The Economist recently compared the crypto sector to a cockroach — arguing both are “indestructible” and impossible to eradicate.
And with every price plunge and multimillion-pound hack, some media outlets have little hesitation in declaring that Bitcoin has died. At the latest count, there are over 470 such obituaries — and usually, prices and sentiment end up recovering a few months later.
Nonetheless, it’s worth taking a moment to contemplate what the future of crypto actually looks like. Millions of early adopters ended up badly burned following breathtaking bankruptcies at FTX, BlockFi, Celsius and Voyager in 2022. Many lost their life savings after withdrawals were frozen, and will be unlikely to return.
You could argue that drawing in new investors is crucial for the industry to survive. Figures from the UK’s Financial Conduct Authority suggest 4.97 million Britons owned cryptocurrencies in August 2022 — doubling from 2.3 million the year before.
The regulator noted there is “growing interest” in the space, but with 9% of adults already making an investment, you have to wonder whether a saturation point is close.
Another reason the crypto sector remains relevant is continual innovation. Back in 2017, initial coin offerings were all the rage. Startups only needed to mention the word “blockchain” to command millions of dollars in capital. DeFi soon took over as a source of interest, followed by non-fungible tokens and Web3. There’s always a new trend around the corner.
This creates problems for regulators, who often end up being unable to catch up. By the time governments create clear rules of the road for one part of the crypto sector, investors have all too often rushed to the next big thing.
What does the future hold?
Crypto enthusiasts have often predicted that, one day in the future, Bitcoin has the potential to replace the dollar — and we’ll all be buying groceries with the world’s biggest cryptocurrency.
This seems pretty unlikely and impractical because of how volatile this asset is. There’s a classic story about a man who bought two pizzas for 10,000 BTC back in 2010. Fast forward to now, that’d be worth $440 million.
But it’s not all doom and gloom. There’s a lot of interest in the technology that underpins cryptocurrencies. Right now, 130 countries are exploring whether to launch a central bank digital currency — in other words, a virtual form of the pound or dollar. This could inject much-needed modernization into our payment infrastructure, and act as a boost for financial inclusion.
Major companies have also expressed an interest in using blockchains to speed up payments and make cross-border transactions cheaper. Visa has been dabbling with Ethereum for years, while Mastercard has been bringing crypto onto its network since 2021. As crypto wallets become more usable, they could become less intimidating for millions of users.
Discourse around crypto is incredibly polarising. Some think it’s a fad that will disappear altogether, while others believe it’s the future of finance. Realistically, the reality will be somewhere in the middle.
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