The Future of Money: 20 Predictions
Will bitcoin kill the U.S. dollar? Will money become tokenized? How do we use cash?
Since we don’t have a crystal ball, we reached out to some of the brightest minds in crypto to share their predictions on “the future of money.” It’s a dead-simple question. The prompt was open-ended, allowing them to interpret the question in any way they see fit … and the results are fascinating.
Contradictions abound. Some are hopeful, some are sinister, some are bullish on crypto, some are skeptical and some envision a world very different from today.
Just a hint of the possible futures: Balaji Srinivasan foresees a “DeFi matrix” that will ultimately be “a check on the power of central bank currencies.”
This article is part of Future of Money Week, a series exploring the varied (and sometimes weird) ways value will move in the future.
Others see a world that is fully tokenized, or as Arca’s Jeff Dorman predicts, “every company in the world will have a token in its capital structure.” Bitcoin maximalist Erik Voorhees suspects that fiat currencies will “self-immolate.” And, in perhaps a chilling vision, central banker Marcelo Prates imagines a future currency “issued by a group of six big tech firms known as the ‘six sisters,’ and this currency gobbles up the world.”
There’s only one thread that cuts through all 20 predictions: Whatever the future of money holds, it won’t be boring.
1. Stablecoins replace ‘dollarization’
In the old days, countries whose currencies collapsed would dollarize — they’d import dollar bills and start using that as money. Ten years from now, that will be a relic. Countries will dollarize using permissionless stablecoins, and central banks around the world will ultimately fear crypto-dollarization as a check against runaway inflation.
-Haseeb Qureshi — managing partner, Dragonfly Capital
2. Crypto and fiat will coexist
Crypto and the top fiat currencies continue to coexist. We might see a consolidation in smaller national currencies as people find it easier to access USD via public blockchains.
-Hasu — research collaborator, Paradigm
3. Everyone becomes a programmer
Digital objects are becoming as commonplace as emails, and programming literacy is akin to reading literacy. I expect in the coming years people will be creating hundreds of tokens a year, all of which will have price discovery, be tradable and have multiple financial attributes.
Similarly, being able to write, read and interact with smart contracts that make this possible will be a skill that increasingly more people have to participate in the economy. This means that money will become less abstract — some number in some box — and far more tied to our digital labor and self-expression.
-Lex Sokolin — head economist and co-head of DeFi/fintech, Consensys
4. The world adopts the ‘DeFi matrix’
The DeFi matrix may be to the 2020s what the social graph was to the 2010s. Once every asset can be represented in a digital wallet — bitcoin and ethereum, yes, but also CBDCs [central bank digital currencies], stocks, loans, bonds, etc. — all these billions of assets will trade against each other every second of every day around the world.
This table of pairwise trades is what I call the DeFi matrix. Some of the cells in the DeFi matrix, like BTC/USD, have tremendous liquidity across many order books. Others, like a recent NFT [non-fungible token] vs. a new token, may only have what an AMM [Automated Market Maker] can give them. But all financial markets can be reduced to sub-matrices of the DeFi matrix. The traditional stock market will be CBDCs vs crypto equities. The forex market will be CBDCs vs CBDCs. And the fiat/crypto markets will be BTC/USDC and the like.
Read the full article: https://www.coindesk.com/business/2021/11/29/the-future-of-money-20-predictions/
