The Future of Bitcoin and Ethereum
The world has gushed over Bitcoin and Ethereum, but the future doesn’t look so rosy.
I’ve loosely followed cryptocurrency for almost a decade. In 2011, I briefly mined Bitcoin (and Litecoin, when it became clear that GPU mining BTC was unlikely to net me much of a reward) from my college dorm room. Bitcoin’s proof-of-work algorithm to create a trustless ledger was a true innovation in decentralized systems, and Ethereum’s expansion of it into a general compute platform was another giant leap. But looking at the state of the world right now, neither seems poised for the level of success that is evangelized.
I am bullish on cryptocurrency in general. Our existing monetary system already operates on a digital ledger, and reducing institutional trust is a good thing. Moving money and tracking ownership is too important to leave in the custody of private institutions that have a long history of looking out for number one. Yet both Bitcoin and Ethereum strike me as being an imperfect fit for mainstream financial products. Some problems I see:
- Block discovery is too long to be used for payments.
- High volatility limits use as a method of payment.
- Smart contracts are too unreliable for institutions.
