Cryptocurrencies have made huge strides. Based on new and advanced blockchain technology, the idea of cryptocurrency as a digital asset has moved into many sectors of the economy. The digital currency is not only termed conjecture. On the contrary, they are regarded as investment vehicles, payment methods, security tokens that mirror real assets, and many other things in 2020.
It is duly noticeable how significantly the cryptocurrencies’ value and usages have grown. The bitcoin market is not merely speculating. It is also used for investments. Its application is not solely on financial transactions such as the traditional ones. Also, the existence of digital currencies with varying usages in different areas already has become a reality. Today, we are talking about what’s next for cryptocurrencies, factoring in the new developments.
The sides of a cryptocurrency future
Investment vehicles
Leading companies have been offering Bitcoin services over the past three years. Consequently, investment managers, hedge fund managers, and institutional investors are now getting heavily involved in cryptocurrencies. Adding digital assets to diversified investment portfolios is a popular strategy among many investors. About 72% of the 400 fund managers and institutional investors surveyed testified that they would really like to dive into digital assets. Retail investors have always been interested in this area. These days, institutional investors are increasingly likely to see cryptocurrencies as financial tools on par with gold and stocks.
Easing regulations
Many countries have taken a different stand on cryptocurrencies and digital assets during the past two years. Bitcoin and other cryptocurrencies have been designated as official custodians by the German Financial Authority. The Indian Supreme Court removed the prohibition on trading digital currencies at the same time in 2020. Governments are now developing rules to offer a legally compliant cryptocurrency trading and investment environment. Countries will probably soon start drafting laws governing the usage, exchange, and storage of virtual currency.
Causing disruptions in banking and finance
The financial sector is the first to be by cryptocurrencies, despite the fact that use cases for them are starting to appear in many other areas. The future of cryptocurrency has uses in many different banking and finance industry verticals, ranging from tokenizing financial products to facilitating cross-border payments. Currently, over 20 nations are investigating the idea of Central Bank Digital Currencies (CBDCs). This study shows that compared to traditional economy transactions, cryptocurrency-based financial transactions have much lower prices. Ninety per cent of US and European banks have reportedly already begun investigating blockchain technology and cryptocurrencies.
Exchange hubs
The growing enthusiasm for bitcoin trading and investments signifies the fact that there is an absolute requirement for infrastructure to support this immediately. Because of the various techniques and methodology involved, the current digital bitcoin buying and selling approaches are not valid in the long term. Exchange hubs that offer a variety of solutions on one platform are projected to emerge soon. For instance, an exchange hub can be a hybrid liquidity aggregator that offers a one-stop solution for traders to reach the best prices in the cryptocurrency market without any problems. Furthermore, this type of exchange hub can store, manage, and buy or sell digital assets from a single portal without having to go through multiple interfaces.
Mainstream adoption
In addition to being viewed as a tool for investing, cryptocurrencies will probably become increasingly involved in daily life. The idea of virtual money is becoming more and more common. Additionally, using bitcoins as a payment method has many benefits. Retailers, merchants, and organizations have begun to recognize this. According to a recent poll, 36% of US small- and medium-sized enterprises use Bitcoin as a payment method. As cryptocurrencies become more widely used, this number is probably going to increase in the years to come. Major retailers that took Bitcoin in 2020 include Wikipedia, Microsoft, Burger King, and Starbucks, to name a few.
Innovation with Crypto Tokens
In the upcoming years, tokens for cryptocurrencies will likely be with other advancements and technologies. AI, smart contracts, and the Internet of Things (IoT) are examples of this. By combining the latest innovations, tokens will build intelligent tools, support infrastructure, and automate processes. As an example, an owner can only unlock an IoT device like a smart lock by depositing cryptocurrency tokens into a designated wallet. A smart contract with inbuilt rules can automate this process even further.
Decentralized Applications
The blockchain infrastructure can be utilized by decentralized apps (dApps) in a number of industries, including healthcare, gambling, supply chain, logistics, food and agriculture, and so forth. Tokens backed by cryptocurrencies will power the decentralized application network. These tokens are helpful for gaining access to dApps’ goods and services. The rapid development of dApps across several industries means that in the coming years, there will be a significant increase in the number of digital currencies.
What to expect next?
Blockchain-based digital money has never been so significant before. There will be disruptions in numerous sectors according to the current moves and developments in the blockchain and cryptocurrency ecosystem. Blockchain, even as contemporary data, analysis, and statistics suggest, is among this century’s most meaningful creations. The future of cryptocurrency, On the one hand, it has been made possible due to Bitcoin’s merits and the development of the industry, but on the other hand, there have been shifts in the public’s viewpoint. Now the issue is, ‘What are the implications of cryptocurrencies for our future?’ rather than ‘Is cryptocurrency going to be a thing?’.
Also Read: Interesting Cryptocurrencies After Bitcoin
FAQS
How are governments and regulatory bodies approaching cryptocurrency?
In recent years, regulations have become more supportive, with countries like Germany officially recognizing cryptocurrencies, while others, like India, have removed bans on trading. These regulatory advancements aim to provide legal clarity, making cryptocurrency trading and investment safer and more compliant.
What role will cryptocurrencies play in mainstream finance and banking?
Cryptocurrencies are set to revolutionize finance through applications like tokenized financial products, cross-border payments, and possibly Central Bank Digital Currencies (CBDCs). These innovations offer faster, more cost-effective transactions compared to traditional methods, with many banks exploring blockchain technology for efficiency.
What is the future of cryptocurrency exchange hubs?
As cryptocurrency trading grows, there's a demand for efficient exchange hubs that aggregate liquidity and provide streamlined, all-in-one solutions for trading, storing, and managing digital assets. This infrastructure is essential for accommodating the growing number of users and the complexities of digital asset trading.
How will cryptocurrencies impact daily life and mainstream adoption?
Cryptocurrencies are moving beyond investments to practical use cases, with more businesses accepting them as payment. As digital currencies become more integrated, their use as a daily payment method is likely to expand, with large companies like Microsoft, Burger King, and Starbucks already accepting Bitcoin.
