Group Co.
What Will Bitcoin Look Like in Twenty Years?
Traders Magazine Online News, May 6, 2019
Prediction is a tricky business.
It’s so easy to be wrong and so hard to be right.
But that’s exactly what we’ll do here. Since we’re rapidly approaching the ten year anniversary of Bitcoin’s whitepaper publication, I’ll attempt to project out twenty years to see the evolution of Bitcoin, blockchain, alternative cryptocurrencies and decentralization.
This is the type of article that will look unbelievably foolish or incredibly brilliant when I’m old and gray.
I don’t care. I’m going for it anyway.
I’m also going to go much, much deeper than “Bitcoin will go to zero” or “Bitcoin will become the reserve currency and be worth $1,000,000”. That’s not really saying all that much and anyone can do it.
Instead we’ll look at how the technology will transform and how society will transform with it.
I’ve got a decent track record of successfully predicting future trends and technology but nobody gets it 100% right. Arthur C. Clarke, one of the greatest sci-fi writers of all time, saw the coming of satellites and GPS, as well as the cloud, the Internet and telecommuting but by his own admission he overestimated the importance of rockets and failed to see the importance of a prototype laptop a company gifted to him to write his next novel.
Magnum Chaos represented by Lorenzo Lotto, at the Basilica di Santa Maria Maggiore in Bergamo.
Chaos theory tells us it’s impossible to predict the future.
But that’s not entirely true.
We can never see black swan events or completely unexpected technology (try explaining a computer and the Internet to an 18th century farmer) but we can do a kind of Monte Carlo analysis of tomorrow and see the major pathways spinning out into infinity.
Few people can do it well.
In fact, most people get the future laughably wrong so before we leap into our predictions, we need to understand why so we can try to avoid the same mistakes.
This Internet Thing will Never Work Out
The first reason people get the future so wrong is because they dedicate about five minutes to looking at something before they form an opinion on it.
That isn’t thinking.
Homer’s brain.
That’s the primordial lizard brain running a mental heuristic that’s absolutely incapable of understanding anything new and novel. It’s only good at attack, defense, finding food and shelter and avoiding boredom. It’s a survival machine.
Unfortunately, many people live almost their entire lives at this level and their opinions are worth zero when it comes to seeing new trends and developments.
The second major reason people get the future so wrong is it goes against everything they understand about the world. Think about a company like Kodak who simply refused to see the power of digital film because they’d built up a business over a hundred years on the back of chemical film. They had every advantage and they blew it. They mistook the past for the future and they paid a heavy price by going bankrupt as the market roared past them. To see the future you have to be able to step outside of yourself, forget your past successes and see beyond your current understanding.
A third major reason people fail to see the future is because it challenges their position of power. That’s why oligarch banker, Jamie Dimon, and a prince from a country that just allowed women to drive last month, all see Bitcoin and cryptocurrencies as a “fraud” or a “scam”.
They literally can’t see clearly because they’re the main beneficiaries of the current system. They don’t want to see. So they engage in a kind of information warfare, even if it’s unconscious. It’s nothing but a mental defense mechanism. The rise of new ways of running the world means their position is under fire and they’re terrified.
Asking these people about Bitcoin is like asking a taxi driver what he thinks about Uber or a horse and buggy manufacturer what he thinks about cars. Their opinions are worth less than nothing.
The fourth major reason people screw up predictions is because they mistake their opinion for reality. There’s what you think about the world and there’s actual reality and they’re often not the same thing. One is the map and one is the territory. Don’t mistake the map for the territory.
Take this now infamous article by Clifford Stoll from Newsweek in 1995 that declared the Internet a total failure poised for imminent collapse. Stoll writes:
“Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms. They speak of electronic town meetings and virtual communities. Commerce and business will shift from offices and malls to networks and modems. And the freedom of digital networks will make government more democratic. Baloney.” [Emphasis mine.]
Clifford Stoll: I see nothing but the shadow of my opinions in Plato’s cave.
Reading that quote it’s impossible not to grin ear to ear as feelings of tremendous superiority wash over you. What an idiot! Who didn’t see the Internet coming?
