Near-term Roadmap for Blockchain
I just got back to Austin TX. I spent the last two weeks in San Francisco and New York. My time there was spent meeting founders, enthusiasts, and team members of cryptocurrency startups. Here’s a quick summary of things I learned.
Things that will happen soon
💰 Stable coins slowly become a ramp for adoption.
Apps and Services built on top of coins like Dai will allow muggles to use cryptocurrencies without even realizing it. We already represent digital money using apps like Venmo, or Square Cash. The jump to stable coins is seamless, with the difference that we will really have control over the funds.
Stable (and liquid) digital money will allow businesses to accept transactions without the fear of volatility. Think about sending money abroad using a mobile app and family members/friends receiving the money in a stable coin wallet that can be used to purchase directly.
Dai has already announced that they’re raising the debt ceiling for collaterization, which means that adoption is quickly gaining traction.
📝 Securities will get tokenized
Buying stocks online is easy, at least for US nationals. Custodianship and compliance is hard.
Moving stock units into blockchain platforms makes sense:
- Allows for trustless compliance (reduces costs of auditing)
- Provides unrestricted access to non-us capital to buy into the stock market
- Improves liquidity. Markets can operate 24-hours
You might be thinking “The SEC will never allow 24 trading, It will never happen”. If it doesn’t, more companies will start setting up shop on crypto-friendly jurisdictions. After your stock structure sits on a decentralized blockchain the company can move the headquarters to Malta, just as Binance did.
Having securities on smart contracts also means that fractional ownership is easier. Crowdfunding real estate development via tokens that yield from rent and are liquid to trade is already happening thanks to startups like Meridio, BrickBlock, Fabrica, and Harbor.
Tokenized assets will also act as catalyzers for mainstream adoption:
- New startups will demonstrate viability of tokenized assets
- Purchase and exchange of decentralized securities increases
- Baked-in compliance allows institutional money to enter the space
- Usage by traditional institutions increases further trust
- More retail investors are attracted to the space
Things that need to improve
👜 Wallets suck
Wallets are hard to use. If I have never used cryptocurrency before I have to go through a series of welcome screens explaining that:
- I’m responsible for holding my funds
- I need to create a password
- I can never share my private keys
- For some reason I have to remember 24 words
- Sometimes I need to “sync” my full node, whatever that means
If you take this Step-by-Step Guide to Metamask there are 25 steps on three different websites. There is still a lot of friction for newcomers.
It might take a whole generation for those affordances to become common, or someone might come up with better custodian solutions, but right now it’s really hard. People value convenience over safety and sovereignty.
👷 Dapps are hard to use.
- UX is not that great
- Browsers are not there yet (but getting better)
- Signing from the same wallet from mobile and desktop not always possible.
⏳ Blockchains are slow
You might have heard of things like Sharding, Plasma, Side Chains, State Channels, Hashgraphs and DAGs. These are all very complex ways to solve the tradeoff between speed and security, and there’s no clear winner yet.
Confirming a transaction still takes minutes. This timeframe works for settlement of financial operations that usually take days, but not great for micro or peer-to-peer payments.
🔈 There's too much noise
It’s hard to identify which projects are real, and which are outright scams. There's lots of money raised, many announcements and hype, and not many live mainnets with solutions being built on top.
🏗 Still lots to build
Basic infrastructure and development tools still have long ways to go, but the community is energized, I had never seen such enthusiasm for improving in any other ecosystem.
My main takeaway is that the representation of real world assets into the blockchain is the next no-brainer real-world-use-case. There is enough proven scalability for trading tokens, coins and kitties (oh my!). Putting bonds, stocks and deeds doesn't require waiting for visa-levels of TPS.
I'm excited 🤩
