The future of cryptocurrencies
The past two years has been somewhat of a nervy time for cryptocurrency investors. There will have been periods of jubilation for some, and there will inevitably have been moments of despair for others.
The price of bitcoin alone went from approximately $1,000, to $20,000 at the end of last year, before falling spectacularly in an alarmingly dramatic post-Christmas drop. Never before have we seen an instrument like this be the topic of discussion at the dinner table across the country.
With that in mind, what does the future hold for cryptocurrencies, and do they look like they’re here to stay?
Even the most ardent opponent of cryptocurrencies would find it difficult to dispute the fact that the blockchain-based asset has found an audience. While many of the cryptocurrencies in existence have caught large numbers of investors out, the demand for these assets, as well as their perceived benefits, remains high.
Of course, navigating such an unpredictable market is difficult, if not impossible, and investors would undoubtedly appreciate slightly more stability ingrained into the market. As such, one of the main drivers that will shape the future of cryptocurrencies is the adoption of regulation. A consistent, stable framework that allows users to use exchanges and platforms freely, while knowing that they are being protected from unscrupulous practices, would undoubtedly benefit the entire crypto universe.
A more consistent approach to regulation should also help to stabilise much of the volatility that currently shapes the sector. Detailed frameworks will help to add some much-needed clarity on several issues, and would help to instil confidence in investors looking for a more long-term investment opportunity. It may also help to convince institutions, previously concerned about a lack of oversight in the market, to take more of an interest in the investing opportunity that digital currencies have created.
The future of cryptocurrency is as entwined with the blockchain technology that it runs on as it is with the value of the asset itself. Blockchain’s capacity for innovation and growth is huge, and many experts argue that the blockchain technology is where a currency’s value lies. The perceived strengths of digital currencies are, in fact, the unique structural advantages allowed by blockchain specifically – with cryptocurrency often cited as merely the first comprehensive application of the technology itself (similar to emails being an application of the internet). For example, greater transparency, accessibility and security are all the result of the blockchain rather than the digital coin itself. Once blockchain technology becomes more mainstream, and it is integrated across a wider range of sectors, there will be greater demand for payment methods that fully utilise the platform.
The future of cryptocurrency remains uncertain. There is certainly demonstrable value, and investors have clearly shown interest in the potential of the technology. However, with prices continuing to fluctuate so wildly, it’s clear that there’s still some way to go before the asset-class settles – and if cryptocurrencies are to reach their full potential, the wider adoption of blockchain technology is a necessity.
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