Introduction
Mass adoption is a popular topic of discussion among cryptocurrency enthusiasts, who often believe that blockchain technology will replace many “legacy” technologies. As a result, this will cause the price of cryptocurrencies to soar as, to many enthusiasts, the blockchain technology and the rewarded cryptocurrency for producing blocks are inseparable.
Without this reward, there is no secure, decentralized blockchain. While other alternative blockchains exist, such as permissioned blockchains like Hyperledger, these blockchains take away a significant amount of decentralization which is often touted as the single greatest benefit of public, permission-less blockchains like Bitcoin.
Decentralization and Mass Adoption
However, a key question often avoided by most crypto enthusiasts is whether or not decentralization and mass adoption are compatible, so let’s start there. While decentralization offers better control over privacy, data, and often better security, there are some serious downsides as well. Notably, performance will generally become worse for a decentralized system because for it to work, it must reach consensus among all its participants.
This is relatively easy to achieve in a centralized system where any participant will look to a central authority for information related to the state of the system. The downside, of course, is that the central authority is easily corruptible or vulnerable to attack. In a decentralized system, participants rely on a set of rules to achieve consensus on the state of the system: There is no central authority to request this information from.
For Bitcoin, this set of rules is mostly governed by the Proof of Work (PoW) algorithm, the process of creating blocks and the chaining of these blocks (the blockchain). Proof of Work is a way to “fairly” (turns out not to be so fair) distribute out the responsibility of creating blocks for the network based on computing power (hash rate). This is a critical role because these blocks are appended together to create the blockchain, which acts as the end-all, be-all authority for Bitcoin and many other cryptocurrencies.
Technically there are multiple blockchains – when I refer to “the” blockchain, I am referring to the longest one with the most work put into it. This is accepted by all the nodes (computers on the network, or participants) and used by these nodes to understand the current state of the system. You’ll note this process is much more complex than it is for a centralized system as it is important in a decentralized system that all the nodes agree without any of them having authority over another.
There’s an odd analogy that might help in understanding why decentralization is simply less efficient: Imagine two crowds of a thousand people. You have one goal with both of these crowds: Have them all say the same word (can be any word at all) at the same time.
In the first scenario, you have a central coordinator who stands in front of the crowd and he shouts over a microphone the word they should all say: Dog. Unless this crowd is particularly rowdy (we’re going to ignore that possibility), it should be a fairly simple task for the entire crowd to repeat “Dog” and win the challenge.
For the second crowd, there is no central coordinator. Every member in the crowd has a sheet of paper that tells them that they are challenged to say the same word at the same time. So what happens? Well a few people start saying the first word that comes to their head and some neighbors start repeating that word. Naturally a few groups chanting different words will start to form and those groups will face off against one another until one gives up and starts chanting the other word. Eventually a cascade effect will occur and everyone will get on the same page to say the same word. But as you might imagine, this process takes quite a bit more time than it did in the scenario with the central authority.
Now fortunately in the real world, we have a better process than what I explained above for the majority of the time. However, the way blocks are prorogated across the network is actually quite similar to the analogy provided above. The point is, decentralized systems will almost always offer lower performance and throughput than the equivalent centralized counterpart and this is generally not fixable by advances in technology. Instead, technological advances will generally serve to reduce the gap (not remove it), with the hope being that the gap will eventually become small enough to not be noticeable.
The Crux of Decentralization
Lower performance and throughput is a trade-off that enthusiasts might be willing to make, but it becomes a more strenuous trade-off the larger the group of users you’re targeting. When discussing mass adoption, it will become difficult to convince many subsets of users that decentralized blockchain applications will provide them a better experience than the equivalent centralized counterpart.
For the power-user, performance is paramount so they may not mind the sacrifices made in privacy or control. Power-users often include the biggest businesses in the world which significantly limits the commercial potential for decentralized, public blockchains. However, even among more casual users, it might be difficult for them to understand the benefits of decentralized systems while it is much easier to understand the disadvantages as those disadvantages are more tangible: It is easy to perceive a drop in performance, but not easy to perceive an increase in privacy.
This is an unfortunate reality that I suspect decentralized protocols will never be able to overcome: Their benefits are not easily noticeable while their downsides are. The core upside of removing trust in a decentralized system does not become a real concern to many users until their trust is violated by an equivalent centralized system, and even then users are often quick to forgive – it can take many betrayals before one finally is willing to give up more tangible benefits like performance and convenience for a trustless, private environment.
The Double-Edged Sword of “Security”
Another benefit commonly stated is that public blockchains are among the most secure methods for storing data. The reason why is that it is near impossible to change entries to the ledger, a characteristic commonly referred to as immutability, which means manipulating transactions is nearly impossible. Furthermore, all data that is appended to the ledger must follow rules that are set by the system which are validated and verified by a network of nodes as opposed to one central authority.
As a result of immutability, the difficulty of creating false entries and the impossibility of blocking valid entries, public blockchains are often touted among the greatest innovations for storing data purely and securely. This is all true and illustrates how Bitcoin has operated so well for nearly a decade now. However, while this type of security is far beyond that of a centralized system (which can fall apart when compromised, such as the high-profile Equifax hack last year), this powerful security also has downsides too that (again) are more visible to most users than the upsides.