Answer: Almost nobody.
Hindsight is 20/20.
I’m betting almost everyone busting up laughing at the poor guy didn’t see it coming either, if they even knew what the Internet was in the first place. If they did they almost certainly didn’t see a working Wikipedia, the rise of telecommuting and a day when they would buy everything from books to groceries through Amazon.
Actually what’s most striking about the above quote is not how inaccurate it is, but how accurate it is on so many levels.
That’s right.
Read the article and you’ll see tons of his predictions are incredibly spot on!
If you go back and strip out all Stoll’s opinions what emerges is an amazingly clear picture of the next two decades of the net. Check it out:
“Nicholas Negroponte, director of the MIT Media Lab, predicts that we’ll soon buy books and newspapers straight over the Internet.”
I yanked two words: “Uh, sure.” His opinion.
Stoll saw the future, he just refused to see it. If he managed to get out of his own way and just observe instead of interpreting and filtering what he saw, the article would have gone down in history as one of the most forward thinking and accurate ever written. That brings us to our next reason.
The fifth reason people get the future wrong is a complete and total lack of patience.
Take the opening line of Stoll’s article:
“After two decades online, I’m perplexed.”
Stoll had already lived with the Internet for twenty years but it just wasn’t coming together for him. It’s easy to think it’s never going to happen when that much time goes by.
The waiting is the hardest part. It takes patience to let things develop naturally.
Patience. Patience. Patience.
Creativity requires setbacks and failures and tremendous tenacity. Once you expose your idea to the reality of rust, gravity and friction, things tend to fall apart. No plan survives contact with the enemy. Reality is a whetstone that either shatters you or sharpens your ideas.
Things take time.
A classic example of the real creative process and how long it takes comes from George de Mestral, the inventor of Velcro.
He first came up with the idea in 1941, after taking his dog for a walk in the woods and seeing a bunch of burrs attached to his fur. The concept didn’t fully take root in his mind for another seven years. He started working on recreating the tiny hooks in 1948 and it took him ten years to make it work and mass produce it.
After that he opened his company in the late 1950s, he expected immediate high demand.
It didn’t happen.
It took another five years before the budding space program in the 1960’s saw Velcro as a way to solve the problem of getting astronauts in and out of bulky and unwieldy space suits. The rest of the world only cares about the problems things solve for them not the idea or ideology behind it. Soon after the ski industry noticed it would work on boots.
All in all from initial idea to functioning, profitable business?
About twenty five years.
Lastly, we can take one more lesson from Stoll before I launch into my predictions for crypto.
His biggest mistake is the sixth and final reason people are blind to the future. He took current inventions, air lifted them forward and imagined them as the solution to future problems. Wrong!
Current inventions solve current problems. Future problems will take brand new solutions.
In the article Stoll mentions that CD books would never replace real books. He was right that reading books on CD with a crappy CRT monitor that rips apart your retinas was a miserable experience. But understanding that helps us understand the necessary characteristics of a future solution.
It’s nearly impossible to know what form those solutions will take, but we can figure out what traits the solution will have so we can recognize it when it gets here.
Let’s see how it works:
CDs are clunky. Monitors back then were blurry and hard to read. They hurt the eyes. Computers were huge and not very portable. Even laptops were bricks that burned your legs that nobody would want to read a damn thing on.
But he also missed the shortcomings of books.
Books are heavy too. They’re made of trees! And they can easily get lost or damaged by the elements. You can only carry so many before you’re carrying a huge weight around.
From there we can see that a good solution would be:
Super-portable and lightweight.
Have a crystal clear display.
Hides the data storage completely from the user.
As easy to use as a book. Just open and read.
Protect the data so if we lose it or damage it, we can recover it without needing to buy it again.
Allow you to carry lots of books at once.
The Kindle improved reading and now it’s even waterproof which makes it better than traditional books. New solutions must offer the same feature set plus new and improved features to really take off.
Of course we know the answer now: the Kindle and the iPad.
Both have tremendous ease of use, hide the storage media from the user completely, protect the data by backing it up and they’re easy on the eyes.
Solutions start by pointing out what’s wrong, asking the right questions about how to fix it and correctly defining what properties we would need to have a better experience.
