Crypto: Not Ready for Mass Adoption

I know that everyone's been screaming mass adoption ever since the beginning of 2018 and even the previous months or years before that. I get it. I get why we want mass adoption. I get why we as a community are compelled to root for it. However, wanting it and needing it are 2 different things.

Here's why: Mass adoption is gonna inflate the price and we all want that! I want that too. But if mass adoption happens this year, I'm gonna cash out for sure because I know it's gonna go down soon! Timing will be the tricky part.

I'll make this super simple by exploring the consequences of premature mass adoption. Let's pretend crypto mass adoption will happen this year ayt?

Pretense: Mass Adoption by December 2018

Let's mimic a real-life gradual mass adoption phenomenon. For it to be realistic, it has to be gradual. You can't expect 500 million new bitcoin users by tomorrow no matter what type of news comes up; that's very unlikely to ever happen. In fact it's more like Hyperbitcoinization--which is an interesting topic for another time.

Pretense details:

1. On September 1, Bitcoin ETFs are approved and a week later other entities all over the world started issuing their own Bitcoin ETFs due to FOMO(Fear of missing out).
2. This will cause a spike in Bitcoin's price as a result of whales without knowledge or care about crypto pouring tens of millions.
3. Now, it's end of September, and a new Ethereum ETFs are being issued and approved and other countries are emulating due to FOMO. Wouldn't wanna miss out you know.
4. Bitcoin and other cryptocurrencies will spike new highs like never before.
5. One good news will lead to another and before you know it, the mass media will be full of crypto news, crypto stories of teenage crypto millionaires.
6. Institutional money and whales start pouring in. JPMorgan or something similar is pro-Bitcoin now and other entities that denied crypto in the past are now holding hands and singing their praise.

Before we move forward I need you guys to just know... more money does not equal more innovation. Likely, it is the opposite. I've read the book The Power of Broke by Daymond John explaining this very clearly.

It is the end of December and now Bitcoin has 500 million new users (I'm not gonna assume a price I'll leave that to your imagination) since August and everybody seems to believe they are sooo smart--including those who got in just a month ago. Everybody will be saying we are going to the moon again and this time it's for sure.

And the whole world will be in a crypto frenzy like never before. Forget drugs we're all high on our own ignorance

And then reality strikes!

When people finally stopped HODLing and accumulating and started using it as currency.

Bitcoin can only handle 9 transactions per second (currently it handles 7 TPS) and surprisingly, mass adoption didn't help much!

It is still underdeveloped. It still hasn't matured. It still couldn't handle 3 million daily active users let alone 80 million.
Now the network becomes congested and magnitudes slower than it's ever been. Transaction fees reach $500. Now no one wants to use Bitcoin anymore. The last time they make a transaction would be to cash out.

Everbody is gonna call crypto a scam. The bankers, whales, government agencies will say "I told you so" "Crypto is a pyramid scheme" and whatever bullshit they can come with. And everybody is gonna believe them because it would appear so.

Is that what you want? Is that what we should all hope for? Premature mass adoption?

And I know some of you will say "That's good Lambo, but you are talking about Bitcoin--which is old and inherently slow. New generation cryptocurrencies are actually faster...."

Let me make this clear: Bitcoin is not inherently slow. Bitcoin is the most secure decentralized cryptocurrency in existence. Bitcoin is slow because it's the only cryptocurrency that hit the ceiling and right now it is in the process of breaking through that ceiling. Most cryptocurrencies that claim to be the next Bitcoin or boast superiority have not even reached halfway of what Bitcoin has gone through.

Always remember that more users means more transactions means more load on the network. As some of you might have noticed, Ethereum is slowing down too. Now Ethereum sucks and EOS or Cardano is the future? Come on guys! I'm not implying anything here but please think these things through before coming up with a conclusion. If possible, just don't come up with a conclusion. Keep your mind open here.

So I did mention that Bitcoin is the only cryptocurrency that's hit the ceiling. Some would say Ethereum is hitting this "ceiling" too. When I say this I mean that crypto has plateaued.

Today, crypto is at a point where there's little improvement in it's capacity and efficiency despite the ongoing innovations. But, do not mistake this for no progress. In fact, progress is growing exponentially in this space. It's just hard to see.

