When will crypto-currencies massive mainstream breakout out happen?

Let’s admit it. No matter the level of ambiant noise, Crypto currencies interest very few people (that are *very* vocal). My best guess is that around 10/20m people in the world have actively interacted (buy, sell, use…) with them and much less in coding or building in/for the blockchain (10k to 50k developers). Compare that to 1 billion users in the word connected to the internet, using smartphones and different technologies with a couple of million of app developers give or take.

To put things in perspective altogether the market valuation of all cryptos together is less than that of Facebook…

Bitcoin and cryptos have been around for years, and for as much as the technology has immense potential, the least we can say is that they are far from being adopted and their visible tangible impact on our day to day life is meaningless. No Blockchain Mania. Yet.

Media Mania, Not Usage Mania

Certainly a much wider audience are intrigued by cryptos and even more have been exposed to some information, rumors in an online outlet or a friend conversation because the buzz has been impossible to escape, unless you live in a locked fridge for the past year. “Hey what’s that bitcoin thingy?” « What’s an ICO? », you must have heard around you. I believe it is unlikely anyone interested in tech, even remotely, has never heard at least about bitcoin. Bitcoin and cryptos are a thing. So in a way you could say the notion of bitcoin is already mainstream, in particular when you see intergalactic celebrities are talking about it. But again, usage, adoption is zero and understanding close to zero. And for a good reason.

It’s really hard to get

To understand the excitement of a mere few millions who talk and buy and sell crypto currencies, you need to deep dive in an incredibly complex ecosystem and learn about cryptology, economics and game theories, protocols, governance, legal frameworks, financial trading and constant news and evolve in a world who has been created by developers for developers. Not exactly the cup of tea of everyday iPhone or android users. I have spent the past few months intensely learning about that space but, no matter how fascinating, it’s really hard to get it. And even if you do, it’s tedious and painful to onboard any sort of apps built for it. Ever tried to buy some coins on an exchange or participate in an ICO? Good luck…They say sending bitcoins should be as simple as sending an email. It is not.

And still blockchain has the potential to become the main engine that will power apps, and more generally any type of transaction within the economy (nothing less) and possibly even our society with significantly more reliable, secure, fast and cheap foundations.

In my view the Blockchain is probably the biggest industrial revolution in mankind because the upgrade it will enable will just be life changing at so many levels (and not just for paying each other)

So why are we in such a gap between the excitement (bubble some will call it) and the actual adoption/understanding? What is missing for this to happen? If this revolution is going to be so huge why no one really understands it even the big shots? (Yes i am looking at you Jamie Dimon)

So what is missing so that the blockchain ecosystem really breaks out to mainstream audiences.

Faster, more efficient protocols

Right now it’s too expensive to make the blockchain work and definitely not fast enough. A bitcoin/ether block takes 10 min to be mined at current transaction level (3/6 bitcoin/ethereum transactions every second). If we want to be able to process billions or trillions of data transaction per day mining a block should be a matter of seconds or fraction of seconds.

That’s is currently just impossible. First because the protocols have not originally been designed to support that scale (for example every computer has to keep “in memory” every single chain transaction), which explains why they are currently being forked (Segwit2, Proof of Stake,…), but the number of nodes involved is not high enough (and may even reduce with China’s Ban).

What will solve this? Better code and patience and time.

Right now the cost in electricity and computing power to maintain the blockchain is just not adapted to more scale. I doubt the cost of electricity will ever decrease, even with Solar energy, so we’re reliant on cheaper/more powerful hardware material which Moore’s law has helped deliver so far but also on better protocols too.

I believe this is right now the highest priority of the industry. Something that Vitalik Butterrin highlighted when i asked him about this aspect

Better developer tools and scripting frameworks

There can’t be massive consumer or enterprise adoption if developers don’t adopt in mass a specific computing framework. If you have any doubt watch how the App Store has immensely contributed to the growth of the iPhone adoption. Apple has invested massively in the iOS developer stack, documentation and tools to make that possible. More developers, means more apps, which creates more adoption. I invite you to read this fantastic post that will explain better than i ever will.

For one, the scripting language is too limited. A scripting language is a programming language where you can write code to perform some actions. An example of a scripting language widely used on the web today is JavaScript.

Blockchain developer tools need to become better so developers can create conveniently better apps. But here, we don’t have an “Apple” to take care of this. We need developers to focus on working together to make that possible.