Notably, any careless error on the user’s behalf will result in a loss of funds as transactions on most public blockchains are irreversible (disregarding special events like a hard fork, as Ethereum did). In other words, the ultimate security that blockchain provides can also work to lock you out if you make even the slightest error and there is no central authority that can correct such mistakes (although ironically, again, the second largest cryptocurrency, Ethereum, proved that wrong – for better or for worse).
Then there is the fact that most of cryptocurrency storage is arguably less secure than a bank account. I say arguably because theoretically, a brain wallet is impossible to crack (you know, unless you go the old fashioned route with a crowbar) and other options like hardware wallets and paper wallets are very secure.
However, there are many issues with storing cryptocurrencies that seriously hinder them from ever becoming acceptable for the mainstream if they remain as is. First and foremost, the ultimate security we mentioned earlier (recall that transactions are irreversible and impossible to block if valid) works against you because it means if any malicious individual gains access to your funds through ANY means, those funds are now theirs – period.
Secondly, many individuals are technologically incapable of the current methods available for securely holding cryptocurrencies. For example, it is common for one to have a secure form of storage such as a hardware wallet, then store their mnemonic phrase in hot storage which defeats the purpose of the hardware wallet in the first place. This will likely become better with time, although it is worth noting you can only stupid-proof things so much to PREVENT disasters – at some point, there has to be a way to CORRECT them (for mass adoption at least), which decentralized protocols are generally not well equipped for.
Even with the more secure methods of storing cryptocurrencies, if you have ANY desire to be able to pass that wealth onto anyone in the unfortunate event of your death, you must immediately sacrifice a significant amount of security – to the point where it’s probably considered financially imprudent to hold any amount that is substantial (if that wasn’t already true just based on volatility and the nascence of the asset class).
In other words, the security that so many people talk about when they discuss blockchain is a very, very double-edged sword. You put it in the wrong hands and all you’ll end up with is a seriously injured swordsman (these analogies keep getting better).
The Bitter Truth
The real lesson here is that there is a special type of user required for truly decentralized, public blockchains. This user is:
- Patient
- Values privacy and data control to a level that “normal” people would consider “weird” (conspiracy level “weird”)
- Understands the trade-offs and is willing to accept any losses due to user error
When you consider the number of individuals who truly fit that profile, it’s a rather small crowd in comparison to what you hear from many enthusiasts. The adoption of decentralized blockchains is often compared to the adoption of the internet: Many doubted the internet at first, but it later ended up shaking up both the economy and the world. Will we see the same for Bitcoin and its decentralized peers?
Unfortunately, I heavily doubt it – at least not the way people think it will. For mass adoption to be possible, a certain level of centralization is required (see what happened to the internet) which then begs the question of where on the spectrum should a service or application be? How decentralized do you need to be to reasonably protect the data and privacy of a user while still offering them competitive performance, convenience and support?
For the use-case of money, it should theoretically be as decentralized as possible because a trustless and secure environment should be paramount above all-else for financial transactions, where real value is directly transferred. Yet as discussed above, creating this environment also leads to some serious compromises that many users won’t be willing to make, especially as they have gotten used to being careless due to being hand-held by the likes of credit card companies, the banks and Paypal.
The Wrong Question
Perhaps the question of when there will be mass adoption is the wrong one to ask. Perhaps instead we should be asking the question of when will Bitcoin and other cryptocurrencies be ready for the group of users who fit the characteristics defined above?
This is a difficult question to answer because arguably they are ready now for this subset of users. Cryptocurrency wallets are difficult to secure and the cryptocurrency exchange is risky given the required central custodianship on most exchanges, so one can argue that the advent of better wallets and decentralized exchanges with deep liquidity is when we’ll see crypto ready for adoption. However, most advanced users are aware of these risk factors and are willing to accept them (a key difference from less advanced users) for the benefits discussed previously.
Still, there is no denying that even for the most passionate of Bitcoin users, it is still frustratingly difficult to pay for most goods or services with Bitcoin. Whether it is because of the block times, network congestion, the graphical interface, the number of merchants who accept it, the complexity of returns, the price volatility or the additional fees that come with utilizing Bitcoin, there is no shortage of reasons that many people don’t use the currency today.
When will that all change (assuming, of course, that it will change)? My bet is roughly 20 years – although note that the practice of predicting the future tends to be a futile one. The more important premise is that it will take far longer than what most suspect because:
- Innovation must keep up with centralized solutions, which have far more development resources and are easier to coordinate change (Decentralized systems are difficult to change as consensus among nodes can be difficult to reach for controversial updates while centralized systems can force all nodes to update regardless of their desire – e.g: block size change)
- Businesses require much more time to understand the technology and why they should consider accepting it
- Users require more time to understand the benefits and the downsides of utilizing a decentralized solution
- Crypto storage needs to be improved drastically
- GUI and overall ease-of-use must be improved drastically
- The X factors listed in the next sections of this article will require more time to play-out (although 20 years is a relatively short frame of time for some of these macro trends)
Furthermore, we shouldn’t expect that decentralized solutions are for everyone, as some might lead you to believe when they discuss the idea of blockchain bringing along Web 3.0 (where we move all current applications to the blockchain). Instead, these solutions are best suited for those that are deeply concerned about control over their data and are willing to sacrifice some convenience in exchange for privacy, security (on a macro level) and peace of mind.
