Why today's cryptocurrencies are doomed

[BitCoinDream]

Cryptos are very, very far from being doomed. Yes, mainstream adoption has been disappointing.
High-street Western peoples are unenthusiastic as there are no advantages over their debit cards or credit cards.
However, there is still plenty of scope for massive growth in many areas, including amongst the unbanked peoples of the 3rd world, and in any country experiencing a major banking crash.

Wrong !!! Unbanked people from 3rd world wont be able to use Crypto. Because...

i. They dont have internet

ii. They are mostly illiterate

Crypto will first conquer the remittance industry.

[Anders]

The original Bitcoin protocol is very innovative. However, there are several reasons for why today's cryptocurrencies will fail:

1. Too slow transaction times for general use.
2. Too bloated block chain for mainstream adoption.
3. Having to store coins "under the mattress" is a step backwards.
4. Proof of work will lead to too large transaction fees.
5. Proof of stake leads to the rich getting richer.
6. Lack of government support prevents mainstream use.
7. Trading against ordinary fiat currencies causes volatility.

Your're assuming that All of today's cryptocurrencies are made for one purpose, to infiltrate the mainstream population which is not true. There are many niches that Needs to be filled in the cryptocurrency secter.

For ex: One niche would be a store of value coin, another would be a privacy/anonymous coin, etc.

If that was true, we would have seen a success story by now. Bitcoin is a success for investment and currency trading, but could be a limited one. We will see. I stick with my prediction that the bitcoin price will not go much higher than $5,000 because of lack of mainstream adoption.

Though Bitcoin's success is not in its FIAT valuation, here is an interesting stat that u may like...

A statistical explanation why 1BTC may equal 1M USD in future...

Value of 1BTC (around figure)

2009 => 10^-2 USD
2010 => 10^-1 USD
2011 => 10⁰ USD
2012 => 10¹ USD
2013 => 10² USD
2014 => 10³ USD
2015 => 10⁴ USD
2016 => 10⁵ USD
2017 => 10⁶ USD

--- Early Adoption Ends Here and The Price Stabilizes ---

Could happen. My guess is that the lack of mainstream adoption will put a limit to the bitcoin price already within a year or two, and not much above $5,000. In a way bitcoin is already a huge success and I'm still a great fan of the general idea of cryptocurrencies. It's just that some puzzle pieces are missing.

[tspacepilot]

Cryptos are very, very far from being doomed. Yes, mainstream adoption has been disappointing.
High-street Western peoples are unenthusiastic as there are no advantages over their debit cards or credit cards.
However, there is still plenty of scope for massive growth in many areas, including amongst the unbanked peoples of the 3rd world, and in any country experiencing a major banking crash.

True, and furthermore I personally like the comparison to adoption of the internet.  Obviously in the first few years there were only a few people excited about it because many of the supporting software (easy to use web browsers, javascript!, https) wasn't around and there was a technical hurdle for the common "high street westerner" to overcome.  However, as the infrastructure filled out the next step was a big boom-n-bust when all sorts of fly-by-night ventures popped up and thus the dotcom boom then bust.  Finally, in the third stage, internet adoption and online services continue to grow at a steady rate until world domination.

[tspacepilot]

Cryptos are very, very far from being doomed. Yes, mainstream adoption has been disappointing.
High-street Western peoples are unenthusiastic as there are no advantages over their debit cards or credit cards.
However, there is still plenty of scope for massive growth in many areas, including amongst the unbanked peoples of the 3rd world, and in any country experiencing a major banking crash.

Wrong !!! Unbanked people from 3rd world wont be able to use Crypto. Because...

i. They dont have internet

ii. They are mostly illiterate

Crypto will first conquer the remittance industry.

Realize:

ia. Internet access through smartphones is increasingly available even in the poorest countries.
iia. Illiterate ≠ stupid.  People will use technology as it becomes helpful to them, you don't need to know how to interpret Derrida in order to use a phone to pay a bill.

[Anders]

The original Bitcoin protocol is very innovative. However, there are several reasons for why today's cryptocurrencies will fail:

1. Too slow transaction times for general use.
2. Too bloated block chain for mainstream adoption.
3. Having to store coins "under the mattress" is a step backwards.
4. Proof of work will lead to too large transaction fees.
5. Proof of stake leads to the rich getting richer.
6. Lack of government support prevents mainstream use.
7. Trading against ordinary fiat currencies causes volatility.

What does this mean about "under the mattress"?

