
Cryptocurrency in the 2020s - openmosix
https://blog.coinbase.com/what-will-happen-to-cryptocurrency-in-the-2020s-d93746744a8f
======
aazaa
The trouble with this article is that the author doesn't seem to know what
Bitcoin is for.

Notice the vague treatment of actual cryptocurrency applications. There are
lots of predictions about startup activity, "flippenings" and venture capital,
but little about the goods and services customers will actually be buying, or
what specifically startups will be building.

It's this kind of thinking that leads people into the dark thicket that is
"tokens": digital instruments bought and sold largely for speculative
purposes. It's understandable. The ability to print money is a fantasy of many
people from a young age.

The last two years have seem a solid refutation of this notion. Almost every
token has lost value against Bitcoin. It seems reasonable to conclude that the
carnage will continue.

So the money printing press ship has sailed. It's going to come as a shock for
many people (some with economics degrees), but bootstrapping censorship-
resistant money is a one-time deal. Any attempt to profit from the undertaking
harms the credibility of the founders. Only the genuine scammers are left to
continue the exercise.

Here's a vision for the future of Bitcoin. Bitcoin will extend its role as a
refuge from the growing foreign and domestic militarization of money. It will
become an indispensable weapon against civil asset forfeiture, international
sanctions, deplatforming, and mass surveillance.

That's your application for Bitcoin in the '20s. And it's a doozy. It places
Bitcoin on the side of personal freedom and on a collision course with some of
the world's biggest governments, including the US. There will be many attempts
to "ban" Bitcoin.

Startups will play a marginal role at best because their ultimate aim of
monopolization flies in the face of what Bitcoin was designed to do.

~~~
JohnJamesRambo
I find it hilarious you think Coinbase CEO Brian Armstrong doesn't "know what
Bitcoin is for."

Maybe you don't know what it is for. People that are sane like Mr. Armstrong
and Satoshi Nakamoto intended it to be used as a currency. If Satoshi is still
alive I'm sure he was quite disappointed when Bitcoin decided to not scale
past its blistering 7 transactions per second.

"Bitcoin can already scale much larger than that with existing hardware for a
fraction of the cost. It never really hits a scale ceiling." -Satoshi Nakamoto

[https://steemit.com/bitcoin/@cryptodailyuk/bitcoin-broke-
coi...](https://steemit.com/bitcoin/@cryptodailyuk/bitcoin-broke-coinbase-ceo-
brian-armstrong-s-heart-so-he-s-now-focused-on-ethereum)

~~~
pixelperfect
Bitcoin is continuing to scale, but it's doing so with the Lightning Network
instead of by increasing block size.

I'm not super familiar with Bitcoin's tech, but that seems sensible to me. The
blockchain is already 250 GB at 7 transactions per second. If you multiplied
that by 100, you still have orders of magnitude less transactions per second
than credit card processors, but the hardware requirements are now high enough
that few individuals could afford to run full nodes.

~~~
mundo
Correct me if I'm misunderstanding things, but Lightning Network means off-
chain transactions, right? Which can be be reneged on if one party is
malicious, meaning they'll only occur between trusted parties? And in
practice, that means traditional financial services companies and their KYC-
compliant customers, which is the exact 180 degree opposite of the originally
envisioned use case.

From where I sit, it seems like BTC was designed to be a currency that would
free us from financial regulation, it has failed on both counts, and crypto
enthusiasts are trying to turn it into an over-elaborate debit card because
the alternative is for it to become a historical curiosity.

~~~
moduspol
It's complicated, and I'm not sold on the Lightning Network as the future, but

> Which can be be reneged on if one party is malicious, meaning they'll only
> occur between trusted parties?

This is not correct. My understanding is essentially each party is tying up
Bitcoin as being between them on the blockchain, then trading
cryptographically verifiable assertions of each other off-chain about what the
latest status of the ongoing "tab" is between them. Either of them can close
the tab at any time and reconcile to the blockchain.

They don't really need to trust each other, although this does introduce a
dependency on some entity (whether the user's own server or a third party) to
publish the latest version of the "tab" if the other guy maliciously tries to
publish an older version of the "tab." And of course, that means you need some
redundant storage / handling of those cryptographic assertions from the other
guy about what the status of the latest "tab" is. But that doesn't require
trust--you'd want to do it even if you trust the other party.