The X Factors: Privacy
There are a number of potential reasons why this article could be proven wrong that I’d like to discuss briefly here and which I’ll likely discuss further in future articles. First and foremost, the first world society is becoming increasingly tense over the topic of privacy and data control in a world dominated by internet giants like Facebook (FB), Amazon (AMZN) and Google (GOOG). The recent fiasco with Facebook and Cambridge Analytica, where data stored on 50 million individuals was accessible and used by a political data firm (is this seriously a surprise?) has illustrated just how relevant the topic of privacy is today.
However, both investors and users have a tendency to get over such scandals as time passes. The question is where the tipping point will be, or if perhaps greater regulations will begin to cripple these businesses, such as the General Data Protection Regulation (GDPR). There are websites out there that allow you to lookup your name and you’d be amazed at the amount of information that is publicly available about you. At what point will society feel violated enough to change?
Even then, however, there is no certainty that people will come to decentralized blockchain applications. It would come as no great surprise if people simply moved from one central solution to another (which naturally promises not to follow the same path as its predecessor). Note how we’re already seeing the government start to talk about the use of permissioned blockchains for complete and absolute transparency, the opposite of privacy.
In other words, we already have a movement in the blockchain space where the governments and large corporations are aiming for complete surveillance on all economic activities, big or small. Talk about a “Big Brother” type move. This is very confusing for the public, because there is a massive difference between a permissioned (private) and permissionless (public) blockchain, yet both are simply referred to as “blockchain.”
Furthermore, up until this point we’ve just been assuming that public blockchains have privacy, but this isn’t really true. Bitcoin, for example, is only pseudo-anonymous and can easily be analyzed as the NSA has proven. Even Andreas Antonopoulos, one of the greatest pro-Bitcoin speakers, has discussed time and time again that there is not enough privacy in Bitcoin. The same holds true for many other cryptocurrencies as well.
Privacy will undoubtedly become one of the greatest debates of the 21st century as we enter the age of big data. As storage costs decrease and as machine learning improves, the benefit of storing data will increase as the ability to turn that data into information becomes both easier and faster. Data dredging will no longer be as large of a concern as, through deep learning, computers will be able to identify poor statistical relationships. As a result, there will likely be little disadvantage in collecting the maximum amount of data possible.
This is the “extreme” scenario – the fear scenario. Obviously there are almost always good intentions with the collection of data, such as displaying more accurate advertisements or improving a product for users. Whether or not the privacy debate reaches its pinnacle soon and whether or not decentralized protocols are the place that the public turns to is a complete unknown. However, if it were to occur, we’d likely see adoption far beyond what I speculate on in this video.
The X Factors: The Third World
One of the consistent defenses for Bitcoin, along with other cryptocurrencies, is the ability to bank the third world and also protect them from unstable governments. The first world has financial services that extend far beyond what is available in the third world, which largely contributes to the economic disparity between the two.
Part of the issue in banking the third world is implementing the architecture and figuring out appropriate regulations. Furthermore, it is not too profitable for the banks themselves so there is little incentive to set them up. Bitcoin can help solve this problem because something as simple as a mobile phone is all that is needed. However, this is still happening at a relatively small scale and it is far more likely for regional governments to act against Bitcoin in these circumstances as it poses a far realer threat to third world currencies than it does to first world currencies.
Additionally, the concerns that we’ve outlined for Bitcoin above (particularly the security of holding it and lack of error forgiveness due to irreversible transactions) should likely be solved before trying to introduce it to the third world, where education is a serious problem. I find it difficult to believe that a decentralized protocol will ever be simple enough for the third world to utilize safely, but it is possible and they often have the incentive to figure out how to use such protocols like Bitcoin due to government oppression, economic hardship and capital controls (e.g: Venezuela / Argentina). If the third world were to adopt decentralized, public blockchains as a way to achieve socioeconomic freedom and increased financial services, then naturally adoption would scale far beyond the limitations discussed in this article.
Conclusion
There is other X factors I am leaving out, but the two listed here are the key ones that I wanted to discuss briefly. All-in-all, decentralization is a valuable and rare characteristic that public blockchains offers, but most individuals aren’t fully aware of the trade-offs associated with it. I suspect that mass adoption may not be plausible at all unless the gap between centralized and decentralized solutions becomes minimal, which will be difficult as far more resources are being invested into innovating centralized systems.
However, Bitcoin and other cryptocurrencies appeal to a subset of users that value their privacy and control over their data above all else (including performance and convenience). Even for this subset of users, I suspect it could take 20 years before we see real use because:
- It will take a while to narrow the gap between decentralized and centralized solutions to an acceptable level even for more passionate users
- Both businesses and users need more time to understand why they should accept / use crypto
- Cryptocurrency storage needs to be streamlined and far safer than it currently is
- The ease-of-use and overall interfacing with the blockchain must improve drastically, otherwise it will remain too uncomfortable for most users (e.g: copying and pasting addresses)
There are some potential trends that could result in larger scale adoption than what I expect, such as the fight over privacy and banking the third world. However, these are predictably unpredictable trends and it is difficult to comprehend how Bitcoin and other public blockchains will fit into that future.
