Charting Crypto’s Course

Cryptocurrencies are nearly eleven years old now, and an impressive ecosystem has formed around them. The total cryptoassets market cap is well north of $100 billion. Billions of dollars of crypto are traded daily. Millions of users have installed a crypto wallet. Major US financial institutions CME and ICE make markets in crypto derivatives.

Yet, despite the incredible advancements, there remains a lot of work to get where we want to be. As an industry, we’re looking forward to global democratized access to financial products, banking the unbanked (and unbanking the banked), and mainstream applications.

In this post, we’ll take a look at crypto’s trajectory and what efforts are underway to make the visions turn into reality.

What’s needed?

Each market is different, and cryptocurrencies are already solving problems for a few resourceful and tech savvy folks in particularly oppressed parts of the world like Venezuela. Challenges such as volatility, liquidity, transaction costs, and lack of convenient user interfaces prevent them from becoming ubiquitous in more market segments. An aspiring freelancer in a developing country is more ready to jump through difficult hoops than someone in the first world with plenty of financial opportunity and access.

Crypto enthusiasts have long held beliefs that removing middlemen and counterparty risk from transactions will make them cheaper and faster. It can make previously impractical or impossible transactions possible for the first time. Micropayments as reward for content creators or marketplace access for sex workers and freelancers in oppressive countries are often cited as example areas that are ripe for disruption. As crypto takes over in relatively niche areas, we can expect the infrastructure to mature much more rapidly with wide use and become even more user friendly.

Developers (& their tool chains)

The Internet

How the early internet looked. credit: Telnet BBS Guide

Early on, developers used C/C++ for server infrastructure and Java servlets on the client. Development was difficult and without references of successful applications, progress was slow. Adobe Flash made media and interactivity easier, but was riddled with security vulnerabilities and has now been largely replaced with HTML5. JavaScript took at least a decade to become ubiquitous on the front end. JavaScript now powers many backends as well with the popular Node.js that was first released in 2009.

Today’s services rest on top of a massive foundation of prior art, libraries, standards, and best practices. These standards evolved to meet the increasingly innovative developer community’s demands. Low level protocols such as TCP/IP, UDP, HTTP, SMTP, FTP as well as higher layer protocols such as WebRTC or BitTorrent took time to develop.

Crypto’s early days

Early software comes with growing pains. Credit: Jackey Force

Right now, developers across crypto are building out all levels of the technical stack. Many teams are focused on the bottom of the stack. Firming up these foundational layers is necessary before significant amounts of investment in end user applications and interfaces can be justified.

Deficiencies in the stack limit the ability for digital assets to be used cheaply and conveniently. Today crypto offers the best value in select market segments that have extremely limited options. But, just like the early internet solved problems only for the most dedicated, we can expect the technology to improve and the cost/benefit tradeoff to become more and more attractive.

What to look for?

co-founder @scalarcapital, burner, #bitcoin enthusiast, previously growth eng @coinbase

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