That's the biggest problem! Cold storage. An absolute nightmare to have manage oneself even for a crypto-savvy person. Some people may enjoy storing private keys on paper etc, but those are the fanatics. For ordinary people the mess with having to secure the coins oneself is a major step backwards, into the Dark Ages.

Hmm, I'm not sure I agree.  I guess I'm a "fanatic" because I printed out a paper copy of some keys to be safe from a computer crash but I don't know why that's so crazy.  What do you do to secure anything else on a computer that's important to you?  I'll let you know what I do, I make backups and store them somewhere cool and dry.  Here's the LOCKSS rule: lots of copies keeps stuff safe (a librarian told me that).  As far as security, again, isn't this already an issue that's bigger than cryptocoins?  Here's some rules of thumb: don't run windows, don't install programs you don't inspect, encrypt sensitive material.

I don't see how these issues of backing up and securing data are relevant to crytpocoins specifically. They seem to me like general issues related to keeping sensitive/important information on a networked computer.

I'm looking at it in a long-term perspective. As a comparison, to have to keep one's computer safe oneself is also incredibly old tech from that perspective. The usability of information technology will become much better. Even having to install apps on a smartphone is very old and cumbersome tech.

[Anders]

Signs of the problematic nature of today's cryptocurrencies are all the messy ad hoc additions to the technology, such as 0-confirmation transactions, micropayment channels, deterministic address generation, random address generation and so on.

[Anders]

All the altcoins existing today are a good thing! Not that I believe any particular altcoin today will become a huge success, but the combined innovative force behind them can lead to some really useful applications. Probably in some unexpected ways. I believe that all the services that you have to pay to use will fail. It will more likely be open source projects which are free to use that will become successful and where companies can make money on providing services around the open source. The altcoin projects today are way too greedy and often socially lopsided constructs with the intent of making the wealthy become more wealthy and/or early investors become super rich.

Someone said that proof of stake only gives those who have lots of coins more voting power and is not a means of making the super wealthy profusely rewarded while those who have few coins hardly rewarded at all. Yeah, right. Like there would be no conspiracies between the stakeholders and the miners.

[rikkejohn]

you don't need to know how to interpret Derrida in order to use a phone to pay a bill.

Derrida couldn't interpret Derrida, a most confused character.

[rikkejohn]

All the altcoins existing today are a good thing! Not that I believe any particular altcoin today will become a huge success, but the combined innovative force behind them can lead to some really useful applications. Probably in some unexpected ways. I believe that all the services that you have to pay to use will fail. It will more likely be open source projects which are free to use that will become successful and where companies can make money on providing services around the open source. The altcoin projects today are way too greedy and often socially lopsided constructs with the intent of making the wealthy become more wealthy and/or early investors become super rich.

Someone said that proof of stake only gives those who have lots of coins more voting power and is not a means of making the super wealthy profusely rewarded while those who have few coins hardly rewarded at all. Yeah, right. Like there would be no conspiracies between the stakeholders and the miners.

A good analysis, and nice to see a focus on crypto being far from "fair".

It isn't fair, and those that claim it is are most probably the people that benefit from it.

Like you imply, it has been a great experiment, and I can see small-scale altcoins that service specific groups or niche markets being successful at some point.

At the moment, crypto is a state of nature, quite nasty and brutal with greed the motivating factor.

[tspacepilot]

I'm looking at it in a long-term perspective. As a comparison, to have to keep one's computer safe oneself is also incredibly old tech from that perspective. The usability of information technology will become much better. Even having to install apps on a smartphone is very old and cumbersome tech.

I guess you're a kind of a prophet, or there's something in your version of the future that hasn't made it into mine.  I keep my own computer safe because no one else has a vested interest in keeping my computer safe like I do.  When I buy a smartphone the first thing I do is erase everything in memory and install cyanogenmod---why? because I've inspected the source code and I can control what I put on or take off.  Oftentimes, I download the cm source code and modify it to my needs before I put it on my phone.  Who else is going to do that for me?  I don't really know what you mean about "old and cumbersome tech".  For me, it really sounds like you're saying something along these lines:

Having to choose what you are going to eat for dinner is very old and cumbersome tech.  In a happy future, you can just allow a company or institution to choose your dinner according to a correctly balanced nutritional profile.

However, in my world, choosing what apps to install, what pictures to back up, what plants to put in my garden, what to eat for dinner isn't "old and cumbersome", it's what makes me me!  I don't want to agree that choosing things for yourself is an old and cumbersome way to live.

[Brilliantrocket]

Clearly you forgot #8 :

8: The propagation of information is limited to the speed of light. Therefore in the year 3973 people on Earth won't be able to keep the same blockchain as the people across the galaxy. Just won't scale. Transactions could take millenia! Clearly doomed!