Some industries and applications will be better suited for decentralized solutions and therefore could see high levels of saturation than implied in this article (e.g: gambling). However, I believe this article covers the greater overall themes of cryptocurrency mass adoption. Future articles might venture further into identifying industries where public blockchains are and aren’t best suited. Keep an open mind and be cautious when investing in this new asset class as always.
I hope you enjoyed this video / article. Forgive the rather weak video - I wanted to do so much more, but my computer is old (will be updating soon) and struggled with the footage in Premiere (crashed so many times and rendering took 4 times as long), but wanted to get video out today. If you found this analysis useful in anyway, please follow me here on Steem so you'll receive updates from me in your feed. Additionally, you can support me by subscribing on YouTube or following on Twitter. Thank you for watching / reading!
Maybe blockchain solutions are near full adoption in its current state. As in, (almost) all of the people who want to roll their own in the current tools have done so.
It's kinda like, when people would log into a BBS, in that era, that technology basically reached 100% adoption for the people willing and able to use a BBS. Then the Internet came along and it was almost an extension to what people used BBSs for.
In that scenario, the only reason people increased adoption for the Internet was because it got easier to use. In the beginning, you had to be rather savvy. There were a lot of historical requirements to launch an ISP (e.g.: you had to host a copy of usenet).
As popularity would rise, tools improved, things got bundled, availability slowly improved while technical requirements of the individual user would fall.
I could see something like that happening in crypto. A centralized "CSP" (cryptographic service provider) could bridge the gap. We have some of that already, like with Coinbase, to some extent.
My grandmother doesn't need to know what TCP/IP is, but she can post her cat photos.
Likewise, my grandmother could bank with a "CSP" that offers familiar services but powered by blockchain solutions. Is it better? For her, maybe. It might be able to shield her from that double-edged sword you referred to. Would the people who currently use the Bitcoin-QT wallet want these solutions? Probably not.
I agree decentralization is not the magic bullet. We're in a phase where people think decentralization is always the solution and if it has any centralization, it's automatically bad. We might need to rethink that.
I will make an over simplfied metaphoric comparision\scenario, look at it this way, because it seems like, and I can see how so, but we all seem to be comparing bitcoin wallets and likes to bank accounts, when in actual fact what we should be comparing it to is your physical wallet with paper currency. If you handed paper cash to a stranger, its mostly final, non-refundable as you will probably never see that person physically again, so you can't get your cash back.
Think back also to when paper currency was also replacing precious metal coins, a lot of people would have been very sceptical of this concept. They would have wondered if the paper was really a representation of the precious metals, i.e backed by them (i'm only trying to paint a picture of the scenario here nothing else). So it's basically the mindset and shift of conceptual thinking.
Your grandmother can post pictures on the internet? well just imagine her when she firt saw a computer? she would never have thought of ever finding a use for it.
Now back to the paper cash in a wallet, if you went to a legal registered vendor like a supermarket, you could give up your papaer currency in exchange for goods, but you could get a refund if the goods were faulty( depending of the terms of the sale of course). The point I'm trying to make here is that you can do exactly the same thing here with crypto currency. So it needs to be thought of conceptually as simple physical wallet rather than a bank account. tow very different things. ( mind you I drastically over simplified how much more effective crytpo currency is here). So what seems totally nonsensical because of a change of concept will just become the norm, its just that there are no authorities enforcing this.
By the way, as far as I know, if you transfer money from your bank account to the wrong person, it's gone too. There is no way to 'reverse' the transaction unless the other party agrees to send it back to you.
Yep,but you can contact the institution and maybe get a bit more information etc.. but fair call, could be hard
BBS is a great analogy.
Ok, you just took several pieces of the crap I have been spewing at you for three years and rephrased it so it sounded better and made sense. WTF? Maybe you forgot, you say something super cryptic, then I slowly figure out what it means and tell somebody else. If you start doing this on a regular basis I will have no alternative to believe you are either getting smarter, dumber, or better at talking to dumber people. I hope it is the last one because I am definitely getting dumber.
Another thought, assuming the above analogy is solid, can we please stop effing around with BBS and get on with the Internet? I am guessing there are still some people floating around in the dungeons of BBS only sticking their heads out to check if the paper came so they can read the news and talk about it with their buddies. For crap sake, this stuff is neat, but the wait for something useful you can share with your peers, let alone your parents or grandparents, is murder.
It's only semi-solid. Technically, BBS technology is younger than Internet technology. But in terms of popular adoption, that's probably not important.
Then again, if we want to make the analogy more solid, maybe we're currently using pre-BBS Internet (current crypto). And now we have to wait for the BBS nerds (second tier crypto) to get popular so that the true Internet becomes more feasible (third tier crytpo like Dash Evolution tried to define).
That's Dash Evolution saying, "Oops, we bit off more than we can chew. Stand by." At least they'll have an "Official user-friendly Wallet" sometime this year (even though it was supposed to be released December 2017).
RE: Security:
I would argue hacking a bank account is orders of magnitude easier than hacking into someones crypto. You can create a simple phishing email and fake website and with a little social engeneering people will happilly tell you even their 2FA codes....
There is no central website you can phish in crypto.
