scams, because they are what disappointed me from the whole endeavor once they emerged in the ICO craze. Once 1 bitcoin has price of 500,000 to a few million in USD per individual 'bitcoin' UXTO, it'll be obvious for governments to just start using it, and create dual money systems that are just layers on top of the (maybe single, maybe not) existing, working blockchain, despite its slowness. China is pursuing this now, even in anticipation of large price increases.
IMO Bitcoin is definitely the numeraire of the future, and it is certainly not a sure thing right now but I am extremely certain of this. It then becomes so trivial to do aggregate balance of payments calculations without so much sketchy behavior by fraudulent sovereigns that want to represent their own vision of 'real trade' for various purposes, such as economic warfare.
For non-finance people, numeraire is a representative abstraction of a 'unit of exchange', used to simplify things. You can then idealize situations like having riskless borrowing, which simplifies many formulae. But this is not an accurate portrayal of reality, (look up sovereign defaults, as one example. Greece, Spain, Italy, some Asian countries at different times, Argentina, Venezuela, etc.) So having a numeraire that isn't sovereign would be really impactful in making all economic participants way more honest, outside of the immediate smaller-scale effects of allowing people to get their cryptos ropped by unscrupulous people on the darknet.
From Wiki: "The numéraire is a basic standard by which value is computed. In mathematical economics it is a tradable economic entity in terms of whose price the relative prices of all other tradables are expressed"
Anyways, the Bitcoin protocol could definitely fail, for any number of a few different reasons, but at present barring some kind of major technological paradigm shift that breaks existing cryptography (maybe QC, maybe something different) it is uniquely positioned to become the de-facto standard for all balance of payments activity internationally. Scalability issues are definitely a factor, but hey, the mempool is working its hardest until they rewrite the underlying consensus mechanisms to work at larger scale. But as a settlement system and a darknet unit of exchange, it is extremely clear that this is the first hard asset that won't just vanish at the mercy of sovereigns. Very powerful new technology.
Consider the source, right? How many people without a large vested interest in the propagation and uptake of cryptocurrency consider further growth likely?
My guess is that governments will more and more realize that the main utility of blockchains is money laundering and speculation. As has been remarked over and over again, they don't solve any above board problem more efficiently or with lower expense than existing technologies. I predict we'll see growing regulation increased amounts of crackdowns on cryptocurrency and its applications going forward.
I honestly don't understand where the perception comes from that this technology is only useful for laundering and speculation. Certainly it is currently being used for those purposes. But to say there is no imaginable use outside of that seems unwarranted.
I've commented in the past here that the use of public blockchains to automate the functions of clearinghouses and escrow services will be a huge cost reduction for many industries such as finance. The technology as of today is not ready to handle that use case, but with the developments currently in the pipeline for Ethereum v2, progress is being made in that direction.
If you look at what MakerDAO is doing with the Dai stablecoin, they've proven that it's possible to create a synthetic asset closely pegged to the dollar purely through financial incentives, and they did it all just using Ethereum v1. A holder of Dai can earn 4% APY through a Dai Savings Account, and a vote is currently in place to raise the rate to 6%.
I personally find it incredible that an asset exists on the blockchain that's equivalent in value to USD, with a higher APY than you can get from any US bank. And because everything is on the blockchain, there's a public ledger of exactly how much is being collected in interest from those who are collateralizing their Ether for a Dai loan, how much of that interest is being paid to savings account holders, and how much is being collected by the system as surplus. It's the closest thing we have right now to a decentralized bank.
Whether or not you buy into the technology, it's improving by the day and more and more use cases and applications are being tried out and built. If all you see in blockchain is money laundering and speculation, you haven't been paying attention.
Exactly. It has been 10+ years since the Bitcoin paper. No cryptocurrency has significant consumer adoption. [1], [2] Except for light financial crime (ransomware, money laundering, gambling, theft, etc), it has no demonstrated advantage over alternative technologies. I don't think it will go away, any more than Ponzi and Make Money Fast schemes have gone away. But like you, I expect it will fade into the background as "that weird old thing" as governmental KYC and AML efforts make it ever harder to convert it into real money.
I also expect that the fashion for it in VC investment, already waning, will totally fade by the end of the 2020s. And that regulators like the SEC will have ended the various its-not-equity equity investments, cutting off the other major source of funds.
