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Crypto Waves: Past, Present & Future

The Present

Speculative Waves

Pioneer generation

Settlers Generation

Competing Chains

Cross Chain

Layer 2

  • State channels. Collateral is deposited to a hub and two parties can transact between each other. Sometimes these channels are setup as a hub. Transacting with someone who isn’t part of a hub can often be hard from a routing perspective. Some implementations require hub owners to deposit as much collateral as the amount that’s being transacted. Good for use cases such as gaming, gambling etc. Not a fool proof solution to a global payments though (some people may disagree here). See: Connext, L4 Generalised State Channels, Lightning, Celer Network
  • Side chains. Completely separate chain from the base layer chain but allow interoperability with it thereby extending the ecosystem. These chains do not inherit from the security of their base layer chain although can submit checkpoints periodically to make sure they can revert the side-chain should anything go wrong. See: Skale Labs
  • Plasma. Similar to side chains but have the full security of the base layer chain. Any double spends or 51% attacks cannot result in funds being lost in the base layer chain. Many have skepticism around it however Plasma Cash and Plasma MVP are now live with many UX issues being solved at a rapid pace. Main downside is creating more expressive applications beyond payments isn’t possible in the near term. See: Matic, Loom

Expansion generation

Closing Remarks

  • We’re going to have another 1–2 speculative waves before the expansion wave. Each speculative wave will give 10x all-time-highs than the previous speculative wave before it.
  • Regulation will play a minor role in the overall scheme of things. The appeal of crypto is participating in unregulated financial markets. Evidence to suggest otherwise is sparse (STOs). Synthetic assets will be a massive winner here.
  • Layer 1 chains who’s core value proposition is speed and scalability have no edge with the proliferation of layer 2 scaling solutions. Governance and community may be value differentiators but are minor once again.
  • Scaling isn’t super important in the short term. Finding product market fit is.
  • Polkadot, DFINITY, Cosmos etc. are competing with Ethereum 2.0, not the current chain. There’ll be a brief point in history where they have the chance provided they have all their tech in order and a community (not incentivised with money)
  • Technological problems will be the easiest to solve. Convincing people about the ideology behind this movement will be the hardest. Our assumptions about security are still in a sandbox, they still need to be tested against real world attacks.

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