Could Crypto really be $10 Trillion? Could Crypto really be $10 Trillion?

It’s clear there’s a ton of money in cryptocurrencies. A recent report from Morgan Stanley said the 100-crypto focused funds in existence right now have assets that total more than $2 billion. 2017 saw massive price upswings for a wide plethora of virtual currencies, and propelled Bitcoin straight into the hearts and minds of millions across the world.

But another report from an analyst at the Royal Bank of Canada (RBC) said the value of cryptocurrency, blockchain technology, and decentralization could equate to an ecosystem with a value of $10 trillion dollars. The market cap for all cryptocurrencies out there is more or less around $700 billion right now.

The number came out in a research note from Mitch Steves of RBC Capital Markets, who wrote that “opportunity appears vast” despite the perceived risks in the cryptocurrency space in his 36-page note. He said the $10 trillion figure was a conservative estimate since it’s predicated on the idea that virtual currency is a store of value.

Steves also included a photo of his homemade mining rig in the report. He was a bit hesitant to share if the mine was actually creating virtual currency, but did say it was working and hinted that he might have more mines in his house.

He said the bulk of value could come from the protocol layer since that drives interest in decentralized app development after the actual application becomes successful. This line of thinking echoes the fat protocol theory put out by Union Square Ventures, which essentially says value creation of cryptocurrencies is going to happen at the lower levels of development.

Some of the main points Steves built his case on include how cryptocurrencies are a secure way to operate without a third party intermediary, and how blockchain has not ever been hacked.

Even though Steves is looking towards the future, his report also asserts that the fundamental aspects of the digital currency market are here to stay. He says the market for Bitcoin mining equipment stands at more than $4.2 billion dollars, with an additional $350-$450 million in ASIC-mined openings like Bitcoin Cash.

Steves also writes that GPU mined coins like Ethereum have a market of about $1.9 billion dollars. He also believes that spikes in cryptocurrency markets could spurn more miners to enter and buy new processing units. Companies like Nvidia and AMD were experiencing record-breaking sales figures for GPUs in the first half of the year, which started to sharply tail off in the third quarter of 2017. Steves predicts the conflation of better technology and interest by traditional investors will lead towards more mining in the future.

Steves also writes in the report about massive misunderstandings with decentralized technology. He compared the data storage network Filecoin (backed by a token), with the cloud storage company Box as an example. He explained how users of Box would see their data owned and controlled by a third party who has essentially unlimited access to information, and can retrieve files, documents, and photos at will.

However, users of Filecoin would see their stored data distributed and decentralized, making it pretty much impossible for someone to get in and grab something. Information would be totally secure thanks to the power of blockchain.

Despite Steves’ optimism, he also cited several concerns in his report about cryptocurrencies. One was the potential that stolen digital cash would disappear forever because governments don’t have much of an incentive right now to go after criminals.

He also wrote about the potential for criminals to get more than 50% of the computing power and then launch an attack against the network, or start hacking virtual currency smartphone wallets to get money illicitly. Some other points included computer hacking to get computing power and the risk of an attack to manipulate cryptocurrency prices.

The report also highlights how progress and general acceptance of cryptocurrency and blockchain have kept paving the way towards a global supercomputer, especially since blockchain still has a rock-solid security record. Steves wrote the “value of a decentralized world computer could potentially become a multi-trillion-dollar industry” as scaling and protocols mature. He expressed excitement at the thought of building something on top of the “secure layer” of blockchain.

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