Crypto Ceiling

We are walking through uncharted territory. We are now building the new infrastructure of the future! The new internet or whatever. And when I say we, I don't mean me. I mean the developers all over the world not just on Bitcoin but for every serious cryptocurrency out there.

Why? Because of the SCALING PROBLEM that's been going on for 3 years now. Apparently no one has solved it yet without compromising the main principles of decentralization. This is the ceiling I'm talking about. A lot of altcoins have proposed their own solution to this and they are working on it.

You should leave it at that. You can't rush these things with mass adoption.

This is how Bitcoin is breaking through that ceiling as we speak.

Bitcoin's Ongoing Developments:

MAST

- MAST, short for Merkelized Abstract Syntax Trees, proposes to improve Bitcoin by changing how smart contracts are written to the blockchain. In effect, it allows smart contracts to be split into their individual parts. This has several benefits in terms of privacy, transaction size and allowing for larger smart contracts.

Schnorr signatures

- Schnorr signatures are a proposal to replace Bitcoin’s current digital signature algorithm (ECDSA) for a more efficient one. The first way they will improve the bitcoin protocol is that they will allow for the aggregation of multiple transaction signatures into a single signature. This is useful in situations where, for example, one party wants to send a transaction funded by three different accounts to a single receiver. Instead of having to send three signatures in the transaction, they would be able to send just one.

Bulletproofs

- Bulletproofs promise to improve the privacy of Bitcoin by concealing quantities of transactions, while still leaving the sender’s and reciever’s wallet addresses public. Developed by Jonathan Bootle of University College of London, and Benedikt Bünz of Stanford, bulletproofs are zero-knowledge proofs, meaning they don’t require any trust between the parties.

Confidential Transactions

- Confidential Transactions (CT) would keep the amounts of Bitcoin transactions visible only to participants in the transaction.

Liquid Network

- Liquid is a private sidechain, so there is some control over who can access it. The benefits of Liquid are that it allows instant transactions, privacy (Confidential Transactions are built in) and the ability for users to hold Liquid funds outside of an exchange.

RSK

- RSK is a sidechain that plans to bring smart contract functionality and near instant payments to the bitcoin network. Like Liquid, it uses a federated system, with custodians tracking the movement of bitcoin between RSK’s network and Bitcoin’s mainnet. It does this by using a token called SBTC (smart bitcoin), which is pegged to BTC at a 1:1 ratio.

Drivechain

- Drivechain plans to allow for multiple blockchains to be linked up to Bitcoin’s mainnet. Like RSK, Drivechain sidechains built can be secured by Bitcoin miners using merged mining. Unlike RSK, Drivechain is flexible, and developers could create sidechains tailored to the specifications they want, such as larger block sizes or privacy features. Drivechain would require an upgrade at the protocol level, or softfork. Drivechain separates the changes needed into two parts: hashrate escrows and blind merged mining.

Mimblewimble

- Mimblewimble is a proposal for a bitcoin-like blockchain which claims to provide higher security than the current Bitcoin protocol, improved scalability, a different kind of cryptographic security and ASIC-resistant mining algorithm to encourage mining decentralization. It is being implemented by a project called Grin. Transactions would be completely fungible, meaning the amounts of Bitcoin transactions would be concealed, as would the public keys of the parties involved. The improvements do come at a cost, however, as Mimblewimble wouldn’t support scripts like Bitcoin does. As Mimblewimble is quite different from the Bitcoin protocol, it would likely be implemented as a sidechain, or even a separate altcoin.

Lightning Network AKA the main innovation

- This is the most controversial innovation of them all. This will make or break bitcoin according to some expert opinions. In theory, this could allow Bitcoin to scale 100 million daily users

The Lightning Network’s use of payment channels effectively allows users to transact with each other directly rather than broadcasting their business to the entire world (aka main blockchain). By tracking their payments between each other on their own, the two parties are able to avoid expensive and time-consuming interactions with the blockchain. If there is some sort of dispute regarding balances on the Lightning Network, the most recent balance sheet provided by either of the two parties will decide how the funds in the multi-sig wallet are split up.

Conclusion

It's not that I don't like mass adoption or anything like that. In fact, if Bitcoin moons again as a result of mass adoption, I would rejoice for a day then cash out in time. Timing would be the hard part because if mass adoption happens so soon it is bound to come down deep afterwards.

Innovation takes time. Be patient. The price has little to do with how secure a cryptocurrency is. There's just too much hype clouding people's judgment.