Or at least that's my understanding of it. I like the conceptual idea of LN
but some of these details seem like dealbreakers to me.

~~~
mundo
> My understanding is...

That's how two finserv companies would transact off-chain with each other, but
when I go to buy a cup of coffee with a bitcoin, I'm not opening up a payment
channel with them for one transaction, that would defeat the whole point. The
coffee shop will use a payment processor, who isn't going to deal with me off-
chain unless I'm the KYC'd customer of them or some other finserv they trust.
(please correct me if I'm wrong here)

~~~
moduspol
I think you're correct in that this will be the inevitable result. It just
won't really be for trust reasons.

You won't want to open up a payment channel to them, but you don't need to.
You just need an already open payment channel to someone who is, or (more
importantly) there is some route of payment channels between you and them
through any number of intermediaries.

There won't be a way to enforce KYC on the network itself, and you don't need
trust for this to work.

But because of the inherent cost / time / complexity reduction benefits of
just maintaining big channels between large entities, normal people and
businesses will inevitably be incentivized to just work through banks to do
this. The banks can just hold all their money and handle keeping the channels
between themselves open and funded.

And that's where I think you're correct. It leads to a world where KYC can be
required easily because the vast majority of legitimate use cases will be
through centralized endpoints.

------
asdfasgasdgasdg
Consider the source, right? How many people without a large vested interest in
the propagation and uptake of cryptocurrency consider further growth likely?

My guess is that governments will more and more realize that the main utility
of blockchains is money laundering and speculation. As has been remarked over
and over again, they don't solve any above board problem more efficiently or
with lower expense than existing technologies. I predict we'll see growing
regulation increased amounts of crackdowns on cryptocurrency and its
applications going forward.

~~~
v64
I honestly don't understand where the perception comes from that this
technology is only useful for laundering and speculation. Certainly it is
currently being used for those purposes. But to say there is no imaginable use
outside of that seems unwarranted.

I've commented in the past here that the use of public blockchains to automate
the functions of clearinghouses and escrow services will be a huge cost
reduction for many industries such as finance. The technology as of today is
not ready to handle that use case, but with the developments currently in the
pipeline for Ethereum v2, progress is being made in that direction.

If you look at what MakerDAO is doing with the Dai stablecoin, they've proven
that it's possible to create a synthetic asset closely pegged to the dollar
purely through financial incentives, and they did it all just using Ethereum
v1. A holder of Dai can earn 4% APY through a Dai Savings Account, and a vote
is currently in place to raise the rate to 6%.

I personally find it incredible that an asset exists on the blockchain that's
equivalent in value to USD, with a higher APY than you can get from any US
bank. And because everything is on the blockchain, there's a public ledger of
exactly how much is being collected in interest from those who are
collateralizing their Ether for a Dai loan, how much of that interest is being
paid to savings account holders, and how much is being collected by the system
as surplus. It's the closest thing we have right now to a decentralized bank.

Whether or not you buy into the technology, it's improving by the day and more
and more use cases and applications are being tried out and built. If all you
see in blockchain is money laundering and speculation, you haven't been paying
attention.

~~~
RcouF1uZ4gsC
> If you look at what MakerDAO is doing with the Dai stablecoin, they've
> proven that it's possible to create a synthetic asset closely pegged to the
> dollar purely through financial incentives, and they did it all just using
> Ethereum v1. A holder of Dai can earn 4% APY through a Dai Savings Account,
> and a vote is currently in place to raise the rate to 6%. >I personally find
> it incredible that an asset exists on the blockchain that's equivalent in
> value to USD, with a higher APY than you can get from any US bank.

I also find this “incredible”, but in the old sense of the meaning as “not
believable”.

~~~
ianferrel
Seriously.

The risk adjusted return on whatever that crazy contraption is is almost
certainly negative, and probably incalculably so.

The idea that any sane financial instrument could increase its return by _two
points_ by the holders of it voting to do so is... I haven't the words.

~~~
spir
> whatever that crazy contraption is

The people who built "that crazy contraption" are pioneers in an industry that
is going to help lift hundreds of millions out of poverty via cheap, non-
predatory financial services and create trillions in wealth by further
unifying the global market.

