Where will Bitcoin go? Will it continue to be strong or eventually lose its space in the market? Gizmodo, a popular tech site that is generally not very favorable of cryptos, recently spoke to several crypto experts in order to determine the future of the network.
Sabrina T. Howell, assistant professor of finances at the New York University, for instance, affirms that the future is uncertain. Bitcoin has a difficult scalability problem to solve, as it can only process seven transactions per second while Visa can do much more than that.
Here is her whole quote:
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.
According to her, if the developers come up with a solution for that, the future can be bright. If they can’t, however, Bitcoin will only be able to continue as a speculative asset and will never reach widespread use.
Garrick Hileman, from the blockchain research center of the London School of Economics, is more positive. BTC is only ten years old and already famous and it has come a long way. He bets on the scarcity of the tokens and its anti-inflation measures as powerful tools for the future.
Here is his whole quote:
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.
In the short run, with our current financial, trade, and political instability, the most powerful catalyst for continued cryptoasset adoption is bitcoin’s role as a scarce, trust minimized ‘hard asset’. Indeed, bitcoin’s inelastic and capped total supply arguably make it the hardest asset in history. This quality has been a major factor in the cryptocurrency’s 3x price appreciation this year in the wake of US-China trade disputes, challenges to central bank independence, Brexit and other European political turmoil, and the return of financial instability to Argentina and other emerging markets.
James Grimmelmn, a law professor from Cornell Tech, affirmed that Bitcoin will fork in the future and that drama will continue. Another cause of hard forks might be local regulations.
Here is the whole context of his theory:
Bitcoin will become Bitcoins, plural. There will be forks and fragmentation. Some of this will come from deep disagreements over technical decisions. Some of it will be drama and politics from inside the community, fueled by accusations of secret mining cartels, secret identities, and secret conspiracies. And some of it be driven by regulatory pressures from governments around the world. Humans have never been great at consensus, not even with the help of cryptography.
The Ecole Polytechnique CREST assistant professor Lunda Schilling, however, is focused on competition. She affirmed that what will define the future of the token is whether Bitcoin can compete with the other altcoins and with national digital currencies, which will definitely be a thing in the future. Other tokens such as Facebook’s Libra are also strong competitors.
Here is the whole statement:
In the short and the long, Bitcoin has to face its competitors. Competition comes from within the group of cryptocurrencies and from national currencies. In the long-run, Bitcoin as a product ultimately has to provide an edge over other existing currencies, some feature that makes it unique. Bitcoin advertises itself as a vehicle to conduct anonymous payments without involving a trusted, third party watching. To pay anonymously via Euro, in contrast, you either need to hand over Euro bills face to face. Alternatively, somebody else needs to do so in your place whom you trust that (s)he does not take your money and run. Interestingly, the popularity of cryptocurrencies has prompted some central banks to restrict further the services provided by their product. The abandonment of cash in return for a central bank digital currency implies that anonymous payments with national currency will become impossible altogether, by this creating another void for cryptocurrencies to jump in. Bitcoins future may, therefore, depend on the people’s valuation of privacy, and Bitcoins capacity to reliably provide anonymous payments on a potentially large scale in a fast and cheap way.
There is no answer for the future. Bitcoin has challenges ahead of itself, but it has the potential to overcome them all.
Then, we go to Cornell researcher Steven Goldfeder, co-founder of Offchain Labs and co-author of the book Bitcoin and Cryptocurrency Technologies, who said this:
Bitcoin’s core technology is revolutionary, and you can expect both Bitcoin and other blockchain projects to be here for the long run. But whether Bitcoin will remain the dominant cryptocurrency of the future or be dethroned by another project depends largely on how its competitors mature, and how the Bitcoin community, in turn, responds.
Despite its many strengths, Bitcoin has several shortcomings, which other cryptocurrencies seek to address. To name a few: the smart contracts of Ethereum greatly expand the possibilities of building powerful decentralized applications. The private transactions of Zcash offer a massive improvement over the fully public nature of Bitcoin’s transaction history. And the 1000+ transactions-per-second claimed by various other projects dwarf Bitcoin’s capacity (which is estimated at less than 10 transactions per second).
Currently, these competing projects are in relatively early stages and have yet to prove that they can deliver their respective visions at scale without compromising on security. But as time goes on, they will no doubt mature. And when that happens, it will be up to the Bitcoin community to adopt these newer technologies within Bitcoin—something that the community has until now been slow or reluctant to do—in order to maintain Bitcoin’s dominance.
While Bitcoin was quite revolutionary in 2009, in 2019 other projects are pushing forward and making innovative improvements over Bitcoin’s original design. And in order for Bitcoin to retain its dominance in 2029, it’s going to need to be open to incorporating some of these newer innovations as they mature.
And lastly, we go to NEC Labs security research group head, Ghassan Karame, who added:
It is clearly hard to predict how the future of Bitcoin will look like. Many tried this exercise for fun (and profit), and their attempts were not necessarily successful. However, any such prediction should consider the following aspects: the increased awareness of users, the plans of regulators, the position of mining pools, and the advances of the consensus technology.
As time passes, more users (that are not miners) seem to be more aware of the underlying concepts/issues in Bitcoin. While the hype did not completely disappear, users seem to realize that (1) the costs of making payments in Bitcoin are not so low after all, (2) the Bitcoin engine (Proof of Work) consumes more energy than expected, (3) their transactions are not so private and could be linked to their profile (network-layer and behavioral-based linking), and (4) it is not as decentralized as desired (few mining pools control the computing power).
In parallel, regulators are also becoming increasingly aware that (1) Bitcoin is not as private as they initially feared and they might effectively use it as a “honeypot” where many criminals leave a trace that is not so easy to erase, and (2) it is not impossible to regulate Bitcoin as originally thought.
Mining pools will continue to push Bitcoin as long as it remains a profitable business. As long as this holds, pools might be willing to resist pressure from regulators, might even cooperate with national tax legislation, and might even agree on a framework that regulates their involvement in Bitcoin.
Finally, the technology itself might mature, and we might see the birth of an eventual consensus technology that does not favor pooling and can efficiently replace Proof of Work. This can only add considerable pressure on mining pools but should not considerably affect the position of users/regulators.
All in all, Bitcoin seems to have passed a tough phase already (adoption/resistance to pressure). There does not seem to be any considerable threats for Bitcoin that would change the current situation in the short term. On the long term, if it keeps resisting any drastic changes in spite of all the aforementioned aspects, it runs the risk of being simply overrun by a younger system that appeals better to the appetite of all involved stakeholders.
What do you guys think of these future of bitcoin predictions? Give us your feedback below regarding the input and insights these six individuals provided Gizmodo and our readers.
Author: Silvia A