More regulations, guidance, less scam

I love the space, but i start to be seriously annoyed by the excess. Too many coins, soon to be deadcoins, Too many people who just don’t get it but want to “flip”, make a quick buck and are not here with the right intentions, too many scammers. This is what happens in a new blooming industry where excitement overtakes reality. Sure you can’t have the Facebook, and Google of the world on one side without a fluke of scam companies that have seen the light in the ad tech space, or great Apps like Instagram and Snap without scammy app developers embedding tracking malwares in their counterpart or Netflix and Spotify without The pirate bay and Napster. And you cannot either blame the protocole TCP/IP or Xcode for enabling it.

That is just a necessary evil of any new transforming industries with high potential. But things have to change and regulations have to flush out the excess that dominates today (yes, dominates). The ad industry would be a mess if there were not clear rules that differentiate an ad from a piece of editorial content or if it was ok to advertise a fake product. We need clearer ways to guarantee the rules of governance of a project are well respected in a blockchain company, that the ICO funds are used as promised, that the road map is actually respected, that the activity is reported to its investors.

On the other side we also need more clarity on how the law and tax administrations qualifies and authorizes tokens. We need a clearer position from the tax administration on how to qualify tokens (securities or not?), profits on coins (capital gain or not?).

We can’t, just like a developer in an App Store, be at the mercy of grey changing rules that can kill a business in a matter of days. We need a stable business framework so entrepreneurs can, in peace, do what they do.

As a matter of fact i do believe VCs have a major role to play in helping bringing more guidance to the ICO world.

Once they pass the threshold of whether they could/should enter the space (because they will one way or another), i believe they will bring decades of experience in guiding entrepreneurs build a real company, not just a protocol.

Significantly better security

There is not a week without a hack and security theft. Not because the blockchain is not safe and secure but because people, founders or companies don’t set up well their security stack. And they don’t set it up well because, let’s admit, the world as we know it is full of holes. Android can be cracked, mobile operators can be fooled. Just look at Slack, one of the major tools used by developers to manage their community. It’s bombarded daily by fake bots and scams which find they way through.

A fake bot in slack pointing to a scam URL

We also need something that is way better than 2FA (two factor authentication). Security holes aside, I just don’t see myself using the authenticator and password managers apps 20 times a day. Just too much friction out there. I believe FaceID is hint at the future, a digital footprint based on something unique about each one of us. I also think browsers should be better at supporting the blockchain ecosystem from a security point of view with ways to highlight or block security threats just like they do with javascripts already. They could highlight the reputation of a website, of a link or even of a blockchain wallet address. Browsers should become the 3rd party trustees we need for the future.

A new vocabulary

If we want anyone to be able to understand and adopt those technologies, we, crypto geeks, we’ll need to talk in a more accessible way. We must ban and replace the intimidating abstract words like ledger, database, protocols, dapps, decentralized and find new simpler terms than mnemonic phrase, keychain, private/public key, whitepaper, yellow paper, gas, Gwei, blockchain, chain explorer, txn,

The web would not have grown if a search box was called a web query tool.

A new nomenclature and set of conventions will arrive, probably under the growth of some of the killer apps built by the community (just like we “skyped” someone instead of saying “voip me”), or because some great mind will coin a new term that will be massively adopted….

But we need this badly.

Dramatically better UX/UIs

Bitcoin is programmable money and the blockchain is a world created by developers mostly for developers. You realize that the second you use or touch any sort of crypto-app. Take for example one of the primary tools anyone needs to use the blockchain. A crypto-wallet. Attention to details, onboarding, user flow, readability and ease of use are definitely not a priority. This has not been an obstacle to millions who had the urge to get on board quickly but is intimidating to millions who are used, thanks to Apple and Google, to simple, clear apps.

one of the most popular Ether wallet out there. good luck.

It’s not just about design. It’s also about the experience (how it works, not how it looks). Today feels as if, instead of entering web adresses or searching google, the only way to get to a web page was to enter its IP address.

The industry is maturing and i am fairly confident that product and design talents will help take that forward.

Education and schools

If we study English and maths at school, why not learn about what’s going to be the most central topic in our day to day life. Kids actually will get cryptos faster than anyone else because they are digital first and grow with the gaming culture which is central to any crypto economics. Every kid at school should be provided with a wallet, a few coins and get homework to “play” with those.