I am somebody who spends hundreds of hours per year reading about Ethereum and
blockchain. I could stop doing this whenever I want, I'm not bound by my
employer or anything.

I keep at it because the underlying technology and things being built with it
are amazing and valuable.

If you take one thing away from this thread, let it be that Bitcoin is the
"Ask Jeeves" of cryptocurrency and the future is actively being built on
Ethereum.

------
jimhi
"Just like the dot com craze kicked off the idea of an internet startup (and a
decade later, just about every tech startup uses the internet in some way), I
believe that by the end of the 2020’s almost every tech startup will have some
sort of cryptocurrency component."

This literally already happened for a hot second, did you not notice the
everyone doing their own ICO when bitcoin was 20k? Are you saying it will
happen again?

~~~
zeroxfe
> ... did you not notice the everyone doing their own ICO when bitcoin was
> 20k? Are you saying it will happen again?

I don't think that's what they're saying. I suspect it'll be more like support
for existing major cryptocurrencies like Ethereum and Bitcoin. Either for
payments or smart contracts, or other decentralized book-keeping.

I'm not convinced about "almost every tech startup", but I do think it'll
become more mainstream.

~~~
jimhi
There is like ~5 million people using crypto right. I could see this being
possible if that number was closer to 500+ million

~~~
hanniabu
At 500M it's already mainstream.

~~~
jimhi
That’s my point, why would a startup implement it if it’s not mainstream and
can bring a lot of customers. Startups barely pay attention to China and India
consumers, much less a cryptocurrency holder.

~~~
hanniabu
It said it would become mainstream, and in that process there would be
commonplace integration. Also, I think there's some confusion if you think the
startups would need to pay holders.

------
csscrack
I just wanted to write 'hey, could anyone give a brief overview/current status
of the crypto space' but then I realized once again that I might get answers
influenced by personal investments (I've got still quite some significant
portfolio).

This space is difficult, after the last years there's some stigma and trust-
levels towards and within the crypto-community are super low (similar to the
porn space) and I decided for myself, this sector is over. Main reason is:
distributed DBs are hard, publicly distributed DBs are even harder, there are
so little use cases that justify the effort involved (except currency & fund
raising).

Maybe I am wrong.

~~~
aeternum
"He who controls the money supply of a nation controls the nation." And this
does not necessarily only apply to nations. Isn't that a strong justification
for the effort involved?

------
dnprock
I have a different view of the 2020s. We don't need more tokens or
programmable technology. Money is the dominant use case for crypto. We still
haven't figured out how to make crypto money that people can use beyond
speculation. Notable projects will be around money use cases. Currently, we
see Bitcoin, Tether, and stablecoins. In the 2020s, there will be more coins
that people can use as money. We'll spend the next decade searching for them.

Tech-focused projects, like Ethereum 2, Algorand, won't be successful.
Decentralized coins, Libra, corporate coins, government coins will be.

For decentralized coins, I think the market needs to find a way to incorporate
inflationary economics into the system. Bitcoin needs an inflating parallel
blockchain. It's all about money. I put my focus there.

I wrote a post on the topic: Emerging Markets of Cryptocurrencies

[https://bitflate.org/post/2019/11/10/emerging-markets-of-
cry...](https://bitflate.org/post/2019/11/10/emerging-markets-of-
cryptocurrencies.html)

~~~
newguy1234
Check out open bazaar. It is a decentralized p2p market place similar to ebay.
Even has a decentralized escrow system with moderators that get paid to
resolve disputes. Best part of it is that there are no fees at all to buy/sell
stuff other than the cryptocurrency transfer fees. You also pay a fee if there
is an issue with the product you bought/sold etc.

Not much people using it though. Seems like best selling items are gift cards.

~~~
bdcravens
> Seems like best selling items are gift cards.

So either this is a way for crypto to be "used" for purchases at popular
stores, or it's being used for money laundering. (those gift cards are easily
sold on eBay and other marketplaces for fiat; this is how you'd take payment
in mostly untraceable crypto and cash out without having to subject yourself
to exchange KYC/AML)

~~~
Qworg
Almost certainly money laundering.

------
Lerc
>Olaf Carlson-Wee and Balaji Srinivasan estimate that at a price of $200,000
per Bitcoin, more than half the world’s billionaires will be from
cryptocurrency

This misses a key piece of information. They take the price as an an
assumption for their argument, but that is insufficient to draw this
conclusion. When Bitcoin reaches $200,000 is also a factor.

The worlds existing billionaires will not sit still. If it takes 70 years then
it would be pretty easy to make better money elsewhere. I have no idea if or
when it will happen. I'm inclined to think on average it will increase at a
decreasing rate.