From the above, we have three principles to help us predict the future:
Patience.
Observe, don’t interpret.
Don’t graft today’s solutions onto tomorrow’s problems.
All right, let’s break out the crystal ball and peer into the fate of Bitcoin and crypto.
Hopefully we’ll have better luck than Stoll and this article won’t get trotted out by tomorrow’s Boing Boing replacement to call me an idiot.
The Rise of Bitcoin, Crypto and Decentralization
We’ll start with a few easy predictions and move on to some more complex and far reaching ones as well as some seriously controversial ones.
I’ll also include a confidence meter to let you know how strongly I feel about the scenario playing out.
1) The Bubble Bursts
People in and out of crypto see them as bubble that will pop, causing prices to crash badly.
They’re right.
But so what?
That’s not the end of the story. It’s just the beginning.
Right now we’re in the grips of tremendous euphoria. There’s so much potential. We can practically taste the decentralized future. It’s just around the corner! Any day now.
Of course, that’s almost certainly not how it will work out. The bubble will pop. Vitalik is right. 90% of tokens will fail.
But after the pop comes the real working ideas.
Eight years into the crypto experiment, everyone is working on the railroad tracks of the future but we don’t have much to show for it other than speculative trading and some smart contracts. The apps are hideous and practically unusable. It’s nerve wracking when you push “send” and blast $5000 across the web to someone. Better hope you copy and pasted that address right so your money doesn’t disappear into the void!
When the Internet bubble burst many of today’s marquee companies saw their stocks crash 85%. Yet they survived and the best was yet to come. Amazon and Google went on to dominate the world.
The same will happen in crypto.
The 10% of projects that make it through the bloodbath will turn into the Amazon, Google and Facebook of tomorrow and likely even the JP Morgan and Goldman Sachs as well, not to mention maybe even the governments of the future, like digital direct democracies or liquid democracies.
Innovation is hard work. You’re literally trying to create something that doesn’t exist!
There are no guidelines, no working templates, no business models to clone. There’s nothing. You’re on your own! It’s just you and your imagination. With those odds of course 90% of people and companies fail!
It doesn’t matter.
Crypto, blockchain and triple entry accounting are probably the most important invention of the last 500 years so they’re not going to go gently into that good night.
The bubble burst is just the next step. Three years after that the tech will really mature and take off running.
2) Government Cryptocurrencies will Flourish
The community won’t like this one, but it’s a no brainer.
Many governments will not sit by and lose control of the money supply without a vicious fight. Anyone working on a project right now should be anticipating protocol level assaults on decentralized cryptos and designing defenses against them.
A distributed, decentralized DDoS stopping grid, like the one from Gladius is a great first step but there is a lot more work to be done. We’ll talk about some additional defenses cryptos needs to survive later when I come to the evolution of protocols.
Governments will lose the battle in the long run, probably in thirty to one hundred years (maybe faster depending on how many wars or financial crises strike). That’s provided we survive as a race, don’t nuke ourselves, and push out into space. But in ten or twenty years expect very strong government cryptocurrencies to come to power and dominate the flow of money for many, if not most, people around the world.
“But no one will adopt them!” scream the crypto faithful!
Of course, they will.
The average person has zero understanding of just about anything that actually matters and they absolutely don’t see a need for privacy and security until it’s physically ripped away from them under extreme circumstances like a war. When soldiers invade your house and take everything you own suddenly the need for privacy becomes very real to people.
Remember this interview with Snowden about government surveillance on the John Oliver show?
Watch the look on Snowden’s face when he realizes that the average man on the street doesn’t know a damn thing about privacy and doesn’t care about it in the least! The only time they care is when the government has a picture of their dick on file. Seriously.
People will adopt government cryptos like good little sheep without a second thought. Even better, they’ll think it’s absolutely the right thing to do and they’ll even be willing to kill for it if told that’s right. Count on it!
Of course, in many ways government issued cryptocurrencies are utterly ridiculous, as Naval Ravikant points out in his epic blockchain tweetstorm:
They’re nonsense because the very purpose of blockchain is to distribute power across a system. By not allowing a single group to control or change the rules arbitrarily, decentralized cryptos and apps provide a powerful set of checks and balances against harmful actions to the system.
