The co-founder of Ethereum Joseph Lubin recently stated at the SXSW conference in Austin on March 14 that in the next 10 to 20 years, the global economy will be 10 times larger and when blockchain is fully ramified, it will be involved in the most of it. He also stated:
There aren’t a lot of “normal” people who are using these systems right now but there weren’t a lot of normal people firing Email around in 1983.
Blockchain-based and tokenized systems are only being used by some specific communities and the general public is largely avoiding the crypto space owing to illegal and fraudulent activities linked to them. If Joseph’s prediction regarding blockchain taking a huge chunk of the economy in the future is right, here’s some insight into which sectors will it impact and what are the hurdles that it needs to cross in order to achieve this feat.
The biggest features that blockchain presents are trust, transparency, and decentralization. Any centralized framework relating to any industry can benefit from it. One of the biggest examples in this regard is elections. Elections across various countries are carried out through centralized authorities or election commissions. Allegations of rigging are often seen in countries like Pakistan. If elections are done through blockchain, this issue is solved completely. Be it the logistics of financial institutions or medical records of patients, the transparency and openness of blockchain make it usable in almost every framework. Blockchain projects providing use-cases in different sectors of life are already springing up. From elections to content-creation, decentralization and transparency are proving to be valuable.
Then comes the aspect of tokenization. Every blockchain-based framework contains an internal token that moves value in that particular framework. Putting an asset class on blockchain also tokenizes it, which makes it easier to distribute. For example, if real estate is put on a blockchain with tokens carrying fractional ownership of land, new avenues are opened up giving people access to a new kind of economy. Fractional ownership cuts the huge price tag of an asset and makes it easy to sell fractions at very less value as compared to the price tag of the whole asset.
These are some of the possibilities that blockchain offers but bitcoin is the biggest use-case that this tech has shown us in the real world. One of the reasons why blockchain hasn’t gotten the attention it wanted yet is due to the issues associated with bitcoin. Illegal usage and negative connotation attached with cryptos and blockchain have stopped them from widespread adoption. Dark web, which is an online marketplace for extremely illegal activities like drug selling and buying etc. solely deals in cryptos. Scams, money laundering, and fraudulent investment opportunities have raised questions regarding cryptos.
As we are moving forward, things are changing rapidly. Developers and regulators from across the globe are trying to make blockchain and blockchain-based monetary frameworks more efficient and foolproof. A lot of capital in the form of money and intellect is flowing into the blockchain space which signifies its importance as the technology of the future. Just recently we saw Tendermint raise $9 million in Series A funding. Tendermint is firm behind the launch of the much-hyped blockchain project Cosmos, which is a blockchain network to connect different blockchains.
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But before Lubin’s statements prove to be true, there are certain limitations attached with blockchain that need to be tackled, scalability being the first one of them. The number of transactions per second (TPS) that bitcoin and ethereum can handle is far less than VISA at the moment (7 TPS for bitcoin and 24,000 for VISA). Running a bitcoin and Ethereum node is also too expensive in terms of hardware costs. If cryptos and blockchain are to gain more widespread adoption in the “normal” public, these issues need to be solved. As pointed by Joseph, Ethereum is already working on solving this issue with its new version, Ethereum 2.0.
In Bitcoin and currently in Ethereum, you need to have specialized hardware, burn lots of electricity, waste lots of computation, to basically keep everybody in sync. [With Ethereum 2.0, in 18 months] we’ll have a blockchain system much more powerful and scalable that uses orders of magnitude less energy.
With the brains and capital that this space has, it surely does not seem overkill to say blockchain will dominate major part of our social economy in the coming few decades.