Cryptocurrency has been the talk of the town in recent times, but is it sustainable, or is it a hype that will eventually die down? Is this nascent industry worthy enough to replace the dominance of fiat currencies and traditional finance?
The journey of cryptocurrency has been nothing short of a rollercoaster ride. Having witnessed unprecedented gains in 2017, followed by a slump of almost 80% in 2018, the crypto market regained itself in 2021.
History of Cryptocurrency | |
Founder of Digital Cash Concept | David Chaum developed it in 1980 |
First mention of Cryptocurrency | 1989 |
First Cryptocurrency Developed | Bitcoin in 2009 |
Founder of Bitcoin | Satoshi Nakamoto |
First Altcoin Developed | Namecoin in 2011 |
Founder of Namecoin | Vincent Durham |
Highest Market cap till date | $3 Trillion approx. in Nov. 2021 |
However, after reaching a $3 trillion market cap and Bitcoin making an all-time high of almost 69000 at the end of fall in November 2021, the market started to trend downwards. Was it an indication of a bear market with a steep correction?
Well, 2022 turned disastrous due to various macro factors, high inflation, and economic slowdown. The crypto industry also took a deep dive into the abyss, with multiple billion-dollar crypto companies disintegrating.
It all started with the famous algorithmic stablecoin Terra. This incident was followed by the bankruptcy filed by multiple organizations, including Three Arrow Capital, Celsius, and BlockFi. The biggest shocker was the fall of the second-largest crypto exchange, FTX.
This fiasco wiped out more than $2 trillion from the crypto market. As pointed out by global financial experts, the lack of regulation for digital currencies has made it even more difficult for retail investors to be protected from such incidents.
Addressing these unresolved issues will slowly pave the path for the future of cryptocurrency. Let’s see what we can look forward to.
Although we don’t have an oracle to look into the exact future, keeping a close tab on the various aspects of the crypto industry will enable the investors and the industry participants to make more informed decisions.
Unlike the US Stock market, which is more than a century old, the crypto industry is nascent. Hence, there’s a lot of room for improvement as it gradually evolves into a more stable one. We should be attentive to the following.
There has been no official declaration, but given the buzz created due to the successive failures of the multi-billion dollar firms and substantial loss of funds by the investors, it’s likely that regulations will finally be adopted by the governments globally.
Solicitors, lawyers, regulators, and authors agree that strict regulation will soon follow, substantially altering how the industry functions.
Strong Government regulation may be more helpful for the industry as it will boost the confidence of the institutional investors and eradicate the role of bad actors prevalent in the industry.
Web 3 is the future of the internet as it takes power from the Internet giants and gives it back to the people. It is a decentralized network where the users will be owners, and they will be able to govern and operate these protocols.
“We can now build something that looks and feels like Facebook or Twitter using open protocols and using this new kind of philosophy where the value and control accrue to the users of the network, not to a company, because there is no company, right?” – say, Chris Dixon, Partner at Andreessen Horowitz and founder of A16Z.
JP Morgan just did a volte-face on their policy towards the crypto industry and blockchain as a technology. They are now at the forefront of accepting the web3 platform.
Although they are a traditional financial firm, and it might be painful for its executive members to accept this highly volatile and decentralized technology, even they cannot deny the inevitable as regardless of all its fault; this blockchain technology remains the driving force in the financial sector.
Source: forbes.com
As there are more and more possibilities for regulatory clarity and improvement in the channels to impart basic knowledge of blockchain technology and its decentralized property, the adoption rate of crypto will move faster. Some experts even believe that stablecoins may replace fiat currencies as the major form of payment in the future.
“I do believe crypto will get more and more popular with time, as the proper education of people on crypto. Once more people get familiar with the advantage of blockchain in general and cryptocurrencies in particular, we will see a significant rise in crypto adoption.” – says Paul Sokolov, CEO of Guarda Wallet.
Many experts have predicted that as inflation settles, the crypto market will likely bottom out at the end of 2023 and slowly rise throughout 2024.
The featured event of Bitcoin Halving is also due in 2024, and historically bitcoin, followed by ethereum and other altcoins, has seen significant growth post-bitcoin halving.
However, before all these happened, many experts, such as popular cryptocurrency trader and analyst Capo, said that Bitcoin would likely plummet from $10000 to $12000.
Ethereum is the most popular decentralized currency after Bitcoin, the most prominent cryptocurrency, as various applications are built on it. The most popular nfts are also based on the ethereum network.
In 2022 ethereum also changed from Proof of Work to Proof of Stake. As a result, the supply of ethereum is decreasing, which will naturally increase the value of ethereum.
As a result of all these factors, ethereum may outperform Bitcoin even better than last time in 2021, when it gained four times as compared to Bitcoin’s 66% gain. It may well become the dominant cryptocurrency in the future.
“If you’re skeptical about owning digital property, then you’re not only denying capitalism on the internet …. You’re saying we’re not going to have a collectively owned future. We’re going to have a government-owned future and corporate-owned future.” – says Naval Ravikant, author and co-founder, chairman, and former CEO of AngelList.
Although the NFT, i.e., Non-Fungible Token industry, has seen a significant downfall, the industry has also received significant investment from large companies, including Starbucks and Disney, and all the other related investments reflect the industry’s sentiment towards NFTs.
It will be one of the first sectors in the crypto industry as a whole that would recover.
