Since its inception in 2009, Bitcoin has made and ruined fortunes, helped sell fentanyl and books about cryptocurrency, withstood literally millions of jokes and just as many predictions of imminent collapse, and—through a process opaque to most people, myself included—arrived at a point where, as of this writing, roughly ten of them could buy you a decent-sized house, assuming your realtor takes cryptocurrency. What’s next? Will it all come crashing down, or will this one-time punchline survive through the next decade? For this week’s Giz Asks, we reached out to a number of experts for some sense of Bitcoin’s future.
Assistant Professor, Finance, NYU Stern School of Business & NBER
Bitcoin represents a watershed in the development of digital assets: It was the first decentralized currency that managed to prevent cheating (often called the “double spend” problem), encode rules for creating new currency, and incentivize participants (“miners”) to maintain and secure the historical record of transactions. This is a breakthrough in record keeping that is not about any one currency—and there are now thousands of cryptocurrencies. It’s about the underlying decentralized, tamper-resistant record keeping technology of blockchain.
My answer to “What’s going to happen with Bitcoin?” is that I have no idea. Bitcoin faces many challenges to widespread use, including the fact that it can handle just 7 transactions per second, while Visa can handle 10,000. However, if the main miners adopt a protocol update enabling higher volumes, it’s not impossible that Bitcoin will become much more widely used. Today, it is mostly a speculative asset, a tool for money laundering, and a currency of last resort for people in countries with grossly mismanaged currencies, like Venezuela.
The bigger picture is that blockchain will affect all sectors that rely on secure data transacted among many participants, which is basically all sectors. This fall Walmart’s leafy green suppliers will be required to use the IBM blockchain built for supply chain logistics. This is not an accident, because leafy greens are often the site of food borne illnesses and the cause of expensive recalls. When each package is on the blockchain, managers will be able to source the problem to the farm in seconds rather than weeks, and discard only the packages from the problem farm. I believe that healthcare, financial services, and real estate will also see their data shift to blockchains.
Head of Research at Blockchain and Researcher at the London School of Economics
Bitcoin is only just over 10 years old, but it has already attracted tens of millions of users and is growing faster than both the internet and personal computer. Looking ahead, there are a number of powerful drivers behind the growth of bitcoin and other cryptoassets. Today, owners of stablecoins can earn 10% annual interest on their savings through various Open Finance or DeFi (decentralized finance) platforms. This is far superior to the de minimis or even negative rates offered at many legacy banks. The development of decentralized Web 3.0 technologies, and the work to rearchitect the internet around “can’t be evil” blockchain infrastructure, is another longer-term driver of cryptoasset growth…
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