What does the future hold for cryptocurrency and how does this new technology aim to revolutionize the way we think about money and business?
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There is a lot to unpack in regards to what the future holds for cryptocurrency. The evolution of new technologies, financial innovations, data, access to funds, and the transformation of digital currencies is shifting the way we use and view money.
In recent years, the world has been building towards a new formation of financing; one in which there can be a breach away from a central authority, to better accommodate global everyday users, without the restrictions of governments or financial institutions. The future is very much still in question, but cryptocurrency holds benefits and setbacks that will alter how we use and manage our money.
Is cryptocurrency the future of money?
For many, the current money system is considered fragile between government and financial institutions having such fundamental control over money, financial products, and financial services. Some see the shift in money as compared to the shift from physical monetization being coins and paper bills, to cards and direct banking.
Comparably, the integration of the internet can serve as an example to the emerging cryptocurrency world. The way the internet’s commercial use started with many users not understanding how to connect or use its services, while the infrastructure and bones behind the eventual future were being built. The internet has since become a mandatory and fundamental necessity in conducting business that many see as sort of an evolution being related to the direction of these new digital currencies.
Crypto, while having a presence since the late 2000s is still in its early days. Being an ever-developing new technology, the impacts and implementations of this technology aren’t known or absolute. All the while, skyrocketing interest rates shown not only by investors but by the culture at large preface that cryptocurrency has a future.
Digital currencies
Digital currency is in reference to a currency that never takes physical form. For example, electronic currency is the predominant form in most countries’ financial systems. In this form, you have a record of your current holdings within a financial institution and can exchange it into physical dollars or use it through a physical means such as a bank card or ATM. Digital currency, on the other hand, is maintained and exchanged via digital means through an internet connection on a decentralized network.
Using digital money increases the opportunity for financial inclusion, ownership, and power at a lower cost while providing increased security, confidentiality, and access to the global market for individual users, businesses, and nations. Fundamentally the goal of digital currencies is to remove the middleman such as major companies and banks and regain the individual’s control over their finances.
Decentralized finance
Decentralized finance or DeFi products is just that, an emerging financial technology that aims to remove the control that banks and institutions have on money, financial products, and financial services. Utilizing secure distributed ledgers on blockchain eliminate intermediaries and allow financial transactions through peer-to-peer financial networks.
Whereas in centralized finance all money is held by banks, whose end goal is to make money. The financial system takes a cut for all financial services in regard to bank accounts. It also is required to be approved by a said institution for any transactions to be made. This process costs extra money and takes time.
In this new system an individual user can lend, trade, and borrow money anywhere they have access to an internet connection, and eventually, go to a coffee shop and buy coffee with crypto, buy things off marketplaces like Facebook, or do other investment process options using industry data, or with investors accessing digital currencies in a similar manner.
This just requires early adopters and internet users with a digital identity to use new secure technologies for transactions. All money will be held in a secure digital wallet eliminating the fees and control of financial companies. Funds can be transferred in seconds.
Crypto space
Cryptocurrency presents many opportunities for individuals, as well as businesses to become trusted partners and investors without the risk of systemic failure. The appeal of peer-centric transfers has amassed a great deal of attention and investment within the space.
However, problems have arisen by this influx of attention as it draws attention from government bodies looking for cryptocurrency regulation and individuals aiming to commit fraud through hacking measures, scams, and criminal activity. Government interference as well as the examples of security measures being breached have put a damper on some users’ views in the cryptocurrency space.
Digital assets
A digital asset is anything stored digitally and is uniquely quantifiable in order that organizations can use to realize value. For example, documents or audio and video such as NFTs. These assets are an extension of blockchain and crypto capabilities and values. They allow the transfer of ownership without the need for paper documents.
Adopting digital asset exchange will allow for faster issuance of transactions spanning the world with the only limit being access to an internet connection. As more and more traditional assets are turned digital, these platforms will begin offering a greater variety of services and products that can be more easily traded.
Cryptocurrency investments
There has been a large influx of individuals, businesses, and even governing bodies looking to invest within the crypto industry. Bitcoin has a market cap of $741 billion USD and the second-largest cryptocurrency, Ethereum has a market cap of $344 billion USD. One example from the past few years; while Bitcoin is the largest by market capitalization, Ethereum proves to be laying the groundwork for the future possibilities of crypto and blockchain technology.
Bitcoin acts as a peer-to-peer payment system, whereas Ethereum blockchain is providing the tools for users to create Decentralized apps (DApps) which is proving to empower the end-user and forward the goal of original crypto idealists. Bitcoin holds the popular notoriety, while Ethereum holds the framework for the future of what crypto has to offer. Other cryptocurrencies have had a hard time proving to the average investor beyond the appeal of the greater speculative market.
There are many types of cryptocurrencies on the market. In order to hold real value to assets, a class of crypto referred to as “stable coins” attempts to offer price stability, in a similar fashion to the valuations of fiat currency. In doing so, these stable coins attempt to have both the instant processing, security, and privacy of payments crypto has, but also the volatile-free stability of a government-issued currency.
Crypto trading
Cryptocurrency trading involves speculating on crypto price movements using a contract for difference (CFD) account or buying and selling coins with an exchange. CFDs trade in derivatives allowing for speculation of a coin without owning the coin. An individual or a crypto expert may buy if they see a sign of raising value or sell if they believe there will be a fall. The profit or loss made from these trades is calculated according to the full size of the position held on the coin.
This form of investing poses some problems as it proves to create the aforementioned volatility that stable coins aim to avoid. The volatility of cryptocurrency values creates a difficult situation when looking at crypto as a means to replace traditional currencies.
What is the future of cryptocurrency?
Cryptocurrency and the cryptocurrency market are still in their early days building toward a future free of restrictive or intermediary measures on how we use our money. With any structural shift, there are positive goals to aspire to, and faults to be measured and repaired. As it stands, with its stellar development foundation, crypto looks to be altering the way we see and use money the same way the inception and integration of the internet altered our everyday discourse.
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