What is the future of cryptocurrency?
by : Hajar Ouled Sebtia
A cryptocurrency, unlike paper currency, is a digital asset and not a physical medium of exchange but takes the form of coins or tokens. They are decentralized networks based on blockchain technology. Their existence is bound to a distributed and decentralized ledger. Since it is protected by cryptography, it is almost impossible to imitate. Another characteristic of cryptocurrencies is that they are theoretically exempt from government control or manipulation as any central authority does not issue them. In 2022, there have been high levels of price fluctuation of cryptocurrencies like Bitcoin in the market. Numerous people have either lost millions or gained millions on such trades. There are pressing questions pertaining to the future of cryptocurrency in the next five years. The industry grew from $923 million to $ 6.6 billion.
What is sure for now is that there are several advantages and disadvantages pertaining to the usage of cryptocurrency, and several regulatory bodies are trying to mitigate the risks of investing and trading in such a sector. The Chair of the Federal Reserve, Mr. Jerome Powell, has already shown interest in the regulation of cryptocurrency through the Securities and Exchange Commission. This shows the need to develop a digital currency in the future, but it has to be regulated with proper norms and guidelines. There has been legislation passed on cryptocurrency that would help in reducing tax evasion and would boost the regulation as well.
Governments are promoting the technological revolution brought about by cryptocurrency as well. Companies are taking payments in cryptocurrencies that are allowing the market to grow even more than required. Furthermore, blockchain technology has been perceived as extremely safe as it has not been hacked before. The only way to hack such technology is through the wallets that are linked to the system. But it is expected to be one of the most secure networks in the world. There are several expectations for the future of cryptocurrency. The value of Bitcoin is expected to surpass $100,000 per unit. The commodity markets will also turn into a completely digital form. This would make matters easier for trading and investing. The exchanges would completely be decentralized and digitalized. This is viable only with the help of cryptocurrency. The need for liquidity is more important for the companies than profits. It is because of the liquidity crisis that companies are not being able to meet their current liabilities. Consumers can easily access finance in the future, and this would promote microfinance. This also enhances financial inclusion in several countries around the globe. It is expected that cryptocurrency will also solve the problem of tax evasion as all the transactions are recorded on the digital platform, and they cannot be evaded at any cost. There is a concept emerging that is called the emergence of the bitcoin-denominated yield curve. Therefore, it is observed that there is future growth in the industry at large. It is seen that security, protection, and safety are essential for investors. A considerable amount of government regulation in several countries is being established. The level of corruption and taxes increases accordingly. The economy is not yet ready for cryptocurrency because processes are prolonged. The economy requires an efficient regulatory body that can quickly adapt to digital networks and enhance transparency. It is so because of the volatility in the prices of the instruments. Thus, the future of cryptocurrency has yet to evolve in the coming years.