I don't think it will take 20 years. That's too long of a timespan and the world at it current state is too fragile. I think we need a few (maybe just one) major catalyst event in the financial sector to draw people into decentralized financial solutions regardless the ease of use. If people see the value higher than the ease of use then it won't be a problem. I do agree that some level of centralization is good at least right now to make things moving but in 5-10 years it might change.
I would tend to agree with you. With the current level of economic manipulation in the stock and bond markets, and extreme asset inflation overall due to QE (or should I say debt-monetization), it's my feeling that we are on the precipice of another great financial markets calamity. Add to this, growing income inequality in the United States, and increasing geopolitical uncertainty (vis a vis proxy wars in Syria) and you've got a bubbling little pot of shit stew that, should it boil over, might be just awful enough to put a bad taste in people's mouth and induce a shift in tastes towards alternative decentralized systems.
I don't think it will take 20 years. I think things will move a lot quicker than that. And I also think that there are enough ideas, concepts, and cryptos that you can offer decentralized, centralized, and possibly a hybrid for each user based on their wants and needs. Each coin/token represents a different community and with that community a different thought/belief ideology. Obviously each would have their own unique advantages and disadvantages, without any one coin holding all of those aspects.
There is undoubtedly a spectrum, and the question is where on that spectrum is the Goldilock level - the perfect balance of decentralization and centralization for a given application. As noted in the article, one concern is that the use case of money is best suited for TOTAL decentralization, yet most people AREN'T suited for the realities of that.
Adoption in Korea is quite a bit higher than here in the States
Ease of use is essential for mass adoption! When my grandmother can make transactions and not easily loose her money for good with no hope of ever getting it back, maybe people will get on board.
Point is, ease-of-use may not be solvable while retaining real decentralization.
I’m certain there is room for improvement while keeping things decentralized. Solvable? Not sure, but improvements that allow more people to enter. For example, wallets and exchanges could be made much easier to use, and that doesn’t affect the decentralization.
Agreed! Incremental progress in ease of use will go a long way in bringing people in to the fold. As you say wallets and exchanges seem to me to be low hanging fruit - if crypto could make things easier it would go a long way toward getting grandma to come aboard :)
I’ve tried to get friends to invest money they would otherwise blow. It’s not so difficult, until you tell how to purchase alts and then secure them in a wallet.
Exactly. If you've been in for awhile you get used to it, but conversations with newcomers remind me how non-intuitive it all is: come in on coinbase, but are you nuts, don't trade on coinbase, trade on gdax! Then transfer, but only to the exchanges that have the desired coin and make sure you don't do something stupid like adding a memo or messing up the address when transferring because all is lost forever, watch out for fees, use different wallets for different currencies, etc. etc. I'm fine with the effort because that goes along with being an early investor/adopter, but man, at some point, we have to make it super simple to attract the masses.
To me it's like a sports team or a company focusing on putting their own house in order first - of course there are many circumstances in competition or business you can't control but for the things you can control why not fix those to give yourself the best chance for success?
I've explained the whole Coinbase -> GDAX -> Binance -> wallet process to my wife and she just gives me a blank stare.
Finally someone understands what I’m saying! Thank you for your reply.
From a technological standpoint, decentralization is more inefficient than centralized systems. However, the overhead to build trust (cost for governance, audit and middlemen) on centralized systems might cause it to be less efficient than a decentralized trustless system. It is going to be difficult to quantify and I think only time will tell.
I believe a HYBRID solution where institutions and decentralized companies work together to ensure one another without interfering
A "middle" man if you will between governments and D-companies
This of course must happen through public consensus like Parlaments or Congress and that alone could take years , roughly 20 years or so like you said but am betting on tech progress to beat the clock and would like to say 10 years
Tech progress is the fastest industry humanity have ever witnessed...
So things like Lightining network, Quantum computers etc. could be a disruptive force in terms of creativity, possibilities and of course, speed
I think the short answer to your question is that "mass adoption" will only occur once everyone finds it simple, easy, quick, generally accepted by businesses, and secure. As long as it's "hard" many people won't mess with it. Once DAPPs come into greater use for exchanging cryptos, I think that will help a lot.
Also, there's something like 1,500+ cryptos out there. The question of which ones are going to survive is far from being answered. Of course, there are some obvious ones (top 10 market cap coins) but there will also be a few surprises, I think. The vast majority of these cryptos will fail. It will be ugly. We will have to wait for the smoke to clear from that train-wreck before many people feel it is well enough established to trust.
Great points raised. As always. Decentralisation has not found its 'Killer app' yet, but it is still early days.
Decentralisation has huge benefits.. I just don't think they are touted enough. A decentralised web could be far more efficient. I love the work done on IPPS(Interplanetary File System). Centralised systems seem almost backwards, and slow when throwing data around the world.
The web worked well as a sort of centralised/decentralised hybrid when it was relatively small. But its grown big enough to be decentralised, and could benifit massivly
We were very much in a chicken and egg situation with computer networks. But no we have mass adoption of the technology and interconnected networks. Its the centralisation that could be argued to be a weakness.
I do agree that most of the public won't recognise the benefits . But when it becomes financially profitable for buisness to adopt it, expect it to get adopted.
I used to think that an entity like Netflix or youtube could never work on a centralised system. But storage and bandwidth are expensive. If they could find a way of distributing it securlly in a decentralised way, it could be profitable.
