The world of cryptocurrency is a tailor-made financial paradise where timing is everything and nothing is certain. The moment you think you have your hand in the market, a billionaire tweets a meme and you’re pushed to one margin or another.
Roller coasters and thrill seekers may appreciate the experience, but investors looking for a way out of the oppression of centralized money and banking might wish for a less volatile future.
Unfortunately, the way forward is not straightforward. On paper, decentralized digital currencies like Bitcoin and Ethereum make perfect sense.
If I own a dollar worth of Bitcoin and the US government decides to denounce me and declare my citizenship null, I still own a dollar worth of Bitcoin. But every penny of fiat money I have in the US markets, banks, 401Ks, and other investments would be completely wasted.
In theory, no government or other cryptocurrency holder should be able to revoke your holdings in a truly decentralized financial paradigm.
But, often, the only thing stopping government agencies from seizing cryptocurrency is technology. What if this changes?
Today we are promised that our crypto holdings are secure against intrusion, theft and retention by word cryptography. Just as the government technically cannot access our WhatsApp conversations because they are encrypted, it should not be able to touch our cryptocurrency holdings.
And, with Bitcoin and the like giant cryptocurrencies built on decentralized (but well managed) blockchain platforms, there is little concern for a government could gain sufficient technological advantage to seize assets. If, for example, China or the United States invent a quantum computer capable of breaking binary cryptography, the Bitcoin platform is large enough to solicit community support for technology to mitigate these attacks.
But market 99.9 is smaller than Bitcoin and Ethereum. And without crypto to protect what’s in your digital wallet, there’s no difference between a total scam and a legitimate cryptocurrency.
If a given cryptocurrency is unable to fend off quantum computing attacks by the IRS, FBI, DoD, Chinese Department of the Military, and any other given entity capable of funding and building a computer quantum, the future of cryptocurrency may be a bleak one.
Only a handful of walled gardens the size of a Bitcoin would prevail in such a technological paradigm.
Opponents may point out that quantum computing is still in its infancy, but these opponents might not have an ear on the pitch when it comes to where we are with the technology.
It doesn’t seem risky to assume that useful quantum cryptography systems could be fully operational before 2050.
If governments are able to seize cryptocurrency with relative ease even greater than physically confiscating people’s money or ordering the freezing of their fiat accounts, that will be a problem for people who don’t want to hold crypto only because it is decentralized.
The problem is that, theoretically, when only a handful of cryptocurrencies are available, the whales gain even more advantage by essentially becoming ‘home’.
Elon Musk, for example, can move entire cryptomarkets with just one tweet right now thanks to the strength of his position and popularity with cryptocurrency aficionados.
But at least there is some balance in the market today. For every DogeCoin riding Elon’s wave of emotions, there are hundreds of just as legitimate cryptocurrencies in hopes of making their way into the heart of the next whale and into the social media feed.
It might sound offhand, but if you’re one of the countless people who turned their pocket change into Lambo cash with nothing but a few hundred bucks, a crytpo trading app, and a Reddit account, you don’t care. probably.
The point is that today’s crypto market offers the illusion of choice to such an extent that as long as you only care about short-term financial gain, all investors can make a lot of money, no matter what. guppies or whales. .
But the imminent addition of quantum computers to government agencies could change everything. Cryptocurrency holdings currently represent over 90% of total funds seized by the IRS in 2020 and the agency expects that number to increase in fiscal year 2021-2022.
We can logically assume that countries like India, where an outright ban on public cryptocurrencies is currently on the table, and China, where all cryptocurrency activity is currently banned, would be equally likely to seize crypto-assets where applicable and to the extent possible.
A future where only the world’s largest cryptocurrencies can withstand government seizure and corporate manipulation is a future where even decentralized coins are artificially centralized in a marginalized market.
When Einstein coined the term “spooky action at a distance” he was talking about the bizarre machinations of quantum physics. But the sentiment is just as applicable to cryptocurrency.
It’s hard to imagine what the next five minutes will look like for most rooms. Trying to look 30 years into the future of the field is an impossible task.
All we can be sure of is that players currently holding a whale-watching position in the fiduciary market (like the US government and Elon Musk) are unlikely to relinquish that position. Whether that means they are taking over the cryptomarket or going their separate ways depends on their motives.
In the meantime, the people who support a decentralized future for cryptocurrency should urge the communities and development teams behind the legitimate coins to start sustainability now.
If you wait until IBM or Google starts selling quantum computers on Amazon before you start preparing for the impending encryption nightmare, you bet the next 30 years of technological breakthroughs will be less eventful than the last.
And, given that Bitcoin wasn’t invented 30 years ago, it seems like a huge gamble.