Haha yeah like I said I hope I just lack imagination :-)
My bitcoin-qt finally synced \o/
Time to start betting on exotic crypto-financial derivatives!
I'll try and answer part of your question. Assuming that crypto currencies do establish themselves with some utility and adoption in the marketplace, then the next battleground will be for derivatives of crypto currencies.
http://en.wikipedia.org/wiki/Derivative_(finance)Derivatives can be used in a variety of ways and the market is enormous:
1) Hedge against negative movements of an asset they hold.
2) Speculative trading - cf London Whale, where speculative trading was disguised as hedging.
3) Creation of complex instruments that are sold to other parties to a) hedge against difficult to calculate risks, b) make bets on the price movement of a set of assets.
To give a concrete example of a present day problem, a US retailer who accepts bitcoin has a risk exposure to the volatility of USD/BTC. They could choose to purchase a derivative to ensure they could sell their bitcoin at a later date at a fixed USD price (protect against the price of BTC crashing).
Similarly, the US retailer could use derivatives to protect against the price of bitcoin rising. Example: A customer purchases a television for 1 BTC. The retailer uses a payment processor such as bitpay to immediately convert the BTC to USD. In the future, the customer returns the television and wants a refund in BTC. The retailer could purchase a BTC derivative to give them the right to purchase BTC at a fixed price in the future.
Some reading:
http://en.wikipedia.org/wiki/Foreign-exchange_option #1. Currency risk in fact is the number one thing hampering global adoption of cryptocurrencies, as alluded through numerous times in the US senate bitcoin hearings, the PBOC statements, other statements by the US government, even more statements from other foreign governments, and most of all merchants. (Again it goes back to trust, though -- who will run the derivatives exchange?)
The derivatives market in the US is worth approximately ... $600,000,000,000,000. That's right, 600 trillion. That was back in 2007-2008. Estimates for the global market in 2012 are in the
quadrillions. Both hugely scary, and a huge opportunity for cryptocurrencies (if they combined can capture even 1% of that market...)
.
