Wired 25: Neha Narula and Alexis Ohanian say it's Early Days yet for Cryptocurrency
By KLINT FINLEY 10.15.18 07:36 PM
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Some people call bitcoin "the internet of money," suggesting the digital currency and related technologies could do for the financial system what the internet did to information distribution over the past few decades. But skeptics are still waiting for a "killer app," while bitcoin prices have never returned to their late 2017 peak when trading hit more than $20,000 per bitcoin.
Today at the WIRED25 Summit, Neha Narula, director of the Media Lab’s Digital Currency Initiative, and Alexis Ohanian, a venture capitalist and the cofounder of Reddit, talked about some of the ways blockchain, the decentralized ledger technology at the heart of bitcoin and other "cryptocurrencies," could press forward through the current slump and actually become useful.
Bear in mind that the internet industry has had its own ups and downs. The "Dotcom Bubble" burst in early 2000. But instead of destroying the internet industry, the bust created fertile ground for its next stage. Within about five years of the crash, we saw the introduction of Wikipedia, Facebook, the photosharing service Flickr, YouTube, and early smartphones like the Danger Hiptop/Sidekick, to name a few highlights. Not all of the early 2000s experiments are still around, but even the failures helped pave the way for things that came later.
Ohanian thinks cryptocurrency world could be heading towards a similarly productive period. "Now is a good time because it's scattered all the hucksters and scenesters," he said during the panel. But he sees the current state of cryptocurrency as more analogous to the early 1990s period of the internet, before the introduction of the Netscape web browser in late 1994. And much as Netscape made the internet useful to average people by making the web far simpler to use, Ohanian says the cryptocurrency world needs a breakthrough in usability.
Narula, for her part, doesn’t think things are that far along, comparing today's competition between various incompatible cryptocurrencies and technologies to the internet's earlier days, perhaps the late 1970s, before the adoption of TCP/IP as a common protocol. She also cautioned against assuming that cryptocurrency will evolve in the same the internet did.
"The internet developed in secret, a little bit," she said. "People weren't paying attention in the early days." As a result, engineers and academics were able to hammer out the technical details of interoperability without business pressures. In contrast, there's an enormous amount of pressure to make money from cryptocurrency projects. That's one good reason that "crypto winter," where investors pay less attention to blockchain-related technologies, could be a good thing.
It's also important to learn from the mistakes made during the development of the internet, most importantly the establishment of monopolistic powers like Amazon, Google, and Facebook.
But what tools could emerge, given the right conditions? Both Narula and Ohanian point to cross-border payments by people who don't have bank accounts as one socially important use. While bitcoin is often derided as too volatile to be used as a traditional currency or store of value, Ohanian argues that it's better than nothing in countries where where corruption is rife and citizens are at risk of having their assets seized by the government at any time. "As volatile a store of data as bitcoin is, it's still yours," he said.
Less world changing, but still fun, is the idea of using blockchains to manage digital items in video games. Lots of games, such as the blockbuster multiplayer game Fortnite, allow users to purchase virtual items, such as weapons and power-ups. The blockchain could make it possible to make legitimately rare items, not unlike rare cards in the game Magic: The Gathering, and make those items tradable across the internet, not just within a single game.
How quickly any of this will develop is anyone's guess. On one hand, Narula says cryptocurrency and blockchain technologies are still a long way from delivering on their potential. On the other, things are changing fast. "It's developing faster than I ever thought it could," she said.