Volatility has long been a trademark of cryptocurrencies. From the heady digital gold days of 2017 to the 2018 market crash, just about everyone has been trying to get on the blockchain bandwagon.
The volatile nature of cryptocurrencies has been seen as both a boon and a bane for many. With prices fluctuating by more than 200% at a time, investing in cryptocurrencies is an extreme example of high-risk and high-returns.
For a lucky few, fortunes were made overnight back in 2017 when BTC valuations jumped to more than USD 20,000 per BTC. At the peak of this craze, thousands of investors were flocking into the market, eager to carve out their own piece of the pie.
Unfortunately for many, more often than not the crypto market would prove to be a brutal testing ground. The unregulated nature of the crypto market meant that scams and hack attacks were rampant. Crypto exchanges could collapse with no warning leaving many out of pocket and with no legal recourse.
Fast-forward a few years later and the crypto market has changed significantly. What was once the domain of deep web users and people on the fringes of society has become something else entirely.
Institutional investors and multinational corporations have begun taking notice of this new untapped market. From Telegram and Facebook to government institutions, it would appear that the future of money as we know it has changed irrevocably.
Now as demand for more stable form of cryptocurrency rises, can we expect the nature of cryptocurrency to evolve accordingly? If so, what does the future hold for digital money?
Join us as we take a look at the future of cryptocurrencies.
- An increase in institutional interest
As we can see, institutional interest in cryptocurrencies has been on the rise for some period of time now. For the unaware, institutional investors are nonbank organizations that trade in large amounts of a particular asset. These investors are sometimes known as movers and shakers as their trades can sometimes shift the balance of supply and demand.
Even sports brands, like Premier League are now legitimating Bitcoin and cryptocurrency. Besides eToro crypto trading system sponsoring 6 Premier League teams, Bitcoin is now sponsoring Watford’s kits. Since the Premier League is the most watched soccer league in the world, this shows that cryptocurrencies are finally becoming mainstream and being seen as legitimate businesses.
Having seen the potential for cryptocurrencies, it is fair to say that institutional investors, and even governments will be a part of the digital currency revolution. With such massive amounts of money at stake, it will be nearly impossible for this trend to be ignored.
- A rise in regulation
Ironically, the strongest selling point of cryptocurrency is also its biggest weakness. And that is deregulation. The pseudo-anonymity offered to users by cryptocurrencies like Bitcoin and Ethereum have made them extremely popular with people who prize their privacy.
Unfortunately, it has also made the crypto market a hunting ground for scammers and thieves. As cryptocurrencies are not issued by any particular body, government bodies and law enforcement agencies typically do not have any jurisdiction in the market.
Consequently, victims of scams and hack attacks have little-to-no legal protection. Furthermore as crypto transactions are notoriously difficult to trace, this has caused extreme consternation amongst many governments.
This is because, cryptocurrencies can be used to smuggle money into or out of a country while also being used for tax evasion purposes. This has led to calls for crypto to be better regulated or even banned outright.
Hence, as cryptos become increasingly popular over time, it is also fair to expect governments to clamp down and increase regulations accordingly.
- An increase in demand for stablecoin
Stablecoins are a form of crypto that brings together the benefit of more traditional cryptocurrencies without the price volatility. These types of cryptos can be either backed by a basket of assets or unbacked.
A clear advantage of stablecoins lies in their lack of volatility. Typically pegged to the valuation of fiat-currencies, stablecoins are able to facilitate trade between both parties due to their stability.
As the market matures and investors seek out longer-term solutions, it’s not hard to see why stablecoins could potentially be the future. Unfortunately, they are not without their problems and may potentially face pushback from regulators around the world.
Despite the variety of challenges, it can clearly be seen that cryptocurrencies are the way to go. However when buying or using cryptos, it’s always best to be careful and ensure that you have the best information on hand.