Cryptocurrencies have come a long way since the invention of Bitcoin in 2008. Backed by innovative technology, blockchain, the concept of cryptocurrency as a digital asset has encapsulated various arenas.
The digital currency is not merely looked at as speculation. Instead, in 2020 they are perceived as investment vehicles, security tokens representing a tangible asset, a mode of payment, and much more.
The future of cryptocurrency in 2020 and beyond
The significance and role of cryptocurrency have expanded substantially. From mere speculation to an investment instrument –the cryptocurrency industry is thriving. Moreover, its use cases are not restricted to financial transactions only. Instead, digital currencies with different applications in various industries have already transpired.
Today, we are going to take a look at what the future of cryptocurrency looks like, taking into consideration advancements in the sector.
Investment vehicles
Over the last three years, prominent organisations have started offering services pertaining to the cryptocurrency industry. With that, institutional investors, hedge fund managers, and investment managers have started developing an interest in cryptocurrencies. Investors are now keen to include digital assets in their diversified investment portfolios.
A recent survey, consisting of 400 institutional investors and hedge fund managers, revealed that nearly 72 per cent are keen to make investments in digital assets.
The industry has always held the interest of retail investors. Now, with the onset of institutional investors, cryptocurrencies are much more likely to be treated as investment tools alongside stocks and gold.
Easing regulations surrounding cryptocurrencies
Over the last two years, a number of governments have changed their stance towards cryptocurrencies and digital assets. Germany’s Financial Authority classified Bitcoin and other cryptocurrencies as official custodians.
At the same time, in 2020, the Supreme Court of India lifted the ban pertaining to trading with digital currencies.
Governments have now started drawing regulations to provide a legally compliant environment for trading and investments in cryptocurrencies.
In the near future, we are likely to see countries drawing regulations pertaining to the use, trade, and storage of digital currencies.
Crypto causing disruption in banking and finance
While the use-cases of cryptocurrencies have started developing in numerous industries, the financial ecosystem is first of the many that are likely to undergo massive disruption. From cross border transfers to tokenising financial instruments– cryptocurrencies have applications in a number of verticals in the banking and finance industry.
More than 20 countries have already started exploring the concept of Central Bank Digital Currencies (CBDCs). As per this research, the costs of financial transactions using cryptocurrencies are significantly lower than transaction costs in the traditional economy.
According to another research, 90 per cent of the US and European banks have already started exploring blockchain and cryptocurrencies.
Cryptocurrency exchange hub
As all cryptocurrency trading and investments are gaining rapid interest, it would create an imminent need for supportive infrastructure. The current methods of digital cryptocurrency trading are not sustainable for the longer-term owing to discrepancies in methods and processes.
In the near future, we are likely to see the emergence of exchange hubs catering to providing multiple solutions under one platform.
For example, exchange hubs such as Finxflo, a hybrid liquidity aggregator offers a one-stop-solution for traders to access the best prices in the cryptocurrency market with minimal hassles. Additionally, such an exchange hub enables storing, managing, and buying or selling digital assets from a single portal instead of navigating between multiple interfaces.
Cryptocurrency mainstream adoption
Apart from being treated as an investment tool, it is likely that cryptocurrencies will take a more prominent role in our day-to-day activities. The concept of digital currencies is growing increasingly familiar.
Furthermore, cryptocurrencies offer a lot of perks when used as a mode of payment transfer. Merchants, retailers, and organisations have started acknowledging this fact.
A recent survey reveals that 36 per cent of small-medium businesses accept Bitcoin as a payment method in the US. This number is likely to grow in the upcoming years as cryptocurrencies become mainstream.
In 2020, major retailers including Microsoft, Wikipedia, Burger King, Starbucks are a few names that accept Bitcoin.
Innovation with Crypto Tokens
In the upcoming years, cryptocurrency tokens are likely to be integrated with other technologies and innovations. This includes AI, smart contracts, and the Internet of Things (IoT). Tokens will be used to provide supportive infrastructure, build smart tools, and infuse automation by integrating innovative technologies.
For instance, smart locks (an IoT device) can only be unlocked if an owner deposits cryptocurrency tokens into a specified wallet. A smart contract with encoded rules can further automate this system.
Decentralised applications
Decentralised applications (dApps) are developed by leveraging the blockchain infrastructure. The blockchain-enabled dApps are developed for various industries including healthcare, supply chain, gaming, logistics, food and agriculture.
Cryptocurrency tokens will serve as the fuel to the decentralised application network. These tokens serve as a function of utility for accessing products and services of dApps. Since dApps are rapidly being developed for multiple industries, subsequently there will be a lot more digital currencies in the next few years.
What to expect next?
The potential of digital currencies empowered by blockchain technology is unprecedented. Looking at the current advancements and projects that are underway in the crypto and blockchain ecosystem, we are going to witness disruption in multiple industries. Even the current stats, analysis, and figures reveal that blockchain will be one of the greatest innovations of this century.
Owing to its advantages and subsequent developments in the cryptocurrency arena, the perception of this entire industry has transformed. The question has changed from ‘Is there a future of cryptocurrency’ to ‘What is the scale of implications of cryptocurrencies on our future’.
Source: e27
