A New Paradigm: What Is the Future of Cryptocurrency?
In the last decade, cryptocurrencies have taken the world by storm. What was once a niche technology has not made it into the mainstream. Around 46 million Americans own Bitcoin, and that number is rising every day.
People who have managed to predict the crypto market have made a lot of money. A very modest investment in Bitcoin years ago would literally be worth millions today.
With the right insights into the future of cryptocurrency markets, you could potentially make a lucrative investment as well. This article lists some potential outcomes for the future of crypto.
Mining cryptocurrency such as Bitcoin involves using graphics processing units (GPUs) to mine the coins. The more powerful your GPU is, the more likely you are to get coins.
Bitcoin miners have gone to extreme extents to maximize their chances of getting coins. Mining setups consist of arrays of expensive GPUs. This has caused problems in the GPU market as the manufacturers simply can’t afford to keep up with the demand.
This is causing the price of GPUs to rise to a ridiculous extent. Gamers are frustrated by this as the primary use of this hardware is to play video games.
As of right now, it seems there is no end in sight. Crypto miners will continue to purchase GPUs at inflated prices. Don’t expect to see the price of GPUs to fall back down any time soon.
More Countries Will Adopt Bitcoin as Legal Tender
El Salvador recently shocked the world by being the first country to make a cryptocurrency legal tender. As of June 2021, you’ll be able to spend Bitcoin almost anywhere in El Salvador.
It’s still unclear whether or not this will be a successful move, but in the early days, it looks promising. With that said, the decision to make Bitcoin legal tender is causing El Salvador some issues with the IMF.
Other countries will be watching El Salvador closely. If their Bitcoin experiment goes well, you can expect to see other countries following in El Salvador’s footsteps.
El Salvador is planning to take things even further by utilizing the power of its volcanoes to create reliable and renewable Bitcoin mines.
It seems that Paraguay is the next country likely to adopt Bitcoin as an official currency.
Focus on the Environmental Impact
Elon Musk recently withdrew his support for Bitcoin based on its environmental impact. Bitcoin mining operations use a lot of energy, leading many commentators to condemn cryptocurrency as a whole.
It seems very likely that people in the cryptocurrency community will start looking into how to make crypto more friendly to the environment. Expect to see cryptocurrencies that can demonstrate low environmental impact to do well.
While this is certainly a valid criticism, it seems unlikely that it will do significant damage to crypto in the long run. It’s quite likely that new mining methods will develop that will significantly limit the impact on the environmental impact of crypto.
It seems that green mining methods are currently the perfect business idea.
Cryptocurrency is notorious for its volatility. Of course, this can be beneficial as it allows you to make massive returns on your investment. On the other hand, there’s a high potential to lose money. High volatility also means that Bitcoin is seen as less legitimate.
It seems quite likely that this level of volatility will continue in the years to come. The Bitcoin market has shown it is highly susceptible to shocks. This means that serious investors may need to ride out periods of instability and low prices.
More Countries May Ban Cryptocurrency
Many countries see cryptocurrency as a threat. For example, some countries don’t like how transactions are anonymous. This is leading to some countries banning the use of cryptocurrency.
For example, mining or dealing with Bitcoin is now banned in China. Other countries such as India are also considering a ban.
With that said, blocking this kind of digital currency is a challenge. Bitcoin transactions are continuing to happen in China despite the ban. This makes it unclear just how effective a ban on crypto is.
Banks May Get Involved
As of right now, banks are starting to dip their toes into the world of crypto. For the first time, customers of American banks such as Morgan Stanley can invest in Bitcoin through their bank.
If this kind of thing takes off, it could be perfect for the price of Bitcoin. The extent to which banks engage with Bitcoin could well indicate what we can expect to see from the crypto market.
Banks starting to adopt could indicate another bull run. On the other hand, if the banks stay away, it could suggest a stagnating market.
The Bitcoin Price May Become Less Important
As of right now, the price of Bitcoin is central to the market. When Bitcoin is down, every other crypto is down too. In the future, it’s possible that we will see some other cryptocurrencies create their own value independent of Bitcoin.
This could mean that investors need to think a bit more carefully about the specific coin they invest in. With that said, it seems that Bitcoin will still remain the most important coin for the foreseeable future.
The Future of Cryptocurrency Is Uncertain
As you can see, the future of cryptocurrency is not set in stone. While it seems that the upwards trajectory of Bitcoin will continue, there is a lot of uncertainty in the market.
History has shown, there is a lot of money to be made in cryptocurrency as long as you’re capable of holding for long periods of time.
As with any kind of risky investment, you should never invest more into cryptocurrency than you’re prepared to lose.
If you want to learn more about other cryptocurrency-related topics, check out the rest of our blog posts.