Silicon Valley vs. Wall Street

The headline sums up what cryptocurrencies are all about. Of course, they are mainly not developed by companies in Silicon Valley. But the point is that cryptocurrencies are part of a larger narrative of pervasive and unrelenting digitalization of society. I see distributed ledger technology, of which Bitcoin and other blockchain-based currencies are examples, as so disruptive as to render banks and other financial institutions obsolete in the coming decade or two.

As the US gradually loses its dominance in world economy, a new global reserve currency will be needed. It will not be Bitcoin in its current incarnation but I think it is likely that it will be a cryptocurrency. It will be no problem at all to tailor cryptocurrencies for the needs of all economies. Monetary policy will be implemented at the protocol level and/or regulated by financial AI systems based on vast quantities of data.

Cryptocurrencies will grow rapidly in the developing countries together with the proliferation of cheap mobile devices and Internet access. Corrupt middlemen will be cut off. The financial industry will undergo a transformation where permissionless and trustless distributed ledgers will serve as sources of shared truths. Blockchains will serve as marketplaces for data of which there will vast quantities. Increasingly complex financial decisions will be made by artificial intelligence. Said data will be a vital commodity as it will be necessary for the training of financial AI systems.