I don't think cryptocurrencies will succeed
I could imagine the future of cryptocurrencies heading towards the direction of centralization. And it will be a failure of cryptocurrencies.
I bought and sold cryptocurrencies, making some profit, but I’m not a great believer in them. I bet on Bitcoin and Ethereum because I thought their prices would appreciate. I sold them later because I thought the market was overheat. Will Bitcoin rise to $500,000? Perhaps. But that’s nothing to do with the success of cryptocurrencies. They can still go to the moon even if the masses aren’t using them in real life, but can you call it a success? Speculating on the price appreciation and believing in the technology are different things.
I don’t believe in the story of cryptocurrencies. However, I want cryptocurrencies to succeed, especially the decentralized ones whose original intention was to escape from centralized control, but I suspect that they will eventually fail in this regard.
When it comes to making an argument, I often try to eliminate all minor ones and boil down to the single most important argument. Minor arguments are negligible if you can’t even beat the most important one. I have read quite a few articles for and against cryptocurrencies in which usually a long list of reasons are laid out, but what the most important argument is? Is it the environmental friendliness? Is it the scalability problem, e.g. low transaction rates? Is it the price stability? I don’t think they are the most important. The opponents of cryptocurrencies surely can say that cryptocurrencies are not environmental friendly, not scalable and their prices are fluctuating. But what if you can make them environment friendly, scalable and stable? Suddenly their cons become pros. If something viewed as pitfalls today can somehow be solved technologically, there won’t be any excuses to oppose cryptocurrencies.
The most important argument that I think cryptocurrencies will fail lies in government regulations. If cryptocurrencies was to be regulated, they would’ve lost the original intention of being decentralized. Surely, you can argue that peer-to-peer cryptocurrencies won’t go away and no one can shut down blockchains even the government has banned the usage of unregulated cryptocurrencies or mining. But that’s not a success! In order for the masses to adopt cryptocurrencies, they must be regulated by the government. Centralized government regulation and true decentralized cryptocurrencies cannot coexist.
Time and time again decentralized technologies pop up, give us hope, and eventually fail. Cryptocurrencies are just distributed file storage of which the concept is not new at all. Remember that you could download pirate movies and music via BitTorrent? That was a cool peer-to-peer technology, but it wasn’t popularized. BitTorrent networks still exist today. No one can shut them down although downloading pirate content is illegal. But what popularized nowadays are centralized video streaming services, music streaming services and cloud storage services running by regulated companies like Netflix, Spotify and Dropbox. The centralized companies apply distributed technologies like CDN (Content Distribution Network), making the services convenient, scalable and fast. Does BitTorrent fail? I would say so.
I could imagine the future of cryptocurrencies heading towards the direction of centralization. And it will be a failure of cryptocurrencies. The good parts of decentralized blockchains will be applied in a centralized way. Every country has its own centralized blockchain by applying decentralized technologies, but it’s still centralized. China clearly pioneers in this regard. That’s not a compliment. That’s actually something to worry. But that’s what most probably will happen.