Interview, Fireside Chat, Conference Presentation
a16z Podcast | Trends in Cryptocurrencies
- Filecoin is predicted to eventually repurpose Bitcoin's proof-of-work mechanisms for cloud storage, potentially applying Bitcoin's exponential growth trajectory to the storage market.
- An algorithmic token market is expected to facilitate the trading of spare storage capacity, creating a peer-to-peer "Airbnb for storage" that leverages excess capacity unavailable to individual providers.
- Users are anticipated to migrate from centralized cloud services to verifiable decentralized systems to mitigate risks associated with third-party control over digital assets.
- Peer-to-peer protocols may eventually challenge major Web 2.0 platforms like Twitter, Uber, and Etsy by eliminating centralized value extraction and transferring ownership to users.
- Consumer applications built on these protocols are projected to emerge starting in 2018, with significant competitors to traditional social applications appearing in late 2018 or 2019.
- Robust peer-to-peer infrastructure supporting consumer applications is forecast to arrive within approximately three years.
- Verifiable off-chain computation systems, such as Truebit, are expected to enable complex logic execution for smart contract platforms like Ethereum and Tezos by submitting proofs to the blockchain.
- High-throughput blockchain systems utilizing scaling techniques like off-chain computation are expected to be developed over the next one to two years.
- Implementations of these scaling solutions are projected to go live within the next two years.
- The pace of cryptocurrency development is expected to remain at an unprecedented level due to an ICO-driven inflection point that has made capital readily available to knowledgeable participants.
- Market noise and hype surrounding ICOs are expected to peak and subside, leading to a return to greater rigor in investment practices.
- The community is anticipated to form credible groups to establish standards for teams and implementation to distinguish credible projects from noise in the ICO space.
- On-blockchain governance systems involving monetary staking for voting on protocol changes are expected to become necessary for faster iteration and robustness.
- On-chain governance models are predicted to become relevant despite uncertainties regarding majority voting incentives and the potential for capital to dictate outcomes arbitrarily.
- Game theory applied to incentive structures is expected to transform centralized systems into decentralized ones and enable applications difficult to achieve by single parties.
- Smart contracts are projected to facilitate the creation of complex, innovative applications over the next couple of years.
- In the short term, formal verification is expected to be applied to smart contracts to prevent catastrophic funding losses from single-line bugs.
- Long-term application of these technologies is expected to rewire internet power structures and establish an incentives layer to preserve internet freedoms.
- Government efforts to restrict internet freedoms are expected to increase, likely emerging after the next year as they struggle to keep pace with decentralized technologies.
- Strong infrastructure is expected to be in place before government restrictions result in a direct conflict, ensuring the continued ability to remain free.