So far, cryptocurrencies are generating a lot of buzz and it is fairly easy to see why.
The atmosphere around it is evocative of the bewilderment that followed the emergence of the motor car and the internet.
In the advent of the above mentioned technologies, people were both astonished and mystified. They just can’t wrap their heads around what was before them. “What are these things? How do they work? Oh, no, aren’t they going to destabilize our lives now? What will the future be like?”This were common questions asked then. But of course, this concerns are valid.
After all, they are called ‘disruptive technologies’ for a reason. They are meant to change our lives, forever.
This exactly is what cryptocurrencies are doing.
Already, we are seeing how cryptocurrencies like Bitcoin and Ethereum are causing a serious paradigm shift in the way companies and organizations conduct businesses.
In the same vein, governments around the world are (belatedly) trying to grapple with the ‘disruption’ this exceptional technology is visiting on established financial systems.
While big financial institutions are looking for ways to integrate it into their operations.
Cryptocurrencies are certainly taking the spotlight away from them.
The fact that financial institutions and governments are already embracing it is an optimistic view for cryptocurrencies, nevertheless, questions are still been asked about its future: is it just a fad, what is its real value, will it survive the next decade, how about security and regulation, and the list goes on and on like that.
No one knows exactly what the future of cryptocurrency looks like. But to put all of these concerns to rest, or at least provide strong answers to them, here are three reasons cryptocurrencies are part of our future just as the internet and motor cars are right now.
A parallel has already been drawn between cryptocurrencies, the motor car and the internet. Nonetheless, it is worth stating that these technologies achieved widespread relevance by first gaining institutional acceptance; they had to be patronized by high value individuals and organizations.
Cryptocurrencies are also playing by that script.”The whole market cap of all of the cryptocurrencies is $300 billion. That’s nothing. This is global. I have a sense this can go a lot further.”
Michael Novogratz had said about cryptocurrencies. The ex-hedge fund manager believes the technology has the potential to be a viable store of value like gold in the long term.
This comes before billionaire investor Tim Draper predicted earlier this year that the value of Bitcoin will balloon to 250,000 USD in 2022!
What has consistently sold disruptive technologies is the backing they normally get among opinion leaders across all spectrums.Think Amazon, HTC, Microsoft, Expedia, Subway, PayPal, Overstock, Shopify and Maersk. These are some of the more established companies exploring cryptocurrencies as payment options.
Additionally, Japan’s Fisco Bank and SkandiaBanken, Sweden’s largest online bank, have plans to create financial products like bonds that can be purchased with Bitcoin, and also to link customers’ traditional bank account with their crypto-asset to facilitate seamless financial services.
It is generally expected that this momentum will be maintained and possibly increased among institutions and institutional investors going forward.
As a natural effect of a strong institutional acceptance of any technology comes robust investment in the further development of such technology.
The end game will see cryptocurrencies adapted to serve varied purposes. For now, payment seems the most popular application of cryptocurrencies.
While the wide application of the underlining Blockchain technology has never been in doubt, cryptocurrencies are constantly examined for their relevance outside the digital-fiat system.
However, recent progress in crypto-currencies has seen it applied to serve various functions.
Already, Ethereum has ‘smart contracts’ which is revolutionizing the way people verify, perfect and execute contracts, and cryptocurrencies like Siacoin, Factom and Golem are specific use coins that enable cloud storage, decentralized application (DApps) and cloud computing.
There is more. And with sustained acceptance and investment in crypto-currencies over the next decade, we will begin the see it integrated into every facet of our digital lives like IoT is trying to do.
Regulation is one of the many grey areas in cryptocurrencies. Opinions are sharply split on what role governments and regulatory agencies like the Security Exchange Commission should play amidst the overarching goal of decentralized, private and secured financial services that crypto-currencies seek to offer.
Their point is clear; it will defeat the goal of cryptocurrencies which is to empower ordinary citizens and protect them from the exploitative propensity of traditional financial system.
By contrast, in a survey conducted by Encrybit, a cryptocurrency exchange platform, 40% of those asked identify security as one of their biggest concerns about cryptocurrencies. Security has been the monkey on the back of cryptocurrencies.
This particular problem is recognized as an important deterrent to prospective adopters and investors, and is stunting the fast-paced growth of the market. Consequently, calls are made for the government to step in.
In response to that call, seven central Chinese government regulators – including the China Securities Regulatory Commission (CSRC) and the China Insurance Regulatory Commission (CIRC) – in 2017 issued a joint Announcement on Preventing Financial Risks from Initial Coin Offerings, which effectively banned Initial Coin Offerings (ICOs) in China.
Thus, governments are compelled to maintain standard in that nascent market, not only to promote transparency and fairness but also to protect the investment of people. While it might not go down well with developers and cryptocurrency enthusiasts, regulation is looking like a given and the coming years will see more systematic and extensive regulation of the market by governments and other internal regulatory mechanism that will emerge.
In conclusion, from all indications, cryptocurrencies are on the right track.
The market is booming and new coins are ever coming up with smart solutions to the many problems afflicting financial exchanges in our world.
The headway cryptocurrencies are making in this area is phenomenal. However, a lot of issues bordering on regulation exist and this is not unconnected to the illegal application of the technology by people to hurt the society.
Consequently, potential investors and adopters are on the sideline, fearing their investment might be all-together lost forever. This is stifling the mass adoption and growth of the technology.
Nevertheless, the cryptocurrency market is not slowing down, and it increasingly looks like our technological future will be significantly powered and enhanced by cryptocurrencies.
Dr. Edson Pindza