> they don't solve any above board problem more efficiently or with lower expense than existing technologies
You've picked two arbitrary criteria, which certainly don't cover the entire range of useful properties that anybody in the world might want. And even still, you're only right about one of them. Cryptocurrency is very inefficient from a power consumption standpoint, no denying that. Not sure what you mean about lower expense though, sending money internationally (in a perfectly above-board way, like placing an order or supporting relatives in another country) can be a lot cheaper via bitcoin than alternatives like Western Union. It's also useful as a store of value that's not tied to a single government, so similar to gold in its intrinsic value but with the benefit that it doesn't take up physical space and can be sent and received much more easily.
I'm still quite bullish on bitcoin itself, for these properties alone, I see these properties as basically a floor on the value that it can provide and even just for for this use there's room for a lot of growth. If Ethereum-style contracts/apps and all the other kinds of things discussed in the post also gain wide adoption (which certainly seem like far from a sure thing at this point, but also not completely crazy), that's just a bonus.
> As has been remarked over and over again, they don't solve any above board problem more efficiently or with lower expense than existing technologies.
If you mean by that, it's possible to have a fiat currency with no dilution, that is true.
Crypto currencies are fundamentally a political innovation; it is much more politically expensive to force dilution onto a crypto-currency than a fiat one. Whether that's valuable enough, I suppose we'll see.
> Consider the source, right? How many people without a large vested interest in the propagation and uptake of cryptocurrency consider further growth likely?
I agree with you in general, but also: The reason it's not that many is because the ones who see further growth, gets a interest into it, maybe even vested interest. So, not a good argument.
> Consider the source, right? How many people without a large vested interest in the propagation and uptake of cryptocurrency consider further growth likely?
So 90% of this post's accuracy is unchanged whether the CEO of Coinbase was the CEO of Coinbase or not. Lets look at some of the points:
People are working on removing the surveillance aspect of cryptocurrencies. thats a truth that has nothing to do with adoption.
People are working on making them faster. that's a truth that has nothing to do with adoption.
The Chinese Government has said they will a central bank digital asset for currency. that's a truth that has nothing to do with bagholding other cryptocurrencies
Every industry experiences consolidation, it doesn't really take a soothsayer with a conflicting interest in to tell you that.
This involves state and county governments recognizing a current problem that is easily solved with blockchain technology. In this particular use case, blockchain is used to prevent fraud and provide a more efficient process.
I’d much rather see a practical and modern replacement for physical cash that doesn’t impose a multiple percentage point revenue hit on businesses than a $200k bitcoin.
"Just like the dot com craze kicked off the idea of an internet startup (and a decade later, just about every tech startup uses the internet in some way), I believe that by the end of the 2020’s almost every tech startup will have some sort of cryptocurrency component."
This literally already happened for a hot second, did you not notice the everyone doing their own ICO when bitcoin was 20k? Are you saying it will happen again?
> ... did you not notice the everyone doing their own ICO when bitcoin was 20k? Are you saying it will happen again?
I don't think that's what they're saying. I suspect it'll be more like support for existing major cryptocurrencies like Ethereum and Bitcoin. Either for payments or smart contracts, or other decentralized book-keeping.
I'm not convinced about "almost every tech startup", but I do think it'll become more mainstream.
An alternative hypothesis is that the cryptocurrency ecosystem is suffering the same luck as the Torrent protocol: the Torrent protocol is well alive[1] but never mainstream since most people use streaming services as most people use the traditional finance system. At the end it is about convenience.
I just wanted to write 'hey, could anyone give a brief overview/current status of the crypto space' but then I realized once again that I might get answers influenced by personal investments (I've got still quite some significant portfolio).
This space is difficult, after the last years there's some stigma and trust-levels towards and within the crypto-community are super low (similar to the porn space) and I decided for myself, this sector is over. Main reason is: distributed DBs are hard, publicly distributed DBs are even harder, there are so little use cases that justify the effort involved (except currency & fund raising).
"He who controls the money supply of a nation controls the nation." And this does not necessarily only apply to nations. Isn't that a strong justification for the effort involved?
I have a different view of the 2020s. We don't need more tokens or programmable technology. Money is the dominant use case for crypto. We still haven't figured out how to make crypto money that people can use beyond speculation. Notable projects will be around money use cases. Currently, we see Bitcoin, Tether, and stablecoins. In the 2020s, there will be more coins that people can use as money. We'll spend the next decade searching for them.
Tech-focused projects, like Ethereum 2, Algorand, won't be successful. Decentralized coins, Libra, corporate coins, government coins will be.
For decentralized coins, I think the market needs to find a way to incorporate inflationary economics into the system. Bitcoin needs an inflating parallel blockchain. It's all about money. I put my focus there.
