In this post, I am going to predict something. This is very unusual. Usually I am writing about what is likely to happen, not what will happen.
I have been writing about the future of cryptocurrency for a while now, and I know there are many things I do not know. For example:
Will 2018 be the year of blockchain technology or the year of cryptocurrency?
Will Bitcoin continue rising in price over the next 12 months or will it fall back to Earth?
How will cryptocurrency change the world in 2018?
Is Cryptocurrency The Future Of Money Or Just Another Bubble?
Is crypto truly safe from government regulation or will banks and financial regulators clamp down on cryptocurrency’s growth and popularity?
Will Bitcoin collapse in 2018 or will it go through the roof again?
Here is my prediction:
Cryptocurrency will become even more popular in 2018 than it already is. The total value of all cryptos in existence today is probably over $100 billion. In 2018 that number will grow by at least 20 times. Cryptocurrency investments are becoming more popular than ever before as more people realize how powerful a tool they can be for individual empowerment and freedom. New cryptocurrencies are being created all the time and because they are so easy to create they don
The question of whether there will be a cryptocurrency or not is an easy one to answer. If a coin has a future, it will probably exist in 2018. The only real question is what it will look like.
Cryptocurrency aficionados are more likely than the general public to believe that Bitcoin’s future is assured, and that the rest of the field will follow suit. But let’s go back to basics: how do you create a cryptocurrency?
Cryptocurrencies are built on blockchain technology. Blockchain, in case you’re wondering, is like a giant spreadsheet everyone can access and edit at any time. Everybody in the world can see all the transactions on the blockchain; every single one.
But this might sound boring and uninteresting until you realize that it means cryptocurrencies could become an important part of the world economy. They could provide transparency, which is of course an essential element in any modern economy, and they could provide security against theft and fraud and counterfeit money, which are also important.
And they could provide new ways for people to send each other money anonymously, which is also useful if you’re doing something illegal.
Cryptocurrency is an idea that can be divided into two parts: the technology, which is just about the same for all cryptocurrencies, and the rules by which they are governed. The technology has been around for decades, and most of it has been in use since at least 2005. But the rules were only formalized in 2009, with a collection of papers submitted to a cryptography conference.*
Cryptocurrencies are relatively new, but they already have a lot in common with other currencies. They use some sort of minted coins to represent wealth or value. There may be no central bank or government issuing them (except to those who create them). They are usually based on some kind of public record-keeping system. And they usually involve some kind of transaction ledger.*
There is a vital difference between cryptocurrencies and money-based financial instruments such as stocks, bonds, and derivatives. Money-based financial instruments are based on tangible things that exist in the real world; they are backed by something real. Cryptocurrencies are not backed by anything except themselves: no gold bars, no physical servers storing transactions. If you buy into a cryptocurrency, you are speculating on its future value—and if people lose faith in it entirely, there’s nothing to back it up except the
Cryptocurrency is a fascinating technological phenomenon, the first truly digital form of money. At first glance, it looks like an incredibly high-risk investment. After all, there are no guarantees that new cryptocurrencies will succeed. If a new cryptocurrency fails, you have lost all your money. You could have just spent your money on something else that would have been more useful to you.
What’s wrong with this picture? How can I make a ton of money by investing in a risky technology?
There are two big ways to make money from an investment that is inherently risky. One is to be able to predict the future and drive the price up by telling others about it; speculative investors do this all the time by driving up the price of Bitcoin by predicting how popular it will be in the future or saying that it is going to change the world. The other way is to make mistakes and then cash out at a higher price than you bought it at; this can work if enough people get into the same mistake, but of course it will only work if enough people actually buy into your mistake in the first place. The bad thing about doing this is that once you’ve made your mistake, everyone will know what it was and they won’t buy into your next one any more
I’m calling this one The Cryto Hopper. It’s a bunch of different algorithms, each running on its own computer, that work together to create one kind of coin. It’s a lot like the Russian doll. The innermost secret is the one you don’t see: it’s a program that has to manage a very large number of computers, all working together. The result is that it tends to do things slowly.
When they were first becoming popular, crytocurrencies were called altcoins, and people thought they would soon become obsolete. But they didn’t: as mining hardware advances made mining coins on your own computer more difficult, the price went up and up until now it is nearly impossible for any individual or even small group to mine a coin without having some kind of supercomputer. And since most miners are using supercomputers, most coins are controlled by the big pools-the big bitcoin farms and the like.
So even though there are new coins popping up all the time, the power of these pools makes money from them almost impossible for anyone except them to make. They have a lot of money invested and are going to keep trying to get more until one day they find a way to break out.
Instead of predicting the future, I am trying to explain what it would take to get there.
It is common to hear people say that blockchain technology is the next big thing, and to see them going off in various directions, trying to apply it where they think it would be useful. But if we are trying to understand how things will turn out, we should not try to predict what will happen.
We might as well be playing a slot machine or throwing dice. The odds are against you every time.
Your chance of being born tomorrow is about one in two. Your chance of being born in a rich country is about one in six billion. Your chance of being born on the planet Earth is one in 370 billion. So you are more likely to be a monkey or a chimpanzee or an elephant, than to have been born as a human being.
The fact that you are here means so much. It’s not just that you are here; it’s that you are here, here today, and here now. You have every right to be.
If I could speak to every person on this planet, I would tell them: You are made of starstuff. The stars are made of atoms, which are themselves made of electrons and protons and neutrons and quarks, which themselves are made of even smaller components called gluons and God knows what else.* The point is that everything is built from these fundamental building blocks just as your body is built from atoms, which came from the original cloud of gas that exploded into existence more than fourteen billion years ago when the universe was only half its current age.