The Capital
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The Capital

5 Predictions On Blockchain

By Paul Stavropoulos on ALTCOIN MAGAZINE

Love it or hate it, cryptocurrencies have now grown to a point where they’re hard to ignore. 10 years in the space feels like the internet in 1995.

To me, the key innovation blockchain brings is that it programs trust, and does so in a decentralized fashion. This brings to life a slew of use cases that will be awesome to witness come to life in the coming years.

Here are a few of my theses about the blockchain space and how I see the space evolving over the coming years.

The First Use-Cases Of Cryptocurrencies Will Revolve Around Financial Services

Cryptocurrencies have been the leading use case for blockchain the last 10 years with bitcoin leading the way. I don’t see this changing in the coming years. It’s easy to see how the blockchain can bring in a new era of money and finance, starting with bitcoin’s “digital gold”, Litecoin as “digital silver”, projects that look facilitates everyday transactions, stablecoins, and the next wave of lending, banking, and insurance applications.

We’re starting to see this world play out in front of us today. Blockchain adoption is growing, people can use cryptocurrencies to make exceedingly more purchases, teams are creating new loan and investment platforms, and new financial instruments are being created. There are many hurdles that the community needs to go through to bring forth a more open world of finance — these include big regulatory questions that need to be answered, protocols that need to be perfected, and standards to be selected.

Cryptocurrencies Will First See Real Adoption Outside The US

Because I see the first use cases finance-related, I think that real-world use and adoption will first happen outside the US. In comparison with the rest of the world, the US has a relatively strong institutional and financial backbone (for what it’s worth), and the US populace doesn’t really have a dying “need” to facilitate economic behavior.

That’s not true for countries like Argentina, Zimbabwe, Venezuela, and Turkey — bitcoin and cryptocurrency are much more integrated into everyday life and/or are truly seen as a refuge against the dangers of (hyper)inflation and banks. In fact, the last hyperlink above shares a statistic from a survey that claims 20% of Turks hold cryptocurrency!

Cryptocurrencies Will See “Mainstream Adoption” When Developed Countries Experience Institutional Troubles

We’re either near or past the top of a very long bullish global economy, and are currently experiencing an unusually long bullish market. This won’t last forever, and with difficult economic times comes more instability in the institutions we rely on. Banks are a key example — Greek banks still have capital controls which prohibit people from withdrawing more than 5K Euros a month from their accounts.

As similar controls are placed on populations of more “developed” nations in a coming downturn, I would expect the younger generations of the populace to naturally turn to cryptocurrencies to store wealth and transact outside of these capital controls.

I think it’s key that these events occur in “developed” countries in order to spur bitcoin adoption. This is key for adoption since I think only then will the general first-world global population truly take bitcoin seriously. At the moment, bitcoin and cryptocurrencies are making a difference in developing countries, but this has yet to really spur global communities to spend more time and money into cryptocurrencies.

Web 3.0 Uses Will Take Off Later, Most Probably In Ways That Abstract Away Blockchain Use

I use “web 3.0” to refer to the swath of decentralized products and programs that will be built on the blockchain for use-cases other than money and finance.

In short, the blockchain will allow for applications that are truly user-centric and private, and they will bring an air of true privacy and personalization to the web. It will be exciting! But I foresee the more short-term use case for the blockchain will specifically be cryptocurrency and the use of money.

A friend of mine, Jon Choi, wrote this great piece on cryptocurrency that I largely agree with. One of the points made is that Web 3.0 faces a huge burden of competing with incumbent service providers for their internet usage; they’ve built large network effects, quick and effective services, and “stickiness.” Even when these service providers breach our deepest private details and lose our trust, we still use them; we’ve highly discounted trust and privacy as a society. For a technology where that is at its very core, it will take some work for us to turn to it as an infrastructure as the go-to option to build products.

That said, the blockchain and cryptocurrencies bring with it a whole new world of crypto-economics, incentives, and direct-to-user offerings. It is highly likely that new ideas will be created highlighting these features, and that they will see adoption. I suspect they’ll need to abstract away some of the new (and thus deemed “scary” parts of the blockchain) blockchain underpinnings for them to see adoption. Just as everyday users of the web most probably don’t know how the HTTP protocol or the TCP/IP protocols work, so too they will treat smart contracts, oracles, and interoperable blockchains.

I believe that we’ll first see web 3.0 interactions and implementations in the virtual world or in online games.

We’re Still 15 Years Away From Prolific Use Of Smart Contracts

It doesn’t take long for someone to look into smart contracts to begin thinking up of ways they can partner with existing technology to bring about a more automated and efficient world.

But again, the blockchain space looks like the internet did in 1995. We’re still building the protocols to create these smart contracts, testing ways to interact with data in this new and decentralized way, and trying to bring together coalitions to create the first end-to-end smart-contract powered solutions that have at stake multiple players and organizations.

To put things into perspective, the modern internet was created in the early 1980s and took roughly 20 years to break 100 million users. It was some 25 years later that Facebook was founded. We can expect adoption for cryptocurrencies to occur slightly faster, but we’re still in the first inning. In a decade and a half, we’ll be able to easily and seamlessly create a smart contract on several blockchains, just as a developer today can create a simple web app on one of several frameworks.

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Paul Stavropoulos

Paul Stavropoulos

I like olives. And coffee. Technology, economics, and psychology are also decent things to talk about. Cofounder of Calltend.