A friend asked me – so if you are not that optimistic about bitcoin prices and the general direction and success of the technology, where do you see it all in 10 years? I wasn’t optimistic.

This is what I said. It’ll likely be approximately at the same place – bitcoin will be a marginal financial asset with price determined by its power cost, and most of the other crypto initiatives either be dead or not even considered “crypto” anymore, but rather a thing of its own (same way we don’t consider now the BitTorrent, the Skype, and the Bitcoin to be the same “p2p” technology, which they arguably are).

This answer is as safe as it’s wrong.

It’s near impossible to predict future of an emerging technology. Most estimates you’ll see tend to be linear, where forecasters mistake linearity for being realistic [1]. It’s not their fault, really, - it’s a human nature to predict this way, in a narrow enough corridor of variation from the current state. While if we look at previous technological advances, and take a survivor bias into account, then we should presume that a correct forecast has to be very quantum – it’s a possibility now of two very different outcomes. The technology will either fail or grow much faster than linearly. Fail is more likely (again, remember the survivor bias), but then again, there’s Lindy effect[2], so the longer it’s here, the closer the situation is to the boiling point.

This is, again, considering the crypto to be an emerging technology still. Which is the only thing nobody really argues about, while it’s a topic for a separate long discussion if it really still is, and what are the symptoms of a technology that is still emerging. But that’s a topic for other time.

Anyway, assuming it is emerging, to honestly answer the 10-year prediction question, we have to assess what we know for now, what stage of the progress is and see which outcome is closer.

Here are the most important topics I consider when thinking of Bitcoin future. A Bitcoin agenda, if you will. These aspects represent undetermined sides of the Bitcoin progression, internal conflicts in its current state, and thus could be both threats and opportunities.

a. Institutional money – its scale, stage, importance, and effects

Expectation: big money will buy in and send Bitcoin price to the moon.
Reality adjustment: financialization diminishes Bitcoin by expanding and integrating it with systems that negate its advantages.

b. (Non)-importance of the decentralization

Expectation: decentralization is essential for Bitcoin, as it's source to most of its advantages.
Reality adjustment: Compromises on decentralization don't seem to be a detriment, even for Bitcoin itself in regard to mining. Perhaps it's because decentralization isn't valuable by itself, it's a way to establish trust towards the system by being trustless towards its participants. Trust is a complex thing though. Market and user adoption requires emotional trust, which is largely superficial. Is it a ticking bomb or a reason to rethink potential?

c. Bitcoin pricing model – mining cost, utility, emotion, manipulation

Expectation: increasing usage has to lead to an appreciation of limited quantity asset.
Reality adjustment: If the price is a sum of fundamentals and emotions, the latter component seems to trump. Several positive and negative feedback loops are in play, but there's seem to be a peg to the energy cost of mining.

d. Is it really a Netscape moment?

Expectation: everyone have noticed the crypto in 2017, and so wide adoption has started.
Reality adjustment: the mania made crypto a speculative asset and a store of value in comparison to QEed fiat. But the medium of exchange side of money is lacking. Arguably it's the most important for the ultimate Bitcoin success, and a countermeasure to the financialization side effects. Is the Netscape moment for Bitcoin possible without finding a product-market fit for the medium of exchange side?

e. What are conditions for wide user adoption and is it really needed?

Expectation: Bitcoin will grow to become the world money in all senses of the word.
Reality adjustment: Bitcoin has shown success as a monetary tool, not as money. It's an open question if this will change, and even how many people actually would like that to happen. Perhaps a dual-money system is a sufficient one as we've seen in some countries, for example in post-Soviet years in Russia.

f. A KYC frenemy

Expectation: regulation and integration with regulated systems is a sign and a milestone for recognition and adoption, and thus these developments are ultimately good.
Reality adjustment: most people will follow the officialization route, motivated by financial interest. This moots censorship-resistance of Bitcoin though and ultimately destroys its core benefits, so could have terrible consequences long term. It's a boiling frog we see here.

References

[1] Tony Seba: Clean Disruption - Energy & Transportation

[2] Lindy effect – for non-perishable things like technologies “every additional period of survival implies a longer remaining life expectancy”. In most primitive version, every technology we see is most likely in the middle of its life.
https://en.wikipedia.org/wiki/Lindy_effect