But if we want to build super nations the education system has to embrace the revolution and teach the notions, the limits, the rules and the principles of that revolution. It can’t be just left out in the wild. Kids need to be educated also early on about personal digital security which i suspect is going to be one of the most important personal issues we will have to deal with in the coming years.

Amazon, Apple

Until mainstream retailers don’t embrace cryptos nothing of scale will happen, no matter what. I am going to make a wild prediction. Within 5 years Amazon or Apple or both will enable anyone to buy on their site in crypto currency (not sure which one, maybe bitcoin or not). Then everyone will have a built-in crypto wallet. Including kids.

Other retailers could lead the way but non have the impact of Amazon and Apple. The economical velocity they have is second to none.

wouldn’t it be cool?

Already there are hints that major browsers will be able to support transactions in crypto currencies

updated 23/9: some rumors about amazon actually moving that direction

Crypto Stability

Let’s clearly say it: most of the growth on cryptos is driven by pure blind speculation and excitement and not by clear metrics and actual value created.

Ether in the past 24h…not really stable..

We’re not yet at a stage where the core value of a protocol or a coin is directly tied to to its intrinsic usage value. This explains the insane volatility one can observe on a daily basis. Massive adoption won’t solve this volatile nature of things but it will make it more predictable. Fiat, Oil and Gold are volatile too, but they can be anticipated and understood. Not with crypto. FUD, FOMO, sometimes fear, fraud, irresponsible and uninformed public statements and dreams is what drives the market.

We’ll reach a stage where the size of the protocol , even if not mainstream yet, will be large enough to create inner economic value and will give more confidence that their value and volality can be « contained ». Maybe governments, collaborating together, not at home, will manage to help in that sense.

More managers, More diversity in teams

The crypto world is a world of developers and males. If you have any doubt spend time in reddit or in any industry event. The great thing though is that it is a global movement and there is a strong sense of community and many sub communities but there is an important disequilibrium. It is dominated by developers and males. It is on one side necessary because we’re building the foundation layers of the industry but that won’t be enough to take it to the next step: building a business and getting a diverse range of ideas and adopted apps. The industry will need business minds, marketing brains, HR experts, process experts, COOs, men and women to make that industry a great industry. It’s really hard to find those profiles today when you browse the team section of any company in the space.

Kyber (one of the best ICOs lately) very male-ish team

What about banks?

A few weeks ago i tried to use Transferwise and N26 to make a wire to a crypto exchange. After several painful trials i discovered that Transferwise blocks any type of wire to crypto services. There is no reason this should happen, in particular to services that are fully regulated and compliant. There is no possible future to crypto-currencies in a world where banks don’t play the game. But i also anticipate that most banks will end up using blockchain as a backbone and replacement to their dated infrastructure. In a way it is likely the blockchain will be used by mainstream audiences without being even aware of it (with banks to banks protocols like Ripple for eg)

Last word: patience

I am very bullish that the future will look something like this. We’ll go through waves of major ups and downs but eventually we ll get there. For as long as i can remember, the early days of the web were like that, the early days of blogging were like that, the early days of mobile apps were like that.

That’s what early days look like. Don’t discount an industry because it’s not fine tuned from day 1. But let’s not lose ourselves either. The industry as is just cannot grow bigger than beyond pure speculative formulas. Many of the above should be and are actionable *today*, results and pay out though will take a long time.

It will take patience before things change: i would guesstimate at least 3 to 5 years. But once we pass this timeframe i believe Blockchain will be the best thing that has happened to technology since the discovery of silicon.

How about the legal validity ? [Updated]

I just realized a last and so critic element. The blockchain as an industry can’t go to adoption if we don’t have a new legal framework that will provide a legal validity to the elements of proof provided by or in the blockchain. To understand the importance let’s do a parallel with digital signatures. The technology to sign docs electronically exists for years before the law considered it legally valid. Only them the industry massively adopted the electronic signature and lawyers were no longer afraid to use it and recommend it and as services like docusisgn really grew. Same here with the blockchain. How can we all day long claim that the blockchain will host all our data or contracts our identity and that will prove better the validity and authenticity of the data if the law doesn’t not validate it as such. What is the point of technical validity of proof if the law doesn’t understand and embrace it. We absolutely need this but I am afraid this is what will take the longest to come. And until then the blockchain ecosystem will remain a side economy