Vitalik Buterin has been one of the most influential minds in blockchain technology. Last week he met with Jason Hsu at a fireside chat hosted by Blockchain at Berkeley, a student organization, Origin, and Steve Chen. The downdraft in prices that has been going on all year wasn’t on their agenda, though Vitalik Buterin did talk about how important adoption is for the blockchain space.
According to Vitalik Buterin –
“The amount of sustainable usage of blockchain is very low. Although it exists, there are a lot of people giving value to cryptocurrencies, yet the amount of useful stuff happening is still much lower than the $200 billion market cap makes it seem. The main challenge for the industry as I see it is basically understanding how to bridge that gap and get to point where there is $200 billion in some sense of actual final value being generated.”
For now it would appear that Vitalik Buterin is more or less correct. While there has been a rush to develop blockchain-based platforms by major corporations, the number of DLT based projects that are being adopted by major economic interests that work off of platforms like Ethereum is low.
Vitalik Buterin Sees Privacy as a Concern
One of the major stumbling blocks for the established financial community when it come to adopting Ethereum-based platforms is their need to adhere to numerous regulations. Privacy is a big part of the financial system, which open platforms like Ethereum have a hard time dealing with.
Vitalik Buterin had this to say on the matter,
“Currently, there are no good ways to use blockchain while preserving privacy. There have been good efforts to solve this using Zcash for example, along with research on top of Ethereum. However, there is still a way to go in terms of preserving privacy on the blockchain.”
In addition to regulations, there are some issues with putting sensitive data anywhere near a blockchain. The first stages of blockchain development have been very impressive, but as numerous hacks and thefts have demonstrated, there is still a lot of work to be done. Crypto bank Xapo has created a solid way to defend their clients against hacking, but unfortunately, it involves a series of vaults around the world, and extensive security protocols that are done off-line.
There are some new idea coming, like numerical proofs that would act as a form of verification. To date, they aren’t widely used in the crypto space. This may change as blockchain-specific security protocols develop further, but at the moment, this remains a challenge. Security is paramount for any kind of financial technology. For blockchain to evolve further, there is still a lot of work to be done.
Where to Focus?
Blockchain technology will probably catch on when people are able to use it seamlessly in their everyday lives. Right now, this is a goal, but it could become a reality as more people realize the benefits that cryptocurrencies provide.
Vitalik Buterin expressed his vision for the future with these words
“I want to be able to walk into a convenience store, get a card and pay a small fee to start using Bitcoin Cash. Allowing people to use small amounts of cryptocurrency for everyday use is valuable within crypto, and also particularly for use cases of blockchain that go beyond crypto. Even non-financial blockchain use cases still require transaction fees. If we can reduce this friction with one trip to the convenience store, it would be simple to start using cryptocurrency.”
At this point, there are very few people who own or use cryptocurrencies. The vast majority of people don’t understand what a crypto is, let alone how to use them.
Unfortunately cryptos came into the public eye as a result of a massive rally in prices, which appears to be collapsing at the moment. Blockchain technology has also received a lot of attention. Unlike cryptocurrencies, blockchain seems to be on a more sustainable path, though it isn’t taking on the role that many DLT pioneers had envisioned for it.
The Business Use Scenario
It is hard to find a sector where blockchain isn’t being researched. Most banks are looking for ways to integrate blockchain into their infrastructure, but few are focusing on cryptos. This is another challenge for crypto users, and as Vitalik Buterin pointed out, the regulatory environment is major economies is muddled.
From Vitalik Buterin,
“…on the regulatory side, cryptocurrency exchanges, project fundraising, etc. need to have crypto-friendly regulations. Most importantly, encouraging a strong academic ecosystem is also needed for governments looking to pass regulations.”
Some nations like Malta and Luxembourg have been making strides to integrate cryptocurrencies into their banking regulations, but in places like the USA, there is a near-total standstill at the federal level. To some degree this may be a result of entrenched interests putting up a fight. The ideas that DLT based FinTech are directly opposed to the current financial system, which could mean more struggles before cryptos can buy a cup of coffee.