Extrapolating The Future of Cryptocurrency

Over the past decade, cryptocurrency has become a breaker of old approaches in monetary policy, finance, economics, and e-commerce. The speed at which the crypto industry is growing today is very impressive. The global cryptocurrency market volume is predicted to reach $1,758 million by 2027 with a compound annual growth rate of 11.2%.

More and more people are getting faced with the digital currency so the questions on the future of cryptocurrencies are becoming especially relevant today. So what is the future of cryptocurrency? In this article, we’ll try to figure this out.

Predicting the crypto world’s future is impossible without knowing the current situation on the cryptocurrencies market.

What trends can we observe today?

• Nowadays the crypto market is in its formation stage. We can see an increase in the number of areas where blockchain technology is getting involved. The COVID19 and panic that it caused in the markets are also accelerating cryptocurrency adoption.
• Any cryptocurrencies rate is rigidly tied to the situation in the crypto market.
• Bitcoin and Ethereum are the biggest influencers in the cryptocurrency market.
• Investors are paying attention to the crypto projects that are aimed to create platforms for launching decentralized applications (dApps).
• Significant growth of decentralized finance (DeFi).
• Decentralized Internet (Web 3.0) is actively increasing and creating the basis for the Internet of Things development.

The growth of digital currencies around the world allows making some predictions about the future of crypto market. Let’s look ahead to the future and try to forecast the prospective trends in the crypto world development. 

Bitcoin’s reign will not end

The first thing that worries many crypto holders is “What will happen to Bitcoin”?

The ups and downs of Bitcoin’s rate, rumors about the next hard fork, legalization in some countries, and prohibition in others — all these kinds of news makes people guess what will come up with the most popular coin. Experts have different opinions from a complete drop in price to the status of the only currency in the world.

Most experts are leaning towards that Bitcoin will maintain its current positions and even strengthen them. For example, John McAfee, businessman and computer programmer, says:

“You can’t stop things like Bitcoin. It’s like trying to stop gunpowder.”

He also made a bet that if Bitcoin will not cost $500,000 by the end of December 2020 he will eat his own…well, you know. 

James Altucher, American hedge-fund manager, author, podcaster and entrepreneur, is not sure that BTC price will reach 1 000 000 USD:

“Will it be a million dollars in 2020? Maybe. Will it be 2021? 2022? Who knows.”

He also predicted that:

“At least one country’s currency is likely to fail soon — likely Argentina or Venezuela. This will lead to mass adoption of Bitcoin among that populace. That will in turn lead to Bitcoin rising by more than $50,000 when it happens.”

And just a few days after this forecast, the Venezuelan President announced that they are planning to release national crypto called El Petro. Right now a lot of countries like China, Tunisia, Senegal, Sweden, Singapore, Uruguay, Thailand, Turkey, and Iran are also working on the creation of national cryptocurrency. 

So what will happen to Bitcoin? No one knows. The only thing in which many experts agree is that Bitcoin will stay as a “gold standard” in the crypto world for a long time. 

Cryptocurrencies will be mainstream

“Cryptocurrencies is a fashionable investment and a sign of belonging to the special community” — this idea is actively promoted by various sports organizations, popular performers, public figures that release their own altcoins.

According to CoinMarketCap, there are already more than six thousand cryptocurrencies, and their total capitalization is $353 billion. A couple of years ago, the digital currency was almost unknown to anyone except geek developers and crypto enthusiasts. However, things are changing: prospects for businesses, rising prices, and strong community support will step by step make cryptocurrencies mainstream around the world.

Market volatility will not disappear

Cryptocurrencies are unstable by their nature, and their volatility is one of the reasons why someone becomes a millionaire and the others lose fortunes. 

The strong volatility of crypto is caused by the fact that they are still at an early stage of development. Cryptocurrencies have huge growth potential if they can enter the mass market. 

But every news about cryptocurrencies either hints at the possibility of markets going down or rising up. The volatility in the cryptocurrency markets will continue to be felt as the news affects the market, and it is only at the stage of rapid development.

The future of trading — decentralized exchanges

In the near future, we will see a prime of decentralized exchanges. Many believe that DEXes is not yet ready for mass adoption. But there are factors for a favorable development of events.

First of all, centralized exchanges don’t fit the purpose of cryptocurrencies cause the key advantage of digital coins is decentralization. In decentralized exchanges, transactions can be made directly between users (peer-to-peer) without the need for a trusted intermediary, which means there are no transaction fees for users.

On top of this, decentralized exchanges are much more secure against hackers as there no single point of failure like in centralized exchanges. Everyone knows the cases with Mt.Gox, Bitfinex, Coincheck when people lost millions and millions. The need for more security will lead users to decentralized exchanges.

The rise of crypto loans

“Cryptocurrency is convenient to take on credit” — not long ago this idea seemed like a wild ride since the digital currency has high volatility. But today the popularity of lending in digital currencies is increasing and here are the main reasons:

• Low-interest rates.
• Increase in the number of traders and investors for whom receiving funds immediately in cryptocurrencies is convenient.
• A simplified system of requirements for borrowers, those who hadn’t been approved for bank loans could easily receive digital money.

Nowadays, the entire crypto loaning industry is estimated at $4.7 billion and the number of crypto loan platforms will continue growing.

Regulators gonna regulate

In the early days of cryptocurrencies history, traditional financial institutions sharply criticized crypto enthusiasts. The crypto market, however, has proven that it is sturdy against these kinds of attacks. Nowadays traditional institutions’ opinion regarding cryptocurrency is changing. In the future, stakeholders can have an increase in the flow of funds from Wall Street to cryptocurrencies.

There is no doubt that this will require more transparency and regulation in the crypto market. Today government and regulatory agencies around the world, including the U.S. Securities and Exchange Commission, Federal Bureau of Investigation, United States Department of Homeland Security, and the Financial Crimes Enforcement Network (and this is only within the US borders) are giving more and more attention to cryptocurrencies. The regulation of the crypto in different states is realizing in diverse ways: in some countries, it is legally recognized as a means of payment, in others its use is prohibited.

The G20 summit participants, following the discussions on cryptocurrencies, came to the conclusion that a complete prohibition of crypto will not solve anything as nowadays the digital currency plays a significant role in the economy. And if the digital currency cannot be prohibited, it must be regulated:

“Technological innovations can deliver significant benefits to the financial system and the broader economy. While crypto-assets do not pose a threat to global financial stability at this point, we are closely monitoring developments and remain vigilant to existing and emerging risks.”

As we can see the world is changing very quickly. The speed with which cryptocurrencies are integrating into the global financial system is a clear indicator that traditional financial institutions can no longer have a monopoly on the management of financial flows. 

The year 2020 is the start of a new decade for the cryptocurrency industry. The next ten years will bring us key changes in traditional finance when blockchain and cryptocurrencies will become a daily thing in most countries of the world.

What are your thoughts on the future of cryptocurrencies? Tell us your ideas in the comments below.

The views and opinions expressed here are solely those of the author. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Previously published at https://stealthex.io/blog/2020/09/15/is-cryptocurrency-really-the-future/