~~~
chii
there are people who also believe gold will reach $100k an ounce. I don't
think that will happen, or if it did, society would've transformed so much
that there bears little resemblance to today's world.

~~~
paulpauper
it will take so long to happen that such time frames are irrelevant to anyone
alive today

------
yyyk
Cryptocurrency tries to automate away trust, but in the process ends up
reestablishing centralization while taking up a ruinous energy and complexity
cost.

Perhaps one day, the tech community will understand that some problems require
a political solution and simply cannot be solved by technological means alone.

------
carleverett
The most important challenge cryptocurrencies face is capturing real world
value. The ICO craze turned out to create basically 0 value on any crypto
platform, and the more recent wave of tokenized securities will be very slow
because there are lots and lots of regulations that need to be addressed by
token issuers (for good reason).

The value of our public goods however is not being captured by any financial
asset, and is a huge market that can be addressed by cryptocurrencies. This is
something I'm quite passionate about and have put a lot of time into thinking
through how they might work (see link below). As an example, AirCarbon
([https://www.aircarbon.co](https://www.aircarbon.co)) is a Singapore exchange
being built on an Ethereum token and will tokenize CORSIA-certified carbon
credits for the airline industry. This is a fantastic example of a huge market
($100+ billion) that is right now extremely inefficient, and will benefit
greatly from moving onto a globally accessible and permissionless ledger.
It'll provide everyone in the world the ability to invest in the reduction of
carbon dioxide emissions, and even better, since the tokens also work as
stores of value, investors can sell their tokens in the future.

This type of financial asset has enormous potential.

"Tokenized Goods - A New Store of Value":
[https://medium.com/@tpgwhitepaper/tokenized-public-goods-
a-n...](https://medium.com/@tpgwhitepaper/tokenized-public-goods-a-new-store-
of-value-83b91c53d436)

------
dragonsh
This is a post written by a crypto company, which has all its interest in
keeping it alive. Hopefully 2020 will be a watershed movement in crypto world
and people will stop calling a peer to peer distributed exchange mechanism by
names similar to money.

Crypto is not money and company like coinbase thrive on that information
asymmetry because a normal person do not understand that cryptocurrency is not
really a money,but a network of computers trying to fix some arbitrary value
to a sequence of string which are worthless in themselves if not widely used
for exchange of goods and services.

Hopefully in 2020 peer to peer exchange of good and services evolve and
companies like coinbase don’t need to exist (this was the true purpose of
distributed currency to get rid of companies like coinbase and being hold
hostage by them by keeping wallets under their supervision without liability
unlike the way bank maintains account with liability and protection).

------
4AoZqrH2fsk5UB
I’m pretty new to crypto in general, but it seems to me that the primary value
of it in coming years would be anonymity/privacy.

As I understand it Bitcoin has some problems in this regard, but others have
solved it.

I just can’t find it hard to believe we get to 2030 without a way to buy
things anonymously online.

~~~
WA
Cash is anonymous and private.

~~~
krapp
Cash is still controlled and regulated by a states. The point of crypto is to
have currencies and markets which states cannot control, tax or regulate.

------
waynecochran
How do you fix their No. 1 problem: scalability? The blockchain updating, and
certainly mining, are inherently slow.

~~~
xorcist
Those are two different problems: scalability and finality.

Obviously every transaction can not be processed and stored by everyone. That
much is clear even to casual observers. There has been two or three main ways
people have tried to achieve this during the past decade.

The obvious thing to try would be to shard the blockchain like you would a
database. This turns out to be hard to do in a trustless way since shards
would need to interact. This realization and the contracts required to
securely swap assets between otherwise separate chains leads naturally to:

Full on separate blockchains that run in parallel to the main one,
checkpointing when needed (rootstock, drivechains). These are not limited by
the main chain and can be specialized for custom use cases. The parallel
chains are only interoperable by way of the main chain and need not know about
each other, which helps scaling out.

