The future of blockchains
Predicting the future is in fact easy if we keep awareness of several possibilities and a low granularity in our predictions. In general, for the future of everything, there are two possibilities: evolve or die. One does not exclude the other. From here we can see three main branches or possible futures for blockchains:
- Do not evolve and die as a fad with vanishing interest. At this point, this is the least likely possibility.
- Evolve negatively and be killed by regulation. Death by regulation is a certainty in some countries, e.g. China.
- Evolve positively and become a mainstream product. By far the most likely possibility.
Blockchains would not be the first technology that starts as something impractical and rejected by mainstream users. In fact, this is how disruptive technologies are normally born. In The Innovator’s Dilemma, Clayton Christensen separates product evolution in 4 stages: functionality, reliability, convenience, and price. These points have an immediate translation to blockchains, evolving in several generations:
- Functionality: decentralization, smart contracts, DeFi, NFTs, DAOs,…
- Reliability: custodial and non-custodial, cold wallets, audits, insurance,…
- Convenience: bank integration, ATMs, debit cards, browser extensions,…
- Price: proof of work, proof of stake, side-chains, level 2 chains, shards,…
Blockchains will continue to exist and improve in these areas as long as:
- They provide a functionality that some users want, and as early adopters allow for the further evolution and improvement of the technology.
- They do not provide a functionality that a significantly larger number of users does not want to be provided, and push for restricting or plainly banning it, e.g. heroin.
Therefore, we should expect blockchains to be more functional, reliable, convenient, and scalable. Some aspects like the use of energy in proof of work may be concerning, and possibly avoided, but in any case those should be temporary concerns. The criticism in those areas is in fact misdirected.
What might be a source of permanent concern are the features or functionality, e.g. decentralization. Contrary to limitations, features are meant to be built upon them, not to be solved. If functionality is perceived as negative, regulation may be the best option to keep the good use of the technology and prevent the bad use of it, as currently done with weapons, hazardous substances, hate speech, or cryptocurrencies themselves in countries like China.
Cross-posted from the Sigmoid newsletter