I do understand that there is no compelling reason for the public to buy bitcoin as a curancy. But as a store of value, it may become the gold standard. Its centrally easier to own than a gold coin.
I watched your entire video with interest, and am fascinated by the debate.
On decentralization vs performance: (1) Future blockchain technologies might give the network ability to trade off between decentralization and performance, sharding and Lightning network are some examples. (2) Another way is to have decentralization models inspired by representative democracy, like users voting for validator nodes.
On securely storing coins: (1) Some bitcoins will be stored on stock or futures exchanges, which might have deposit insurance. (2) Also, most people can carry <$500 cash and never lose them or get mugged, this means people might be comfortable with owning small amount of cryptocurrencies.
On fund recovery: (1) Like BTC/ETH blockchain scaling, there might be innovative ideas to do it, like allocating mining rewards to a fund recovery pool, then vote on-chain for whose funds to recover. Also there is a proposal on recovering mathematically stuck funds. (2) Crypto insurance schemes. (3) If "most people" tolerate centralization, give them centralized crypto banks.
On privacy: Bitcoin seems to be both privacy-friendly and transparency-friendly. (1) If you want to buy porn, credit card sounds like a bad idea, so you pay for porn in bitcoins or gift cards. But FBI can trace your bitcoin porn purchases if they make an effort to. (2) Another part of privacy can be achieved with secure multiparty computation, some smart contract dApps might need them. (3) For Big Brother, central bank can create a fiat cryptocurrency to track every tax evaders and money launderers using the blockchain. (4) For transparency, unerasable information on blockchain helps a lot, and Canadian government is trailing the use of blockchain to publish scientific funding information.
Small pockets of adoption (that will never have trillion dollar valuation): (1) Asking for tips and donations internationally is easier if all you need to write is your bitcoin address. Dogecoin seems to be a tipping coin. (2) Paying for things that you shouldn't use your credit card for: Porn, VPNs and gambling. American credit card company blocking purchase of a VPN solution in Europe = frustrated user googling for local bitcoin ATMs.
Alternative path to mass adoption: Banks and stock exchanges will use blockchains (either their own or on top of BTC/ETH), lawyers and politicians will use public blockchains as a way to permanently publish information. Elections will be powered by blockchains. Blockchains will be used everywhere but no one will be aware of it.
With something like data breaches, loss of funds and other such events the crypto alternative needs to be enough of an improvement in the side of the user in order for them to start to believe that the conversion costs are worth it.
This is not a myspace to facebook conversion, that only took a few seconds and the cost was almost nonexistent, this is changing how people think about their funds and the level of commitment and attention people give to it.
Very good video.
Have you looked into EOS much? It covers a lot of the obstacles that you bring up as hindering mass adoption.
It is(will be when launched) as fast as its centralised counterparts 1mill+ tps
Public keys are configurable, ie you could have your first and last name as your public key which is much more user friendly, no more uncomfortable copy and pasting your address.
Funds and private keys are recoverable if you make a mistake or have them stolen.
If fraud happens then an account can be frozen and funds recovered without the need for a hard fork disrupting the network.
I know you are a keen proponent of Steemit, a decentralised version of social media that is almost indistinguishable in functionality from its centralised counterparts , which instead of selling your data pays you for your content. Its creator Dan Larimer is also the brains behind EOS.
I know that dpos isn't as fully decentralised as pow but I think its a compromise worth taking to gain mass adoption.
With the $1 billion warchest to incentive devs to launch apps on their platform and recoverability of lost funds, I agree EOS could be the next big thing.
Excellent video.
As someone who's old enough to have seen home computers grow from Commodore 64s to custom built PCs,id have to agree...with you almost totally with the timeline.
Though there will certain fields where mass adoption might happen within i believe within a 1-5 year timeline.
And as in any new technology ,I honestly it needs to be mass adopted by (gasp)the government to be successful.
Why?
That sweet ,sweet funding...(ex:hence how GPS technology was developed and first implemented by the military.)
Tor is another example of something created & funded by US Military
(its primary purpose was for to protect military intelligence)
And that was in the 1990's.
So yes certain things will get mass adopted quicker (I believe this platform has a good chance to be one of them,especially with FB privacy issues)
Alot dear friends will take time.
Be patient.
All good things come to those who wait...
thanks again for the video @cryptovestor
What about the smart contract use case? Unlike using crypto as currencies, smart contracts offer more than just decentralization as its main benefit; they can actually result in more efficiency (instead of less) as they remove all the middlemen required in processing contracts by executing contracts on a blockchain.
What if the "mass adoption" you're talking about doesn't come in the form of people using crypto as currency on an everyday basis, but rather via companies resolving all contractual obligations (legal & financial) through trustless distributed ledgers?
BTC has survived 9 years, LTC 6 years already & ETH for nearly 3 years ... a massive adoption of cryptos is surely ahead of us, very near to 5 years I'd say.
I like your example with the person in front of a crowd. Continuing this analogy - isn't delegated proof of stake, for example, sort of like selecting a guy from the crowd to go and yell the word on behalf to everyone for the next round, after which some other guy is selected? That seems to be both efficient and decentralized. I think your argument does not work against decentralization as such - it shows that some versions of decentralization are less efficient than centralization. Another way how to optimize things is to remove the requirement to have complete consensus with everyone all the time: sidechains and DAG coins do this, in different ways. In short, I believe there is nothing inherently less efficient about decentralized systems, and the current scalability problems are merely technical challenges that the community will solve in 5 years max.