I wrote a post on the topic: Emerging Markets of Cryptocurrencies
Check out open bazaar. It is a decentralized p2p market place similar to ebay. Even has a decentralized escrow system with moderators that get paid to resolve disputes. Best part of it is that there are no fees at all to buy/sell stuff other than the cryptocurrency transfer fees. You also pay a fee if there is an issue with the product you bought/sold etc.
Not much people using it though. Seems like best selling items are gift cards.
>Olaf Carlson-Wee and Balaji Srinivasan estimate that at a price of $200,000 per Bitcoin, more than half the world’s billionaires will be from cryptocurrency
This misses a key piece of information. They take the price as an an assumption for their argument, but that is insufficient to draw this conclusion. When Bitcoin reaches $200,000 is also a factor.
The worlds existing billionaires will not sit still. If it takes 70 years then it would be pretty easy to make better money elsewhere. I have no idea if or when it will happen. I'm inclined to think on average it will increase at a decreasing rate.
there are people who also believe gold will reach $100k an ounce. I don't think that will happen, or if it did, society would've transformed so much that there bears little resemblance to today's world.
Cryptocurrency tries to automate away trust, but in the process ends up reestablishing centralization while taking up a ruinous energy and complexity cost.
Perhaps one day, the tech community will understand that some problems require a political solution and simply cannot be solved by technological means alone.
The most important challenge cryptocurrencies face is capturing real world value. The ICO craze turned out to create basically 0 value on any crypto platform, and the more recent wave of tokenized securities will be very slow because there are lots and lots of regulations that need to be addressed by token issuers (for good reason).
The value of our public goods however is not being captured by any financial asset, and is a huge market that can be addressed by cryptocurrencies. This is something I'm quite passionate about and have put a lot of time into thinking through how they might work (see link below). As an example, AirCarbon (https://www.aircarbon.co) is a Singapore exchange being built on an Ethereum token and will tokenize CORSIA-certified carbon credits for the airline industry. This is a fantastic example of a huge market ($100+ billion) that is right now extremely inefficient, and will benefit greatly from moving onto a globally accessible and permissionless ledger. It'll provide everyone in the world the ability to invest in the reduction of carbon dioxide emissions, and even better, since the tokens also work as stores of value, investors can sell their tokens in the future.
This type of financial asset has enormous potential.
This is a post written by a crypto company, which has all its interest in keeping it alive. Hopefully 2020 will be a watershed movement in crypto world and people will stop calling a peer to peer distributed exchange mechanism by names similar to money.
Crypto is not money and company like coinbase thrive on that information asymmetry because a normal person do not understand that cryptocurrency is not really a money,but a network of computers trying to fix some arbitrary value to a sequence of string which are worthless in themselves if not widely used for exchange of goods and services.
Hopefully in 2020 peer to peer exchange of good and services evolve and companies like coinbase don’t need to exist (this was the true purpose of distributed currency to get rid of companies like coinbase and being hold hostage by them by keeping wallets under their supervision without liability unlike the way bank maintains account with liability and protection).
Nope. Bitcoin and others don't solve this at all. They're a literal permanent ledger of every single transaction you've ever made. Other coins might be better at anonymity, but BTC and its derivatives are certainly not.
Anonymity is not a fundamental human right. Rather it’s a tool that should be available in extreme circumstances. Totally anonymous systems generally devolve over time. Nothing about crypto is inherently anonymous. Bitcoin was never meant to be anonymous. There’s a public ledger... Crypto a la Bitcoin is fundamentally about building distributed consensus. Secure distributed consensus requires strong identity. Whether it’s easy to tie a crypto identity to a social one is simply a matter of time and not a fundamental principle of these systems (except maybe Monero). Behavior can always be analyzed.
There are several larger private chains, including at least one that has a built in decentralized marketplace. But adoption is very low. People may not know they care about private transactions until too late.
In the end, it might depend on a chain becoming popular first before people want to use privacy features on top of it, like using Ernst & Young's Nightfall protocol that's built on top of Ethereum.
You have a way to buy things anonymously right now, it's called Bitcoin. If you mean a low-fee and frictionless way, it's unclear why that would ever develop. Unless everything you earn and do is anonymous, it seems to me that the transition between the anonymous store of value and your real identity (address, bank acct) will involve friction and cost.
Those are two different problems: scalability and finality.
Obviously every transaction can not be processed and stored by everyone. That much is clear even to casual observers. There has been two or three main ways people have tried to achieve this during the past decade.
