The future of cryptocurrencies has been a subject of intense debate. Some think that cryptocurrency is a fad, and like all fads, it will fizzle out soon. Some think it will be a massive success, just like the internet, while others prefer to sit on the fence and watch how things play out. Cryptocurrency has had several ups and downs in the past, but what is the future of crypto like? Let's analyze it together.
The Past
Cryptocurrency had very humble beginnings. There were several attempts at creating a decentralized currency system. However, bitcoin was the first practical cryptocurrency to gain widespread acceptance. It has come a long way from being worth a fraction of a cent to reach over $65,000.
With the popularity of bitcoin, alternative cryptocurrencies began to emerge to solve perceived flaws, such as energy efficiency. Nonetheless, bitcoin remains the leader.
The Present
Gone are the days when you could buy two pizzas with 10,000 bitcoins. Cryptocurrency is no longer limited to a group of tech-savvy geeks and daredevil investors. Anyone with an internet-connected gadget can now have a crypto wallet and purchase any cryptocurrency of their choice. Some countries, like El Salvador, even accept it as legal tender.
The value of cryptocurrencies has risen steeply within short periods. However, the crypto market is experiencing an extended drop in price due to many macroeconomic events. Still, many speculators think the price will go back up soon, which means now is a good time to buy crypto.
The Future
What is the future of crypto? This is a vital question for anyone considering investing in cryptocurrencies. Although predicting the future of cryptocurrencies is impossible, there are elements that can influence public adoption of cryptocurrency. These considerations are critical since cryptocurrencies are only worth what people are willing to pay for them. Some of those factors are:
A major benefit of cryptocurrency blockchains is their anonymity. However, it can be misused for crime and illegal transactions. To become an accepted means of payment, it has to be effectively regulated to prevent crime and protect users. However, this goes against one of the frameworks of cryptocurrency; to be an entity that's not subject to the whims of any organization.
To gain popular support, people have to understand how cryptocurrency and blockchains work. In its current form, however, cryptocurrency and blockchain technology are still quite complex for many users.
Compared to traditional financial systems, the process of mining bitcoin, verifying transactions, and other processes is considerably more energy-intensive. This is not a positive trait if cryptocurrency is to become widely accepted, especially with increased environmental consciousness. Elon Musk, the founder of Tesla, recently stated that his electric car company would be accepting payment in bitcoins. Later, he rescinded the statement and said that they will accept bitcoin when 50% of the energy expended is renewable energy.
The preceding example pertains to the bitcoin blockchain. Other, less energy-intensive blockchains exist. However, as we've seen, bitcoin has a significant influence on other cryptocurrencies.
Takeaway
So, what are the best and worst-case scenarios for cryptocurrency? In the best-case scenario, cryptocurrencies become globally accepted legal tenders. In the worst-case scenario, they're banned and made illegal worldwide. For this to occur, cryptocurrencies must be manifestly unwanted, and every country must ban them or the ban will be useless.
Both possibilities seem remote, at least currently. Cryptocurrency seems poised for a middle ground between the two extremes, and its future is greatly dependent on public perception.
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