Ever heard of quantum entanglement? When particles become entangled, a change in one particle will produce an immediate change in the other particle immediately, and regardless of distance. The quantum world is a very strange place, and our mastery of it will produce innovations that would seem like magic today.

[Benjig]

The original Bitcoin protocol is very innovative. However, there are several reasons for why today's cryptocurrencies will fail:

1. Too slow transaction times for general use.
2. Too bloated block chain for mainstream adoption.
3. Having to store coins "under the mattress" is a step backwards.
4. Proof of work will lead to too large transaction fees.
5. Proof of stake leads to the rich getting richer.
6. Lack of government support prevents mainstream use.
7. Trading against ordinary fiat currencies causes volatility.

Well if you see always the negative side of the thing nothing will be successful.. at least now we have those more reasoned arguments.. back in 2013 and 2012 people were saying bitcoin is a ponzi.

[Anders]

I'm looking at it in a long-term perspective. As a comparison, to have to keep one's computer safe oneself is also incredibly old tech from that perspective. The usability of information technology will become much better. Even having to install apps on a smartphone is very old and cumbersome tech.

I guess you're a kind of a prophet, or there's something in your version of the future that hasn't made it into mine.  I keep my own computer safe because no one else has a vested interest in keeping my computer safe like I do.  When I buy a smartphone the first thing I do is erase everything in memory and install cyanogenmod---why? because I've inspected the source code and I can control what I put on or take off.  Oftentimes, I download the cm source code and modify it to my needs before I put it on my phone.  Who else is going to do that for me?  I don't really know what you mean about "old and cumbersome tech".  For me, it really sounds like you're saying something along these lines:

Having to choose what you are going to eat for dinner is very old and cumbersome tech.  In a happy future, you can just allow a company or institution to choose your dinner according to a correctly balanced nutritional profile.

However, in my world, choosing what apps to install, what pictures to back up, what plants to put in my garden, what to eat for dinner isn't "old and cumbersome", it's what makes me me!  I don't want to agree that choosing things for yourself is an old and cumbersome way to live.

How many people store money under the mattress today? Sure, storing money in the bank is also old-fashioned compared to the future. The trustless part of cryptocurrencies is a major step forward. But trusting oneself isn't trustlessness. That's why I consider having to manage security oneself will sooner or later become outdated.

[Anders]

The original Bitcoin protocol is very innovative. However, there are several reasons for why today's cryptocurrencies will fail:

1. Too slow transaction times for general use.
2. Too bloated block chain for mainstream adoption.
3. Having to store coins "under the mattress" is a step backwards.
4. Proof of work will lead to too large transaction fees.
5. Proof of stake leads to the rich getting richer.
6. Lack of government support prevents mainstream use.
7. Trading against ordinary fiat currencies causes volatility.

Well if you see always the negative side of the thing nothing will be successful.. at least now we have those more reasoned arguments.. back in 2013 and 2012 people were saying bitcoin is a ponzi.

There will be innovations! Thomas Edison failed lots of times before he came up with a functioning light bulb. However, from a conspiracy theory perspective Bitcoin is an invention made by a big power group, and they are one step ahead and will introduce a new cryptocurrency and Bitcoin is "only" their pilot project. So the innovations in this case are then already done. I still think the bitcoin price may reach $5,000 though.

[tspacepilot]

I'm looking at it in a long-term perspective. As a comparison, to have to keep one's computer safe oneself is also incredibly old tech from that perspective. The usability of information technology will become much better. Even having to install apps on a smartphone is very old and cumbersome tech.

I guess you're a kind of a prophet, or there's something in your version of the future that hasn't made it into mine.  I keep my own computer safe because no one else has a vested interest in keeping my computer safe like I do.  When I buy a smartphone the first thing I do is erase everything in memory and install cyanogenmod---why? because I've inspected the source code and I can control what I put on or take off.  Oftentimes, I download the cm source code and modify it to my needs before I put it on my phone.  Who else is going to do that for me?  I don't really know what you mean about "old and cumbersome tech".  For me, it really sounds like you're saying something along these lines:

Having to choose what you are going to eat for dinner is very old and cumbersome tech.  In a happy future, you can just allow a company or institution to choose your dinner according to a correctly balanced nutritional profile.

However, in my world, choosing what apps to install, what pictures to back up, what plants to put in my garden, what to eat for dinner isn't "old and cumbersome", it's what makes me me!  I don't want to agree that choosing things for yourself is an old and cumbersome way to live.

