In terms of speakers at this year’s Web Summit, there isn’t much by way of Bitcoin. One exception was Gavin Andresen, Chief Scientist at Bitcoin Foundation. He today discussed Bitcoin’s future with Lisa Fleisher, reporter with Wall Street Journal.
On the future of mining
He addressed growing concerns over the centralization of mining. Due to economies of scale, it is more efficient to have fewer, bigger miners. The operations are performed in regions where electricity costs are minimal, and mass quantities of specialized chips (ASICs) are aggregated.
He compared today’s climate to that of the days before we had personal computers (PC’s). Computing was performed on mainframes, operated by large players who were the only ones equipped to leverage this economy of scale. When he was in university in the 80’s, the computing industry was on the cusp of shifting from the mainframes to PC’s. Working in a tech support role at university, thesis time was the busiest as large numbers of students sent print requests through the centrally operated mainframe.
That all changed when PC’s came along. So too, mining chips will one day be like PC’s. They will be a cheap, common commodity owned by anybody, and mining will once again become decentralized. People will be able to mine while their cellphone is charging. There may be electric blankets powering the network.
Ultimately, he believes it’ll go in waves.
On the future of cash
In the future, physical cash will not exist. All it takes is the spread of Ebola virus through a euro note for people to start “rushing to the exits.”
Will we see more failures, such as MtGox, in the future?
We definitely will. We should not expect smooth sailing for the Bitcoin ecosystem. It can be compared to the dot com bubble, where we saw spectacular failures like pets.com. Yet from all the chaos, there emerged some great companies.
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The startup culture is prevalent in Bitcoin, which means that you’ll inevitably get a lot of failures. But in 5-10 years, some great success stories will emerge.
The applications of Bitcoin
Sidechains have come into play to experiment with new blockchain-based technologies. Transactions can be made on the bitcoin ledger, then transferred over to another ledger with more appropriate attributes, and then moved back.
It is implausible for such work to be conducted on the main Bitcoin protocol. Bitcoin’s core code has grown from a $30k to a $5 billion software project, so we can’t afford to ruin it.
Blockchain technology can also be used for property transfers, smart property, etc. The internet knows who the owner is. You can have self-driving cars, which only drive when they know they are being driven by their owner.
He noted the usefulness of Bitcoin for donations, a good example of which is Bitx’s campaign to fight ebola.
What do we need to get there?
Regulatory clarity is important. One year ago, it was the most important thing for getting Bitcoin mainstream. Now, the more important thing is to get Bitcoin to interface with fiat.
We need to be able to build banking relationships- to be able to open and maintain an account without fear of it getting closed. Banks are averse to the Bitcoin culture and are typically not as focused on innovation- the “permissionless innovation” espoused by Bitcoin.
Banks, if they want, may be able to slow Bitcoin down by blocking the exchange of BTC for fiat. But they will never be able to eliminate the ability of two individuals to transact in p2p fashion.