In a report published on January 3, 2018, Royal Bank of Canada (RBC) Capital Markets analyst Mitch Steves confidently stated that the cryptocurrencies and blockchain technology applications market could increase thirteenfold in 15 years, reaching $10 trillion.
The report, called Crypto Currency & Blockchain Technology: A Decentralized Future, examines trends in the Canadian crypto space and predictions for how the market will grow.
Steves told CNBC that his $10 trillion estimate comes from taking one-third of the roughly $30 trillion in assets held in offshore funds and gold, as investors look to digital currencies as a new store of value.
One market opportunity for blockchain tech includes a decentralized world computer that removes third party access; the report gives the example of a company like Box, which can be accessed by the company, in comparison to a service like Filecoin, which makes file storage distributed and decentralized, making the holders unable to retrieve a user’s data.
International remittance was also a major use case, as transaction and foreign exchange fees normally associated with this process could be eliminated through bitcoin, which would require a small mining fee.
“With the use of cryptocurrencies, with an internet connection, an individual, group, or town can now have access to digital payments,” writes Steves in the report. “This would not require a large ecosystem and could function with a smartphone or a dated laptop. Since Bitcoin is well known, we can use it again as an example in this case.”
Steves also expects that “fat protocols” will provide the ability to own the protocol layer. This theory was presented by Union Square Ventures in 2016, and says that the previous generation of shared protocols like HTTP meant most of its value got captured on top of applications. However, the relationship between protocols and applications is reversed in the blockchain applications stack.
“As the application becomes successful, the protocol layer captures more value, which then creates more interest in additional Decentralized Application development,” says Steves. “As an analogy, by owning the protocol layer, you are invested in ‘the network’ versus a specific application on the network.”
The report also presents risks to cryptocurrency adoption, including a potential lack of government intervention (“if cryptocurrencies are stolen, the government has no incentive to catch the criminal — not backed.”); problems with scalability due to high mining fees; and privacy, as public display of transactions reduces privacy.
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