To the casual observer, stories about finance might be a boring subject matter. After all, who wants to battle through hours of lectures about expenses, cash flow statements, and liabilities? But surprisingly, in less than a decade, the subject matter of Blockchain has taken the entire planet by storm. Now, experts try their best to predict enthusiasts want to know what the future of cryptocurrencies will look like.
In 2017 alone, the crypto market grew by a mind-boggling 4,000 percent with the market cap hitting the 750 billion USD mark. Even though things have changed since then, there is no doubt among most crypto enthusiasts that cryptocurrencies and Blockchain are here to stay.
Needless to say though, that the crypto ocean hasn’t really been smooth and calm all the time. This market has been volatile, there have been disagreements that have led to Blockchain networks being forked and the mainstream adoption of this new technology has proven to be quite difficult. With that in mind, this post will take a look at the future of cryptocurrencies: What it looks like and what some of the experts have predicted about this budding, but more and more popular industry.
Future of cryptocurrencies may include its mainstream adoption
Even though the hype around Bitcoin and other top cryptocurrencies like Ethereum and Ripple have somewhat died down, more and more governments and important private institutions are starting to pay attention to this new form of capital. Some institutional investors have already started putting their money into cryptocurrencies, and governments have started formulating policies that benefit the Blockchain market and cryptocurrency transactions.
In fact, some futurists believe that cryptocurrencies are not just here to stay but might pretty much take over national currencies in a decade. One such futurist is Thomas Frey. He predicts that “cryptocurrencies are going to displace roughly 25 percent of national currencies by 2030”.
It sounds like a bold claim, but looking at how efficient cryptocurrencies can become if the industry is given room to develop, these claims seem plausible. According to Dr. James Canton, finance expert at the Institute of Global Futures, there is bound to be an increase of new investment vehicles from crypto finance.
Cryptocurrencies will further disrupt the banking system
Even though crypto image has been marred by issues of network congestion, delayed and costly transaction plus security issues, it is still evident that they present a better alternative to the banks. The fact that Blockchain technology allows cryptocurrencies to run without intermediaries makes them much more superior to traditional centralized banking systems working with FIAT.
Most investors have been attracted to Blockchain for their capacity for peer-to-peer transactions that most find much more reliable. Experts such as Christine Lagarde, who is the managing director of the International Monetary Fund (IMF), believe that cryptocurrencies have a capacity “to displace central banks and international banking systems.”
Besides, other experts like Canton predict that the future of commerce is set to be shaped along with the future of cryptocurrencies, its supply and demand. Additionally, there will be less friction during transactions which will ultimately enable the industry to further grow in value.
More regulation and government involvement
Let’s face it: Bitcoin was designed to give people more freedom from the watchful financial eye of the government. In fact, for a long time, this attribute made Bitcoin famous on the so-called Dark Web, where illegal items were sold and bought through transactions of Bitcoin. However, going forward, most experts believe that there is bound to be more involvement by the government.
Already now, various governmental institutions and regulators have shown interest in the Blockchain industry and its decentralized nature in a bid to prevent money laundering. For this reason, Canton predicts that “the government is going to play a role” in the future of cryptocurrencies. However, Canton does not believe that too much regulation will be constructive for the advancement of cryptocurrencies – because ultimately, it might destroy the very purpose and principles that Blockchain is built on.
According to Joel Comm, Internet entrepreneur and New York Times bestseller, “regulators also want to protect buyers”. He believes that regulators will face a challenge where they have to come up with regulations that ensure the safety of buyers without stifling the growth of Blockchain and cryptocurrencies.
Price volatility will increase
The volatility of Bitcoin and other cryptocurrencies has obviously turned off most investors from investing in crypto. When Bitcoin hit an all-time high of USD 20’000 at the beginning of the year, most crypto enthusiasts were optimistic about its further growth in 2018. However, the price has since gone down to around USD 6’000, according to CoinMarketCap.
Basically, the cryptocurrency market has been going through cycles of bear and bull markets. Experts believe that this aspect will continue playing a big role in the future of cryptocurrencies. The prices can (and probably will) go much higher than last year. The CEO of a fintech company Smart Valor, Olga Feldmeier, says that “we will see a comeback of the height achieved at the end of 2017 this year“. She further mentions that by 2020 we will most probably see the price of Bitcoin reach up to the value of USD 100’000.
On the other hand, Canton says that the increased volatility of cryptocurrencies shows the increased curiosity for experimentation that people have with Blockchain. Currently, however, Bloomberg reports that Bitcoin is the least volatile is has ever been since 2016. Could this be a sign of an impending bull market?
So what happens to Crypto next?
At the moment, cryptocurrencies are yet to establish a permanent place in the current financial industry. Even regulators such as the IRS and the SEC are still unclear on how to categorize these new digital assets. As it stands, crypto is considered to be property by the IRS, and not a currency. There is obviously a lot to be expected in the future of cryptocurrencies and Blockchain. Whether any of the cryptocurrencies emerge to be the global standard of currency or whether the entire industry collapses in a bear market is anyone’s guess. If you are a crypto enthusiast, all you need to do is watch out for the headlines and stay alert.