According to a recent report released Wednesday by equities analyst Mitch Steves of the Royal Bank of Canada (RBC), there may be the potential to unlock a $10 trillion ecosystem via blockchain technology, cryptocurrency and decentralisation.
Within the report, Steves made his case for why decentralisation will be the future of transactional services, taking a strong bullish stance, writing: “While the cryptocurrency space has many risks, the opportunity appears vast with constant technology updates”.
Although startups that allow cryptocurrency protocols to serve as a means of transmitting remittances or decentralised alternatives to proprietary services have received the greater amount of interest throughout the ecosystem’s formative years, Steves suggests it may be the protocol layer that will provide more value.
Steves goes on to write, “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.”
Moreover, the observations set out by Steves remind crypto-investors of the fat protocol theory produced by Union Square Ventures, stating it will be on the lower infrastructure layers that will drive value creation on decentralised cryptocurrencies.
Also contained within the report is the assertion that the cryptocurrency mining market is sticking around for a while, arguing the case for the existence of a more than $4.2 billion market in bitcoin mining equipment, $350-$450 million for alternate ASIC cryptocurrencies, such as bitcoin cash, and an added $1.9 billion in GPU-mined crypto i.e monero and ethereum.
The report goes on to argue that, within its current state, decentralised technology is underrated and vastly misunderstood. Steves states that cryptocurrencies are becoming better at handling an ever-increasing amount of transactions, citing the Lightning Network as a method of enabling over a million bitcoin transactions per second.
However, government intervention, increasingly sophisticated wallet hacking techniques and scalability were cited as prominent risks to the ecosystem.
Steves continues that persistence on the above and a continuation of blockchain’s exceptional security record will be a catalyst for the creation of an ethereum or alternative-based global supercomputer.
“As scaling and protocols mature, the value of a decentralized world computer could potentially become a multi-trillion dollar industry,” Steves wrote, concluding: “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?”