Also, "prorogated" -> "propagated".
I can imagine large organizations that would curate or be those centralized entities that handle the performance and blockchain innovation in a world where crypto has succeeded to some level of market saturation, easily. There would be too much money in the pursuit of fixing issues in the long run as winners start to win huge. The millions that will be reinvested in R&D across the world towards managing these common problems will be self evident.
Thank you for this very thought provoking piece. You make very valid points about the trade off between decentralisation and for example efficiency and ease of use. However I think the most compelling counter argument is that the current financial system is IMHO broken, fails "Joe Public" and in fact makes him progressively poorer. I think this single fact explains why more and more people will seek an alternative and place at least a portion of their wealth in crypto thereby leading to greater uptake. It may be an osmotic effect but I think that it is a trend that will gain traction & network effect.
there is no specific year.. the adoption is growing like the internet
I think 2017 was the year of mass attention and 2018 and 2019 will be the years of mass adoption.
Ive missed you so much crypto-investor !!
cries like a baby
Upvoted and reestemed. Food for thought! Following you from Argentina!! ;)
I don't know how long it would take for organic mass adoption, but fiat currencies aren't going to last 20 years. They're going to begin plunging towards zero somewhat soon; whichever crypto(s) can handle the incoming traffic will see insanely high gains.
i bleive in the technologie of bloockchain
This was a good informative post! I definitely see mass adoption happening more within the next two years! Keep posting! People need to be informed! Check out my latest post when you get a chance! Thanks! 🙏
Would a UI/UE overhaul of LN change your mind about the prospect of mass adoption? Do you think layer 2 centralization could be a healthy compromise?
" So you're telling me there's a chance?" -Dumb and Dumber
In April 2016 I said 3-5 years so 2021 is still a real possibility especially after spike in December 2017.
I don't think mass adoption will ever happen.
I think that we are still relatively early in our crypto journey and that mass adoption will probably a need a few more years.
Great perspectives on the challenges in the foreseeable future for cryptos. I think the solutions will be found working on a mid point between technology and decentralization. The amount of capital that is and will continue to be put in the space will be sufficient incentive to figure this out and while it may have tradeoffs like some centralization, it can provide the users what they want to improve adoption. One additional factor that can accelerate the adoption is the failure of developed countries to avoid collapse of their own monetary systems built on massive amounts of debt. This would incentivize a larger move to decentralized cryptocurrencies. However, the reality is that it can take yeara for that scenario to play out and I imagine that hundreds of crypto projects will fail along the way. Great post! Thanks!
i don't think mass adoption will ever happen.
There are other important factors as well that, imo, will lead to faster adoption.
Firstly, the underlying demographic change that will happen over time. More tech savvy, bitcoin literate will be controling and managing wealth. It is not difficult for the younger generation to operate wallets in their current format. Most studies also demonstratw how the younger generation sees bitcoin as a better store of value compared to gold and are getting into investing thanks to cryptocurrency.
Secondly, the rhetoric around bitcoin and what it means is also important. Bitcoin to me is storing value or liquid assets in my own custody as opposed to a third party that uses it as cheap source of funding without offering any compensation in today's markets. Banks allowed ordinary people to store cash in a more secure way rather than in their mattress or safe and there was a value proposition in using a bank. That value proposition does not exist anymore. Educating people around this and how to safely and securely store value in wallet will lead to greater adoption.
Thirdly, reduced volatlity will lead to higher adoption and this is somewhat an x factor. Larger pool of capital in bitcoin along with varying investment and trading strategies will lead to reduced volatility in my opinion. This will be followed by greater business adoption i.e. further acceptance of bitcoin as a transaction currency. However, regulation and technological innovation has to move in tandem with capital infusion.
Regarding loss of funds due to errors, I am sure an insurance industry vertical can come up that allows one to buy protection in case such errors happen. Iphone came out 10 years ago and led to the creation of a whole new economic ecosystem and also changed the way we consume data. That is very much possible with bitcoin in 2 years, imo.
This essay couldn't be more pertinent in regards to a recent experience I had. I attended a cryptocurrency / general data protection awareness event that was hosted by very respectable figures in the space. The event was held at a bar that was split in half to accommodate for event attendees as well as general punters who had gone to the bar to have some drinks and wind down after a day at work.
Half-way through, as the panel was discussing the recent events regarding Facebook and Cambridge Analytica, a chant broke out from a group at the back of the bar (People who weren't there for the event), and the chant was as follows: "We don't give a f**k!" - they repeated this until their interest in interrupting the event waned and they soon returned to whatever discussion they were having prior to the ingenious idea of besieging us with needless noise.
At that moment the panel fell silent and everyone in the room seemed to collectively reflect on what we were witnessing. Several seconds passed before one of the speakers broke the silence and said "This sums it up. It seems that the people who are concerned with issues of digital privacy and data protection are a minority, whilst the rest of the population don't give a f**k."