The obvious thing to try would be to shard the blockchain like you would a database. This turns out to be hard to do in a trustless way since shards would need to interact. This realization and the contracts required to securely swap assets between otherwise separate chains leads naturally to:
Full on separate blockchains that run in parallel to the main one, checkpointing when needed (rootstock, drivechains). These are not limited by the main chain and can be specialized for custom use cases. The parallel chains are only interoperable by way of the main chain and need not know about each other, which helps scaling out.
Payment channels by the way of time locked contracts. Satoshi sketched out an initial implementation that turned out to be flawed. This has since been improved on and made bidirectional and made into a standard which is now the Lightning network. It has a number of real world limitations but the general idea is that only the parties involved in a transaction needs to know about it. An added benefit of this is that finality among these parties is immediate.
There have also been some work squashing a large number of transactions into a large transaction. This has the added benefit of obfuscating the flow of individual transactions, which otherwise makes everyone's holdings transparent (mimblewimble, grin). This requires new signature schemes and is hard to retrofit to existing blockchains and make security guarantees about.
There used to be ideas about Chaum like schemes on top of blockchains, but most of that interest probably went on into separate blockchain schemes.
Those are some of the ideas that have been tried, most have shown some promise but are more or less still at the research stage. Don't expect radical changes overnight.
The scalability constraint is a fundamental one. A single cryptocurrency cannot scale beyond a certain TPS without sharding. But sharding reduces the decentralization of each shard. Also, rebalancing existing shards when adding new ones also introduces its own decentralization problems.
I think the way forward for acalability will be multi-chain. Each blockchain has its own accounts and own token but is connected to other chains via fully automated DEXs. The blockchains will form a hierarchy of chains with the most trusted and busiest one at the top. I think there will be a trend to make a consistent payment API so that any cryptocurrency can be used in the place of any other, online shops will use on-chain DEX trade price and volume data to determine which coins they accept and for what value.
Cryptocurrency does not have anything close to widespread consumer adoption. If the Coinbase’s of the world don’t fix this, cryptocurrency will be massively devalued.
I was thinking with some friends recently (new year's eve) : considering a bitcoin model with a fixed finite amount of currency, won't every coin be lost at some point due to storage failure/lost keys/etc ? Statistically ? And rather sooner than later, if my thinking is right ? Like the birthday problem ?
There is a maximum of 21x10^6 bitcoins, imagining a 0.01 chance of losing 1 bitcoin/day ?
Like many have pointed out, this guy is clearly biased. But my own personal opinion is that people will always want drugs and as long as governments enable a black market of drugs, crypto will be used to trade drugs.
I perhaps cynically believe that is what has kept, keeps and will keep cryptocurrency going.
True. Also, aside from Cosmos, none of the projects mentioned in the article have actually launched. And Cosmos does not scale any better than any other blockchain. It may perform better than Bitcoin, but there is still a rigid upper bound in terms of TPS beyond which it cannot process anymore transactions (beyond which point fees would skyrocket to force down demand).
On the Cosmos website, under the "Scalability" heading, it says "Proof-of-Work protocols are slow, expensive, unscalable, and environmentally harmful" but then it says: "Tendermint BFT fixes this."
As a blockchain developer of 2 years who understands the principles behind Tendermint and who has build many scalable systems in his career, I can say for sure that Tendermint doesn't add any scalability to any given blockchain. It only aids with certain specific interoperability scenarios (nothing to do with scalability). The statement on their website is not accurate. The people who wrote this statement are marketing people who do not understand the first thing about scalability of any system. The leaders of these projects wash their hands of any responsibility by pretending to believe their own dogma.
Most blockchain marketing is a flat out scam IMO. As a result of all this deception, almost everything that everyone knows about blockchain today is wrong. Everyone thinks that all the trendy cryptocurrencies can scale but they can't. None of the ones that I analyzed in the last 2 years could scale. And I looked at many; for those whose whitepaper made the most sense, I even made the time to discuss the tech with their lead developers, node operators and community members. The reality is always far behind the marketing.
Unfortunately, investors are investing based on hype and their personal connections, not based on demonstrable facts. Investors are being mislead en-mass. As a developer who understands the tech and who actually believes in its potential to incentivize productive collaboration, it's disturbing to watch how the industry is unfolding.
aazaa|6 years ago
Notice the vague treatment of actual cryptocurrency applications. There are lots of predictions about startup activity, "flippenings" and venture capital, but little about the goods and services customers will actually be buying, or what specifically startups will be building.
