Famous crypto enthusiast and venture investor Tim Draper told about his forecasts for the next 15 years, saying that during this period, the cryptocurrency market will grow to $80 trillion. Not all analysts agree with Draper. Many crypto enthusiasts are sure that the declared ideas are nothing more than unreasonable sophistry and an attempt at promoting Draper's own interests.

Why Such Large Numbers?

According to the investor, blockchain and cryptocurrencies will transform such industries, which we could not imagine in any other light. The potential of the crypto industry is comparable with the Internet boom of the 90s. At one time, the Internet was compared with the appearance of the telegraph, the railway, and the automobile industry. Back then, no one even suspected that such spheres of activity as, for example, agriculture, would also be affected by the Internet.

In the same way, according to Draper's forecasts, cryptocurrencies are revolutionizing some multi-trillion dollar markets. The financial sector, healthcare, management, agriculture, etc. All of this can be radically transformed by the crypto industry.

Continuing the analogy between cryptocurrencies and the Internet, Draper stressed that at the very beginning, there were also significant downfalls in the Internet market. But each recession was usually followed by even higher growth. Moreover, in his opinion, the crypto industry hides a much greater breakthrough than the Internet or any other technological or economic revolution of the past.

At the same time, $80 trillion is a huge figure, especially if it is a highly volatile market, which barely reached $200 billion. Apparently, the crypto industry can be in for the same scalability as the Internet.

According to Internet World Stats, the global use of the Internet has increased more than 100 times between 1995 and 2010. Despite the fact that this number cannot be applied to the cryptocurrency market, if it is assumed that in the next 15 years it will increase 100 fold, then Draper's assumptions may well be very modest.

A graph showing the change in the number of Internet hosts since 1964
A graph showing the change in the number of Internet hosts since 1964. Source.

A Bit of History

On the other hand, the time span of a decade and a half can turn people’s economic relationships head over heels so much that any prophecies will be devoid of meaning. "The considered stage of 15 years is pushing sophistry, but in order to avoid unnecessary words, we can turn to the history of economic development and the stock market, with which it would be logical to draw parallels between the cryptocurrency market. To achieve the digital stage, society needed to go through several stages: the industrial era (approximately 150 to 200 years), the postindustrial (about 100 years), and the information society (about 50 years). Approximately, from the mid-90s of the 20th century, economists started talking about the digital economy, whose volume in 2010 for the G20 countries was about $2.3 trillion (4.1% of their GDP). And now, the growth rate of the digital economy exceeds the growth rates of GDP by several times," said Roman Zabuga, the official representative of the Wirex Crypto Bank. This comparison clearly shows the change in the speed of transition to new economic stages, which can also be projected into changes in industries, one of which is the stock market that has been formed for five and a half centuries.

"For example, one of the first exchanges was established in 1533 in Bruges by Italians, and before that, in the 15th century, state securities were launched. In December 2017, the total capitalization of market companies approached $100 trillion," Zabuga added. Will the cryptocurrency market, which is currently estimated at $200 billion, reach figures of $80 trillion in 15 years? With regulation and institutional investors, it will obviously cease to be as volatile as it is now, then it will be possible to build at least some forecasts. Now, it is more like guessing on coffee muck and presenting desires as reality, in this case for the future."

The Question of Definition

In many respects, the problem of the growth of the cryptocurrency market lies in the very definition of this phrase. Whether Tim Draper is right or not depends on which side to look at. "If we talk about the market of cryptocurrencies as a carrier of values, then probably, Tim Draper's forecast is reasonable. But now there is a trend of reflecting derivatives by cryptocurrencies (derivatives are basic financial instruments) from the real world. In the coming years, the legal component will also be tightened. And then, not only technically but legally, it will be very convenient to reflect all sorts of derivatives through various currencies," said the founder of the CryptoNet professional community of crypto entrepreneurs Dmitry Karpilovsky to DeCenter. "This is an entire class of asset-backed tokens, a whole class of all kinds of investment derivatives, options that can be reflected through some surrogate cryptocurrency. Now, they are not doing this, because it is not interesting. The market is legally immature, and the demand from professional financial players is insufficient. And the derivatives market is a very strong multiplier to the figure. The number of derivatives issued for classic securities is thousands of times higher than the total capitalization of all securities in the world and, since these derivatives will show the same dynamics in cryptocurrencies, in fact, the total capitalization will be many times greater. If you limit yourself to equity and something like money, stocks, bonds, or classic securities, then $80 trillion in 15 years is quite an achievable figure. We need only mass adoption for this, and we will go to it with leaps and bounds," the speaker added.

