Expert Insights on the Future of Cryptocurrency
Blockchain has come a long way from its mysterious beginnings in 2008 when an anonymous person known as Satoshi Nakamoto released the whitepaper for Bitcoin, the first decentralized cryptocurrency.
Almost a decade later, cryptocurrencies have become a major disruption in the finance industry. Other blockchain networks like Ethereum and Ripple have joined the ranks of Bitcoin, while many others are still competing for a substantial chunk of market cap.
But cryptocurrencies, popular they may be, are just one type of application of the blockchain technology. The concept of decentralization is still fairly new, so most industries are still catching up to find ways to integrate this technology into their existing frameworks.
That’s why we asked nine experts on the topic of blockchain and cryptocurrencies to share their insights and forecasts on where the future of cryptocurrency is headed.
We grouped the insights into three categories:
- Technical Insights on Blockchain & Crypto
- Practical Applications of Cryptocurrency in the Future
- Will the Philosophy of Blockchain Remain?
Part I. Technical Insights on Blockchain and Crypto
1. Devin Canterberry, CTO of Blockmason
- The current cryptocurrency industry is skewed towards scammers and speculative investors out to make a quick buck instead of innovators who want to build sustainable businesses.
- Sooner or later, the “currency” aspect of cryptocurrency will run its course, to be replaced by token contracts that will represent virtual assets.
Cryptocurrencies are in an easily exploitable state right now for scammers to make a quick buck. It’s the perfect storm of:
- It’s extremely easy to publish your own cryptocurrency with some simple copy/paste code and less than $1 in fees.
- Market demand is almost completely driven by speculation — the overwhelming majority of coins act only as arbitrary stores of value, as opposed to demand driven by utility (e.g., the oil market is significantly driven by both utility and speculation, resulting in generally more stability).
- There are a plethora of cryptocurrency exchanges, each a prime target for hackers to exploit. Cryptocurrency, as a paradigm, lacks fundamental properties of a fully functioning currency system:
- Inherent value. Few, if any, cryptocurrencies on the market, in and of themselves, have value. This property is also true for fiat, making most cryptocurrency tokens, in fact, fiat. The system for exchange is decentralized, and minting can be predictable, but ultimately, the control and interest in each coin is retained by a centralized authority: the creator.
- Ubiquity. No cryptocurrency has yet achieved ubiquity in the real world as a means of conducting any financial transaction within some jurisdiction, making it of limited utility. Coins are a tradeable asset rather than a unit of currency, much like any other commodity like oil or gold. Cryptocurrency today, as a whole, is used as a short-term investment vehicle and for moving money around with varying degrees of complexity. Individual coins, if claiming to provide any utility at all, do so, in practice, through a single vendor who fulfills/provides this value through a product or service, rather than through the coin itself. In this way, coins are much akin to gift cards, or at the risk of being too on the nose, retro arcade tokens.
We have an overloaded market of :poop: coins, all competing for buyers’ attention with hefty investments in marketing and little attention to building a sustainable business with real value. Cryptocurrency exchanges look and feel like the “real” stock market, but it’s all smoke and mirrors. There are no real businesses underneath; just opportunists. There are some exceptions, of course, but the market right now is skewed toward a long tail of opportunists out to make a quick buck.
Sooner or later, consumers will wise up to this en masse, and the qualities that make cryptocurrency truly useful will become more prominent. The “currency” aspect of cryptocurrency will run its course and become less exciting and unique. We’ll stop treating these like a stock market, and stop inherently trying to associate dollar amounts with units of cryptocurrency, or try to sell them in large quantities like we see today. Instead, we’ll use blockchain token contracts as a way to represent some virtual asset in our apps that we would like to be auditable, authenticated, transferable, and divisible — like karma, reputation, rewards points, etc.”
2. Omid Malekan, Author of The Story of the Blockchain: A Beginner’s Guide to the Technology Nobody Understands
- Adoption is slow, but in time, virtually all of finance will be using the blockchain infrastructure due to its benefits.
