Crypto space is flooded with projects. It's hard to know which one has potential. I think the key is specialization. Hopefully, the next generation of altcoins will be more successful.
Full post on our blog:
https://bitflate.org/post/2019/08/09/how-cryptocurrencies-can-succeed.htmlElusive crypto revolutionTen years after the Bitcoin white paper introduction, cryptocurrencies have not gone mainstream. Crypto aficionados remain bullish that Bitcoin will take over the world financial system. They enforce their views on the world, remain a stubborn minority. They hope that their stubbornness will eventually prevail.
Lindy effect says that life expectancy of something is its current age. Perhaps, there is a non-Lindy effect: the expected occurrence of something is, at least, now plus its current waiting time. If we’ve been waiting for 2000 years for judgement day, its expected occurrence is, at least, year 4000.
Bitcoin has been a Store of Value for the past ten years. Lindy effect implies that it will remain as a Store of Value. It will never become a token for transactions. We need to accept this and develop new thinking to increase adoption of cryptocurrencies. Bitcoin as a Store of Value is a success. It hints an important attribute for success: specialization.
Cryptos are solutions looking for problemsSince the invention of paper money, we’ve developed payment systems that work well. Cryptocurrencies are strange inventions that really don’t solve any problem with the existing systems. They are ideas, solutions looking for problems. Economist and crypto skeptic, Paul Krugman, highlighted the problem:
"In other words, cryptocurrency enthusiasts are effectively celebrating the use of cutting-edge technology to set the monetary system back 300 years. Why would you want to do that? What problem does it solve? I have yet to see a clear answer to that question."
Cryptos are kinda like artsCrypto critics often view cryptos through the lense of logic and science. Cryptocurrencies often don’t solve any particular inefficiencies. They exist because we like to create them. For example, Bitcoin was created to enable us send money without relying on a mint authority. Cryptos represent some ideas, philosophies, inventions that we want to make. Maybe some techniques in crypto space can be transformed later to solve real world problems. But they don’t have to be. They exist for intellectual curiosity.
Successful cryptos solve specific problemsI view cryptos as arts. But some of them can make impact on real world. I believe the most important factor for success is specialization. Cryptocurrencies can become successful if they solve specific problems.
Bitcoin is successful because it serves only as a Store of Value. Some people believe that Bitcoin will take over the financial system. If Bitcoin wants to continue its success, it needs to remain as a Store of Value. Bitcoin Core developer, Pieter Wuille, highlighted in a tweet.
https://twitter.com/pwuille/status/1157339432753565702"As far as tokens goes… for now, Bitcoin’s security depends on its exchange rate (because the subsidy is expressed in BTC). Using the chain for activities that only benefit unrelated assets in a way to competes with its use for BTC is in conflict with security and survival."
Some good specialized coins I see currently: Bitcoin, Zcash, Monero, Dogecoin.
There are cryptocurrencies that want to be platforms: Ethereum, EOS. I think the challenge for them is insurmountable. Not only do they need to maintain their stack, they need to find specific problems to solve. The stack becomes too bloated. When someone wants to create a new cryptocurrency, it may be better to start from scratch than building on a bloated stack.
There’re 3 factors that decide a cryptocurrency success: specialization, specialization, specialization.
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