Three Things That Need to Happen for me to be More Bullish About Crypto
Three things need to happen to crypto for me to be more bullish: (1) blockchain scalability must improve; (2) regulatory impediments must be removed and/or eased; (3) products must be designed for the broad middle as opposed to the right-hand side of the IQ distribution.
Let's take these three points in turn.
Blockchain scalability
This basically refers to the number of transactions that can be recorded per second on a given blockchain. As a point of comparison, Visa claims that its maximum throughput is something like 65,000 transactions per second (as of August 2017), and Mastercard's is claimed to be around 5,000 per second.
Solana claims that its blockchain can process between 2,000 and 3,000 transactions per second. I know that some parts of crypto world don't like Solana because it is viewed as more centralized than, say, bitcoin. But for my purposes, which is scalability, I'm not sure that degree of decentralization is really a pertinent factor.
Bitcoin bulls claim that the Lightning Network, a so-called Layer 2 protocol that lies on top of bitcoin, will be able to process up to 1 million transactions per second.
A lot of work is being done on a variety of chains to increase scalability. I don't doubt that this will eventually be a solved problem.
Regulatory impediments
Right now, in the US, the SEC views virtually all crypto-tokens aside from bitcoin, and possibly ethereum, as being financial securities. And as soon as a thing is labeled a financial security, all sorts of regulatory requirements emanate from it.
I'm not a lawyer, and I'm not going to play one on this blog, so I will make this very succinct, albeit hand-wavy, comment: much of what passes for "web 3" in crypto world entails using digital things that the SEC considers to be financial securities.
And those digital things are meant to be used by normal people, not accredited investors. And that does not jibe well with the SEC or its mandate.
Something has to give here. Either the SEC has to relent, or web 3 has to disappear. At present I'm not at all bullish on the prospects of the SEC willingly relinquishing its power.
Design for the broad middle
From its earliest days as the redoubt of cypherpunks, the various offshoots and neighborhoods of crypto world have been stuffed full of people who, about whom it can be charitably stated, are much smarter than the average person. And when you have small insular communities comprised of smarter-than-average people, something can be lost.
And that something is usability. Usability has a certain ineffable quality to it that, like Justice Potter Stewart's saying, you know it when you see it. When Apple first released the iPod, and later the iPhone, you just knew that it was designed intuitively, and for the average person. Can you imagine the average person reacting to a new crypto release the way that iJustine reacted to the first iPhone back in 2007?
Literally nothing in crypto world is designed for the average person. It's all well and good to say "not your keys, not your crypto." And it's an accurate statement. But the notion that the average user wants to be, much less can be, "their own banker" is facile and absurd.