- Blockchain tech will allow decentralized and open-source platforms to topple tech giants like Facebook, Uber, etc. and distribute the risks/rewards equally around the ecosystem.
To understand how this technology will play out going forward, it helps to separate between the underlying technology itself (blockchain, or distributed ledger) and its various applications (cryptocoins, security tokens, utility tokens). A good analogy is the birth of the internet. The technology was the ability to tie different networks together. The various applications included email, social media, and the world wide web.
Cryptocoins like Bitcoin and Ether were the first and arguably most important manifestations of this technology. They represent a brand-new asset class, and the first of its kind to exist entirely within cyberspace. For many, these coins represent a new kind of money, one that is decentralized and exists entirely outside of the traditional banking system. Such coins are especially pleasing to citizens in countries with serious money problems (like Iran, Venezuela and perhaps even Turkey), but they are also appealing to those who believe the great monetarist experiment of the past decade, where the central banks in charge of the fiat money system have printed trillions of new bills, is bound to end badly. For Wall Street, crypto is slowly becoming just another asset class, one that represents new opportunities to generate fees from trading, analysis and even custody.
Security tokens are generally defined as traditional securities (like stocks and bonds) that are moved from the existing infrastructure (exchanges, brokers, clearing companies) to distributed ledgers to take advantage of the simplicity and efficiency. Adoption is slow and will take a long time, but many blockchain experts, myself included, believe that in time virtually all of finance will be using this new infrastructure due to its benefits. Blockchains allow for faster transactions that combine trading and settlement into one algorithmic transaction. Whereas a stock trade in the US still takes two days to fully settle, with countless intermediaries, a security token representing the same asset might settle within seconds with no middlemen. Tokenization also allows for more features to be programmed right into a security, so a tokenized bond might someday issue its own interest payments.
Utility tokens are the most existing and controversial application of this tech, as they allow for decentralized and open source platforms to be developed to take on some of today’s biggest corporations. Not everyone agrees with me on this, but as I’ve written before, blockchain technology will eventually allow such platforms to take over the highly profitable digital platforms that rule our lives. Everything from Uber to Facebook to Amazon Web Services will be fair game. The main reason why today’s digital platforms are so profitable is because they exist at an odd imbalance between risk and reward. The users of such platforms (be they cab drivers, Instagram influencers, or even businesses) take all the risk, but the platforms capture most of the upside. A decentralized platform will rebalance that relationship, because in a decentralized platform (like the payment platform that is Bitcoin) the user, owner, and creator become one.
3. Eric Kovalak, CEO of Vellum Capital
- The future of crypto will start in places where it can add the most value, like developing nations and third world countries with economic crises that make cryptocurrencies more practical than fiat currencies.
- That said, the cryptocurrency industry is still at an early stage and will need more innovation, not just disruption, to progress to mass adoption.
The future of cryptocurrencies begins in the use cases where they can add the most value. For example, it’s more likely to see bitcoin take hold as the principal medium of exchange in a third world or distressed economy before it replaces the U.S. Dollar or Euro. Fringe use cases will first develop. We just happen to be at a crossroad in history where these economies are developing quickly and joining globalization for the first time. This could be a big boost to cryptocurrencies.
The cryptocurrency industry remains in an early infrastructure stage. We’re still deciding on protocols and processes which will set up the next wave of popular adoption. From where we are today, it may take additional innovation for cryptocurrencies to move from infrastructure to mass adoption.
Society must discern between cryptocurrency novelty and use cases with genuine value. A digital asset’s value must be a substantial improvement and the promised outcome sufficiently better to cover the cost of converting to a new approach. Disruption is always easy, building new and better is difficult and sometimes random.
4. Jed Grant, CEO of Peer Mountain
- The adoption of cryptocurrency would increase exponentially if there were more improvements on user experience and accessibility, not just on infrastructure and performance.
- Well-designed ecosystems with incentive mechanisms that reward proper behavior will win out in the long run.
