Why the future of money isn’t Bitcoin (and what it will look like next instead)

Wednesday 19th September 2018 by in 2018

A guest blog post from York app developers, The Distance Agency.

Cryptocurrencies and blockchains are the most hyped financial technologies in the last couple of years. If you followed the prices of Bitcoin and Ethereum last year, you’d be forgiven for thinking a new money paradigm had finally arrived. In fact, these were just classic speculative bubbles in largely unregulated assets, much the same as those that have occured many, many times in the past. Meanwhile, other commentators are busy telling us that blockchains will allow us to fully decentralise the web and apps, forming the basis of Web 3.0. They’re wrong too; a blockchain makes a truly terrible distributed database, creates more problems than it solves for decentralising the web, and doesn’t actually provide new capabilities that most consumers care about.

Don’t get me wrong, I think blockchains are a genuinely brilliant innovation. They solve the problem of distributed trust, such that transactions on a network can be trusted and audited without the need to trust any single entity to run that network. I’m convinced they will be an important piece of future systems that a large fraction of the population of the planet depend upon. The key word in that last sentence is “future”. The current generation of cryptocurrencies and blockchain projects are almost all too early. Believe me, I have plenty of first hand experience being too early. I wanted to do a machine learning PhD in 2000. I was building smartphones in 2002. I built Augmented Reality apps in 2012. These new blockchain technologies similarly suffer the typical issues of a brilliant solution in search of problems, before the technology has matured. The industry will learn from the failures and eventually start using them as just another tool to solve problems that start with a genuine customer pain point.

The core of the cryptocurrency movement is also fundamentally anarchistic. Whilst I understand the growing desire to overturn a system that no longer works for many, I believe the technology will have to leave that ideology behind to gain mainstream acceptance. I predict that mass market blockchain systems will have a limited number of trusted nodes chosen such that they’re extremely unlikely to collude with one another. This shift is probably a decade away from going mainstream. That’s why blockchains were not high on my list of technologies to invest in when I started as Technical Director here at The Distance in February this year. Instead, I believe the near-term future of money will be driven by ever-better mobile apps for banking, savings, insurance, investing and more. Mobile payments will continue to grow in adoption, meaning ever more users have payment details pre-entered in their devices. Although they’re far less exciting, the open banking APIs launched in the UK at the start of this year, and the new apps they enable, will bring greater changes to our interaction with money than cryptocurrencies over the next five years.

By Mark Wilcox (Tech Director at The Distance)

More 2018 Updates

Thanks to our partners

Supported by