It’s been ten years since the pseudonymous Satoshi Nakamoto published his white paper, outlining the concept for the world’s first decentralized digital currency – Bitcoin. Nakamoto’s vision ultimately paved the way for over 2,000 altcoins which would follow in the footsteps of Bitcoin, but what have we learnt from the revolutionary technology in the decade since its inception? And how will these lessons help cryptocurrencies grow over the next ten years?
The Importance of Education
For many consumers, the concept outlined in Nakamoto’s nine-page white paper remains an abstract one reliant on unfamiliar distributed ledger technology and complex cryptography principles. These factors, along with the largely intangible nature of cryptocurrencies have proved to be barriers in their journey to mass adoption, with consumers naturally struggling to comprehend the concept of digital scarcity.
The growth of cryptocurrencies has served as a strong reminder that educating consumers is a crucial first step in increasing confidence in new technologies, and the intricate workings of blockchain technology make this educational process even more vital. Helping consumers understand the benefits of cryptocurrencies, and raising awareness of the technologies which underpin them, will be fundamental to the growth and widespread adoption of digital currencies over the next decade.
Early Regulation is Crucial
There are some in the cryptocurrency industry remain worryingly skeptical about the potential impact of regulation on the sector. However, you only have to look to the increased volatility of cryptocurrencies in the past twelve months to understand why regulation will be fundamental to the sustainable growth of cryptos – and any future applications of similar decentralized technologies.
Regulation represents a positive development for new burgeoning industries that face challenges in confidence, stability, and reliability, and the cryptocurrency market is no exception. Not only will regulation help to protect future investors from disreputable ICO projects, but it will also serve to hold those behind rouge projects accountable and prevent them from further damaging the industry’s reputation.
The establishment of a transparent, balanced regulatory environment will be crucial for cryptocurrencies, and other industries that adopt, or are supported by, new technologies like blockchain.
The Benefits of Embracing Transformation
Deeply entrenched industries like financial services have long been reluctant to embrace change, but cryptocurrencies arguably pose major financial institutions with a more complex challenge than any technology before them. The peer-to-peer system was designed to eliminate the need for a centralized body, and has been hailed by some as the end to traditional banking, and yet there’s a great deal for financial institutions to gain by embracing digital currencies.
For the majority of the past decade, large financial institutions have publicly decried cryptocurrencies. However, in a move that surprised many of its peers, Goldman Sacs recently confirmed the launch of a Bitcoin exchange. This announcement is indicative of a shift towards greater adoption among major players in the financial services industry, and as with many transformative technologies, those that adopt them early are those who stand to benefit the most from them.
The Need for Collaboration
Meaningful collaboration is crucial for any growing industry and the cryptocurrency industry is certainly one that could benefit by forging external partnerships and encouraging greater cross-collaboration. The rapid growth in the number of ICO projects and exchanges has led to a largely fragmented industry with few unifying standards or shared values.
By learning from other industries and promoting collaboration with external institutions and regulators industry peers can elevate cryptocurrencies’ reputation and encourage wider adoption. The fragmented, illiquid nature of digital currencies has also been challenging for the sector, and more meaningful collaborations to help create a regulatory framework would go a long way to incentivizing institutional investment and reducing volatility.
In the decade since their inception cryptocurrencies have experienced a series of highs and lows, but the challenges they have faced on the journey to mass awareness and adoption are certainty valuable ones. Improving understanding, encouraging transformation, regulation and promoting collaboration have all been challenges for forward-thinking industry leaders. Not only will these factors play crucial roles in the growth of cryptocurrencies over the next decade, but also for new technologies which are underpinned by decentralized technologies.