They’re one of the biggest financial trends right now, and there’s no sign that this will change anytime soon. Cryptocurrencies have managed to sway some of their staunchest detractors, helping them expand their portfolios and become traders. Even those that aren’t sold on the importance – and reliability – of crypto can’t deny its influence. Over the past few years, an increasing number of companies and retailers have begun incorporating crypto into their business plans, and this is only the beginning. Researchers estimate that cyber coins are only gaining more traction with the general public and are becoming more important for the world of finance overall.
But what does the future actually hold for crypto? It’s impossible to say for sure, but based on the current situation and the history of other assets that were once as popular as digital money, you can make a few educated guesses. Let’s examine some of them.
Possible regulations
Unlike more traditional holdings like stocks or bonds, crypto coins aren’t backed by future income streams or tied to any government or financial agency or entity. For defenders, this is nothing short of undeniable proof that cyber currency is superior to fat money. The argument is that, since crypto platforms are essentially trustless systems, meaning untied to any nation-state or central authority, they’re also free from censorship and unsusceptible to inflationary trends or crashes. And while this is good news, in theory, the truth is that this is also one of the main reasons crypto doesn’t already stand side by side next to fiat money.
Decentralization also means that crypto can be very volatile. Indeed, its fluctuations are so infamous that even those who aren’t traders have heard of them. It might just be one of the main words the general public associates with crypto. And while for seasoned traders, it sounds like a worthy challenge, for the rest, it spells danger. When people hear volatility, they instantly associate it with financial losses, which certainly doesn’t sound appealing.
Therefore, the future of crypto holds regulations if it plans on becoming even more visible in the financial world. Regulations are the safest path to taking away some fluctuations and making cyber coins more stable.
Increased usage
The average consumer has been using crypto at much faster rates since only 2018 across all age groups. In fact, nearly half of those expected to invest in crypto over the next six months are over 35 years old. For many of them, digital money represents a window to gaining more control over their finances and being liberated from the rigidity associated with traditional banking. Many are also drawn in by how accessible and easy to use crypto is. Setting up an account isn’t a relatively simple thing, and after you’ve provided proof of your identity, you can start trading right away.
Some traders associate crypto with increased anonymity, which makes them feel more confident that their funds will stay secure no matter what. To make sure your trades are as safe as possible, choose a crypto that’s a little more well-established on the market, such as Ethereum. The prices are less likely to record massive fluctuations in a short time, but it’s still essential to use an ETH price chart to get a better idea of how values change.
With the increased usage by the general public, institutions have begun to notice the growth of digital money and want to become involved with it. This has resulted in several large companies and brands adopting crypto as an eligible payment method. While currently still mainly used to perform online payments, you also have the option of converting your currency into fiat money and using it at brick-and-mortar stores. And while many retailers are still on the fence about adopting crypto payments, it’s very likely that they’ll change their minds sooner rather than later.
The future of money?
Given the ways in which technology is becoming more and more critical every day, it’s not far-fetched to assume it’s also going to change one of society’s most inconspicuous yet vitally important commodities: money. Some believe that it won’t be long until governments figure out a way to implement a legal framework, as well as a working taxation system, that could signal that crypto is on its way to becoming a part of the digital wallets of consumers on an unprecedented scale.
Others believe that this scenario is much more unlikely than you’d be led to believe, estimating that realized legislation might still be years in the making. It’s also not outside the scope of imagination that some vendors may never be on board with cryptocurrencies. They would still insist on traditional cash or credit payment methods, in which case there’s no possibility that crypto could ever replace fiat money. However, the case might not exactly be for ultimately ousting local currencies out of the financial system, but for co-existing side by side and offering an alternative for those that feel more comfortable in the crypto environment.
Stablecoins
Many cryptos might soon have to follow in the footsteps of stablecoins in order to gain a smoother entrance into mainstream markets. While working like a traditional digital coin, stablecoins have one main difference: their price is pegged to a reference asset. This can be an exchange-traded commodity, another crypto or fiat money.
Over the recent past, these assets have grown in popularity, with some investors pegging them to be the safer, more secure cousin of cryptocurrencies. Some even go as far as to draw the line between the two, being that stablecoins supposedly hold real value compared to crypto. Others, however, would consider this a sweeping generalization based entirely on stereotypes.
One thing’s for sure; cryptocurrencies aren’t going away anytime soon. In fact, with traditional markets hit quite by a succession of crises over the recent years, many people have gravitated towards crypto as the preferable alternative. If you’ve been debating becoming a crypto investor, there’s no time like the present to start.