It's this kind of thinking that leads people into the dark thicket that is "tokens": digital instruments bought and sold largely for speculative purposes. It's understandable. The ability to print money is a fantasy of many people from a young age.
The last two years have seem a solid refutation of this notion. Almost every token has lost value against Bitcoin. It seems reasonable to conclude that the carnage will continue.
So the money printing press ship has sailed. It's going to come as a shock for many people (some with economics degrees), but bootstrapping censorship-resistant money is a one-time deal. Any attempt to profit from the undertaking harms the credibility of the founders. Only the genuine scammers are left to continue the exercise.
Here's a vision for the future of Bitcoin. Bitcoin will extend its role as a refuge from the growing foreign and domestic militarization of money. It will become an indispensable weapon against civil asset forfeiture, international sanctions, deplatforming, and mass surveillance.
That's your application for Bitcoin in the '20s. And it's a doozy. It places Bitcoin on the side of personal freedom and on a collision course with some of the world's biggest governments, including the US. There will be many attempts to "ban" Bitcoin.
Startups will play a marginal role at best because their ultimate aim of monopolization flies in the face of what Bitcoin was designed to do.
nootropicat|6 years ago
It's not, the majority of hash power is in China. That means the Chinese government could start censoring bitcoin transactions in a week if they wanted to - by orphaning non-compliant blocks. Regardless of anything else, this centralization alone makes bitcoin a failed experiment.
https://cointelegraph.com/news/study-chinas-btc-miners-contr...
kerkeslager|6 years ago
> Startups will play a marginal role at best because their ultimate aim of monopolization flies in the face of what Bitcoin was designed to do.
I'd go further with this and say that decentralization is an active impediment to startups trying to create monopolies in the crypto space.
I think there's still room for development, but it will be hard for it to be motivated by profit. Particularly, a better-executed namecoin could be revolutionary if people started building infrastructure around it (i.e. as usernames, or a DNS replacement).
danans|6 years ago
And until and unless you can use it to purchase the goods and services needed for daily life, and the military and police forces needed to secure the supplies lines of those, it will be at best a theoretical form of personal freedom.
Even if Bitcoin doesn't rely on trust, the rest of the functions of human society do.
JohnJamesRambo|6 years ago
Maybe you don't know what it is for. People that are sane like Mr. Armstrong and Satoshi Nakamoto intended it to be used as a currency. If Satoshi is still alive I'm sure he was quite disappointed when Bitcoin decided to not scale past its blistering 7 transactions per second.
"Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost. It never really hits a scale ceiling." -Satoshi Nakamoto
https://steemit.com/bitcoin/@cryptodailyuk/bitcoin-broke-coi...
nradov|6 years ago
bouncycastle|6 years ago
James-primitive|6 years ago
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brighton36|6 years ago
arthurcolle|6 years ago
Bitcoin will definitely singularly emerge as the new common 'numéraire' in the near to mid-term (5 to 10 years). I love that you specifically call out the omnipresent crypto scams, because they are what disappointed me from the whole endeavor once they emerged in the ICO craze. Once 1 bitcoin has price of 500,000 to a few million in USD per individual 'bitcoin' UXTO, it'll be obvious for governments to just start using it, and create dual money systems that are just layers on top of the (maybe single, maybe not) existing, working blockchain, despite its slowness. China is pursuing this now, even in anticipation of large price increases.
IMO Bitcoin is definitely the numeraire of the future, and it is certainly not a sure thing right now but I am extremely certain of this. It then becomes so trivial to do aggregate balance of payments calculations without so much sketchy behavior by fraudulent sovereigns that want to represent their own vision of 'real trade' for various purposes, such as economic warfare.
For non-finance people, numeraire is a representative abstraction of a 'unit of exchange', used to simplify things. You can then idealize situations like having riskless borrowing, which simplifies many formulae. But this is not an accurate portrayal of reality, (look up sovereign defaults, as one example. Greece, Spain, Italy, some Asian countries at different times, Argentina, Venezuela, etc.) So having a numeraire that isn't sovereign would be really impactful in making all economic participants way more honest, outside of the immediate smaller-scale effects of allowing people to get their cryptos ropped by unscrupulous people on the darknet.