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The cryptocurrency sector has seen a significant drop in value in 2022. However, one aspect of the industry which has shown continuous growth and is still growing is the decentralized autonomous organizations (DAO).
Similarly, the gaming industry is starting to rise slowly and is poised for notable growth this year as more and more AAA games, such as Star Atlas, Sorare, Heroic Story, etc., are planned to enter the market.
The FTX fiasco has dented investors’ confidence in centralized exchanges and garnered increasing interest in decentralized finance. It will lead to more and more crypto investors moving away from traditional cryptocurrency exchanges such as Binance or Coinbase to decentralized exchanges and trading platforms such as Uniswap, DyDx, and GMX in the future.
Unlike tokens like Bitcoin and Ethereum, which are based on different utilities, there are tokens with no utility but only social popularity, known as meme coins.
However, the days of the meme coins are gone, be it the pioneer Dogecoin or a barrage of meme coins such as Shiba Inu or Safemoon. As more and more people become aware and knowledgeable in the industry, these coins are likely to disappear, thus making the future of crypto more secure.
As the crypto winter dawned upon us in the last year in 2022, it is high time that all the stakeholders of the industry regroup and understand the issues, improve them and build on the blockchain technology and regain the trust of the investors, thereby cementing a solid future for the crypto market.
The regulation of the crypto industry is quite a complex issue, as the level of acceptance varies widely around the globe. It is accepted as a legal tender in El Salvador, whereas crypto transactions are illegal in various countries.
However, it is high time that regulators worldwide have agreed to lay the foundation for the crypto regulatory framework.
Under the guidance of Joe Biden, the U.S. government has appointed Janet Yellen, U.S. Secretary of the Treasury, and Gary Gensler, chairman of the Securities and Exchange Commission, as the team’s leader in formulating the regulation process in the U.S.
Both often portray a negative image of the cryptocurrency market, especially Gary Gensler, despite teaching classes on various crypto topics at MIT.
Despite a few crypto bills being introduced by Congress in 2022, nothing significant has been achieved, and the slow bureaucratic pace is further hindering progress on this front.
However, the idea is to work out a regulatory framework as fast as possible to engage all the investors, businesses in the crypto industry, and traditional banks.
The regulation and a proper taxation system would enable large-scale cryptocurrency adoption by U.S. consumers.
Accepting crypto or digital money as a legal tender in the USA seems far-fetched compared to the South American and African nations. Most large economies will stick to the traditional currency instead of adopting the virtual currency.
However, as more and more small and large-scale businesses, including Twitter, Amazon, and Facebook, start accepting crypto as payments, the adoption rate will increase significantly, which could force the government agencies to finally adopt regulation which would be a blessing in disguise for the industry.
As India is hosting the G20 summit, the finance minister of India, Nirmala Sitharaman, said, “We are talking to all nations, that if it requires regulation, then one country alone cannot do anything,” and “We are talking with all nations, if we can make some standard operating procedure which is followed by everyone to make a regulatory framework, and if it can be effective.”
Source: reuters.com
Multiple reasons could thwart cryptocurrency’s progress as the future of money. They are as follows:
If these negative aspects are taken care of, it will boost the confidence of the stakeholders. Otherwise, it will drive them away from the dream of decentralized cryptos, such as Bitcoin becoming the future of money will remain a dream and not turn into a reality.
Thus, as a general rule, putting all your eggs in one basket is not wise. So, it is not advisable to not just invest in crypto but to diversify your portfolio and hedge your investments so that another covers one sector in case of a downfall.
The crypto industry plummeted significantly after catastrophic events in 2022. However, 2023 is when stakeholders need to regroup, analyze and formulate a strategy to regain the people’s trust. The idea is to survive 2023, stabilize the industry, and ensure steady growth by 2024 and beyond.
The following cryptocurrencies have the best future based on their potential:
Although nothing is inevitable as the forecasts are mainly made based on historical data of the token, it is a common acceptance amongst most of the crypto experts, including Talegoan and the Winklevoss twins, that cryptocurrency will thrive in 2030 with bitcoin trading anywhere between $175,000 to $500,000
As per FinanceShots, Bitcoin, Ethereum, and Dogecoin will be there in 2025, but nothing is guaranteed, but crypto will likely be around. After the bitcoin halving in 2024, the crypto market may slowly start gaining value, enter a bull market by the end of 2024 and continue till early 2025.
No, it is not the end of crypto. With the multiple collapses, including the vast FTX fiasco, crypto as an industry has hit rock bottom. Still, as most experts say, blockchain tech is being adopted even faster today, and the future is only bright.
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The future of cryptocurrency remains uncertain but promising. Despite the challenges and setbacks, the industry faces, key factors indicate its potential to become the future of money.
With the implementation of regulation, widespread adoption, technological advancements like Web 3, and the growth of decentralized finance and NFTs, the crypto market can rebound and establish itself as a significant player in the financial world.
It may be especially beneficial for countries with weak currencies where these blockchain-based tokens provide much-needed financial stability with low transaction fees.
However, addressing market volatility, regulation, and security issues is crucial to building trust and stability.
The path toward a secure and widely accepted future of cryptocurrency lies in the industry’s ability to adapt, innovate, and gain the confidence of investors, businesses, and governments worldwide.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial advice. The author’s opinions are their own and should not be taken as a recommendation to invest in any particular product or service. It is strongly advised that you consult a financial advisor before making investment decisions. Investing always carries risk, and it is up to each individual to consider their options and make informed choices carefully.
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