future of cryptocurrency 2020

The future of cryptocurrency in 2020 and beyond

A cryptocurrency is a digital currency that is created and managed through the use of frequently advanced encryption techniques such as crypto. The cryptocurrency made the leap from being an academic concept to a (virtual) reality with the creation of Bitcoin in 2009. While Bitcoin attracted a growing number of followers in the following years, it captured significant attention from investors and the media in April. 2013 when they cost a maximum of $ 266. per bitcoin after increasing 10 times in the previous two months. Bitcoin had a market value of over $ 2 billion at its peak, but a 50% drop shortly thereafter sparked furious debate over the future of cryptocurrencies in general and Bitcoin in particular. So will these alternative currencies eventually supplant specific currencies and become as ubiquitous as dollars and euros someday? Or are cryptocurrencies a fad that burns in no time? The answer is in Bitcoin. 

The future of cryptocurrency

how cryptocurrency works

Some economic analysts predict that there will be a big change in crypto as institutional money enters the market. Furthermore, there is a possibility that crypto will float on Nasdaq, which would add even more credibility to blockchain and its uses as an alternative to electronic currencies. Some predict that all crypto needs is a verified exchange-traded fund (ETF). An ETF would definitely make it easier for people to invest in Bitcoin, but there must still be demand for wanting to invest in crypto, which some say won't be automatically generated with a fund.

Understanding Bitcoin

Bitcoin is a decentralized currency that uses peer-to-peer technology, allowing all functions, such as currency issuance, transaction processing, and verification, to be performed collectively by the network. 2 While this decentralization makes Bitcoin free from government manipulation or interference, the flip side is that there is no central authority to control that things run smoothly or to support the value of a Bitcoin. Bitcoins are created digitally through a "mining" process that requires powerful computers to solve complex algorithms and crisp numbers. Currently they are created at the rate of 25 Bitcoins every 10 minutes and reach a limit of 21 million, a level that is expected to be reached in 2140.3

These features make Bitcoin fundamentally different from a fiat currency, which is backed by the full faith and credit of your government. Fiat currency issuance is a highly centralized activity supervised by a nation's central bank. While the bank regulates the amount of currency issued in accordance with its monetary policy objectives, in theory there is no upper limit to the amount of currency issued. Additionally, local currency deposits are insured against bank failures by a government agency. Bitcoin, on the other hand, has no tales of support mechanisms. The value of a Bitcoin depends entirely on what investors are willing to pay for it at any given time. Also, if a Bitcoin exchange folds, customers with Bitcoin balances have no recourse to retrieve them.

Bitcoin Future Outlook

The future prospects for bitcoin are the subject of much debate. While the financial media is proliferating by so-called crypto evangelists, Harvard University professor of economics and public policy, Kenneth Rogoff, may present the "overwhelming sentiment" among cryptocurrency advocates is the "total market capitalization of cryptocurrencies could explode in the next five years. " , increased to $ 5-10 [billion]. "

The historical volatility of the asset class "is no cause for panic," given. Still, he toned down his optimism and that of Bitcoin's "crypto evangelist" vision as digital gold, calling it "crazy," claiming its long-term value is "more likely to be $ 100 than $ 100,000." 

Rogoff argues that, unlike physical gold, the use of Bitcoin is limited to transactions, making it more vulnerable to a bubble-like collapse. Furthermore, the cryptocurrency's energy-intensive verification process is "much less efficient" than systems that rely on "a trusted central authority such as a central bank." 

Increasing scrutiny

Bitcoin's main benefits of decentralization and anonymity of transactions have also made it a favored currency for a number of illegal activities, including money laundering, drug trafficking, smuggling, and the acquisition of weapons. This has attracted the attention of powerful regulatory agencies and other government agencies such as the Financial Crime Control Network (FinCEN), the SEC, and even the FBI and the Department of Homeland Security (DHS). In March 2013, FinCEN issued rules that modified virtual currency exchanges and controls as money services businesses, which fall within the scope of government regulation. 5 In May of that year, DHS froze a forest. Gox, the mayor of the Bitcoin Exchange, which was held in Wells Fargo, alleging that he violated anti-money laundering laws. 6 7 And in August, the New York Department of Financial Services issued subpoenas to 22 emerging payment companies, many of which handled Bitcoin, asking about their measures to prevent money laundering and protect consumer protection.

Alternatives to Bitcoin

Despite its recent troubles, Bitcoin's success and increasing visibility since its launch has spawned several alternative cryptocurrency companies revealed, such as:

Litecoin: Litecoin is considered to be Bitcoin's main rival today, and is designed for the smallest, fastest parameters. It was founded in October 2011 as "a coin that is silver for Bitcoin's gold", according to founder Charles Lee.9 A difference from the great computer power required for Bitcoin mining, Litecoins can be mined by a computer from Normal desktop. Litecoin's maximum limit is 84 million, four times Bitcoin's 21 million limit, and it has a processing time of about 2.5 minutes, about a quarter of bitcoin.

Ripple: Ripple was launched by OpenCoin, a company created by tech entrepreneur Chris Larsen in 2012. Like Bitcoin, