Synopsis: You have seen the progress of Bitcoin and other crypto since it began – but it still has a long way to go. This article takes a crystal ball and looks into the future of cryptocurrency. Read it now to get ahead of the trends that are on their way over the next 5 – 10 years!
What Does The Future Of Cryptocurrency Hold?
That’s the trillion-dollar question. Will the future of cryptocurrency be one where crypto has completely replaced fiat currency, like the automobile extinguished horse-driven transport? Or will it end up being a technology which runs in the background, delivering similar financial products and services to what we have today almost without anybody noticing?
When it comes to these big picture questions, it’s impossible to say for sure. But crypto has the sort of momentum that has a lot of people very excited about its potential. By any measure, it is impressive how far it has come in a relatively short space of time. In The Internet of Money, Andreas Antonopoulos wrote:
“We are ahead of the curve. Bitcoin is growing faster than Twitter did in the first three years. Bitcoin is growing faster than Facebook grew in the first few years.”
1. More Transactions Will Be Denominated In Crypto
One of the criticisms of crypto is that the price is too volatile. But the reason for its volatility is that people who accept crypto as payment are still basing their crypto price on the fiat-crypto exchange rate of the day.
This will change as the crypto economy matures. In the future of cryptocurrency, more sellers will choose to price their goods and services purely in crypto, rather than anchoring it to US dollars, Euros, or other fiat currency. So something may cost 0.2 Bitcoin – regardless of what the USD/Bitcoin exchange rate is that day.
2. Prices Will Continue Their Upward Trajectory
Mark Twain once said:
“Buy land. They’re not making any more.”
The largest crypto tokens like Bitcoin are inherently deflationary. This is a good thing for those that hold onto them. Because the supply is constrained, the existing units will hold their value, or increase in value over time – especially as the use of them grows.
Will there be bumps along the way? Most certainly. The early days of the Internet had the dot-com bubble, but the Internet is still here and stronger than ever. The underlying technology is so compelling that the long-term future of cryptocurrency is very bright.
Unlike fiat money, whose supply has no ceiling (meaning the value of each unit declines over time), there will only ever be a fixed amount of Bitcoin produced. If Twain was alive today, his famous quote might have instead been “Buy Bitcoin. They’re not making more than 21 million of them.”
3. User-Friendliness Will Continue To Improve
Using crypto isn’t exactly intuitive. The fact that it takes a book to explain how to buy, store and use crypto is a bit of an indictment on where it’s at. Think of the slick design of an iPhone – unlike user-friendly tech like this, crypto doesn’t work too well out of the box. This complexity deters people.
It is worth reminding ourselves of what the early Internet looked like. You needed something called a ‘modem’ to connect (and no-one really knew what these were), it took over your phone line, it was expensive (you paid by the minute), and even if you got online you couldn’t really do much. The websites would have commands like “press ‘?’ for help, ‘q’ to quit, and ‘<’ to go back”. No wonder the Internet was the exclusive domain of techno-geeks for so long. Eventually though, the Internet improved to its current state where basically anyone can figure it out.
The same is true of any new technology. Early cellphones were the size of bricks. Early cars were slower than horses. Crypto still has some growing up to do, but it will get there. Many startups are working very hard on this exact problem, and in the future of cryptocurrency we can expect to see more clever solutions to make crypto far easier to use than it is today.
4. A Consolidation In Crypto Tokens
There have been an explosion in the number of so-called “altcoins”, many of which introduce no real new innovation. They might alter the supply schedule, or tinker with the mining algorithm – but basically they are copycats. Nothing more than an existing coin with a different logo.
The intrinsic value of a particular crypto asset is driven in large part by the community it builds up. There will be a shake-out, like the early days of the Internet. Remember Altavista, Ask Jeeves, and AllTheWeb? Eventually, all of them were replaced by Google, because Google does the best job of the use case it has been designed for – search.
There are many different use cases for crypto, but there are currently far more cryptos that do practically exactly the same thing as each other. In the future of cryptocurrency, expect to see communities cluster around the best-in-class cryptos, and the others to quietly disappear.
5. Smart Contracts
When you buy a house, you need to involve an expensive lawyer to make sure that the money is transferred at the same time that the title of the house is. If the title were transferred before the money was delivered, or visa versa there is always the risk that one party could renege on their obligation.
The future of cryptocurrency will see smart contracts, enabled through crypto, parameterize these sorts of transactions within computer code. For example, you can setup a payment to execute once goods have been received, by linking the smart contract up with the delivery agent’s package scanning system.
If you want to see the future of anything (including the future of cryptocurrency), follow the money. Venture capital can see the opportunity, and are jumping in with both feet with investments of hundreds of millions of dollars. Such a huge market as banking is exactly the sort of incumbent that they delight in shaking up.
Bitlisten.com represents each Bitcoin transaction with circles of small or large size, accompanied by a sound of high or low pitch, depending on the value traded. The site quite stunningly demonstrates the extent of Bitcoin adoption by providing a visualization. Seeing (and hearing) it for yourself is far more powerful than dry graphs or statistics.
If you’re impressed by the present, then just wait until you see the future of cryptocurrency.