Recently, a couple friends of mine were blustering a lot about the future of crypto. I was inspired to write a prediction about the topic, to be evaluated in 10 years. My primary goal was to write something that would not be laughable in 2031, and my secondary goal was to be as specific as I could. It's not super rigorous, since I wanted to sketch my overall feelings, not cram them into narrow probabilistic claims.
(I will use the word crypto as a stand-in for the whole cluster of cryptocurrency, blockchain tech, smart contracts, and so on.)
Here are my claims:
- To say that crypto tech has huge potential is an understatement. Crypto might revolutionize civilization as much or more than the invention of money itself.
- When it comes to this topic, smart people routinely fail to synthesize the Inside View and Outside Views. You can tell that folks are also not applying the lessons of Superforecasting.
- I hear that people tend to overestimate technological progress in the short term and underestimate it in the long term. I think this will turn out to be the case for crypto.
- The technology is still being developed. Monthly price movements are a distraction. Predicting long-term value requires doing lots of effortful, interdisciplinary homework. Long-term evaluation is the diet & exercise of investment.
- Maximalism of any kind seems silly to me, if only because of all the other uncertainties listed here.
- I cannot take seriously any plan or prediction that does not consider things like Vitalik's list of hard problems.
- I think crypto as it currently exists represents a threat to the status quo around government, not least of all with regard to taxation and money printing. There is no reason to think that governments will not use laws, zero-days, and physical force to preserve their powers. Blanket bans are unlikely; nationalization by force is a plausible scenario; and pressure on devs to hard code governmental privileges is all but guaranteed.
- An investor friend of mine said, “I think ETH had tons of exciting tech potential a few years ago, but little enough is being done on it that I don’t really see how it will keep its valuation unless there’s a new building boom or it happens to slide into store-of-value territory with BTC.”
- Sounds plausible to me. In 2015 I was really confident that we would have at least one good platform for prediction markets by now. Augur is bad and polymarket is okay. I have to admit that I have been chronically overoptimistic.
- I feel more than 75% confident that in 10 years, a majority of my friends' and my family members are personally relying on at least one smart contract, even if they don’t deeply understand it or interact with it directly.
- As with all engineering, security guarantees are proposed and speculated upon via mathematical proofs & technical models. But systems are only widely trusted after demonstrating themselves at length in the real world. I will probably just end up trusting whatever expert consensus emerges, and the experts will trust whatever has gone a while without failing.
- The story of TheDAO should continue to weigh on our minds as we make decisions about crypto.
- No existing cryptocurrency is safe from challengers. I have about even odds that when people like my elderly family members finally move onto crypto, it will be with some yet-unborn cryptocurrency, perhaps one that proactively curries favor with governments.
- NFTs might be a really good fit for altruistic things like demand offsets and certificates of impact.
- Decentralized court protocols like Kleros seem well-suited to outsourcing mass moderation, for example unlocking Twitter accounts that were incorrectly locked by trigger-happy modbots. (Hat tip to ChristianKI.)
- I have no idea how crypto tech will interact with quantum computing, ML, deep fakes, self-driving cars, UAVs, 3D printing, or the various things things Elon Musk is working on.
- I have no idea how crypto tech will interact with the collapse of the mainstream media, the intensifying competitive pressure on memes, state-sponsored troll farms, the decline of privacy, the rise of mental illness, remote work, special economic zones, and so on.