According to a survey conducted by Grayscale in partnership with The Harris Poll, more than 53% of Americans agree that “cryptocurrencies are the future of finance.”
Despite the optimistic outlook for the future of cryptocurrencies, the current market has primarily stalled, with Bitcoin and Ethereum down more than 50%. Most altcoins have also shed between 40-90% of their original market cap.
Some experts have even gone as far as to predict that crypto prices could fall even further, while others remain optimistic.
However, regardless of the current market conditions, what is the long-term potential of cryptocurrencies? And what will the future of this technology hold in 2023 and beyond?
This article will discuss some of the most likely scenarios for cryptocurrency in the future.
Crypto regulation has been a pain point for the crypto industry for quite some time. In the past, governments have tried to regulate cryptocurrencies in various ways, but it has not succeeded.
Countries like China have moved to ban cryptocurrencies, while the United States has tried to create a regulatory framework for them. However, the jury is still out on whether or not these regulations will be effective.
El Salvador even went as far as introducing Bitcoin as legal tender, thus becoming the first country in the world to declare crypto legal tender against IMF’s recommendations.
This doesn’t just encourage other countries to adopt crypto but also invites them to start formulating a regulatory framework for cryptocurrencies like Bitcoin.
As we move into 2023 and beyond, governments worldwide will likely continue to try and regulate cryptocurrencies in one way or another. As a result, this will give crypto more legitimacy and trust in the financial world.
Institutional Adoption of Crypto Payments
One of the biggest challenges for cryptocurrencies is getting them used as payment methods. Currently, very few merchants accept crypto payments, and even fewer consumers own any cryptocurrency.
However, this could change as more companies start to put Bitcoin on their balance sheets. Various companies such as Microsoft, Twitch, Virgin Airlines and Wikipedia already accept crypto payments.
Moreover, central banks worldwide are also experimenting with issuing their digital currencies. This could increase the use and awareness of cryptocurrencies for payments in the near future and further expand their use cases.
The Rise of DApps and Web3
Dapps, or decentralized applications, are applications that are hosted on a blockchain and allow people to access them without having to trust a third-party server. Decentralized applications serve various purposes and can be used to create a variety of services from gaming, media, finance and more.
Decentralized exchange platforms such as Uniswap have taken the crypto trading space by storm, enabling users to trade coins without having to trust a third party.
Other additional services designed to simplify DeFi are also under development. For example, Crypto projects such as Ren are working to bring interoperability into the crypto space by allowing users to move their coins from one blockchain network to the next.
Ethereum 2.0 is another development that could accelerate the adoption of dApps as the world moves towards a decentralized Web 3.0 internet.
The web3 movement is a push away from the centralized and controlled internet we know today to one where users fully control their data. Ethereum is well-positioned to become the foundation of Web3 since its platform supports the development of decentralized applications.
Increased Security Measures
As cryptocurrency technology becomes increasingly popular, security measures will likely intensify. Over the years, various hacks have been reported in the crypto world, leading to massive losses in the billions of dollars.
Most hacks have been caused by weak security measures, which is why crypto exchanges, wallets and other services need to invest in the highest level of security.
As institutional capital flows into the crypto space through DeFi, crypto or NFTs, security measures will likely become a priority for developers who have learnt from past mistakes.
The security of most cryptocurrencies is built on blockchain technology, but to make them even more secure, developers can turn to other technologies like quantum computing and artificial intelligence.
These emerging technologies could create a new level of security for cryptocurrencies that will protect them from potential hacks.
Increased Utility for Cryptocurrencies
Currently, most cryptocurrencies are used as a store of value or a means of speculation. However, this could change as more projects work on creating real-world use cases for their tokens.
Blockchain technology is becoming more mainstream, with its tentacles touching nearly every industry. As a result, more platforms are emerging with diverse applications of blockchain and crypto. This could lead to more use cases and increase their utility.
For instance, some projects, such as StormX, are working on creating new ways to pay bills or use their tokens as a form of loyalty points. Similarly, DeFi platforms are now allowing users to borrow money with crypto-collateralized loans.
Simply put, increased utility in cryptocurrencies could lead to more adoption and increased value for most coins.
Crypto for Creating an Equitable Economy
Cryptocurrencies strongly appeal to minorities and the youth, who often feel disenfranchised by the traditional financial system.
Cryptocurrencies are seen as a way to create a more equitable economic system that’s not biased against people from specific backgrounds.
This egalitarian nature of cryptos can further be extended to other aspects, such as accessing banking services, investing and trading in different markets.
Cryptocurrencies and blockchain technology espouse the idea of decentralizing the power of finance and creating more equitable financial systems.
This will surely attract more mainstream users into the world of cryptocurrencies.
Conclusion: Get Ready for a Wild Ride
It remains to be seen if cryptocurrencies will have widespread adoption or remain a niche item. Currently, most cryptocurrencies are barely a decade old, and most people don’t own any cryptocurrency.
However, the increasing mainstream awareness and acceptance of digital currencies, especially with the popularity of DeFi and NFTs in 2020, could lead to broader adoption over time.
Institutional investors are already entering the crypto space despite its volatile nature, which shows their faith in the market. This doesn’t just create more adoption but also brings legitimacy to the industry.
Finally, the idea of decentralized financial systems free from discrimination will have strong appeal among minorities and people who are disadvantaged by traditional financial systems. This unbanked class can benefit the most from cryptocurrencies and could considerably boost adoption.