It’s hard not to love cryptocurrencies.
If you bought digital coins in 2017, you would have had a great year. Making more than 12-times your money was as easy as buying a single bitcoin.
2018 might be more of the same.
The purpose of cryptocurrencies
But this isn’t the purpose of bitcoin and other cryptos — a playground for speculation. Many of them were built on ideas. A new payment system or a way to create smart contracts, for example.
In 2017, bitcoin and other digital currencies provided little utility. A lot less than was promised anyway, according to the MIT Technology Review:
‘In 2017 we were told that blockchain technology and cryptocurrencies were going to save the world, disrupting just about anything with a digital fingerprint. But we saw very few tangible examples that justified the hype. In 2018, many of the intriguing pitches we heard will still be around, only now the challenge is going to be finding a way to deliver real products and services.’
In fact, it seems the utility of bitcoin is actually decreasing as more investors jump on the bandwagon. I’m of course talking about bitcoin’s rising transaction fees. It was supposed to be a medium of exchange, without relying on trust.
However it’s still yet to become an effective medium of exchange. The MIT Tech Review continues:
‘The higher Bitcoin transaction fees rise — a function of soaring demand bumping up against the currency’s transaction-processing capacity — the stronger the tension grows between two camps of Bitcoin devotees. On one side are those in favour of addressing the currency’s capacity bottleneck by doubling the size of transaction “blocks” recorded on the blockchain. On the other are traditionalists loyal to the core developers, the small group in charge of maintaining Bitcoin’s software.’
2018 might be cryptos’ best year
But 2018 might be the biggest year yet for cryptos. And it could be thanks to maths of zero-knowledge proofs. With such maths it’s possible to prove something without revealing anything.
For example, say you wanted to prove someone is over 18 years old, but it didn’t reveal how old that person was.
Such maths can also make anonymous transactions possible. It’s a real tangible benefit for those who want to keep information private. This could be the theme of 2018 for cryptos according to the MIT Tech Review — privacy.
‘It would not be surprising if the next year were to yield applications of zero-knowledge proofs that we haven’t yet imagined. Get ready: things could be about to get very weird—and very private.’
Junior Analyst, Money Morning
PS: Want to find out more about the secret world of bitcoin? click here.