Inevitability of Blockchain becoming a world dominating force.

What do I mean by inevitability?

Let’s state some facts: Every 7–9 years we have a recession, usually preceded by a crisis. Now we are in a longest period of relative peace and prosperity, but problems of 2007 haven’t been solved. They were just moved up a level, to Central Banks. And they are running out of option to stimulate the economy. Are we sure that these guys invented a cure to recessions? Are we at the “End of History” again?

No matter what triggers the recession. It might be housing bubble, Deutcshe Bank bankruptcy, negative rates, REPO market abuse, or any other of dozens of possible causes. People will start to lose value of their assets. And as the panic breaks, some of them will hedge in a finite asset backed by nothing but math and demand — Bitcoin.

Now why Bitcoin? Why not time-tested hedges like Gold and Silver? The answer lies within properties of this piece of code, such as deflation, security and close to zero cost to store. Every 4 years the amount of Bitcoin goes through a “halvening” — cutting the supply in half and thus increasing it’s value. Every person with a phone can hold their pension savings in Bitcoin. There is no more need in third party that dictates what a person can and can’t do. Governments can confiscate gold — we’ve seen that. Dictators can try to ban Bitcoin or restrict access to the Internet — but you don’t need the Internet to store Bitcoin. A person can write 12 words on a piece of paper and bury it under a rock. Or just remember them. Next time you or someone next to you is online — you now have some value to operate with.

Beautiful thing about Bitcoin is that it is many things at once. Not only it’s a store of value; it’s also a gateway to the whole new asset class — smart contracts. The underlying technology behind Bitcoin and smart contracts is Blockchain — a protocol that creates a set of records and which is impossible to forge without breaking it.

And speaking about many things — there’s hard to find an industry that wouldn’t benefit from having a bit more trust in others. Since Blockchain solves an important mathematical problem — a need in third party to validate transactions, — it removes a lot tension in business processes. Companies can build their supply chains on a blockchain, store accounting information, give secured loans; we can have identification systems where a person chooses what information he or she want to disclose to the third party, and for how long. We can build trustworthy governing systems — when was a time in history when humanity could say these words in such order?

Of course there are few scenarios when Blockchain can fail. One of those is if when the a population permanently loses ability to access the Internet. But in such situation there are probably issues of higher urgency to care about.

Photo by Pawel Janiak on Unsplash

Now, currently crypto assets aren’t easy to get. In many countries governments are guarding their citizens and businesses from the Wild West of crypto space, taxing every crypto transaction or banning from acquiring these assets altogether. But it’s hard, almost impossible to prevent someone from buying Bitcoin. And when the crisis happens, money will move into Bitcoin, it possessing the advantage of being first and most well-known app. Thus the demand increase. And since there could be only 21 m (4–5 m of which are estimated to be lost forever by now), we will see inevitable spike in price. As more and more people become exposed in these assets, they will gain access to superior services. Even now we have excellent example of crypto-based projects providing way better service than the legacy industries such as banking. How can the latter compete on a free market with near-instant, cheap, borderless and trustless transactions that work 24/7 for more than a decade without a failure?

And what about fluctuations in price? Most of businesses and individuals can’t afford their assets to lose 40% of it’s value on a regular basis. And that is a fair point. But current volatility is caused by a relatively small size of crypto market. As we bobble around 200 b in estimate evaluation, the potential for growth is enormous. And as the mass adoption reaches it’s peaks, it will be way harder to manipulate the price. History of Bitcoin “bubbles” shows that cycles are less volatile percentage-wise with each new iteration. And various second layer solutions that attempt to create “stablecoins” and ease-of-use scenarios will further escalate the speed of adoption.

Blockchain has the potential to radically change the world around us. It also works as a hedge in next crisis, whenever it comes. In terms of technology — developers are ready for mass adoption. Yes, Bitcoin fees would probably skyrocket, but that will only give altcoins a moment to shine. Usability is improving, fiat gateways are increasing in quantity and quality and use cases are multiplying. We have countries like Malta and Lichtenstein that encourages Blockchain companies by providing clear rules of the game. China is racing to become a world leader in Blockchain, albeit in it’s perverse manner. And the only thing that we as a society are missing is global necessity in moving forward with Blockchain adoption. Blood on the streets provides such necessity. We definitely have an interesting times ahead of us, and it would be wise to ride the wave rather than being crushed by it.