When five different banks own a blockchain, that’s not a blockchain, that’s a database. Only when the banks, the regulators, the shareholders and the customers of the bank hold the keys to the blockchain at the same time and can counteract each other’s power is it a true blockchain.
The checks and balances on power are exactly the point!
Government crypto will represent a total and complete corruption of that idea.
But it won’t matter. They’ll do it any way.
In fact, instead of distributing power, they’ll look to concentrate even more power, by giving themselves the ability to track every single citizen’s spending with impunity and automatically collect taxes from wages and sales of goods and services. That’s why authoritarian governments are racing to build official state cryptos. They can’t wait to have panopticon money in your pocket as soon as possible.
They will absolutely outlaw physical cash and they will do it under the guise of one of three excuses:
Stopping money laundering
Stopping terrorists
Stopping crime
Of course, knowing that you spend half your paycheck on Amazon, groceries and rent has nothing to do with any of those things but hey, if you trot out any or all of the above reasons you can easily get half the population to do whatever you want and even better they’ll believe it with all their hearts.
Remember American psychologist Gustave Gilbert’s talk with Nazi Herman Goring during the Nuremberg trials? Goring told him that most people will go along with whatever their leaders tell them to do without question, whether it’s a democracy or fascist dictatorship.
Naively, Gilber replied, “There is one difference. In a democracy, the people have some say in the matter through their elected representatives, and in the United States only Congress can declare wars.”
But Goring only laughed and said, “Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.”
Government cryptos will be a very, very bitter pill to swallow for current true believers in the crypto space but they better get used to them.
A better bet is to assume there’ll be hybrid systems of decentralized and centralized crypto and to design for it right now to avoid getting swallowed in the tsunami to come. Better to embrace the current system with blockchain and then overwhelm it from within rather than ignore it so that it becomes hostile.
3) Decentralized Cryptocurrencies Will Become a Parallel Economic Operating System for the Planet
Just because centralized cryptos rise to prominence doesn’t mean the decentralized cryptos will go away. Oh, many governments will try, but in the end they’ll fail to stamp them out. The reasons are simple.
The same factors that make it hard to form consensus across a blockchain, make it hard for all the world’s governments to agree on anything. They won’t be able to do it. Some governments will love decentralization and others will hate it.
Even as some countries openly rail against them, many others will openly embrace decentralized cryptocurrencies, especially the ones who suffered the worst under the dominance of Europe and the US dollar over the last century.
I see the Latin American countries, freewheeling no-holds-barred globalists like Singapore, historical bankers-to-the-world Switzerland and many of the Asian and African countries welcoming decentralized crypto with open arms, if only to stick it to the current empires.
If all the countries don’t agree, then decentralized cryptos are never going away, even as centralized cryptos come to power.
But to remain relevant, decentralized cryptos need to move fast. They need a killer app. Right now they’re vulnerable to attack. To really take root they need that killer app to spread virally across the globe. It’s got to be something so indispensable that people can’t imagine their lives without it. This will bring existing power players into the system and they will then use that power to defend it against attacks from outside powers.
I outlined one of the ways that can happen in my article for gamifying the distribution of money. But that’s just one way it can play out. There are many, many more. If you’re working on a platform now, know that it’s a race against time before central cryptos take root.
4) The Killer App for Crypto is NOT a Browser
This is a classic example of grafting old inventions onto a new system. The Brave Browser is awesome and I bet I’ll really love it as it gets paired with BAT and/or a universal payment system that automatically swaps cryptocurrencies without the need for an exchange but I don’t see it as the final interface to the blockchain. I see it as a potential intermediate step.
So what does the killer app look like?
I don’t know.
But I know it is:
Ubiquitous
Easy to use
Acts as a platform for everything from changing money to getting tickets to protecting privacy and information.
Open source
It’s also something totally new and original that expands and extends the best characteristics of the blockchain while minimizing its greatest weaknesses.
Maybe a decentralized AI assistant or attention filter? The possibilities are endless so get moving!
