A researcher at the Royal Bank of Canada has pegged cryptocurrency, blockchain technology and decentralization as having the potential to become a $10 trillion ecosystem.
In a recently released report, Mitch Steves, an equities analyst with Royal Bank of Canada Capital Markets subsidiary, argued his bull case as to why the future of transactional services will eventually be decentralized.
“While the cryptocurrency space has many risks, the opportunity appears vast with constant technology updates,” he said.
Though startups that allow cryptocurrency protocols to function as decentralized alternatives to proprietary services or as a way of transmitting remittances have gotten the most interest throughout the ecosystem’s formative years, Steves argues that the protocol layer is where most of the value will be claimed.
“We see that the protocol layer will capture more value than the applications.
“As the application becomes successful, the protocol layer captures more value, which then creates more interest in additional decentralized application development,” Steves said.
As such, the comments are similar to the fat protocol theory put forward by Union Square Ventures.
The theory states value creation on decentralized cryptocurrencies would happen at the lower infrastructure layers.
The report also says that the market for cryptocurrency mining is not going anywhere.
It argues that there is at least $4.2 billion market for bitcoin mining equipment with an added $350-$450 million for other ASIC-mined cryptocurrencies like bitcoin cash.
There’s also another $1.9 billion market for GPU-mined coins like ethereum and monero.
Of note, the report claims that decentralized technology in its current state is often misunderstood and underrated.
It claims that cryptocurrencies are becoming able to handle more transactions.
In particular, Steves sees the Lightning Network as a platform to allow more than a million transactions per second on bitcoin.
Still, scalability, along with government intervention and the creation of more sophisticated wallet hacking techniques, was identified as one of the key risks facing the ecosystem.
Continued progress on these fronts will be a boon for the development and mainstream adoption of a global supercomputer.
Whether it be ethereum-based or on an alternative, so long that blockchain’s impeccable security record remains spotless, Steves asserted.
“As scaling and protocols mature, the value of a decentralized world computer could potentially become a multi-trillion dollar industry.
“If there’s one positive technology item we can agree on, it’s that the blockchain has never been hacked. What happens if we build on top of this secure layer?”
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