How many people store money under the mattress today? Sure, storing money in the bank is also old-fashioned compared to the future. The trustless part of cryptocurrencies is a major step forward. But trusting oneself isn't trustlessness. That's why I consider having to manage security oneself will sooner or later become outdated.

At least in my country, storing money in a bank is mainly trustworthy because of the Federal Deposit Insurance Corporation under which deposits to accredited banks are ensured by the USGovt even if the bank fails.  Before the FDIC, putting money under a mattress was a reasonable solution.  Longer term people would buy precious metal or whatever.  I just cant get on board with you that in the future, taking responsibility for yourself will be outdated.

[Skoupi]

Not 1, not 2, not 3...(/lebron sarcasm off)  but 7  reasons about why today's cc are doomed!
Thanks Anders. This community has been looking for those reasons for 5 years. 

PS. My personal favorite: No.3 

[Anders]

At least in my country, storing money in a bank is mainly trustworthy because of the Federal Deposit Insurance Corporation under which deposits to accredited banks are ensured by the USGovt even if the bank fails.  Before the FDIC, putting money under a mattress was a reasonable solution.  Longer term people would buy precious metal or whatever.  I just cant get on board with you that in the future, taking responsibility for yourself will be outdated.

But don't you want the whole money chain to be trustless? That's what I think we will have in the future. Instead of banks or mattresses the money will be stored on a distributed block chain. And instead of managing private keys, there will be a global user ID system that will keep the money safe and connected to individuals anonymously.

I could be wrong. Such user ID system is easier said than done. Biometrics can be shaky and counterfeit. ID cards can be stolen. Tricky problem.

We will see. Maybe you are right! That there will always be necessary to manage the security of private property oneself or having to trust a third party.

[tspacepilot]

At least in my country, storing money in a bank is mainly trustworthy because of the Federal Deposit Insurance Corporation under which deposits to accredited banks are ensured by the USGovt even if the bank fails.  Before the FDIC, putting money under a mattress was a reasonable solution.  Longer term people would buy precious metal or whatever.  I just cant get on board with you that in the future, taking responsibility for yourself will be outdated.

But don't you want the whole money chain to be trustless? That's what I think we will have in the future. Instead of banks or mattresses the money will be stored on a distributed block chain. And instead of managing private keys, there will be a global user ID system that will keep the money safe and connected to individuals anonymously.

I could be wrong. Such user ID system is easier said than done. Biometrics can be shaky and counterfeit. ID cards can be stolen. Tricky problem.

We will see. Maybe you are right! That there will always be necessary to manage the security of private property oneself or having to trust a third party.

I think I finally understand where you are coming from on this.  However, I thing that the kind of "trustlessness" that you're talking about isn't really trustless, it's just trusting in a community.  Indeed, I think this is a powerful idea.  And you might be right about some eventual implementation, I'm not convinced though.  Anyway, I'm glad I finally understand what kind of thing you're referring to.

[Anders]

At least in my country, storing money in a bank is mainly trustworthy because of the Federal Deposit Insurance Corporation under which deposits to accredited banks are ensured by the USGovt even if the bank fails.  Before the FDIC, putting money under a mattress was a reasonable solution.  Longer term people would buy precious metal or whatever.  I just cant get on board with you that in the future, taking responsibility for yourself will be outdated.

But don't you want the whole money chain to be trustless? That's what I think we will have in the future. Instead of banks or mattresses the money will be stored on a distributed block chain. And instead of managing private keys, there will be a global user ID system that will keep the money safe and connected to individuals anonymously.

I could be wrong. Such user ID system is easier said than done. Biometrics can be shaky and counterfeit. ID cards can be stolen. Tricky problem.

We will see. Maybe you are right! That there will always be necessary to manage the security of private property oneself or having to trust a third party.

I think I finally understand where you are coming from on this.  However, I thing that the kind of "trustlessness" that you're talking about isn't really trustless, it's just trusting in a community.  Indeed, I think this is a powerful idea.  And you might be right about some eventual implementation, I'm not convinced though.  Anyway, I'm glad I finally understand what kind of thing you're referring to.

One potential danger is that a global ID system (or even local ID systems) will lead to Orwellian control over people. Scary. In the long run we will have artificial intelligence taking care of all of that, but that's technological singularity stuff and hopefully without a Skynet, lol.

[wbaw]

Totally agree that current generation cryptos are all doomed, but the problems can be fixed if we see some real innovation in alts. There is the possibility of making our own decentralised global identity system.