From Wiki: "The numéraire is a basic standard by which value is computed. In mathematical economics it is a tradable economic entity in terms of whose price the relative prices of all other tradables are expressed"
Anyways, the Bitcoin protocol could definitely fail, for any number of a few different reasons, but at present barring some kind of major technological paradigm shift that breaks existing cryptography (maybe QC, maybe something different) it is uniquely positioned to become the de-facto standard for all balance of payments activity internationally. Scalability issues are definitely a factor, but hey, the mempool is working its hardest until they rewrite the underlying consensus mechanisms to work at larger scale. But as a settlement system and a darknet unit of exchange, it is extremely clear that this is the first hard asset that won't just vanish at the mercy of sovereigns. Very powerful new technology.
asdfasgasdgasdg|6 years ago
My guess is that governments will more and more realize that the main utility of blockchains is money laundering and speculation. As has been remarked over and over again, they don't solve any above board problem more efficiently or with lower expense than existing technologies. I predict we'll see growing regulation increased amounts of crackdowns on cryptocurrency and its applications going forward.
v64|6 years ago
I've commented in the past here that the use of public blockchains to automate the functions of clearinghouses and escrow services will be a huge cost reduction for many industries such as finance. The technology as of today is not ready to handle that use case, but with the developments currently in the pipeline for Ethereum v2, progress is being made in that direction.
If you look at what MakerDAO is doing with the Dai stablecoin, they've proven that it's possible to create a synthetic asset closely pegged to the dollar purely through financial incentives, and they did it all just using Ethereum v1. A holder of Dai can earn 4% APY through a Dai Savings Account, and a vote is currently in place to raise the rate to 6%.
I personally find it incredible that an asset exists on the blockchain that's equivalent in value to USD, with a higher APY than you can get from any US bank. And because everything is on the blockchain, there's a public ledger of exactly how much is being collected in interest from those who are collateralizing their Ether for a Dai loan, how much of that interest is being paid to savings account holders, and how much is being collected by the system as surplus. It's the closest thing we have right now to a decentralized bank.
Whether or not you buy into the technology, it's improving by the day and more and more use cases and applications are being tried out and built. If all you see in blockchain is money laundering and speculation, you haven't been paying attention.
wpietri|6 years ago
I also expect that the fashion for it in VC investment, already waning, will totally fade by the end of the 2020s. And that regulators like the SEC will have ended the various its-not-equity equity investments, cutting off the other major source of funds.
[1] E.g.: https://www.nytimes.com/2018/04/16/nyregion/new-york-today-l...
[2] For "significant" contrast it with M-PESA, which is also digital money and launched around the same time: https://en.wikipedia.org/wiki/M-Pesa
cactus2093|6 years ago
You've picked two arbitrary criteria, which certainly don't cover the entire range of useful properties that anybody in the world might want. And even still, you're only right about one of them. Cryptocurrency is very inefficient from a power consumption standpoint, no denying that. Not sure what you mean about lower expense though, sending money internationally (in a perfectly above-board way, like placing an order or supporting relatives in another country) can be a lot cheaper via bitcoin than alternatives like Western Union. It's also useful as a store of value that's not tied to a single government, so similar to gold in its intrinsic value but with the benefit that it doesn't take up physical space and can be sent and received much more easily.
I'm still quite bullish on bitcoin itself, for these properties alone, I see these properties as basically a floor on the value that it can provide and even just for for this use there's room for a lot of growth. If Ethereum-style contracts/apps and all the other kinds of things discussed in the post also gain wide adoption (which certainly seem like far from a sure thing at this point, but also not completely crazy), that's just a bonus.
nordsieck|6 years ago
If you mean by that, it's possible to have a fiat currency with no dilution, that is true.
Crypto currencies are fundamentally a political innovation; it is much more politically expensive to force dilution onto a crypto-currency than a fiat one. Whether that's valuable enough, I suppose we'll see.
capableweb|6 years ago
I agree with you in general, but also: The reason it's not that many is because the ones who see further growth, gets a interest into it, maybe even vested interest. So, not a good argument.
rolltiide|6 years ago
So 90% of this post's accuracy is unchanged whether the CEO of Coinbase was the CEO of Coinbase or not. Lets look at some of the points:
People are working on removing the surveillance aspect of cryptocurrencies. thats a truth that has nothing to do with adoption.
People are working on making them faster. that's a truth that has nothing to do with adoption.
The Chinese Government has said they will a central bank digital asset for currency. that's a truth that has nothing to do with bagholding other cryptocurrencies
Every industry experiences consolidation, it doesn't really take a soothsayer with a conflicting interest in to tell you that.
and so on
l3kk0|6 years ago
https://www.deeds.com/articles/the-real-estate-deal-declutte...
