As exciting as the Crypto market is, it is rife with volatility and uncertainty. In some ways, this is inevitable. The first cryptocurrency, Bitcoin, only appeared in 2008. Its relative novelty means much of its function and its features have not been decided upon as of now. Much of the public is still wary when it comes to cryptocurrencies. This is doubly true for many financial professionals, both the young and the traditionalists. Nevertheless, there remains some hope around younger generations that there is some place for Crypto in the global economy. There may still be a long road ahead before we know its true function and for it to become established. Hopefully, the Crypto future will become clear with time.
Possible paths for a Crypto future
The first thing we can say about Cryptos, in general, is that they challenge many traditional currencies. This is especially true of the U.S. dollar, as it is a safe-haven and a standard currency many use for global transactions. Cryptocurrencies open up an avenue of opportunity, as an intermediary currency, for international transactions. This could then have the knock-on effect of damaging many traditional financial institutions. Whether this is banks, currency exchanges, etc. The forex market in general. They are the usual beneficiaries of all transactions. Without these traditional forms of currency exchanges, these financial institutions will suffer hard blows. This is a significant portion of the global economy, so worldwide markets could also hurt. It soon becomes quite clear why these institutions do not want to accept cryptocurrencies.
On the other hand, some banks are already looking into opportunities to assimilate cryptocurrencies into their systems. The currencies may offer many new opportunities that traditional institutions could possibly achieve. For example, certain transactions could be heavily streamlined, as a transaction usually has to jump through a great number of hoops before they complete. They know that technological advancements are an inevitability. To some extent, it is something they just have to accept. So, we could end up in a world where cryptocurrencies and financial institutions work alongside each other. However, we should keep in mind that the main aim of most cryptocurrencies is to circumvent these institutions. Time will tell.
Safe-haven Crypto future
Cryptocurrencies have quite a bright future as possible safe-haven currencies. In times of economic hardship, investors tend to move to safe-havens, like the dollar or gold. This is to shield them from the possible devaluation of whichever currency they currently hold. The main feature of these assets is that they remain relatively stable whatever the situation is. Once cryptocurrencies achieve some form of stability, they too can become reliable safe-haven investments. Since these coins have some practical application, they could be even more attractive than gold in the future. Storing cryptocurrencies is also a lot less complicated than storing physical assets, and no payments would be necessary to do this. Some say Bitcoin has already reached this safe-haven status, but it currently remains too volatile for investors to properly rely on.
Reasons to be positive about Crypto futures
The thing about cryptocurrencies is, there is so much we do not know yet. It being a digital form of currency, all cryptocurrencies can continually adapt and change to become more appropriate for widespread use. They can also adapt with changing economic situations. There are also many cryptocurrencies out there, with a wide range of possible uses. It seems quite likely that at least one will rise that will have a general appeal.
The main feature that attracts many traders to the Crypto market is that it offers alternatives. It offers alternatives to people who distrust financial institutions, allowing them to their transactions to be tracked. Furthermore, It helps them avoid unnecessary meddling by governments who want to meddle in their affairs.
It can help people living in countries in poor economic condition. It could shield them from suffering severe devaluations of their currency, so they do not end up in a financial struggle. If a particular government is particularly tax heavy, this presents an opportunity. People do not need to find some offshore tax-haven to keep their funds safe. They can simply transfer to Crypto. That is, as long as they have access to electricity and the internet.
Cryptos, in summary, offer people individuality. They offer people the opportunity to break away from the traditional financial institutions that control their financial well being. People can have an easy, relatively safe, way of circumventing the status quo.
The current problems Crypto must overcome
If there will be a future for Crypto, there are some problems that need to be ironed out. The main issue is that, currently, cryptocurrencies do not have much tangible use. Sure, blockchain technology is a very promising feature, and there are many theoretical uses for cryptocurrencies. However, at the end of the day, people do not accept Cryptos for many services, and people still mainly rely on traditional currencies. Most cryptocurrencies are also not directly tied to any economy or real assets. This results in a situation where much of the activity in the Crypto market is driven by trader speculation. Additionally, many startup cryptocurrencies may not be very legitimate, as their creators are often anonymous.
What has to occur is for governments to be more accepting of the Crypto market, facilitating its spread and viability for general transactions. Some may wince at the idea. We may have said that individuality is the most attractive feature of the Crypto market, however, this is a necessity. A balance has to be found between regulation and individual freedom. It seems unclear when this will happen, but governments, especially in Europe, are slowly warming up to the market. They are creating regulations around the Crypto market as the technology develops. The fact that prices are so volatile indicates that many individuals do have hope in their value.
Additionally, many of the new currencies must become more established, as they are all currently miles behind Bitcoin. Once we have cryptocurrencies with well-defined uses, prices should start evening out. The main element is time, at the end of the day.