Who is Yahoo Now?
People often ask if we are in a cryptocurrency bubble. I do not think we are. We are still at the hype stage, where a new technology is not yet stable, but everyone is excited about its potential. The problem is, when it comes to blockchain, people don’t understand that right now, this is one gargantuan and expensive experiment. People have also lost sight of this experiment and tend to think of Bitcoin when someone says Blockchain. They aren’t the same thing.
People mistake Bitcoin for digital gold, without really understanding what that means. Try not to call something a name if you don’t know if that is the right name. Gold is not currency, it’s a store of value, an investment. You can’t go to the store and buy a bottle of orange juice with it but you can invest in it to sell to someone later when the market is good and then it will be money. Bitcoin is also a protocol and it’s a first attempt at creating a trustless currency. Meaning that there is no central system or middle men to verify any information. It’s an excellent first attempt, by the way, but it’s just a first attempt. It has some well know competition.
Ether is the next evolution of cryptocurrency. Ether is also not digital gold. It is a protocol as well and supports a more purpose driven blockchain opposed to some others. The Ethereum blockchain can handle multi-signature accounts and has smart contracts already built in and stores programming logic. It is not just to record cryptocurrency exchanges. Companies in the medical, telecom and AI world are already looking at Ethereum blockchain to replace their older storage methods. But at the moment it’s still not stable enough to handle a sudden rush of kitten breeders and traders.
It’s hard to tell who will dominate the market. The cryptocurrency market is unstable as shown in the CoinMarketCap.com table. Not all coins are worth the same amount and have different patterns in the rise and fall. It would be foolhardy to invest in it if you can’t afford the possible negative outcome or do not want to just hang on for dear life or HODL as the term goes. Think about it, what if you had invested in Friendster, Pets.com, Flooz or Yahoo’s Geocities? These did not weather the dotcom bubble burst that happened in March, 2000. Many people lost a lot of money when these crashed.
Cryptocurrency is here to stay, just not in the current format. It’s tempting to believe that we have found the next greatest technology in Bitcoin and Ether, and I believe that we have, for now. The technology is still in its infancy and it will probably take different turns and incarnations so that it will be enough for each new generation. There will be teams and individuals who will improve on it. They will prove that Vitalik didn’t have the ultimate answer just as Vitalik proved that Satoshi didn’t have the ultimate answer. Plenty of people think that what we have in Bitcoin and Ethereum is good enough, but that’s just turning a blind eye to the real problems.
The issues with the market would require many steps to be resolved. You have multiple exchanges without a single pool to draw on which causes liquidity issues that are only going to get worse as more exchanges enter the market. The transaction times are slow and can take anywhere from 6 minutes to 60+ minutes. The system has miners that can simply choose not to confirm a transaction because the fee is too low. Dozens of forks confuses the market and causes problems with its liquidity and makes it about as stable as Francium. There is also a governance that, no, no we aren’t getting started on that. I could go on and on. It is all quite preposterous.
At this point, we are facing too many problems for me to believe that the current generation of cryptocurrencies is the one that we will see 5 or 10 years down the line. People and companies are thinking of new ways to improve the system. They are already working on solving the issue of slow transaction times by creating Lightning Network.
I say we do not need an ultimate answer. If there was one in the past we could all very well be stuck with a Sidekick, writing checks and having a wired cable remote. What we need is something good enough in this moment. Everything changes, and hopefully it’s all for the better.