The Coin Dilemma

As the new cycle seemingly emerges, It’s important to visit a widely discussed topic in the cryptocurrency space, the growing number of coins in existence.

At the time of writing, there are 2133 coins listed on Coin Market Cap. There are more coins out there that are not listed on CMC.

Here’s the thing:

We need to change the way we think about cryptocurrency (and it is a testament to how early it is that people have yet to see this). Cryptocurrency is not a 0 sum game. By design it cannot be. It wont be 1 coin to rule them all in the world of ALT’s.

Instead lets look at it like this:

How many people collect points at the gas station?

How many people collect airmiles?

How many businesses offer points or rewards?

If we look at these questions objectively we can paint a bigger picture of how the future of cryptocurrency and commerce could work. Imagine a market place where you could buy and sell these collected points at will. With atomic swaps (or the offspring of it) transactions wont exist the same way they do now. Neither will transactions.

Let’s run a thought experiment. Imagine you have your daily routine, things you do and consume on a regular basis. You work, frequent certain shops, use certain services wether provided by a private business or corporation or a government. You have a car or take public transportation, Maybe uber.

You may have a few different cryptocurrencies that you use as you go on about your day. However, to someone who does not trade these currencies, you may not even know it. Imagine say you have a bitcoin wallet on your phone. This is where your spending money is. As you purchase an item, product or service the bitcoin in real time gets converted to another coin via atomic swap for the equivalent amount. The transaction is done and you go on your way. This is a possible outcome of how cryptocurrency could work in the future.

The evolution of crypto currencies is headed to real time transactions. To understand this lets look at our current tech and understand how transactions work.

Since humans began trading things, there has been a transaction rate. If you hand someone money and they give you something in return. This is a simple transaction that would work pretty smoothly. But what if you hand someone money along with 100 more people? The rate of transactions would be very slow as the one person behind the counter can only deal with one person at a time.

We have invented things to help with this. Computers are a great tool for handling this and now with the advent of the internet all humans across the globe can transact at any time they wish with anyone they wish. As humanity develops even more, there will be increasing bottle necks for various reasons. Emerging markets will be leap frogging in technological advancement. Thus they will have an exponential amount of electronic devices attached to the world grid.

To add to this, IOT will become more and more wide spread. Some of these devices will transact on the behalf of a human and there will be machine to machine transactions happening faster than a human can think.

As automation grows this will only increase and our current system of payments will not support this.

Bitcoin – 3 – 5 TX/s

Ethereum – 20 TX/s

PayPal – 193 transactions per second

Visa / Mastercard – 1,667 – 2000 transaction per second

Zilliqa – 2828 – (Linearly scalable)

As you can see, we are very early in improving transaction speeds as we have never really needed to. During peak times (for example Christmas holidays) Visa and Mastercard can peak tx speeds. But to get to real time transactions or something close to it, will take time. Even for some, to wrap your head around this may be hard to do. It can be hard to imagine machine to machine transactions just as much as it can be hard to imagine a likely future where most people probably wont even think twice about transactions for the most part. They will just happen in the background.

Now. How does this tie into the crypto currency market, coins and projects? Well at this stage it is still very early. A lot of projects will fail but many more will come. However it may be safe to say that cryptocurrency is still building the infrastructure. Many projects may end up working together or perhaps merging in some way. However it is likely that we are still in the foundational stage. As new services emerge on these block chains, we will see services that will make it easier to use and be more widely adopted until it is easier than traditional finance. At this point something like atomic swaps would probably be automatically integrated into whatever wallet you use. If you own one coin and need another? It can be done automatically in seconds with ease and provide a full report if you need it. For the daily user it would be a no brainer.

Where does the market come in to play? In the future markets, similar to the traditional markets now but a little different. Investors will actively trade these coins which will fluctuate the prices, by this time the prices would be more stable as there would be much more money in the cryptocurrency market than there is now. Different blockchains, blockchain services and DaaP’s (and anything else running on chain) will have different valuations depending on the markets. Similar to how traditional markets work now. We all think about the price of gas but when you need it, you just buy it. The same is true for other products and services.

The only difference is that currently we are bound by our government issued fiat currency that is in reality backed by nothing. In the future when digital currency is king, different coins will have different valuations, bitcoin could still be the main currency but if you hold, lets say a coin that is issued from your grocery store, you can spend those to get your groceries and depending on the market valuation of that coin, it may be more valuable, thus increasing your purchasing power. Alternatively it could be atomic swapped to Bitcoin in real time (or close to it) a the cash out of any other store.

This paints a possible picture on where things are headed. Regardless, lets hope that it is an open source future where the people decide. A future where we are free to transact and trade with each other freely. It does not have to be a 0 – sum game with one coin to rule them all. Rather, it will likely end up being an ecosystem where many coins exist and work together, some may even compliment each other. With machine to machine transactions happening in the background and automation, it will all be an after thought.

Categorised in: Cryptocurrency Markets

This post was written by BlockAdvisor