My top five crypto predictions

Remember, all this week, we’re covering the world of cryptos. Not because crypto markets are over $100bn up from a couple of weeks ago. That’s just lucky timing.

But because I have a new service out, dedicated to exploring cryptos in more depth than we can in Exponential Investor. If that sounds like something you’d be interested in reading, you can find out all about it here.

We hear a lot about how cryptos will change the world. But what are they supposed to be changing specifically?

What is the big impact blockchain and other crypto tech is actually supposed to have, and on what areas of our lives?

Well, in today’s issue I’m going to list the top five predictions I’ve seen for what this technology will do in the coming months and years.

And we’re not talking over the very long term here. As I wrote yesterday, with adoption rates’ ever increasing speed, many of these predictions could come true within five to ten years.

1.Bitcoin will become the world’s reserve currency

This is what Twitter and Square co-founder Jack Dorsey believes will happen “probably over ten years, but it could go faster.”

He revealed his views in an interview with The Times on 21 March this year.

“The world ultimately will have a single currency, the internet will have a single currency. I personally believe that it will be bitcoin,” he told The Times. This would happen “probably over ten years, but it could go faster”.

Mr Dorsey accepted that bitcoin “does not have the capabilities right now to become an effective currency”.

“It’s slow and it’s costly, but as more and more people have it, those things go away. There are newer technologies that build off of blockchain and make it more approachable,”

And we know what those “newer technologies” are. He’s talking about bitcoin’s Lightning Network.

This is a technology Dorsey and many other big tech names are heavily invested in. It aims to make bitcoin suitable for smaller and much faster payments. It will essentially eliminate most fees and make transactions almost instantaneous.

Although it’s not without its flaws, it could be a game changer for the biggest crypto out there.

Could bitcoin really become the world’s reserve currency? I guess we’ll have to wait and see.

But with tensions high around the world, and with the US’ “trade war” with China, and Iran switching over to euros for its reporting currency, perhaps a more neutral reserve currency make sense.

I have read more than a few conspiracy theories that this is China’s big plan. Most of the world’s bitcoin mining takes place in China. And if there was ever a push to make bitcoin the world’s reserve currency, China would make a killing, and gain a lot of power.

2. World trade will be run through blockchain

If you were reading Exponential Investor back in January, you might remember this prediction from IBM’s general manager of blockchain, Jason Kelley.

He made it in his presentation at London Blockchain Week.

He said the traditional supply (or value) chain is owned by intermediaries.

This is the process the supply chain takes.

Production > distribution > processing > regulations and compliance > manufacturing > point of sale.

At every step of the way there is an intermediary taking a cut. Kelley’s vision is that the blockchain will eliminate these intermediaries.

And he showed us the partnerships IBM is forming with Walmart and Maersk.

Maersk is the world’s largest shipping company. If any industry can benefit from blockchain technology, it is Maersk. And it knows it.

As Kelley showed, Maersk projects the savings and efficiency gains blockchain will provide will lead to a 5% increase in world GDP and a 15% in world trade volume.

Here’s the slide from Kelley’s presentation.

Slide from Maersk projects the savings and efficiency gains blockchain will provide will lead to a 5% increase in world GDP Source: Harry’s phone camera

So, as you can see, this prediction is already on its way to coming true. We have some of the world’s biggest companies already testing it out. And the benefits they believe it will provide are massive. A 5% increase in world GDP and a 15% increase in total trade volume.

3. We will have self-sovereign identities stored on blockchain

Instead of our identities being stored on centralised systems, we will have control of our own identities. And we will have control of who we share them with.

Imagine your passport being your iris or fingerprint. With our identities stored on cryptos there would be no need for a centralised database, and no need for a paper document that proves we are who we say we are.

As you’ve seen in the last few years, passports have been going electronic. But this will be about more than passports. You will be able to store your medical data – blood type, past history, etc – on the blockchain.

This may not sound that beneficial. But, while I was at the Event Horizon conference last week, the co-founder of TenX gave a presentation about exactly this topic.

He used to be a trauma surgeon. And he said one of the biggest difficulties they faced was getting people’s medical records. If you’re in a different country or were brought in unconscious with no ID, it’s very hard to know how to treat you.

Do you know where all your medical data is stored – or how you could give it to a surgeon if you were taken ill in a foreign country?

Now, using biometric data for security has some very big issues. But that is a problem that is constantly being worked on.

Solving the problem of identity is one of the main use cases that blockchain has. And there are already number of big players in this area. For example, here’s Microsoft’s take on identity and the blockchain:

We aspire to a world where the billions of people living today with no reliable ID can finally realize the dreams we all share like educating our children, improving our quality of life, or starting a business.

To achieve this vision, we believe it is essential for individuals to own and control all elements of their digital identity. Rather than grant broad consent to countless apps and services, and have their identity data spread across numerous providers, individuals need a secure encrypted digital hub where they can store their identity data and easily control access to it.

Each of us needs a digital identity we own, one which securely and privately stores all elements of our digital identity.  This self-owned identity must be easy to use and give us complete control over how our identity data is accessed and used.

We know that enabling this kind of self-sovereign digital identity is bigger than any one company or organization. We’re committed to working closely with our customers, partners and the community to unlock the next generation of digital identity-based experiences and we’re excited to partner with so many people in the industry who are making incredible contributions to this space.

This will go even further than just identity, it will also involve asset ownership. The deeds to your house will be stored on the blockchain.

In the UK, you might think, why? The system we have is okay as it is. But in many parts of the world, property rights and proving you own something is a massive issue.

4. Stock and bond markets will be run on Ethereum

As I have written about before, Ethereum could save bond markets billions by the use of smart contracts.

If you missed my article on Ethereum and smart bonds, you can read it here.

But to sum it up: Ethereum smart contracts will make it very easy and secure for companies to issue bonds themselves. This will cut out many of the intermediaries that leech money from both buyers and sellers in the bond market.

And it will also mean bonds can be traded around the world at any time of the day or night, just as easily as people trade cryptos right now.

And not only bonds, but the entire stockmarket could – and most likely will someday – be run on Ethereum. You can think of this in a similar way to when stockmarkets went digital. But its impact could be arguably even bigger.

Brokers will go the way of HMV. And fees will either be eliminated or made completely negligible. It will also open up stockmarket investing to a whole new world of people.

5. Energy markets will run on crypto

Given that I spent all of last week at a conference dedicated to this vision, I can safely say, it is on the cards.

As I wrote last week, there were industry leaders in energy in attendance from all over the world. And the overwhelming message was energy markets are changing. And changing fast.

We already have Chilean regulators using Ethereum to track, store and secure energy data.

Here’s what Chile’s energy minister, Susana Jiménez, said about the program earlier this month:

“We are interested in taking this technology from a conceptual level to a concrete case, understanding that it’s considered to be the most disruptive technology of the last decade by world-class experts, and that it could be part of day-to-day life in the next few years.”

But it’s not just governments and regulators. I saw presentations from the likes of Shell, the World Energy Council, The Energy Web Foundation, Centrica, MIT and others.

The message was overwhelmingly that the energy markets are moving in a digital direction, and blockchain is making that move possible. They also believe this move will come about much faster than many realise.

You see last Friday’s Exponential Investor here for more on this prediction.

Until next time,

Harry Hamburg
Editor, Exponential Investor

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Category: Cryptocurrency

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