Cryptocurrencies: The Past, Present and Future
In the beginning, there was only one cryptocurrency and it was called Bitcoin (BTC). Its creator Satoshi Nakamoto’s true identity is unknown and will probably never be publicly known. But that’s not important to the development of cryptocurrencies.
BTC was the catalyst to a paradigm shift in thinking. Its existence brought into question how we fundamentally understand what money is, how we use it, and who controls it; the individual or a centralized authority? Satoshi debated this question in online forums in the latter half-decade of the 2000s and came up with an answer around the 2008 recession.
The Bitcoin white paper went from theory to live in January 2009. The cat was out of the bag and there was no going back.
The idea behind cryptocurrencies was to give people real control of their money. That was revolutionary. And with that control in 2010, Laszlo Hanyecz (a programmer from Florida) bought two pizzas from Papa John’s for 10,000 BTC.
“Nerd money” was real and that was the public proof. Even the New York Times wrote about it.
Skip to 2013, many forks later and the playing field has grown, the numbers of cryptos has 10X. Digital money was being used on sites like the Silk Road. All the questionable items you couldn’t find on eBay or Craigslist were there. Then came the FBI. You know how this story ends.
Andreas Antonopoulos traveled the world spreading the idea of economic sovereignty and popularized the phrase “bank the unbanked”. Meanwhile, governments went on the offensive to smear the image of cryptocurrencies to the public. It was expected by the community.
Cryptocurrency Exchanges Appeared
For those who had been in the space for a while, it seemed like crypto exchanges sprung up overnight.
One of the biggest (and that will always have an infamous history) was Magic: The Gathering Online Exchange, more commonly known as Mt. Gox. In 2014, it experienced one of the biggest hacks in crypto history. Even after closing them down, we're still feeling the effects felt today.
Looking at 2015, the Crypto Space has grown far beyond the four core elements of HODLers, miners, traders, and devs. The space started to form into its own industry with its own merits.
Nearly 10 years later, supporters of crypto still debate which school of thought is the right model to view crypto-economics from, Keynesian or Austrian?
From the beginning, naysayers of cryptocurrencies “predicted” the death of BTC more times than you can count on two hands. This was mainly because of price fluctuation. When BTC reached $20k by the end of 2017, crypto fever was at an all-time high.
[caption id="attachment_1146" align="aligncenter" width="1280"] Price volatility is not for the faint-hearted[/caption]
Price volatility is said to be something you can only appreciate and learn from by having some skin in the game. Living through a few bear markets; maturing a weak hand into a strong hand.
2017 brought a tsunami of ICOs fundraising hundreds of millions in that one year. The influx of money helped to build the momentum for cryptocurrency conferences with ticket prices ranging from $70 to $2,500.
At least one event a month has taken place since last year; from South Korea to Denver and a number of places in between.
2018 Has Been the Year of Government Regulation
With the blessings of Japanese regulators, Recruit Lifestyle Co., Ltd partnered with Japanese exchange Coincheck to provide the retail sector POS for BTC. Nationally allowing for customers and merchants to use cryptocurrency in everyday life. Over 200,000 stores are on track to participate and the number is expected to grow with chain stores.
This past July, Malta legislators passed laws making it more friendly to the financial sector of cryptocurrency and blockchain technology. Implementing the legal framework making a distinction between a utility and security token is certainly a big plus. The Blockchain island as some call it is positioning itself to be the home of innovative blockchain based companies for decades to come.
This summer too, Venezuela sanctioned its own official crypto called the Petro and are backing it with the country’s oil. They will be noted in history as the first government to make such a bold move. Many in the crypto-community question the success of this particular government backed crypto. But perhaps a more important question is, who will be the next to do it?
Regulatory Uncertainty in the US
Looking at the US, there is still deliberation on what cryptocurrencies are when using the traditional economic meaning. Regulators are trying to understand how to control something that can be used as a store of value, a medium of exchange, and unit of account yet is borderless and has no "off" switch. Add in private coins like Monero and Zcash that can’t be tracked like BTC.
The ecosystem has evolved and the reality of what is happening now isn’t exactly what people imagined back in the Wild West days.
Arguments of centralization through mining pools aren’t just really long threads on Reddit anymore. There are now websites that track the hashing power of miners and the numbers don’t lie. The big boss is Bitmain, the maker of ASIC miners.
Cryptos are borderless but the creators of the products and services are not. In order to prosper, border-hopping is the new thing to counter stifling regulatory environments.
[caption id="attachment_1019" align="aligncenter" width="1200"] Digitex will be launching their live demo on the Blockchain Island[/caption]
Countries like Malta, Singapore, Lithuania, and islands in the Caribbean like Puerto Rico and St. Kitts are becoming home to companies looking develop more innovative ways to use cryptos and the underlying technology. Why? Because they're drafting and implementing more industry-friendly regulations.
What does the future look like for cryptocurrencies? No one knows for sure how the space will develop in the coming decades. But we have a few ideas.
The Gig Economy will expand more with cryptos as a payment option. Low function jobs like dog walking or even high function jobs like mechanics will be paid by the actual minutes worked since cryptos can be broken down into decimal points less than a penny. Micropayments and remittances will grow globally.
Generation-Z will see self-banking as normal. Mobile Crypto wallets will be integrated into smartphones and other personal smart devices. In fact, HTC is already making a smartphone that will have a universal crypto wallet and a built-in native node.
In the ever-growing crypto exchange market, futures trading websites like Digitex Futures will take trading to new heights. Our mold-breaking platform has no trading fees. This will lower the barrier to entry for all types of investors interested in gaining exposure in the crypto futures market.
Cryptocurrencies Around the World
Currently, China has put hard controls on ICOs starting within the country. But with its Belt and Road Initiative also known as the New Silk Road, in the coming years, a cryptocurrency will become an instrumental part in tracking the monetary flow of the investments. As well as a cost-effective payment option for merchants and vendors using the high-tech trading route. The investments so far into Eastern Europe and Africa are near $1 billion.
With smartphone users growing at an exponential rate, cryptocurrencies in African markets are being seen as the next frontier. In part, since opening up to China, countries like South Africa, Kenya, Ghana, and Nigeria have made great economic strides in a short period of time.
They will leapfrog past the West, becoming the financial and tech hubs of the continent.
Reshaped Political Campaigns and Business Models
Government project funding will undoubtedly change with the integration of cryptocurrencies. There will be better accounting of cost and easier means to track and stop fraudulent spending.
2019 will be the start of politicians finding ways to introduce cryptos into campaign funding. This will be presented as providing transparency to the public and running an honest race to the election.
The top-down model of how money is dispensed by the government to banks and corporations (the trickle-down effect) then to the masses will change.
There will either be a complete inverse V model or maybe even some kind of hybrid of cryptocurrencies in the national economy. As a result, peer-to-peer and micro lending DApps (decentralized applications) will become more commonplace around cryptocurrencies.
Who Has the Key?
The current scaling issue of cryptocurrencies is the Achilles' heel for everything mentioned previously. There's no one size fits all solution, yet. But considering how things are developing, it's only a matter of time until crypto transactions can be processed at Visa speeds for a fraction of the cost. With the underlying technology being open source.
There is a friendly competition taking place between developers around the world. The person or team to win will go down in blockchain history and probably reach Satoshi levels in notoriety.
With interest in cryptocurrencies growing and production to market cycles shortening, it will be interesting to see how--and when--cryptocurrencies are integrated into everyday life.