I don’t think people truly see the potential in crypto. To me crypto is literally a breakthrough for financial technology. Right now is the very early stages where machines are first getting invented.
Corrupt government (adds competition)
The fundemental reason why I think government currency is bad, is because it has to be regulated. Luckily I live in the US where the fed is based, so I don’t really ever have to worry about currency as usd can’t possibly fail and even if it does, all world currencies do. If I did not live in the US this would be a massive problem because 1 bad decision can lead to the destruction a entire economy. Crypto never has this problem because you can’t just “print more”. Even if you make the claim that developers can make the bad decision, just read the paragraph below.
Another beautiful part about crypto is that you don’t need loyalty to one crypto or another (especially in the future). This solves the problem of bad leaders which are leading your coin. Using cosmos sdk or exchanges (coming in the near future like thorchain) you should be able to easily swap between cryptos. You may think, but renzix that will cause a taxable event! While this is true 1. you are only taxed on gains and 2. If you take out a loss that will offset a gain so you should actively try to keep that at a net 0. Because of cryptos digital nature it is very easy to track everything about the transaction and it should get even easier on the future. I also hope that once crypto actually gets adopted, that governments will change tax precedents to treat it more like a currency and add a buffer on capital gains tax or something.
Even though governments may ban crypto, that tends to drive more people to crypto.
Moving Money
The modern banking system is really broken because of all the checks it has to do to function. It takes days and massive amounts of money to transfer funds across countries when it takes even the worst cryptos minutes. There are plenty of cryptos with extremely small fees which are safer and decentralized which you can use already. Not to mention there is work being done so that the plumbing of these financial institutions would be seemless so that you could transfer usd -> eur in another country without even knowing that you used a crypto currency. This use case alone will free up so much time/money.
The second use case is something like the lightning network, you could feasibly make a true pay for exactly what you receive. A great example of this is a netflix like service. Instead of a monthly reoccuring fee you could have every second 0.0001 BTC gets pulled out of your account. This is interesting because with stuff like XLM and the lightning network this is actually possible because the fees are literally that low.
Relevant (probably not scams) crypto: bitcoin (with lightning network), litecoin, bitcoin cash, ripple, stellar
Programmable
Ethereum revolutionize crypto when it introduced smart contracts. The tldr of a smart contract is just code that executes on the blockchain. Because it’s on the blockchain you can know exactly what code was ran so you do NOT have to rely on a project saying it’s open source but in reality it is not (and steals money from you). The drawback is the gas fees however you are able to do whatever your mind can think of (as long as the gas fee isn’t too large) and not have to worry about erasing or double spending money with clear rules on how the money will flow. This really shines with specific use cases which is why ethereum has so many different projects. Currently ethereum has by far the biggest ecosystem and the most work done on it.
Relevant (probably not scams) projects: Ethereum, Cardano, Polkadot
New coins
Because you can program things, you can setup new coins which follow a specific standard and use the same code base. The standard for ethereum is erc20. This let’s you piggyback off of etherums success as a project and be able to access the ability to run smart contracts without making a entirely new vm. The price that you pay is that you have to use ethereum to pay gas fees. Also there are various other benefits like security and having a single wallet etc…
Also some coins offer specific gimmicks related to dapps or mining. Filecoin for example let’s you earn coins by serving files on the network. You can then use these coins to access said files or just outright buy them. This kinda functions as a scuffed AWS. Without the overhead of a real business with thousands of employees.
Relevant (probably not scams) projects: Chainlink, Basic attention token, maker, dai, usdc, compound, Filecoin, etc…
Dapps
Dapps are the real reason why ethereum is so powerful. These are (normally) open source applications which let’s you do advanced things like banking, loans(basically margin for crypto), automatic market making, and other services. The 2 currently most popular is the collatorized loans (basically taking margin out on your crypto) and dex’s. Dexs are basically decentralized exchanges (like coinbase) which let you trade crypto with random people. Normally this doesn’t work because the price would change rapidly but with the magic of automatic market makers (amm) people will take both sides of the trade (with a small fee) and eventually make money.
What a lot of dapps are doing is making their own token to force people to “buy back in”. They then give people these tokens and tell them they can vote on the future of the protocol if they keep it. Not only that but these tokens tend to appreciate due to people buying them to influence the protocol or people thinking that this specific platform will be huge in the future.
This is only the very beginning of the use cases for dapps. With dapps you could quite literally create companies without having a actual company and just pump the related coin to the project. I could in theory start a taxi dapp which is available for Android/ios. This app could be void of any corporate structure or any notion of employees and just have investors of the taxicoin make decisions related to it.
The problem which we haven’t really faced yet (because dapps are so new) is that the people with a massive amount invested might kill or ruin the project because of greed or another reason. This is actually fixable if you build in safeguards at the coin level which cannot be changed like not allowing 1 wallet to hold more then 10% of the holdings or having a high amount of inflation given to the drivers.
