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Future of Cryptocurrency: What to Expect from the Crypto Industry in 2023 and Beyond
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2022 has been a turbulent year for cryptocurrencies. The prices of many assets, including the largest ones, have plummeted. There have been no major regulatory breakthroughs on a global level. In this overview, we’ll try to answer the question “What is the future of cryptocurrency?” in the short and mid-term.
Why Cryptocurrency Could Be the Future of Money
It’s unlikely that all the national governments will agree on a common stance toward this payment method soon. El Salvador and the Central African Republic have proclaimed Bitcoin their official currency. Around a dozen states have banned crypto on their territories — China and Indonesia with their huge populations belong to this category. However, all the governments realize the importance of regulating the crypto industry. It has become too large to be neglected.
The United States are putting a lot of effort into cryptocurrency regulation. Highly competent and experienced professionals were appointed in charge of this niche. They aim to create a fair and efficient legal framework as well as a taxation system. The country strives to build a system that will be equally beneficial for all its participants, be it conventional banking institutions, crypto businesses, investors or consumers. Probably, other states will be able to borrow the best U.S. practices in a few years.
Regulators feel the urge of developing new laws promptly because many retailers begin to accept BTC, LTC, DOGE and other coins.
Why Cryptocurrency May Not be the Future of Money
Some experts believe that the answer to the question “Is cryptocurrency the future of money?” is negative. They point to the following shortcomings of this payment option:
- Retailers might suffer from losses because of the highly volatile prices of cryptocurrencies
- Regulators might find it too challenging to work with financial systems that are not officially represented in their territory
- National governments might remain biased toward crypto because this payment option can be used for money laundering and financing illegal activities
- People’s trust in crypto can be undermined by technical failures and security breaches
Even though the future of cryptocurrency is full of uncertainty, it doesn’t mean this payment option will become obsolete just as unexpectedly as it entered our lives. The development of this sphere might slow down because of the above-listed factors. To play safe, it would be wise to diversify your investment portfolio.
Crypto Market Predictions for 2023
In 2023, the following shifts are likely to take place:
- The crypto industry will become more regulated
- More and more mass-market retailers will start to accept the digital currency
- Exchange-traded funds will become commonplace, based on BTC and altcoins
- More countries will proclaim BTC and/or altcoins their legal tender
In the foreseeable future, the market shouldn’t expect such tectonic shifts as Bitcoin’s creation in 2009.
Cryptocurrency Regulation
The US is the trailblazer in crypto regulations. Here is a brief timeline of some of the most important events that took place in 2022:
- Prices of crypto assets began to plummet
- TerraUSD depegged from USD
- Luna (a coin linked to TerraUSD) crashed
- Terra and Luna investors lost large sums of money
- Crypto market went on plummetting
- Various businesses froze withdrawals and announced layoffs, some of them filed for bankruptcy
The officials realized that the sphere needs enhanced regulation for the sake of responsible development. A well-regulated industry looks less appealing to cybercriminals and attracts more investors. The latter should know how to pay taxes for owning, buying and selling crypto assets.
What New Regulation Could Mean for Investors
Investors expect the regulators help to achieve these goals:
- Make the crypto market a bit more stable
- Protect long-term investors
- Prevent fraudulent activities
- Provide clear guidance to allow businesses to innovate in the crypto economy
Crypto assets are unlikely to become an everyday payment option any time soon. However, more and more companies begin to accept them.
Broader Institutional Cryptocurrency Adoption
Before calling cryptocurrency the future of money, it’s essential to convince large businesses to embrace this payment method. Here are a few examples:
- AMC accepts BTC payments
- Tesla accepts Dogecoin payments and sometimes BTC too
- PayPal and Square let their clients purchase crypto through their interfaces
A considerable breakthrough might happen when banking institutions and huge online marketplaces start accepting crypto. Amazon might become the pioneer. Some time ago, this marketplace created a job offer for a professional who specializes in the blockchain. On Amazon, consumers will be able to purchase millions of items from various categories with cryptocurrencies. This will be a major step toward the mass adoption of digital money.
