Examine the future of crypto

In 1995, Bill Gates published the first edition of The road to followhis perspective on the implications of personal computing.

The implications were so drastic that Gates revised the book a year later, admitting he ‘vastly underestimated the importance and the speed with which the Internet would grow in importance.

Humiliated, Bill Gates came to a generalization:

We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t be lulled into inaction.

Gates wasn’t the first to realize that people overestimate short-term potential while underestimating long-term potential.

In 1995, the magazine Massachusetts Review pinned the genesis of the idea to science fiction author Arthur C Clarke:

Arthur Clarke noted that we tend to overestimate what we can do in the near future and grossly underestimate what can be done in the distant future. Indeed, the human imagination extrapolates in a straight line, while real-world events grow exponentially like compound interest.

The dangers of straight-line extrapolation is something my colleague Ryan Dinse has written about extensively.

In fact, he even wrote a book on the benefits of exponential investing. As he explains in his book:

We humans are not used to thinking exponentially. We generally think linearly, in that small, incremental changes follow a linear trajectory of change.

This is why exponential trends shock us with their impact.

This fun little graphic explains it well:

Can we use our historical underestimation of the future to improve our predictions?

Maybe. But even if we couldn’t, guessing the future has merit.

As the novelist Nevil Shute noted:

No one can see the future, but unless someone makes a guess once in a while and posts it to stimulate discussion, it seems to me that we’re drifting in the dark, not knowing where we want to go or how get there.

So let’s dispel the darkness we’re drifting into and ask where the crypto is going.

what will be Bitcoin [BTC] and crypto looks like in 2030 and beyond?

What if we decentralized everything?

Well, not everything, but what would the 2030s look like if the world embarked on a major decentralization project?

While many believe bitcoin is nothing more than a currency, the bitcoin protocol and underlying blockchain technology have much broader implications.

Princeton computer science professor Arvind Narayanan wrote that bitcoin’s underlying technology could lead to an overhaul of centralized institutions:

Bitcoin’s apparent success in decentralizing currency may lead to rethinking of other centralized institutions, those dealing with stocks, bonds, title deeds, etc. Can blockchain technology also be applied to decentralize them? And if decentralization is technically possible, is it also financially sensible and beneficial to society?

Blockchain technology can be applied everywhere.

In 2030, you might even find yourself buying a smart car using blockchain without even needing to meet the seller.

As Narayanan writes:

Consider the situation where Alice owns a smart car and wants to sell it to Bob. The ability to transfer control digitally opens up some interesting possibilities. For example, Alice may be traveling abroad and, to fund other travel expenses, may want to sell her car, which is physically parked in her driveway back home. With an internet connection, Bob could pay Alice for the car with Bitcoin, Alice could remotely transfer ownership to Bob with the blockchain used by the car, and Bob could drive away with his new car.

As long as the currency used for the payment and the ownership of the car coexist on the same blockchain, Alice and Bob can form a single atomic transaction that simultaneously transfers the ownership of the car and the payment for the car. Specifically, the transaction would specify two inputs: Alice’s ownership and Bob’s payment; and specify two outputs: ownership to Bob and payment to Alice.

As with smart car sales, blockchain technology may also change the way we transact real estate.

Real estate, cars, assets – blockchain can change the way we make sales through so-called smart property.

Smart property is an asset that has access to the blockchain… and can be controlled via the blockchain, whether through transactions, transfers or contracts.

If we can connect ownership to the blockchain, we are one step closer to realizing the promise of the Internet of Things (IoT):

As noted by researchers Konstantinos Christidis and Michael Devetsikiotis in an article on blockchains and IoT (emphasis added):

The combination of blockchains and IoT can be quite powerful. Blockchains provide us with resilient and truly distributed peer-to-peer systems and the ability to interact with peers in a reliable and auditable way. Smart contracts allow us to automate complex multi-step processes.

Devices in the IoT ecosystem are the touchpoints with the physical world.

We believe that the continued integration of blockchains into the IoT space will drive significant transformations across multiple industriescreating new business models and forcing us to reconsider how existing systems and processes are implemented.

Bitcoin and quantum computing

Now on to something less hopeful for the future of crypto… the threat posed by quantum computing.

As part of the new scientist explains (emphasis added):

The bitcoin network is secured by computers known as miners that use a cryptographic algorithm called SHA-256, which was created by the US National Security Agency. Breaking this code is essentially impossible for ordinary computers, but quantum computers, which can exploit the properties of quantum physics to speed up certain calculations, could theoretically break it.

Of course, quantum computing isn’t just a threat to cryptography. Quantum computing poses a threat to cryptography in general.

As computer scientist Mark Webber wrote in a recent article:

Although bitcoin is secure for the foreseeable future, other encrypted data raises concerns with a much wider window of vulnerability. An encrypted email sent today can be harvested, stored and decrypted in the future once a quantum computer becomes available – a so-called “harvest now, decrypt later” attack, which some security experts say is already underway.

Now, what exactly does “bitcoin is secure for the foreseeable future” mean?

This means that while quantum computing could, in theory, pose a serious risk to the bitcoin protocol, the quantum computing power required to pose a viable threat does not exist today.

Webber calculated that breaking bitcoin’s encryption in a 10-minute window would require 1.9 billion qubits or quantum bits (equivalent to standard computer bits). Breaking the encryption in an hour requires around 320 million qubits, which drops to 13 million qubits if the encryption is broken in a day.

Currently, the most powerful quantum computers have around 130 qubits, well below the threshold.

But remember Bill Gates’ adage about underestimating the future.

As Webber explained (emphasis added):

This large physical qubit requirement implies that the The Bitcoin network will be safe from quantum computing attacks for many years (potentially over a decade). The Bitcoin network could negate this threat by soft forking a secure quantum encryption method, but there may be serious scaling issues associated with the switch.

Safe for many years, but not inherently immune.

Developments in quantum computing are definitely something to watch.

Questions for the future

No one can see the future, but sometimes it’s worth taking a guess.

With that in mind, here are some questions I have about the future of crypto.

Thinking about them can give us glimpses of the future.

In 10 years, how many people will own bitcoin? Will it be 10% of the world’s population? 30 % ?

In 10 years, will we use bitcoin primarily for transacting – buying and selling goods and services – or will we store bitcoin as investments?

Will bitcoin remain the dominant cryptocurrency in 2030?

Will blockchain have wide mainstream application by 2030? In which sector ? Health, smart contracts, real estate?

Now there are many more questions we can ask. I’m sure you have plenty.

If you are interested in crypto, blockchain, and bitcoin, I highly recommend checking out the upcoming seminar hosted by Ryan, our veteran crypto expert.

To register, for free, to attend ‘The Great Crypto Lock-Up Seminar’ this Thursday… just go here.


Kiryll Prakapenka,
For silver morning