A cryptocurrency is a form of digital cash, which is made and managed through the use of cryptography techniques. This form of cryptography makes digital currency encrypted and prevents any frauds from occurring. Cryptocurrency owes its advancement to the development and success of bitcoin. Bitcoin set the trends for all cryptocurrencies that exist and has given the framework for all future cryptocurrencies to come. Bitcoin captured the attention of many investors and the media when its value suddenly increased to $266 in 2013, and from then on, its value kept on increasing to around $30,000 until it started to drop significantly by almost more than 50%.
This sparked outrage and debate over the future of cryptocurrency and its stability in the market. But, now, as people begin to understand the concept upon which its value is determined. Things have calmed down, and people have begun to use a digital currency like normal FIAT money.
But the question on everyone’s mind remains the same. That will one day digital currency succumb to the Euro, Pound, and Dollar? Or cryptocurrency like a trend, which will simply fade away with time?
The future; what does it have in store for cryptocurrencies?
We all saw that bitcoins price plummeted to $3000 during the coronavirus pandemic. But it then quickly rose back to over $10,000 in a matter of a few months. There have been different views on the subject. Some believe that the ongoing pandemic is like a fresh start for the bitcoin market. At the same time, others believe that the pandemic has shown us just how unstable the value of the currency is. Tiwari is very positive about the bitcoins value, and he predicts that the cryptocurrency will reach a value of around $100,000 during the pandemic. He was explaining that global panic will eventually make the currency more valuable.
Speculations have suggested that, there is a big possibility that crypto will be added to Nasdaq. This will add credibility to the digital currencies and its use as a more conventional form of currency.
It is important to note that cryptocurrencies are still a fairly new concept. Adopting new concepts take a lot of time, sometimes even generations. This does not mean that cryptocurrencies will take generations to be adopted. It is all about the ease of use and how willing people are to adapt to the new change.
The backlash and scrutiny associated with Crypto
Two of the main reasons for the success of bitcoin are also the two things that bring bitcoin and other digital currencies under the scope of governments and judicial notices in negative limelight. The decentralized system and the anonymity associated with digital currency has made it the go-to currency for hosting illegal activities and transactions. Money laundering, drug dealing, and overall payment for illegal goods and services on the dark web are all made through digital currency.
Institutions such as the Financial Crimes Enforcement Network (FinCEN), the FBI, and homeland security have all expressed concerns about bringing digital currency in accordance with government regulations. This problem is not going away anytime soon.
Countries are finding ways to integrate cryptocurrencies in their economies
European countries such as France and Italy are finding ways to make the use of digital currencies more common in their countries. They believe that this will allow for more investment and faster transfer of currencies among their citizens. However, they are currently coming up with new policies and measures that will make digital currency more assessable to the general public. These countries are also working on security issues so as to prevent money laundering and other illegal activities that can be committed by using cryptocurrencies. When one country creates a working system that covers the transactions and fixes the issues of security. Then that country will create a role model for all others to follow. The acceptance of digital currency worldwide will follow, with countries accepting the change as fast as the falling of dominos. However, all of this is still a maybe, and things can fall through. But, it seems more likely that cryptocurrencies will soon be more accepted throughout the developed countries, at least.
Cryptocurrency is third world countries:
There are many ways in which people still trade cryptocurrencies is countries where they are banned. But their use is limited and can come with risks. Third world countries are the last ones to accept technological change. Factors such as poverty and the non-availability of technology make it difficult for new changes to be incorporated. Furthermore, corrupt governments also makes this a difficult task.
Even if we see the acceptance of Digital currencies worldwide, we still may see many countries as such reluctant to accept the change. North Korea is one example.
Digital currencies success and failure also depend on the public:
The value of the digital currency is based on the demand and supply curve. This means that if more and more people want to make their transactions through bitcoin, its value will increase if fewer people want to hold or use bitcoin, its value decreases. There are a finite amount of digital currencies created, their value and their supply depend upon their demand and their mining.
As more transactions are made, more bitcoins are created to reward the miners. This means that in the long run, we might see a more stable value for digital currencies. But, it all depends on how quickly everyone will adapt to this relatively new form of currency. If future generations are more inclined to use, then we will see a boom in the market. Moreover, people might ditch traditional currencies altogether at one point and move towards digital currency. The opposite can also occur, future generations might lose trust in the new system, with less and less people accepting cryptocurrency as payment. Its value may fall so much so, that people might forget this concept ever existed. So our acceptance is the real basis for the success and failure of this currency.