Future of NFTs
Non fungible tokens have turned out to be even more volatile than traditional cryptocurrencies. They were invented in 2014 and it took them 7 years to become massively adopted. In 2021, the total volume of NFT sales peaked at $25 billion. The year before, it was only $94.9 million. At the beginning of summer 2022, the volume of NFT sales fell under $1 billion for the first time in one year.
Some experts believe it’s just another bubble. Yet artists, celebrities and brands perceive NFTs as a powerful monetization tool. Non fungible assets minimize the risk of fraud. They show who created a specific object and when. Most likely, the explosive growth of NFT has stopped for a long while — but it won’t become obsolete. Communities need to get used to this technology and come up with new ways of using it.
What the Decline in NFTs Mean for Investors
Some investors have lost huge sums of money of NFTs. The items that they purchased for millions of dollars are worth less than $100 now. Many of these people knew in advance that the sphere of NFT resembles gambling. It’s highly unpredictable and users get involved in it largely for fun.
If you’d like to invest in some kind of crypto assets to make a profit in the long run, it would be reasonable to choose something else but not NFTs. There are no reasons for sustainable growth in this sector.
Future of DeFi
In the sphere of decentralized finance, smart contracts replace conventional financial institutions. There is no central bank in the cryptocurrency market. Users rely on blockchain technology and software and don’t need any intermediaries to process and supervise their transactions.
The DeFi sector has great perspectives because it provides investors with total control over their assets. However, this niche is still in its infancy. Technological solutions that it involves need to be improved. DeFi remains even less regulated than the crypto market in general. It would be wise to keep an eye on this sector — yet no one knows for sure how exactly it will develop.
Bitcoin’s Future Outlook
By the end of 2021, the price of BTC had reached a record-breaking height of $68,000. In 2022, it plummeted to lower than $20,000. Bitcoin mining became a loss-making activity.
This was a result of:
- Recession fears
- Growing interest rates
- Shaky stock market
- Surging inflation
Despite all the macroeconomic uncertainty, experts believe that the price of this asset will keep growing and will reach $100,000 one day. Right now, it’s impossible to predict when exactly this will happen.
Being the first cryptocurrency in the world and the largest one by market cap, Bitcoin perfectly reflects the state of the crypto industry in general. Most probably, it will remain highly volatile in the short term and grow significantly in the long run.
When Elon Musk says Dogecoin could be the future of cryptocurrency, he emphasizes the fact that he believes in the survival power of irony. DOGE was created as a joke and managed to become a widespread asset purely by chance. The market value of this “cryptocurrency of the future” is not backed up by any technological advancements. Bitcoin, Satoshi Nakamoto’s brainchild, will keep serving as a reference for all crypto currencies.
Ethereum’s Future Outlook
When ETH hit the market in 2015, its price was $0.311. The historical maximum that it has reached was over $4,800 in 2021. The next year, it plummeted.
Experts predict that Ethereum will be able to retrieve its price and maybe even go as high as $12,000. Its performance will depend on the results of The Merge — that is, the transition to a less energy-intensive version. The ETH blockchain is supposed to become faster and more cost-efficient for users.
Just as with Bitcoin, it might be smart to purchase ETH now and leave it for a few months or years until it becomes much more expensive.
The Future of Cryptocurrency
To sum it up, we can say that the crypto industry is expected to recover soon from the downfall of 2022. Bitcoin will keep setting the bar for all the other assets. Ethereum has decent growth potential. The DeFi niche requires more technologically advanced solutions. NFTs can become a reliable monetization tool for artists and brands — yet it would be too risky to invest large sums in them now. The US is making good progress in crypto regulation. Many other countries will follow suit. In a nutshell, this was the answer to the question “What’s the future of cryptocurrency?”.
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