Payment channels by the way of time locked contracts. Satoshi sketched out an
initial implementation that turned out to be flawed. This has since been
improved on and made bidirectional and made into a standard which is now the
Lightning network. It has a number of real world limitations but the general
idea is that only the parties involved in a transaction needs to know about
it. An added benefit of this is that finality among these parties is
immediate.

There have also been some work squashing a large number of transactions into a
large transaction. This has the added benefit of obfuscating the flow of
individual transactions, which otherwise makes everyone's holdings transparent
(mimblewimble, grin). This requires new signature schemes and is hard to
retrofit to existing blockchains and make security guarantees about.

There used to be ideas about Chaum like schemes on top of blockchains, but
most of that interest probably went on into separate blockchain schemes.

Those are some of the ideas that have been tried, most have shown some promise
but are more or less still at the research stage. Don't expect radical changes
overnight.

~~~
lawn
You forgot the most important thing wrt scaling: everyone don't need to run a
full node (store the block chain).

Most mobile wallets are light wallets, that query servers for the information
on demand. It works great, but you have the risk of the server lying to you.

So the next level up is SPV wallets, which verify that transactions are
included in blocks and that the proof-of-work is valid. So the cheat them you
need to reproduce POW, which is _very_ expensive, and also very secure.

This notion that everyone needs to run a full node is simply false. SPV
security, and even light wallets security, is enough for almost everyone.
Exchanges, payment processors and the paranoid few can still run full nodes.

------
sosuke
That was very optimistic. And $200k Bitcoin? Might as well suggest $2m Bitcoin
and the odds will be about the same.

I've become very pessimistic around cryptocurrency after a year of chasing
coins.

Wake me up when Turtlecoin hits $10.

~~~
drcross
I remember people scoffing at the concept of 100 dollars per bitcoin like it
couldn't possibly happen.

~~~
nobleach
I remember people scoffing at the internet like there no legitimate use-cases
for it. "Yeah, we have places for information, it's called Grolier's
Encyclopedia on CD-ROM, and it's cheap!". "I already have yellow pages
delivered for free by C&P Bell". While cryptocurrency may be quite a bit more
narrow, blockchain is most likely a far more interesting technology.

~~~
iamaelephant
> blockchain is most likely a far more interesting technology.

Why? Really, I would like to know why you think this. Append-only data
structures have existed almost since the dawn of computing. Making it
distributed and trustless doesn't seem to solve any real problems, which is
why over a decade since they entered the public consciousness they are used
for almost nothing interesting, and nothing that couldn't be done better in a
centralised system.

~~~
Geee
> doesn't seem to solve any real problems

If you don't see the current monetary systems as a problem, then I guess you
don't really have a way to understand Bitcoin.

I think it's one of the most important innovations of our civilization; a
'next step', if you will.

Personally, it solves my problem of storing value of my work indefinitely.

~~~
laurus
Are you against private banks being able to create money when they make loans?
If so, why?

~~~
vinniejames
Banks don't create money, they create debt.

~~~
laurus
It's only a debt for the business who receives the loan.

When a business receives a loan it shows up as an asset to them in the form of
a bank deposit. The business then usually uses that demand deposit to purchase
goods and services, so people who don't owe debt to the bank get those
deposits in their accounts, and spend the deposits, etc., etc. So effectively,
private banks create money.

~~~
vinniejames
You missed the part where the business gives the money for those goods and
services back to the bank plus interest and the fact that the bank already had
the money to give, nothing was created

~~~
laurus
The bank doesn't usually "have the money to give" when it makes a loan.

Let's say Bank A loans $1000 to a customer. It creates a $1000 bank deposit in
that customer's account. On the balance sheet it looks like this:

Bank A:

(Asset) Loan to customer of $1000

(Liability) Bank deposit in account of customer $1000

Bank A created the $1000 at will out of thin air. This is how it happens most
of the time.

------
cryptica
The scalability constraint is a fundamental one. A single cryptocurrency
cannot scale beyond a certain TPS without sharding. But sharding reduces the
decentralization of each shard. Also, rebalancing existing shards when adding
new ones also introduces its own decentralization problems.

