Cryptocurrencies: What does the future hold?
The digital currency has become a global phenomenon in recent years, since its first appearance in the market in 2009. Satoshi Nakamoto invented Bitcoin in response to the 2008 financial collapse. However, today, more than 9000 cryptocurrencies are registered on Coinmarketcap, circulating the global digital infrastructure.
2021 has started as the best year for the cryptocurrency market. The top 10 cryptocurrencies, including Bitcoin and Ethereum, are going parabolic and show more functionalities and promise than ever. They have indeed proven resilient. Investor interest, both retail and institutional, in digital currencies has risen dramatically in recent months.
What are some of the predictions for cryptocurrency?
● Price predictions.
Regarding the prices for the future of Bitcoin, there are several opinions. We have Citibank analysts who predict Bitcoin will be worth $300,000 by the end of 2021. Mike Novogratz says that $65,000 is a more realistic level. On the other hand, according to the Stock-to-Flow (S2F), BTC will reach $100,000 by December 2021. However, they all agree that greed for crypto will only grow more and more in the future.
● Massive acceptance.
More and more institutions are climbing on board in a significant way for the first time. They allow for larger trading volumes, helping the industry sustain itself. Also, some of the most innovative companies in the world are investing in crypto. For instance, Elon Musk has publicly declared himself a Bitcoin supporter, buying $1.5 billion worth of the cryptocurrency. Furthermore, PayPal has finally integrated cryptos into its platform, allowing its users to use or trade them as they see fit.
● A currency that stores value.
Initially, crypto was intended to be a decentralized peer-to-peer currency to provide better security, stability, and usability. Even with the events of 2020, crypto is still quite far from replacing the traditional Fiat money, but its image as a store of value will continue to grow. Countries facing economic difficulties, like Argentina, Paraguay, and Venezuela, are already seeing Bitcoin as an alternative to their own weaker and more volatile currencies.
● As a payment system.
As a payment system, digital currencies are relatively slow, processing only some transactions per second. For comparison, decentralized electronic payment systems counterparts (like Visa) can process over 20,000 transactions per second. But, since crypto is considered to be still in its infancy, it is expected to improve its speed exponentially. Yet, having to wait 10–20 minutes for a Bitcoin transaction is still faster than waiting for banks to transfer funds between them.
● Imposing regulations.
More and more countries worldwide continue to prepare and impose cryptocurrency regulations, even though much slower than this market needs right now. There seems to be an increased interest from governments in educating people about cryptocurrencies. This will help with the recognition and perception of crypto as a legit asset to invest in. However, we are still quite far from seeing homogenous legislation. Nonetheless, the general public is exposed much more to crypto. For instance, Revolut users can easily buy into cryptocurrencies, even if they had never thought of it when they signed up.
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