Cryptocurrencies Look Toward a Cashless World for Mass Adoption

  • Grace Noto
  • January 31, 2017
  • 3

pexels-photo-9816Blockchain is here to stay, in some capacity or another, but what’s less clear is the fate of cryptocurrencies.

Bitcoin, ether, Zcash, and like coins could fade into oblivion — or be the mainstream method of transaction in a future where the only physical bills remaining are behind museum glass.

Zcash’s partner projects with Ethereum might be a good step forward for the cryptocurrency networks to create this result, especially as more businesses consider leaving cash behind completely.

This is driven by a consumer shift to payment methods such as chip cards (which are now majorly accepted in the U.S by merchants) and payments through services such as Apple Pay, which experienced a 50% jump in 2016 from its numbers in December 2015.

Interestingly, this jump was not attributed to more in-store payments, but was caused by more payments through websites and mobile apps; in other words, through primarily digital methods of pay.

However, the U.S. also experienced a surge in online fraud across most of these channels—2016 was, after all, the year of ransomware–which is where cryptocurrencies might be able to step in.

Fraud such as identity theft is trickier when up against smart contracts, anonymity of the transaction participants, and transactions that settle instantly—especially when those things are combined.

Currently, there are quite a few projects focused on this goal, including three Zcash-Ethereum R&D projects: ZoE, or Zcash-on-Ethereum, ZRelay, and XCAT, all of which are interledger projects—or projects which aim to connect the capabilities of multiple blockchains.

“Ethereum is a computationally complete system,” said Joseph Lubin, co-founder of Ethereum and founder for ConsenSys, on the role Ethereum is set to play for these “interledger,” (combined blockchains) projects. “I don’t know if Ethereum will be the interledger glue of the future, but it works now.”

The first researches how to link zk-SNARKS, the tool which creates Zcash’s characteristic anonymity, while the ZRelay project concerns linking Ethereum smart contracts with the Zcash blockchain and XCAT is looking into creating a method to execute transactions across multiple blockchains.

Zooko Wilcox, CEO of Zcash, told Bank Innovation:

XCAT works with Bitcoin in addition to Ethereum and Zcash. That means that we can deploy it and users can start using it and building on top of it sooner.

It doesn’t require any upgrade to the Ethereum, Zcash, or Bitcoin blockchains. It can run on the current blockchains.

Beefing up the anonymity of Ethereum as well as finding a method to transact multiple currencies across multiple blockchains are necessary advancements to make if cryptocurrency (especially a completely anonymous, de-regulated cryptocurrency, as opposed to digital currency issued by a bank or government) is going to thrive.

Of course, instead of linking together multiple blockchains, networks could create a singular, global cryptocurrency—if the assorted networks and businesses could agree on it, that is.

“Do you have the power to create a universal token of value that everyone will agree on?” said Lubin. “Even if someone did try to propose a universal token, [we need] more ‘interoperation.’”

Bitcoin in particular would be challenging to adopt, as its supply is easily controllable by the people with the fastest internet connection and the largest amount of cheap electricity (hence, China).

As blockchain technologies and cryptocurrencies stand, the death of cash (which likely won’t occur for a few more years anyway) probably won’t usher in the age of cryptocurrencies, though some services in cash-light countries such as Switzerland have granted some bitcoin wallet providers, such as Xapo, the right to operate alongside banks.

To learn more about cryptocurrency, join us in San Jose on March 6-7 for Bank Innovation 2017, where the best conversations in fintech take place. Click here to register.

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3 thoughts on “Cryptocurrencies Look Toward a Cashless World for Mass Adoption

  1. The more cryptocurrencies I learn about and invest in the more I believe that eventually just about every use case will be covered by one form of cryptocurrency or another. It’s just simpler and easier to use.

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