Cryptocurrency technology is at the very early stage today. This transformation in currency will change the way we keep and spend money. With crypto, currency can be imbued with a purpose and can be tailored to the market for which it will be used. This means that rules of the desired marketplace can be embedded into the currency itself.
Well-designed ecosystems with incentive mechanisms that reward proper behavior will win out in the long run. As most effort today is focused on infrastructure and performance improvements, this is what we see in the press. However, we also need to vastly improve the user experience and accessibility of cryptocurrency today. When this happens, adoption will be exponential and at breathtaking speed as crypto is already a global connected technology.
Part II. Practical Applications of Cryptocurrency in the Future
As the first and most popular application of blockchain in the modern age, cryptocurrency has often made headlines due to its price growth and disruption of the finance industry.
But while most people discuss its potential as an investment option, it could also evolve into something that could change the very foundations of the global economy.
5. Avneet Singh, CTO of Dock
- It’s only a matter of time before cryptocurrencies can empower people in underprivileged parts of the world to gain control of their lives through decentralization.
I personally believe cryptocurrencies are destined to revolutionize the world for the better. As with many other revolutions, there might be a sense of chaos before the tipping point is reached and the change becomes irreversible. Right now, we are at a stage where cryptocurrencies have proved their potential to the early adopters while more and more big organizations are waking up to not be left behind.
Common people in even certain underprivileged parts of the world have started to see early benefits in the form of censorship-resistant store of value for their savings, low-cost money transfer, etc. Increased regulation throughout the globe further demonstrates the acceptance that cryptocurrencies have reached critical mass and are here to stay. I believe it’s only a matter of time before cryptocurrencies help common people take back some control of their lives from the large monoliths that are controlling every aspect of our physical & digital lives.
6. Shidan Gouran, CEO & President of Global Blockchain Technologies
- A protocol that enables interchain transactions will make expand use cases for cryptocurrency and form a borderless global banking system for cryptocurrencies.
To ensure the future of the 1800+ different types of cryptocurrencies out there, it is vital that they are able to transact together and transfer value in a way that isn’t limited to addresses on the same chain. Just like the SWIFT protocol was created to form a borderless global banking system for the 180 currencies recognized by the United Nations, a similar protocol required to form a borderless global banking system for cryptocurrencies.
By enabling interchain transactions, cryptocurrencies will become more usable, broadening the uses of virtually every cryptocurrency out there, enabling the ecosystem to grow considerably.
7. Yael Tamar: Founder of Top of Blockchain
- The future of crypto lies in consolidation and stabilization to make it more practical for use in commerce.
It’s no secret there are way too many cryptocurrencies out there, in fact over 5,000 different coins. Every single blockchain ecosystem is requiring the use of its unique coin; an equivalent of that would be having to exchange your dollars into every supermarket’s local currency in order to shop there. And the volatility resulting from the way the cryptocurrency token supply is set up prevents most mainstream systems from effectively using blockchain and cryptocurrencies.
The future of crypto lies in consolidation and stabilization. Stable coins will play a much more important role in the crypto market with many blockchain networks creating mechanisms for major stable coins to be used within their systems. Stable coins have a much higher probability of being used in the mainstream markets than any other type of cryptocurrency.
8. Dmytro Budorin: CEO of Hacken
- Blockchain has a significant potential to impact many industries including cybersecurity, finance, investing, commerce, and even the election process.
Blockchain is an innovative technology that has a significant potential to positively impact both businesses and societies around the world. I think that the positive outcomes of utilizing Blockchain for society and business will be the following:
- Transparency. In one sentence, Blockchain is a ledger of information (or transactions) that is very hard to tamper with. So, the first impact that blockchain will have on society is increasing transparency in various processes, be that logistics (showcasing the history of the product from the source to its end destination), charity work (who has been spending money and how exactly the money was spent), or fair elections process, etc.
- Cybersecurity. Today, everything is “online”. We completely rely on safe access to information via the web. Blockchain technology, by design, is significantly more reliable than conventional data ledgers. One of the reasons why bitcoin became so popular is precisely because it is so difficult to hack and steal someone’s money. Another benefit to the society would be safe and fair election process that run on blockchain protocols.
