Figuring out the future of Bitcoin and blockchain technology seems like a nearly impossible task for most people right now, but there are certain individuals who seen this technology evolve over the years and may be able to take an educated guess at what’s coming next. Eric Lombrozo is the founder, Co-CEO, and CTO of Ciphrex Corporation, and he has contributed code to multiple blockchain-related projects such as Bitcoin, Ripple, and Ethereum. Lombrozo has watched this technology evolve since the earliest of days, which is why it makes sense for him to give a presentation on the future of crypto at the upcoming Inside Bitcoins Conference in San Diego. The Ciphrex CTO recently shared some some of his thoughts on where Bitcoin and other blockchain-based systems could be going with Inside Bitcoins.
New Protocols Allows Blockchains to Be Settlement Layers
Although many Bitcoin proponents believe that all transactions will eventually be processed directly on the blockchain, Lombrozo sees the future of cryptocurrency differently. He explained that it is the protocols built on top of the Bitcoin blockchain that hold promise for the future of crypto in general:
“Some pretty big innovations are taking place, especially regarding layered protocol designs and cross-chain contracts. Things like payment channels and the Lightning Network promise to bring about a new generation of crypto protocols.”
Expanding on his thoughts related to micropayment protocols, Lombrozo claimed that these new innovations will allow Bitcoin (and perhaps other blockchains) to primarily act as settlement layers:
“It’s looking more and more like blockchains will become primarily a settlement layer allowing us to build protocol layers atop them where we can negotiate contracts directly with counterparties. Blockchains provide well-defined settlement guarantees, but settling on blockchains is too slow and costly to support certain killer use cases. With layered protocols, the contracts themselves needn’t always touch the blockchain, making things like cheap, instant micropayments a practical reality.”
Lombrozo also added that the ability to process microtransactions on the Bitcoin network could have implications for the protocol’s scalability:
“Having the ability to do trustless instant micropayments, we finally might have a way to fix the incentive issues that are making it hard to securely scale this technology.”
Alternative Tokens vs Alternative Blockchains
As someone who has worked on multiple blockchain and fintech protocols, Lombrozo also has a unique perspective on the viability of alternative token systems and altcoins. Although Lombrozo sees possible value in the existence of many different tokens, the Ciphrex Co-CEO thinks having a variety of blockchains could be an issue when it comes to security:
“There could well be many different tokens, from generated tokens to issued tokens – I think there’s room for that. But we need to be careful to distinguish between tokens and blockchains. Blockchains provide strong guarantees of irreversibility and censorship resistance. But in order for these guarantees to hold, the blockchain must be public and permissionless and be expensive to attack. If hashing power is split amongst many different chains, it weakens them all, making them all more susceptible to attack.”
Bitcoin is Not a Replacement for Credit Cards
One final point that Eric Lombrozo shared via email was that Bitcoin is not ready to replace credit cards and payment processors. Instead of trying thrive where traditional payment options already dominate, Bitcoin developers should work on use cases that create completely new types of transactions that were not possible in the past. Lombrozo explained:
“Many people have been pushing for adoption of Bitcoin and crypto in traditional retail settings as an additional payment method. While this indeed could eventually occur, I think where we’re most likely to see great inroads with crypto in the nearer term is in certain markets where crypto is particularly attractive, namely, digital content distribution, network services, and sharing of computational resources.”
Although many individuals like to track the bitcoin price and merchant adoption more than anything else, the reality is that these early days of the technology’s evolution will not involve using the digital commodity as a currency for day-to-day purchases.
To hear more of Eric Lombrozo’s thoughts on the future of Bitcoin and crypto, make sure to check out his afternoon keynote presentation at Inside Bitcoins San Diego on December 15th.
Featured image via m anima.
Kyle Torpey is a freelance journalist who has been following Bitcoin since 2011. His work has been featured on VICE Motherboard, Business Insider, RT’s Keiser Report, and many other media outlets. You can follow @kyletorpey on Twitter.