I think the way forward for acalability will be multi-chain. Each blockchain
has its own accounts and own token but is connected to other chains via fully
automated DEXs. The blockchains will form a hierarchy of chains with the most
trusted and busiest one at the top. I think there will be a trend to make a
consistent payment API so that any cryptocurrency can be used in the place of
any other, online shops will use on-chain DEX trade price and volume data to
determine which coins they accept and for what value.

------
debt
Cryptocurrency does not have anything close to widespread consumer adoption.
If the Coinbase’s of the world don’t fix this, cryptocurrency will be
massively devalued.

~~~
DennisP
Cryptocurrency can't have widespread adoption right now, because it's not
scalable enough. Various projects are working hard on fixing that.

------
jrimbault
I was thinking with some friends recently (new year's eve) : considering a
bitcoin model with a fixed finite amount of currency, won't every coin be lost
at some point due to storage failure/lost keys/etc ? Statistically ? And
rather sooner than later, if my thinking is right ? Like the birthday problem
?

There is a maximum of 21x10^6 bitcoins, imagining a 0.01 chance of losing 1
bitcoin/day ?

~~~
Geee
Yes, but every bitcoin is divided into 100000000 satoshis, and it's possible
to add even smaller units in the future.

~~~
jrimbault
Who and/or what decides by what mechanisms and when satoshis would be divided
into smaller units ?

Doesn't that make it virtually valueless by definition ?

~~~
Geee
No, it doesn't change the value. It's just more decimals. A hard fork would be
needed to make the change in the protocol.

Similarly a bank can use whatever amount of decimals they wish to store their
dollar amounts, it doesn't create new money. You can also divide gold into
infinitesimal amounts.

You can already send millisatoshis on the Lightning network, which is rounded
to a nearest satoshi when it's settled on the blockchain.

------
INTPenis
Like many have pointed out, this guy is clearly biased. But my own personal
opinion is that people will always want drugs and as long as governments
enable a black market of drugs, crypto will be used to trade drugs.

I perhaps cynically believe that is what has kept, keeps and will keep
cryptocurrency going.

------
christopherbalz
Interesting research on stock-to-flow:
[https://medium.com/digitalassetresearch/plan-b-is-now-
plan-a...](https://medium.com/digitalassetresearch/plan-b-is-now-plan-a-
ed6277b21760)

------
yellow_postit
“Privacy” seems to be used as a buzz word here. I can assume but no concrete
idea what the author means by _blockchain with built in privacy features_

~~~
biolurker1
Google ring ct and zksnarks

------
seibelj
Yet another thread for me to bookmark. Crypto is eating finance, and I can’t
wait for a decade to pass to repost this thread. Good luck banks!

------
notadoc
Most predictions of the future are wrong

~~~
cryptica
True. Also, aside from Cosmos, none of the projects mentioned in the article
have actually launched. And Cosmos does not scale any better than any other
blockchain. It may perform better than Bitcoin, but there is still a rigid
upper bound in terms of TPS beyond which it cannot process anymore
transactions (beyond which point fees would skyrocket to force down demand).
On the Cosmos website, under the "Scalability" heading, it says "Proof-of-Work
protocols are slow, expensive, unscalable, and environmentally harmful" but
then it says: "Tendermint BFT fixes this."

As a blockchain developer of 2 years who understands the principles behind
Tendermint and who has build many scalable systems in his career, I can say
for sure that Tendermint doesn't add any scalability to any given blockchain.
It only aids with certain specific interoperability scenarios (nothing to do
with scalability). The statement on their website is not accurate. The people
who wrote this statement are marketing people who do not understand the first
thing about scalability of any system. The leaders of these projects wash
their hands of any responsibility by pretending to believe their own dogma.

Most blockchain marketing is a flat out scam IMO. As a result of all this
deception, almost everything that everyone knows about blockchain today is
wrong. Everyone thinks that all the trendy cryptocurrencies can scale but they
can't. None of the ones that I analyzed in the last 2 years could scale. And I
looked at many; for those whose whitepaper made the most sense, I even made
the time to discuss the tech with their lead developers, node operators and
community members. The reality is always far behind the marketing.

Unfortunately, investors are investing based on hype and their personal
connections, not based on demonstrable facts. Investors are being mislead en-
mass. As a developer who understands the tech and who actually believes in its
potential to incentivize productive collaboration, it's disturbing to watch
how the industry is unfolding.