I'm sure that I wasn't the only one to come away from the event thinking that this might be a very long slog to mass adoption. If people cannot realise the severity of what happened with Facebook, and if people can't realise how careless they can be when sharing private information on extremely public platforms, and if people can't realise that there are legitimately bad actors with malicious intent that would love nothing more than to get their hands on as much information/data they can on the general populace, then I just don't know what it will take to convince them that a permissionless blockchain could potentially play a significant role in resolving all these issues.
Ultimately I do believe that enough awareness can be raised to turn the tide, but it seems like we'll likely require an impetus with profundity akin to a digital Franz Ferdinand moment.
BTC has survived 9 years, LTC 6 years already & ETH for nearly 3 years ... a massive adoption of cryptos is surely ahead of us, very near to 5 years I'd say.
thanks for share this valuable post
its amazing
Again, I think you are missing the point. You are judging crypto as it stands right now, assuming that nothing significant will change about the UX. However, the UX is easily improved. This is where the internet analogy comes in (an analogy made by Andreas Antonopoulos, who himself was involved in the beginning of the internet as well).
In the beginning, internet had a TERRIBLE user experience. You had to be a scientist to even connect to it. But what was important, was the core technology, the innovation powering it. This spurred on many more innovations, like first HTML, graphic browsers, and later on stuff like AJAX, HTML5, React, etc that allowed us to build the incredibly advanced web applications we all use and take for granted today.
In my opinion, the key thing about crypto, is that in its core it is decentralised and (at least in the case of Bitcoin) no central bank controls it or can print more as they please. Yes, this comes with downsides for UX, but these can be 'patched' (e.g. some kind of crypto banking app that handles transactions for you, protects you against account typos, has some kind of insurance against thievery etc) — problems in the core architecture underneath it can not.
I remember "e-mailing" my girlfriend in 1992. I was in the US and she was in Germany. I had to go to the ONE computer we had on my college campus that was set up for this, I needed a professor to sit over my shoulder and tell me how to do it, it took about 45 minutes to compose and send, and I didn't know if she received the message until the next day.
In some sense, buying cryptos and transferring across exchanges feels a lot like that today.
Thank you for such an in-depth post, by the way. I'm new to Steemit and have had to dig past hundreds of memes and travel photos to get to some meat. The smartest article I've seen so far.
Billions upon billions of dollars are being thrown at blockchain development right now. I don't think there's a question of "will it happen" anymore. It's happening. I don't think it will take 20 years either. Internet adoption in the US rocketed from 14% in 1995 to 72% ten years later. We just need the AOL of cryptos to emerge... and maybe we need to mail CD-ROMs to every household again.
thanks for all the useful information.
I rly like your realistic view on this topic. many crypto-enthusiast's tend to praise cryptocurrency to heavens and above without adressing actual problems, possible solutions, "x-factors" and so on...
I'm so curious about the future of cryptocurrency, can't wait to see what 2018 may bring :) Who knows, maybe we are closer to the next step of mass adoption than we think right now.
For example there is this ICO who wants to implement a mobile-only cryptocurrency. from what i read so far the app seems to run smoothly (i saw some review on alpha/beta on android). Most interesting about this ICO is that they plan to make mobile-cryptomining as easy as pressing just one button (actually that's all you have to do in the app).
Compared to other ICO's i checked before they seem to have a bigger "fanbase" and in addition to a free app (well, as long as it's really working out in the end) i can imagine their will be some kind of "mass adoption" (i'm sure it won't be the 'mass' we are thinking about when we say 'mass adoption')
The ICO i'm talking about is phoneum.io - maybe, if you have the time to, you can take a look at it and say what you think about the project (by the time of writing this they still haven't released their final white paper, since they are reconstructing it at the moment)
Anyways, thanks for this quality post, you got yourself an upvote and a new follower :) cheers!
Soon. Patience is a Virtue.
I wanted to make a little bit off-topic question. When talking about how big data is going to get more and more important and thus our privacy you state that storage is going to get cheaper and cheaper. Aren't transistors getting closer to their atomic limit?
great article sir.
I really learnt from it especially when you
talked about decentralixmzing, public blockchains which are
Patient
Values privacy and data control to a level that “normal” people would consider “weird” (conspiracy level “weird”)
Understands the trade-offs and is willing to accept any losses due to user error
Looking forward to seeing more of your posts.
Thanks again for your profound contribution! -- Rightfully you state:
"Crypto storage needs to be improved drastically"
"GUI and overall ease-of-use must be improved drastically"
I absolutely agree!
How about:
https://www.ethos.io
https://mona.co
https://crypterium.com
Almost investors are invested in the top CMC coin such as BTC, XRP, ETH ADA... But i like #Nexty - instant cash transfers,
I believe in Nexty (NTY) that will bring real value to everyone.
Prediction is very difficult, especially if it's about the future.
Very informative, thanks for sharing. I've smashed the upvote button for you!
I think we are years away from mass adoption because of the media consistently putting down crypto and also it takes a very long time for people to accept new ways of finance. I know some people who still refuse to use Visa cards!
If you are looking to get hold of some crypto without investing or mining, look into https://www.crowdholding.com. They are a co-creation platform were you get rewarded for giving feedback to crypto startups on the platform. You can earn Crowdholding's token as well as DeepOnion, ITT, Smartcash and many other ERC-20 tokens.