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Are Cryptocurrencies the future?

Cryptocurrencies are all the rage these days for all the right reasons. In summary, they are the future. But if you think this post is just about hyping crypto, wait a minute! I will not go into any super-detailed explanation about cryptocurrencies so this post is very short. I just want to highlight some points of importance which I think would be wise to think about as we surf the Crypto age.

First of all the blockchain is a powerful invention that enables the creation of cryptocurrencies. Many people claim the blockchain is as powerful as the invention of the internet. In my opinion, I don't think so. Nonetheless, the blockchain is great and people are applying it in a lot of wild different ways.

But the most powerful application of blockchain technology is in cryptocurrencies, and the true power of cryptocurrencies like Bitcoin is that it disintermediates payment! This is the killer app!

Bitcoin is perfect except for the lousy wasteful proof of work. Although all the parameters of Bitcoin like limited supply and proof of work are not yet as perfect as they can be, I think Bitcoin is a perfect currency.

Someone has to solve the proof of work problem, it consumes too much energy and for a long time, as a lover of efficiency, made me disgusted about bitcoin. Also, we have to understand that people use Bitcoin for all kinds of nefarious purposes like money laundering but I think if the Government thinks seriously about it, like regulating exchanges where most of the bitcoins are exchanged it will be possible to prevent many of the bad use cases for bitcoin.

Take away the lousy proof of work, which had a very good purpose at the beginning for rewarding miners, and you know wherever there is reward people will go, and Bitcoin or Bitcoin-like cryptocurrencies can be a powerful transformative tool for the global economy.

Payment intermediaries like Visa, Mastercard, etc. hate Bitcoin because it disintermediates them, but we have to understand that technology always renders a lot of systems obsolete. Remember typewriters and word processors?

But is Bitcoin, Ethereum, Dogecoin, etc. the final word on cryptocurrencies? My answer is NO! As big as they have grown, they are still very early technologies with big problems to deal with like Bitcoin's proof of work, Ethereum's central control, too much fun going on in Dogecoin, and I could list other currencies and associated problems but this is enough for now. 

My main interest is in Bitcoin because it has the right fundamentals just like the early Mosaic browser had all the right fundamentals but will still need a lot of engineering and since forks don't do well, there will have to be another Bitcoin-like currency to fix the problems of Bitcoin. Let us not forget transaction speed. A better Bitcoin should be able to do more than Visa, Mastercard, etc. combined. Technologically challenging but not impossible.

Current cryptocurrencies are like powerful templates for the future, the Governments of the world should look into these technologies deeply and not seek to destroy them but rather adopt them at scale.

I have high hopes for the US that as Gary Gensler is now the chairman of the SEC he will look into this, being an expert in Cryptocurrencies himself. I attended his MIT Sloan course on YouTube and he really has a deep understanding of the blockchain! One statement I took away from the course which summarises everything blockchain is this: The Blockchain is an Append-Only Log. If you understand that then you are on your way to innovating with blockchain. 


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