This involves state and county governments recognizing a current problem that is easily solved with blockchain technology. In this particular use case, blockchain is used to prevent fraud and provide a more efficient process.
polyomino|6 years ago
moralsupply|6 years ago
Where did you get the data that justifies that assertion?
In any case, don't bother with cryptocurrencies. I'd recommend that you keep all your wealth anchored in US Dollars for the next 3-5 years.
biolurker1|6 years ago
dcow|6 years ago
jimhi|6 years ago
This literally already happened for a hot second, did you not notice the everyone doing their own ICO when bitcoin was 20k? Are you saying it will happen again?
zeroxfe|6 years ago
I don't think that's what they're saying. I suspect it'll be more like support for existing major cryptocurrencies like Ethereum and Bitcoin. Either for payments or smart contracts, or other decentralized book-keeping.
I'm not convinced about "almost every tech startup", but I do think it'll become more mainstream.
DennisP|6 years ago
wslh|6 years ago
[1] https://torrentfreak.com/filesharing-and-vpn-traffic-grow-ex...
Hydraulix989|6 years ago
companyhen|6 years ago
https://defipulse.com - 3m ETH locked so far as of today (1 year ago = 1.9m ETH, 2 years ago = 63k ETH)
csscrack|6 years ago
This space is difficult, after the last years there's some stigma and trust-levels towards and within the crypto-community are super low (similar to the porn space) and I decided for myself, this sector is over. Main reason is: distributed DBs are hard, publicly distributed DBs are even harder, there are so little use cases that justify the effort involved (except currency & fund raising).
Maybe I am wrong.
aeternum|6 years ago
_7fvc|6 years ago
Tech-focused projects, like Ethereum 2, Algorand, won't be successful. Decentralized coins, Libra, corporate coins, government coins will be.
For decentralized coins, I think the market needs to find a way to incorporate inflationary economics into the system. Bitcoin needs an inflating parallel blockchain. It's all about money. I put my focus there.
I wrote a post on the topic: Emerging Markets of Cryptocurrencies
https://bitflate.org/post/2019/11/10/emerging-markets-of-cry...
newguy1234|6 years ago
Not much people using it though. Seems like best selling items are gift cards.
Lerc|6 years ago
This misses a key piece of information. They take the price as an an assumption for their argument, but that is insufficient to draw this conclusion. When Bitcoin reaches $200,000 is also a factor.
The worlds existing billionaires will not sit still. If it takes 70 years then it would be pretty easy to make better money elsewhere. I have no idea if or when it will happen. I'm inclined to think on average it will increase at a decreasing rate.
chii|6 years ago
yyyk|6 years ago
Perhaps one day, the tech community will understand that some problems require a political solution and simply cannot be solved by technological means alone.
carleverett|6 years ago
The value of our public goods however is not being captured by any financial asset, and is a huge market that can be addressed by cryptocurrencies. This is something I'm quite passionate about and have put a lot of time into thinking through how they might work (see link below). As an example, AirCarbon (https://www.aircarbon.co) is a Singapore exchange being built on an Ethereum token and will tokenize CORSIA-certified carbon credits for the airline industry. This is a fantastic example of a huge market ($100+ billion) that is right now extremely inefficient, and will benefit greatly from moving onto a globally accessible and permissionless ledger. It'll provide everyone in the world the ability to invest in the reduction of carbon dioxide emissions, and even better, since the tokens also work as stores of value, investors can sell their tokens in the future.
This type of financial asset has enormous potential.
"Tokenized Goods - A New Store of Value": https://medium.com/@tpgwhitepaper/tokenized-public-goods-a-n...
dragonsh|6 years ago
Crypto is not money and company like coinbase thrive on that information asymmetry because a normal person do not understand that cryptocurrency is not really a money,but a network of computers trying to fix some arbitrary value to a sequence of string which are worthless in themselves if not widely used for exchange of goods and services.
Hopefully in 2020 peer to peer exchange of good and services evolve and companies like coinbase don’t need to exist (this was the true purpose of distributed currency to get rid of companies like coinbase and being hold hostage by them by keeping wallets under their supervision without liability unlike the way bank maintains account with liability and protection).
4AoZqrH2fsk5UB|6 years ago
As I understand it Bitcoin has some problems in this regard, but others have solved it.
I just can’t find it hard to believe we get to 2030 without a way to buy things anonymously online.
djsumdog|6 years ago
Nope. Bitcoin and others don't solve this at all. They're a literal permanent ledger of every single transaction you've ever made. Other coins might be better at anonymity, but BTC and its derivatives are certainly not.
dcow|6 years ago
ChrisClark|6 years ago
In the end, it might depend on a chain becoming popular first before people want to use privacy features on top of it, like using Ernst & Young's Nightfall protocol that's built on top of Ethereum.
