#BitcoinConf Berlin: The Economics of Bitcoin

LONDON (InsideBitcoins) – Brian Fabian Crain is the founder of Bitcoin Startups Berlin and Bitcoin Center Berlin. With degrees in economics, philosophy and cognitive science from the University of Chicago, London School of Economics and University College London, Crain’s ability to offer a unique perspective on the state of both the currency as it is today and its potential future is hard to match.
‘The possible scenarios for bitcoin’s future range from it becoming the new world currency to it being relegated to a niche existence,’ he told Inside Bitcoins. ‘In my view, the most likely positive outcome is that it realizes its potential as a digital store of value, a Gold 2.0, without necessarily becoming a dominant payment method.’
And that’s just the short term. Further down the line, Crain’s vision takes on a more grandiose scope.
Three scenarios
‘I think in ten years, cryptocurrencies, the blockchain and consensus systems will be pervasive. They will power payments, international money transfers, crowdfunding, and many non-financial applications.
‘For bitcoin itself, I see three scenarios:
‘The worst case is that bitcoin’s inherent weaknesses, such as the potential insecurity of proof-of-work, will prevent its success or even threaten its existence. ‘The most plausible positive scenario would be bitcoin becoming a type of Gold 2.0. In this case, it would be used as a store-of-value and perhaps as a reserve asset. Transactions would be expensive, and usage for payments could be minimal. ‘The best case would be that bitcoin breaks through as a global currency and is used not just as a store of value but also as a payment system. Because of the scalability issues, I see sidechains as the only way that could make this possible.’

This post was published at Inside Bitcoins on Feb 24, 2015.