Cryptocurrencies in the 2020s. What Will the Future Bring?
Thursday, June 4th, 2020, 4:38 PM
The last decade saw cryptocurrencies develop from the pipe-dream of a handful of cypherpunks to trending financial & monetary instruments.
Nowadays, all major financial journals report on the crypto markets and the cryptocurrencies themselves are attracting investment not just from individuals and hedge funds, but also from well-established banks, institutions, and even governments. They are also gaining ground as a method of payment with an increasing number of online shops, casinos, and other businesses now offering at least Bitcoin payment options.
But that does not mean the future of cryptocurrencies is secured. The markets are still extremely volatile and knowledge and acceptance among the general public are still not widespread. So what can we expect in the next ten years? A lot!
Here are our predictions for the next decade:
Blockchain Scalability One feature of cryptocurrencies that is receiving a lot of attention in its own right is the underlying blockchain technology. The possibilities of applying this technology in areas outside of the financial industry are driving strong research and development efforts.
By the end of the decade, blockchains will have become much more scalable, allowing much greater use. This will lead to widespread adoption in emerging markets where the financial system does not function efficiently. In addition, a new generation of crypto startups producing products people want and need will also contribute to mainstream adoption in the developed world.
New Privacy Features One concern with the blockchain as it currently stands is that all transactions are publicly visible. For many users and potential users, this is not something that is neither desirable nor necessary. This will most likely lead to the introduction of a privacy feature in the blockchain and maybe the development of a whole new private coin.
Consolidation Currently, there are a large number of developer teams working on both next-generation protocols and scaling solutions for the existing blockchains. The ones that are most successful at integrating scalability, privacy, and other features such as more user-friendly developer tools will see their chains dominate the market. This could well lead to a series of Mergers & Acquisitions among these teams with the tokens of one chain becoming exchangeable at a fixed rate for the tokens of the purchasing chain.
Full-Blown Use In the last decade, cryptos were mostly seen and used as an investment opportunity or store of value. This will continue in the coming decade but the recently emerging trend of increased growth in the use of cryptos for non-trading purposes will continue. The most successful crypto companies in the 2020s will be the ones who focus on this aspect. By the end of the decade, full-blown use will outstrip investment.
A Crypto Startup Boom Just like the advent of the internet brought about an internet startup boom in the 1990s, the 2020s will see one in crypto startups. Although the dotcom bubble burst, today practically all startups in the world make use of the Internet in some aspect of their business. We believe this will be true of cryptos also by the end of a decade.
A crypto startup will differ from traditional startups in three important ways: ●Funding capital will be raised through crypto. ●Instead of attracting new customers with discounts and special offers, it will reward them for using its products and services with cryptocoins. ●It will have almost immediate access to a worldwide market. This third point is perhaps the most important and will give crypto startups a huge advantage over traditional ones who have to expand one country at a time, integrating all the different regulations and methods of payment into their processes before moving on. Exposure to cryptos will increasingly be through the general use of the Internet for gaming, social networking, work or commerce rather than an active interest in the currencies themselves.
Increased Regulation Facebook’s attempts to launch its own cryptocurrency jump-started efforts to regulate the whole crypto market. And these efforts will continue. This will provide more clarity on what exactly can be classified as a cryptocurrency. It will also lead to a more mature market structure, dividing and regulating the roles of brokerages, exchanges, custodians, and clearinghouses. In the end, the crypto market will come to more closely resemble the world of traditional finance.
Decentralization As cryptocurrencies become more integrated into our lives, we’ll see an online world based on crypto-to-crypto exchange emerge. This will be a world of rapid development and innovation. As non-custodial ewallets do not store clients’ money, they are regulated as software companies rather than financial institutions.
New apps developed within these wallets will have an immediate global reach. Identity will be decentralized and reputation guaranteed through the blockchain rather than traditional credit rating systems.
Wealth and Power Redistribution The development of the online word we talked about in the previous paragraph will allow commerce that cuts out the traditional middle-men. The dream of the founder(s?) of Bitcoin will become one step closer to reality. And with Bitcoin predicted to reach 200,000 per coin, the new billionaires will be from the crypto-land. This will mean greater investments in science and technology. Plus, if the examples of initiatives like the Pineapple fund, GiveCrypto.org, and The Giving Pledge are anything to go by, philanthropy and charitable giving will also increase.
While some of our predictions might not play out exactly as we imagine, we are confident that in the coming decade, crypto uptake will continue to expand and growth will be driven by use rather than investment. Whether this will lead to a more economically fair and free world still remains to be seen.