5) Blockchain is Just the Beginning of Decentralized Consensus
Blockchain systems are only the first successful implementation of decentralized consensus mechanisms.
People are already inventing new ones like IOTA’s Tangle and the HashGraph.
It doesn’t really matter if both of those projects prove failures in the long run because some other project will create another method. This is virtually guaranteed.
Over the next twenty years, I predict dozens, if not hundreds of experimental distributed consensus protocols, capable of transaction levels that blow away Visa level processing, augmented by artificial intelligence systems.
It’s also strongly possible that none of these systems will be designed by humans.
Instead AI’s will rapidly iterate on ideas and come up with systems that no human ever could if they had a hundred years. They’ll draw their inspiration from nature and systems of insects or roots or other biological systems like proteins.
One or two of these systems will come to dominate all coins and become the meta-system to rule them all, uniting many different kinds of coins and running the entire system like a massive fractal that enables countless daughter networks to flourish inside of it.
6) Crypto Will Get a LOT Easier to Use
Today’s user experience in crypto is awful.
If I mistype something or copy and paste wrong, my money disappears forever. If there’s a software glitch I lose my money forever. If someone hacks my computer or phone my money is gone forever.
See a trend there? Make any mistake you’re toast. It’s like driving a motorcycle on the edge of a one inch mountain road with no rail.
The core wallets are slow, hard to use and ugly. When I last upgraded Ethereum, it forgot to keep my private keys so I had to go restore them all. Earlier this year I had an old Bitcoin stuck in an ancient version of Multibit from 2013. It took me a week to free it after the software mistakenly thought I had sent a transaction that was never actually broadcast.
Imagine these wallets going into cold storage and coming out five years later. Will they even be usable? What happens when quantum computers come out and we need to completely update the basic protocols that underscore the system?
The average person will never be able to do these procedures. Zero chance. Two decades in IT taught me that people can and will screw up their machines in ways that are utterly unimaginable to tech people. Murphy’s Law rules.
Even worse, there’s no way to reverse any transaction or to secure it against mistakes. I foresee many algorithmic methods to freeze, roll back and protect transactions, as well as ways to self-escrow money and recover stolen money. Think of them as automated versions of calling the bank and declaring a card stolen.
If grandma can’t do it, forget it. Everyone is not an IT person who can bang away at the Linux terminal.
Only systems that provide all the features of the old system plus brand new features achieve mass adoption.
Think about CD-ROM books from the 80’s again. They had a bunch of new features, like charts and color and you could back them up.
But it wasn’t good enough because CD’s had fatal flaws. Ray Kurzweil calls this the “false pretender” phase of evolutionary development in his book The Singularity is Near. The new tech has some advantages but too many disadvantages to really make it with the wider world and replace the old technology.
It wasn’t until Kindles and iPads came along that eReaders had all the old features of reading a book, such as portability and being easy on the eyes, plus new features like the ability to carry a thousand books with you at once, something no dead tree could compete with, that it could really take off.
Cryptos must follow a similar path from fatally flawed to bringing untold new powers to people and businesses to acheive world dominance.
I also see many of the kinds of systems we really need arising from the desire to pass digital money down to your children. For that we will need ad-hock banks formed with groups of people as needed or algorithmic banks and bullet proof multi-signature wallets with decentralized cloud or foglet services to act as the final arbiter.
It won’t be enough to simply shard up your keys and give them to trusted friends or loved ones. That is a first pass solution. Friends stop being friends, people get divorced or die or worse. We need something better and completely automated.
Think about how hard it would be to pass your Bitcoin down to your loved ones now. What if you died tomorrow or got hit on the head and forgot your password?
Even if you plan for it, it kind of sucks too.
You would have to create a will, lock a backup of your private keys and wallet in a safe, give the password to an estate lawyer and hope that he doesn’t make off with it or the USB stick or Trezor/Nano doesn’t die. You could also create a multi-signature wallet with some friends and family members and hope someone doesn’t check a different version into Github with a backdoor or bug and screw it up. All of it is ugly and immature. It’s unacceptable.