As shown above having the ability to have completely digital and decentralized applications which give profits to it’s users is insane to me. You could totally define a COMPLETELY fair system of economics in which the people involved getting all of the money.
Nfts
Nfts are just like new coins, but instead of being the same, they are unique. Erc720 defines what a general nft is. You can use nfts to prove you own a unique code. The cool thing about nfts is that 1. You can’t leak it without leaking your own wallet address and 2. It’s programmable just like any other coin inside of the ethereum network.
The programmable part makes nfts insanely powerful. You can for example requires a nft to login to a website or let you get backspace passes at a concert. Another really interesting use case is for dapps by letting you use drm on music/videos. Now you can force people to actually own the music/video and not have to worry about the drm going out of service.
Artists can actually get paid for their work and you can own a song so long as you have the nft for it(keys). Not only that but you could properly and effortlessly transfer money to the multiple people in the song. This could all happen instantaneously.
Lastly you could have a “minimum bid” for the song and the “highest bidders” get access to backstage passes or access to a private discord group. All automatically. Do you know how insane the music/movie industry is right now? Billions of dollars are spent in ip rights because they are the only people who know how to market/sell your song. With nfts there is a way for the average person to do this without giving up their rights and STILL receive royalties (on resale or just make a infinite supply).
Imo nfts don’t have much useful things right now and is in a bubble. It needs dapps, talented musicians and businesses to come in and abuse it as the ultimate payment processor. Also keep in mind it is still the early adopter stage. Crypto still needs to get more mainstream but the real life potential is still there.
Privacy
There are multiple coins being created with the goal of being impossible to track while still being secure. These coins may have different gimmicks but this is very useful if you want to keep your privacy to only you. Most coins are anonymous but not private so you would have to have 2 wallets of said coin and 1 of these coins to “clean” the coins to make that second wallet private. It can be argued that complete privacy is a good or bad thing but privacy is even a thing in the real financial world. These coins will take off, if governments start banning crypto or other hiding/privacy is wanted/needed.
Another thing is that you can remove the idea of privacy for certain people/accounts. If you enforce someone to only get paid in a nonprivate coin (or even a company), you can see all their finances. This is kinda done in public companies but its hard to prove for sure.
Related (probably not scams) projects: Monero, zcash, dash
Governance
I was debating on adding this because I am unsure if I covered this enough in one of the programming sections. Governance is the ability for people who own the coin to make changes to the protocol in a systematic way. It let’s people vote on proposals which can be added or removed by developers. One of the key things to understand about governance is that unlike in stocks, this doesn’t have to mean ownership. The creator of a protocol can make rules and regulations which coin holders can’t overturn.
That being said governance has the potential to bleed the users of the protocol out of money if used inside a dapp. Something like collatorized loans is probably okay to take some of the profit and put it into the related governance token but something like that uber app I mentioned above would not be unless your giving the correspondent token directly to the dapp user and not burning ones already on the market. Not to mention these tokens should NOT be deflationary so that new users get a fair share and it doesn’t become a “who joined first”
Related cryptos: compound, aave, yfi, maker
Crypto concerns
These are all of the concerns I can think of with crypto. I will say the only lasting one is the environmental concerns and that both concerns could be said about multiple different industries not just crypto. Not to mention that the second part of that problem is 100% reversible and the first part is solvable right now.
Fees
Currently fees on ethereum are insane. It honestly will take a very long time to fix but we have the same technology in databases in a way. We just need to apply to a secure blockchain.
Environment
I think crypto could in the future have a net 0 effect on the environment. Currently governments attack businesses for being bad for the environment but with crypto we have to make sure people are too. Fortunately for crypto, it is still very profitable to use green energy to mine. We should be able to track people polluting areas in the near future and be able to stop it.
The biggest problem comes in the processors and components that are thrown out once something newer comes along (because it increases power efficiency effectively making more use of electricity). This isn’t just a crypto problem as more and more smart phones and other devices are being made every year. There needs to be some incentive to recycle these products.
Because at its core most cryptos are not private (its generally anonymous not private), we can totally have exchanges with coins only mined with clean energy, good working conditions and recycles their gpus. Kevin O’Leary for example does this by investing in companies that create bitcoin while demanding he gets paid in equity via bitcoin.
Regulation
This probably will happen in the near future. Regulation has the ability to stunt cryptos growth or let it go to the moon. Too little or too much regulation will ultimately slow down crypto growth. I don’t think too little will kill it outright but it will cause a outright ban if not dealt with properly or cause a stunt in growth. Too much regulation could cause it to take 100s of years and I won’t be able to see it grow in my lifetime.
Marketing
Cryptos biggest problem is that it seems sketchy as fuck and it’s not consumer friendly. You can see that by looking at the price of bitcoin/dogecoin. They both are ultimately trash yet they have huge market caps. This is because everyone knows about bitcoin and a large amount of businesses added dogecoin to their payment as a way to market their app to consumers. It let both the company and dogecoin be on the front page of websites for a day.