WA|6 years ago
kspacewalk2|6 years ago
waynecochran|6 years ago
xorcist|6 years ago
Obviously every transaction can not be processed and stored by everyone. That much is clear even to casual observers. There has been two or three main ways people have tried to achieve this during the past decade.
The obvious thing to try would be to shard the blockchain like you would a database. This turns out to be hard to do in a trustless way since shards would need to interact. This realization and the contracts required to securely swap assets between otherwise separate chains leads naturally to:
Full on separate blockchains that run in parallel to the main one, checkpointing when needed (rootstock, drivechains). These are not limited by the main chain and can be specialized for custom use cases. The parallel chains are only interoperable by way of the main chain and need not know about each other, which helps scaling out.
Payment channels by the way of time locked contracts. Satoshi sketched out an initial implementation that turned out to be flawed. This has since been improved on and made bidirectional and made into a standard which is now the Lightning network. It has a number of real world limitations but the general idea is that only the parties involved in a transaction needs to know about it. An added benefit of this is that finality among these parties is immediate.
There have also been some work squashing a large number of transactions into a large transaction. This has the added benefit of obfuscating the flow of individual transactions, which otherwise makes everyone's holdings transparent (mimblewimble, grin). This requires new signature schemes and is hard to retrofit to existing blockchains and make security guarantees about.
There used to be ideas about Chaum like schemes on top of blockchains, but most of that interest probably went on into separate blockchain schemes.
Those are some of the ideas that have been tried, most have shown some promise but are more or less still at the research stage. Don't expect radical changes overnight.
zhoujianfu|6 years ago
The other easy way is to do what either win (ETH) did and change the average time between blocks from 10 minutes to say 10 seconds or so.
sosuke|6 years ago
I've become very pessimistic around cryptocurrency after a year of chasing coins.
Wake me up when Turtlecoin hits $10.
drcross|6 years ago
Geee|6 years ago
https://digitalik.net/btc/
unknown|6 years ago
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cryptica|6 years ago
I think the way forward for acalability will be multi-chain. Each blockchain has its own accounts and own token but is connected to other chains via fully automated DEXs. The blockchains will form a hierarchy of chains with the most trusted and busiest one at the top. I think there will be a trend to make a consistent payment API so that any cryptocurrency can be used in the place of any other, online shops will use on-chain DEX trade price and volume data to determine which coins they accept and for what value.
debt|6 years ago
DennisP|6 years ago
jrimbault|6 years ago
There is a maximum of 21x10^6 bitcoins, imagining a 0.01 chance of losing 1 bitcoin/day ?
kim0|6 years ago
Also it's untested if miners will continue mining after Bitcoin inflation completely stops
Geee|6 years ago
duncan-donuts|6 years ago
INTPenis|6 years ago
I perhaps cynically believe that is what has kept, keeps and will keep cryptocurrency going.
christopherbalz|6 years ago
unknown|6 years ago
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yellow_postit|6 years ago
biolurker1|6 years ago
lawn|6 years ago
https://whycryptocurrencies.com/challenges.html#privacy-and-...
seibelj|6 years ago
notadoc|6 years ago
cryptica|6 years ago
As a blockchain developer of 2 years who understands the principles behind Tendermint and who has build many scalable systems in his career, I can say for sure that Tendermint doesn't add any scalability to any given blockchain. It only aids with certain specific interoperability scenarios (nothing to do with scalability). The statement on their website is not accurate. The people who wrote this statement are marketing people who do not understand the first thing about scalability of any system. The leaders of these projects wash their hands of any responsibility by pretending to believe their own dogma.
Most blockchain marketing is a flat out scam IMO. As a result of all this deception, almost everything that everyone knows about blockchain today is wrong. Everyone thinks that all the trendy cryptocurrencies can scale but they can't. None of the ones that I analyzed in the last 2 years could scale. And I looked at many; for those whose whitepaper made the most sense, I even made the time to discuss the tech with their lead developers, node operators and community members. The reality is always far behind the marketing.
Unfortunately, investors are investing based on hype and their personal connections, not based on demonstrable facts. Investors are being mislead en-mass. As a developer who understands the tech and who actually believes in its potential to incentivize productive collaboration, it's disturbing to watch how the industry is unfolding.
Temasik|6 years ago
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lngnmn1|6 years ago
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