By the way, if you want to start a crypto business that everyone will need in the future, solve the inheritance problem. Everyone will pay you gladly.
I foresee drag and drop smart contracts and AI generated wills with self-escrowing money. In essence, the blockchain itself will be the bank and the customer service department, perhaps using your biometric markers and third party proof-of-staked groups or a decentralized AI that can verify your loved ones, as well as trigger events like your end of days. Automated password and key recovery will be STOP.
Whatever it looks like, we’ll need algorithmic approximations of the controls we have now for giving money to people we want and keeping it out of the hands of people who want to rob us. We also need the system to protect us from accidents, death and going nuts.
7) The protocols of Coins will Get Abstracted from the Coins Themselves
Right now all the coins that exist are inextricably bound to their protocols.
I expect us to abstract away the protocols for exchanging, sending and receiving as well as securing, defending and storing our coins.
This will mirror the evolution of today’s servers from bare metal to virtualization to containers to serverless.
To start with, most coins can’t scale. We can’t even come close to hitting Visa level transaction processing on chain, the holy grail of any crypto system and the subject of much in-fighting and controversy. Bitcoin can do 7 transactions per second at its peak.
Some people have gone so far as to consider this a virtue of the coin as it encourages people to save and store it rather than send it.
That’s just absurd.
We should be able to move the coin as fast and as far and as often as we like.
Let’s face it, the 1 MB limit is nothing but a hack. Originally Bitcoin had no limit. Then Satoshi snuck it in overnight with no mention of it and no explanation in the source code. It was most likely nothing but a ham-fisted way to prevent DDoS attacks.
We can and will come up with better flooding protections.
Are you a 1MB adherent? How about SegWit2X’s 2MB? Maybe you go for Bitcoin Cash’s 8MB block?
Wrong. All of them wrong and ridiculous.
According to the folks at the Lightning Network if we had seven billion people doing a mere two transactions a day it would take:
24 GB blocks
3.5 TB/day
1.27 PB per year
We need to think differently and evolve beyond petty nonsense to design real solutions. To survive Bitcoin and crypto must change. It’s got to be easy to integrate new defenses, newer cryptographic algorithms when quantum computers come knocking and better speeds and innovations.
We can’t just rest on the laurels of the Satoshi vision and assume he thought of everything.
He didn’t.
And frankly, who gives a fuck what Satoshi thinks? He left the project. If he really wanted to guide it he could have stuck around like Linus did with Linux. But he didn’t. He left it up to the rest of us to figure it all out.
So let’s really start to do that because the current system won’t stand or will just become dominated by mega-payment processors just like the system we have right now.
One way to do that is to abstract all the protocols and run all the older coins as something equivalent to virtual machines or containers. Then the rules are separate from the coins themselves.
That’s just one way, but to really become the promised breakthrough technology, blockchain needs real innovation.
Either way, people need to think quick, or we’ll still be debating 1 MB versus 2 MB while the CryptoRuble and CryptoYuan blow past us.
We’ll also need this because it will become necessary to defend against hostile actors and APTs (advanced persistent threat) protocol level attacks. Think the Great Firewall of China attacking or blocking transactions by screwing with packets and headers with state level man in the middle attacks. The NEM architecture is a good first step, as it includes firewall like protection for nodes.
But it needs to go further to stop even more insidious and devastating assaults and it can’t take fours years and a hard fork to implement the solution.
The best solutions will likely be externalized security rule chains downloaded to all nodes in the network that act as intrusion detection, firewalls and protocol inspectors and AI based auto-evolving rulesets and countermeasures.
Think Neuromancer’s ICE.
8) We will have Four Dominant Meta Coins, Plus Fifty to One Hundred Minor Coins, and Infinite Virtual Variations of These Coins, Plus State Coins
Right now we’re making coins for everything.
Got an identity platform like Civic? Make a coin.
Created decentralized DNS? Make a coin and ICO!
Building a scratch-your-ass on the blockchain app? You need a coin my friend!
Actually you don’t need a coin.
Coins will start to shake out into various meta categories. At this point I can only see four types of coins needed, with a blockchain of blockchains (or post-blockchain tech) seamlessly swapping them as needed to consume services:
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