Some cryptocurrencies take immense computing power and complex mathematical problems to create and exchange them.
The energy-related environmental concerns are one of the big knocks against the sustainability of this kind of future. But in 2019, Google announced it achieved quantum supremacy to give its supercomputers the ability to speed certain computations. Some experts worry that doing so could make cryptocurrencies like bitcoin hackable. But could it also make cryptocurrencies more scalable and useful for daily life?
Rumi Morales is a partner with Outlier Ventures, where she invests in virtual and digital virtual technologies, digital currency, quantum computing, artificial intelligence and the Internet of Things. When she thinks What the Future, she sees more promise than risk for cryptocurrencies post-quantum.
WTF: If and when quantum supremacy is achieved what would happen?
Rumi Morales: First, cryptocurrencies are still very young and nascent. They may require a lot of computing power today, but they may not in the future. For example, there’s more power in our cell phones than was used on the Apollo 11 moon landing mission. There’s still a lot of work to be done in quantum computing and their effects, not just on cryptocurrencies, but a variety of technologies yet to be seen. There are different scalabilities here. One is the scalability of the network itself — i.e., how fast it can perform transactions and not get clogged up. At the moment, the blockchain doesn’t scale enough to be efficient for high-frequency, high-bandwidth transactions.
The second is how many people will actually use crypto as a form of payment. The current tax laws can make things very onerous for someone who chooses to pay frequently with cryptocurrency, as each transaction can be considered a taxable event. This is the way the IRS sees crypto as property, but other agencies view it differently: The Commodity Futures Trading Commission says it’s a commodity, the Securities and Exchange Commission examines it in the context of securities, and the Financial Crimes Enforcement Network as a currency.
WTF: If cryptocurrencies were easily accessible and scalable at mass, how would that change life for the average person?
Morales: Right now, there are over 2,000 to 3,000 cryptocurrencies. It can be hard to determine what it can look like for the average person once it’s at scale, because we don’t know which cryptocurrency will take off. Bitcoin is perhaps the most well-known of the current cryptocurrencies, but it does have limitations and flaws. Not being aligned with any sovereign nation or a central bank currently can be seen as a potential flaw. China is developing its own cryptocurrency, its digital currency. And if that takes off, then it could have very wide-reaching ramifications for people at scale.
WTF: Such as?
Morales: If, for example, payment apps such as Alipay and Tencent, but also perhaps Apple Pay, end up using Chinese digital currency, then it can have a very direct impact on people, whether they realize that or not. Specifically, every single transaction is posted to a ledger. So, if a government — in particular a government that surveilles its people — is able to see every transaction, a government would be able to surveil people even outside of the country and understand the financial transactions that they’re making.
WTF: What do you envision for the average person’s wallet in the future?
Morales: That’s a fantastic question. One of the most challenging branding issues for bitcoin is that in the original paper by Satoshi Nakamoto [the supposed creator of bitcoin], it was called a “bit coin” and coin was somehow inferring only currency. But really the power of bitcoin is that it can represent any store of value that you may want, whether it represents a dollar or an airline mile award or something else. It really is ultimately a technology message not unlike the way email is a technology that’s delivering a message.
But the wallet represents not just dollars. It also holds things like other bitcoins or airline miles or reward points, and can use those interchangeably depending on the situation. And you wouldn’t have to calculate fees. You wouldn’t have to calculate the certain circumstance under which you’re trying to pay for something or buy something.
WTF: What other ways could cryptocurrencies change transactions in the future?
Morales: Machines will increasingly be paying each other or needing to pay each other. Maybe a car is embedded with a certain amount of x-coin within it. And it pays for everything as it needs to, whether it’s an electricity charge or whether you’re driving through a toll. As a driver, you don’t even have to think about this. Maybe you are not even in the car when it happens. This is where the power and the potential of blockchain as a currency is the most important, and there’s no coordinating authority for that. There’s no Federal Reserve of Things.