Why I still believe BIG TIME in Crypto.
A lot of people have asked me privately if I am actually pro or against crypto. I post about it a lot, but I often take a middle ground with respect to the pure speculative angle, and in late November I went on record urging caution. So here is where I stand:
I think Crypto is going to have a MASSIVE impact on how human beings use tech over the next few years. There are three fundamental reasons for this:
FIRST: Crypto Tokens enable (in theory) the transmission of value with almost zero transaction costs between parties. This is clearly not the case with Bitcoin today, or even Ethereum, but its clear to me that with Proof of Stake systems (like EOS), transmitting tokens between parties is going to get EXTREMLY CHEAP. Like…0.01% of any amount. Not 40$ per transaction like BTC. Not $3 like ETH. But 3 cents on a $20 transaction.
This is a massive improvement over credit cards, PayPal etc.. Massive. It means that the velocity of trade can be increased dramatically. It means you can have micro-transactions.
SECOND: This transmission of value can be done automatically and programatically. Paypal doesn’t work between machines. Stripe has an API, but it doesn’t work in the general case as a machine-machine UX. You still have these fees, and you still have massive fraud problems. It may not be a huge percentage of users, but a few bad apples mean that you ALWAYS need to check your credit card receipts. You can’t leave it on autopilot.
THIRD: Payment is final. With credit cards, the buyer can call the central issuing authority and reverse the transaction. If the credit card is stolen, the transaction is reversed automatically — to the detriment of the app or marketplace. THIS IS A HUGE PROBLEM. Once you have finality of payment, you can build great things around it. If you need to worry that payment will be retracted, these systems cannot be built.
This does not mean that I am bullish of Bitcoin. I am not (although i recognize that it may stay around for some intermediate period as a store of value). I am bullish on the development of alternative cryptocurrencies and ecosystems that really facilitate this new “Internet of Value”.
I think we are at the very beginning of this transformation. Let’s not place judgement on the small use cases and tech problems of tokens in Jan 2018. This is going to change. People are going to build really, really useful ecosystems around tokens — I am convinced of it.