- Financial freedom. At the moment, roughly 2 billion people don’t have a bank account. Blockchain technology (via cryptocurrencies) can provide safe access to financial services, which will lead to financial freedom and increase standards of living for the people in the developing economies.
A prime example would be Venezuela. The country is experiencing hyperinflation and people have transferred as much of their wealth into cryptocurrency as possible, in order to shield themselves from inflation. Many of the county’s citizens literally survive by mining cryptocurrency from their homes.
Another important thing to note is that cryptocurrencies gave way to the new crowdfunding method called “Initial Coin Offering.” ICOs provide entrepreneurs with the opportunity to raise capital around the world bypassing the “middleman” (VCs, Banks, etc). As a result, it facilitates the development of innovations and business around the world.
Part III. Will the Philosophy of Blockchain Remain?
When the original whitepaper for Bitcoin was published in 2008, one of its fundamental principles was to cut the middleman from transactions and replace it with code that doesn’t require additional fees — making transactions faster and more affordable.
But the cheaper cost is just a bonus compared to the true effect of decentralization, which is the distribution of control from a central authority to the people themselves. So instead of banks setting the terms, it is YOU who sets your own terms for your money.
But what if this principle gets lost in all the iterations that happen to blockchain?
9. Timofey Fortunatov: Head of PR at Tugush Blockchain Capital
- There might be a possibility that the philosophy underlying cryptocurrencies and blockchain may be altered in favor of governments and big corporations.
When we are talking about the future of cryptocurrencies, we need to specify precisely what we want to talk about: the future of cryptocurrencies as a concept or existing cryptocurrencies.
In the first case, I think that cryptocurrency definitely has a future in our society. However, I do not exclude the possibility that the whole philosophy of it will be changed in favor of governments and big corporations. I do not think that our community will be able to keep the crypto-sphere fully decentralized and unaffected by political forces and needs. Therefore, the projects that are aimed to improve already existing systems seem to have more potential in that context than others that exclude such capabilities.
Here it is worth mentioning such cryptocurrencies as Ripple, which is already used not only by some international banks but also by such giants as Apple and Google. The main difference between this system, comparing to other cloud money, is precisely in its focus on improving cross-border transactions and other payment transactions. I think Ripple has all chances to win against its main competitor — SWIFT — over time, even replacing the latter. Or, alternatively, this place may be occupied by any other altcoin that can serve this purpose even more effectively.
So, I would not connect the future of cryptocurrencies only with bitcoin, even though it has a great potential to keep its superiority over the time. Both bitcoin’s position as a pioneer in the field and its popularity among even those people who are still inexperienced in cryptocurrencies will greatly contribute to bitcoin’s future. However, I believe that in a long perspective some altcoins have more abilities to change our perception of money and finances than the first cryptocurrency.
Today, when the crypto-market changes and grows so rapidly, the industry offers an amazing opportunity to participate in its development. Many developers understand it and try not only to earn as much money as possible but also to improve the quality of cloud money for the benefit of society.
When all is said, all of the experts we’ve asked agree that blockchain is still at a very early stage. There may already be innovators who apply the concepts of blockchain to industries other than finance, but it’s still a long way time before we see this technology mature from its cryptocurrency applications.
That being said, it’s also a very exciting time for all of us. In the near future (maybe even the next few years), you can expect to see a host of new and innovative crypto-based projects that could seriously change the way we do things. Right here in the Philippines, the Noah Project has partnered up with real estate developers to create entire townships driven by cryptocurrency. Not only will Noah Coin serve as a digital token to decrease the costs of transferring money across economic and geographical borders, the Noah ecosystem will also play a huge part in retaining customer loyalty.
The thing about ecosystems is that they take time to build properly. Nevertheless, one thing is certain: cryptocurrency, like the Internet, can potentially break down obsolete infrastructures and replace them with more open frameworks, thus helping to create a borderless world.
Originally published at noahcoin.org on October 15, 2018.