The further the digital age passes, the more cryptocurrency becomes integrated into society. Although some might resist the idea now, it is only a matter of time before it all comes to fruition.
As the years go by, cryptocurrency trading becoming more of a norm in society. New coins keep coming into existence and worthy ones like Litecoin (LTC); Bitcoin and Ethereum have survived the test of time and even had net increases in value despite the immaturity of Blockchain protocols. Also, world powers like the United States have finally begun to acknowledge the presence and benefits of digital currencies. Also, financial institutions in China and Russia are making moves to make cryptos legal, and these indicate that the future of cryptocurrencies is in good hands. Looking forward, below we will discuss some of the crucial events that are expected to happen in the world of cryptocurrency. But first, let’s make a small overview of the recent history.
Cryptocurrency in the 2010s
The concept of digital currencies first became popular in the early last decade, and Bitcoin, in particular, was the standout cryptocurrency. However, the question on the minds of many was, “Is Bitcoin going to fail?”, this is because it had no value upon its release. Nevertheless, it has thrived beyond expectations and seemed to be here to stay as the best cryptocurrency on the market.
Also, there was an internal debate within the crypto world regarding implemented protocols and the release of new forms of crypto, sometimes through “forking.” People that owned a particular form of currency become biased toward that coin and developed less interest in newer coins. However, the fact that there are different forms of cryptocurrency has encouraged innovation, and this competition is still on today.
Furthermore, the cryptocurrency industries experience multiple crashes over the decade but manage to come back at a level higher than the peak before the crash. Consequently, the industry brought more attention to itself, and thus, people started investing in the long-term, some going as far as having a tenth of their net worth in cryptocurrency. Even though you could occasionally be a day trader that invested for short term and gained through arbitrage, there are enough hodlers on the market too. To sum up, all transactions have led bitcoin to have a market cap of about $213,011,522,443 by the middle of 2020.
Latest Cryptography Advances
Cryptography is the study of methods that can be used to ensure safe communication and shielding information from external parties. Furthermore, it is all about the development and analysis of protocols that will secure data transmission across channels. However, Blockstream (a Blockchain firm) have researchers that claim Zero-Knowledge Proofs is one of the cryptography development areas that have seen the most progress in preserving privacy.
Remittance is the act of transferring funds to another party out of generosity or as payment for a service. Remittances need to be made between individuals not just within a country but internationally. To meet this demand, firms are constantly on the rise to provide their services all over the world. These firms constantly advertise their versions of low transfer rates so they can bring in more customers and undo their competitors. However, blockchain technology has provided a platform that is free but upon entry into the market, its reception was slow because countries with low-income economies found it challenging to transform Bitcoin and other forms of cryptocurrency into “useful” currency. Further down the line, with the increase in the liquidity of Bitcoin, people in these low-income countries became able to send and receive funds globally as an alternative to other common means.
A national cryptocurrency is a digital currency that is created and monitored by a nation’s government, and this is quickly becoming a reality as we look into the future of cryptocurrencies. Ordinarily, every form of cryptocurrency is decentralized (not controlled by any organization) and can be used worldwide, but a national cryptocurrency does not work in this way. Instead, it is run by a development team that works hand-in-hand with government officials to accomplish a certain goal. These currencies are usually referred to as Central Bank Digital Currency. It should be noted that while cryptocurrency is typically decentralized and is supported by Blockchain technology, a digital currency works without necessarily decentralizing and is supported by an already established finance database.
Blockchain Integration into Government
Places like Venezuela, Dubai (UAE), and The Marshall Islands have already kickstarted the use of national cryptocurrency backed by blockchain technology. In Venezuela, the Petro was introduced in 2017 as an alternation to constantly inflating Bolivar. Also, Venezuela is one of the biggest users of other popular cryptocurrency forms such as Bitcoin Cash, and Bitcoin itself.
Also, in 2017, Dubai declared emCash as their national cryptocurrency, and citizens have the opportunity to use either Dirham or emCash for their trade activities. People that opt for payments with emCash would settle their dealing with merchants directly, while those that use Dirham would go through the traditional process.
The little nation, The Marshall Islands, has their national cryptocurrency called SOV, which they brought forward in 2018 to use a legal tender alongside the USD. However, the SOV has a 24 million market cap to avoid inflation.
Furthermore, Tunisia has been reported to be willing to roll out a Central Bank Digital Currency called E-Dinar, but the exact time remains a mystery. Elsewhere, Senegal has eCFA as a centralized digital form of money.
China will announce its central bank digital currency called the Digital Yuan. This is only natural since China experiences the most exchange of cryptocurrency worldwide through platforms like Godex, which shows the high activity as far as Blockchain technology is concerned. Moreover, President Xi has declared that the nation would be the leader in Blockchain technology and has encouraged research, and developments of strategy in this area as well as investments. Currently, China is looking at electronic payment initiatives that will involve cryptocurrencies that will be available soon.
Law Integration into Smart Contracts
A smart contract is a system that digitally administers a contract between bodies, eliminating the need for a third-party. This is done with the use of blockchain technology and is implemented without the need for verification by an external body or a bot. Consequently, it takes business away from law practitioners specializing in legal contracts. If used more in the future, smart contracts would substantially reduce service fees throughout the world.
Financial institutions have started implementing smart contracts within their system and are regularly improving their processing efficiency and automated payment clearance. Also, credit card firms and accountants use smart contracts to conduct audits in real-time. Moreover, lawyers can use them to develop smart contract templates to help in their business. Certain cryptocurrency types can deal with smart contracts, some of which are Bitcoin, Ethereum, Ripple, and Decred.
Predictions for The Future of Bitcoin Technology
More Types of National Cryptocurrency Will Surface
The more humans become interested in the digital space; the more likely cryptocurrency will become commonplace. At a time, governments would not be able to overlook the trend, and as more countries develop their crypto, others will follow not to be left behind. This future of cryptocurrencies backed by blockchain is inevitable even though countries like China are currently placing restrictions on Bitcoin.
A Lot of Blockchain Startups Would Crash
Presently, a lot of investors are putting money into blockchain startups, but unfortunately, since Blockchain technology is still somewhat new, it will not meet investors’ expectations of the software. The fear of losing money would drive them to make decisions in haste, which would lead to innovations that would fail. Blockchain should be given time to grow because frankly, the fact that the future of cryptocurrencies is the integration in our everyday life is not news anymore. However, most companies will not quickly dive into the use of crypto. Instead, they would wait for it to be successfully integrated into the economy.
The Economy Will Call for The Application of Blockchain
Unlike many conventional companies, the banking and finance industry would not need to implement a revolutionary change to their blockchain technology usage. Financial institutions will begin to seriously contemplate blockchain implementation for conventional banking activity after it is effectively implemented for cryptocurrency.
Over time, people would have more understanding of how blockchain works and will know how to use the technology effectively. Also, the use of cryptocurrency would significantly change the way businesses would operate in the future. Sure thing, it will take time and effort for this change to become obvious. Furthermore, more governments around the world would make cryptos legal and use it to advance their economy.