Ten years have passed since the pseudonym Satoshi Nakamoto published his white paper, outlining the concept for the first decentralized digital currency in the world: Bitcoin. Nakamoto's vision eventually paved the way for over 2000 altcoins that would follow in the footsteps of Bitcoin, but what have we learned from revolutionary technology in the decade since its inception? And how will these lessons help cryptocurrencies to grow over the next ten years?
The importance of education
For many consumers, the concept outlined in Nakamoto's nine-page white paper remains an abstract based on unfamiliar distributed accounting technology and complex cryptography principles. These factors, along with the largely intangible nature of cryptocurrencies, have proved to be obstacles on their way to mass adoption, with consumers naturally struggling to understand the concept of digital scarcity.
The growth of cryptocurrencies has served to remind us that educating consumers is a crucial first step to increase confidence in new technologies and the intricate functioning of blockchain technology makes this educational process even more vital. Helping consumers understand the benefits of cryptocurrencies and raising awareness of the technologies that support them will be critical to the growth and widespread adoption of digital currencies over the next decade.
Early regulation is crucial
In the cryptocurrency sector, there are some who continue to worry with skepticism about the potential impact of regulation on the sector. However, in the last twelve months we must only look at the increased volatility of cryptocurrencies to understand why regulation will be crucial for the sustainable growth of crypts – and for any future application of similar decentralized technologies.
The regulation is a positive development for new fast-growing industries that face challenges in terms of trust, stability and reliability, and the cryptocurrency market is no exception. The regulation will not only help protect future investors from undesirable ICO projects, but will also help ensure that those behind the common projects are accountable and prevent them from further damaging the industry's reputation.
The creation of a transparent and balanced regulatory environment will be crucial for cryptocurrencies and other industries that adopt or are supported by new technologies such as blockchain.
The benefits of embracing the transformation
Deep-rooted industries such as financial services have long been reluctant to accept change, but cryptocurrencies probably pose major financial institutions with a more complex challenge than any technology before them. The peer-to-peer system was designed to eliminate the need for a centralized body, and was hailed by some as the end of traditional banking, yet it's a big deal for financial institutions to get by embracing the digital currencies.
For most of the last ten years, large financial institutions have publicly criticized cryptocurrencies. However, with a move that surprised many of his peers, Goldman Sacs recently confirmed the launch of a Bitcoin exchange. This announcement is indicative of a shift towards greater adoption among the major players in the financial services sector, and as with many transformation technologies, those that adopt them soon are those that will benefit the most from them.
The need for collaboration
Significant collaboration is crucial for any growing industry and the cryptocurrency industry is certainly one that could benefit from the creation of external partnerships and the encouragement of greater cross-collaboration. The rapid growth in the number of ICO projects and exchanges has led to a largely fragmented industry with few unifying standards or shared values.
By learning from other sectors and fostering collaboration with external institutions and regulators, peers can raise the reputation of cryptocurrencies and encourage broader adoption. The fragmented and illiquid nature of digital currencies has also been a challenge for the industry, and more meaningful collaborations to help create a regulatory framework would do much to boost institutional investment and reduce volatility.
In the decade following their beginning, cryptocurrencies have experienced a series of ups and downs, but the challenges they have faced on the path to awareness and mass adoption are precious certainties. Improving understanding, encouraging transformation, regulation and fostering collaboration have all been challenges for forward-looking industry leaders. These factors will not only play a crucial role in the growth of cryptocurrencies in the next decade, but also for new technologies that are supported by decentralized technologies.