So by now, I think we all have heard of the blockchain, ethereum, bitcoin also known as the ‘crypto’ industry. It is growing big. It will grow even bigger, however, like with any growth story, there are crucial challenges that have to be overcome. One particular challenge is scaling. Fred Ehrsam in his post ‘Scaling Ethereum to Billions of Users’:
“Everything will be tokenized and connected by a blockchain one day. Scalability is the crux of that journey at the moment. Ethereum is orders of magnitude off from being able to support applications with millions of users at the moment. Yet in true decentralized fashion, there are a diverse set of efforts attempting to solve that problem. The biggest bottleneck to solving scalability is the number of people working on the problem. If current efforts are well-executed, Ethereum could be ready for a 1–10m user app by the end of 2018.”
There are a number of efforts that are underway to solve this conundrum, but they take it and have some of the smartest people on the planet working on them. What is best is that we finally have a way to monetise and reward these efforts – crypto tokens. As Chris Dixon puts it:
“Crypto tokens are currently niche and controversial. If present trends continue, they will soon be seen as a breakthrough in the design and development of open networks, combining the societal benefits of open protocols with the financial and architectural benefits of proprietary networks. They are also an extremely promising development for those hoping to keep the internet accessible to entrepreneurs, developers, and other independent creators.”
All these new advancements in the crypto sector have drawn a lot of media attention. And investors. The value of bitcoin has soared more than 200% in recent months. Even The Economist, a rather conservative magazine, often features articles on cryptocurrency and bitcoin. Recently, The Economist has raised a very valid question – more often than not, the word “bitcoin” now comes attached to the word “bubble”. But the question of what has driven up the price is important. Is this just a speculative mania, or is it evidence that bitcoin is taking on a more substantial role as a medium of exchange or a store of value?
There are other big challenges too, particularly computing power. And when it comes to computing power, the next big thing is quantum computing and Moore’s law. Vijay Pande explains how Moore’s law will be even more effectively:
“Classical computers thrive on the curve of Moore’s law, with performance roughly doubling every year; after n years, classical computers are 2^n times faster. This means we’ve seen roughly a 1000x increase in computing power in under a decade. In the quantum hyperscaling Moore’s Law, the speed of a quantum computer is exponential in the number of coherent quantum elements or “qubits” — that is, 2^q. But successfully incorporating technological advances in using silicon technology would enable the qubits themselves to follow Moore’s law (q = 2^n)… making the resulting performance power of the quantum computer 2^2^n. This means that the performance of quantum computing is exponentially more rapid than Moore’s Law. It’s as if Moore’s law itself sped up like Moore’s law.”
Finally, the use of the ‘crypto’ infrastructure will go far beyond financial transactions. Chris Dixon has written previously:
“Bitcoin was introduced in 2008 with the publication of Satoshi Nakamoto’s landmark paper that proposed a novel, decentralized payment system built on an underlying technology now known as a blockchain. Most fans of Bitcoin (including me) mistakenly thought Bitcoin was solely a breakthrough in financial technology. (It was easy to make this mistake: Nakamoto himself called it a “p2p payment system.”) In retrospect, Bitcoin was really two innovations: 1) a store of value for people who wanted an alternative to the existing financial system, and 2) a new way to develop open networks. Tokens unbundle the latter innovation from the former, providing a general method for designing and growing open networks.”
And the new ‘killer’ app could be anything. Fred Ehrsam argues it may be VR, it could be anything else.
Also published on Medium.