Interests Solve Everything

According to other crypto enthusiasts, such loud statements from such public figures are nothing more than lobbies for their own interests. "Remember the saying: ‘Everyone praises their own swamp?’ In the same way, cryptocurrency bulls are calling us to buy Bitcoin and wait for a bright future together with them. There are a lot of well-known crypto enthusiasts who call for mass inflows into cryptos. Take, for example, John McAfee, who should, theoretically, physically exist a little less already in the near future as a result of the bet he made. In war, all means are good. Tim Draper, in this case, is no exception. Until recently, Mr. Draper promised that in four years, Bitcoin would cost around $250,000. In other words, its capitalization would be about $4.5 trillion. This is also a serious milestone. By the way, personally, I myself adhere to this point of view, that the first sign of the level of capitalization is the truth, the entire cryptocurrency market as a whole, and not just Bitcoin with a market of $4 to 5 trillion. This is comparable to the size of the gold market. At the first stage, Bitcoin and the cryptos as a whole may be of interest to financial markets as a tool for diversifying their portfolios," as said to DeCenter by Kirill Muraviev, Managing Partner of Blockchain Investment Solutions.

In general, in order to achieve this success in just 15 years, the cryptocurrencies will have to, if not completely, then at least partially "kill" the entire fiat world, which does not yet seem so likely. "The U.S. GDP is about $20.4 trillion. Capitalization close to $80 trillion will be possible only in one case: if the cryptocurrencies really displace, or at least seriously push the U.S. dollar and other fiat currencies into the peripheries. By the way, today, many people are speaking (including representatives of the authorities of different countries) about refraining from transactions in dollars. Brave claims. You can even transact in Bitcoins, or in other currencies, and even in rat tails for God's sake. But the paradox is that other currencies, be they rat tails or Bitcoins, are still considered through the American dollar. That is, despite the theoretical calculation in national currencies or other non-dollar assets, one way or another, the American currency gets support and remains the pillar of the global financial market. For the crypto market to reach the levels that are claimed by Tim Draper, the crypto world will have to press the American dollar," concluded Kirill Muraviev.

Mass Adoption Shapes the Future

At the same time, the market and capitalization of cryptocurrencies are strengthening despite a strong negative correction in recent months. "Tim Draper is right in many respects by predicting a high growth in the market capitalization of cryptocurrencies. Of course, it is difficult to predict exactly to what level this market will grow. At the moment, the aggregate volume of money supply (cash and non-cash money) in the world is about $80 trillion, and therefore, the forecast that the market of cryptocurrencies will go the same way as fiat money had taken several centuries in just 15 years is probably somewhat exaggerated. And Tim Draper's vision of $80 trillion looks somewhat overvalued, but the changes that are taking place today are so fast and great that not even the most courageous forecast can be rejected with absolute certainty," as said by Alexander Klimov to DeCenter.

It is not worth rejecting the semantic points behind the concept of cryptocurrencies. "Behind the cryptocurrencies, there is another ideology, other interests, and needs, another type of thinking: rejection of borders, limits, anonymity, speed, and freedom. These values ​​are not very compatible with the fiat world, hence the growing popularity of cryptocurrencies. But cryptocurrencies also have many enemies: conservative thinking, states with their legislation and established financial systems. And, strangely enough, among the enemies are new technologies that can bury (or slow down) the development of the cryptocurrencies without allowing them to develop properly: for example, quantum computing, computers that can radically change the currency and the cryptocurrency terrain," the speaker noted.

In general, according to crypto enthusiasts, one can say with certainty that distribution and mass adoption of cryptocurrencies will grow from year to year. But giving an accurate forecast of market growth by 400 times for 15 years ahead without deep analysis is more like creating "expert" info noise and no more than that. According to the leading analyst of Icopools.io Mikhail Zasidkevich, such forecasts are more like divination on coffee muck.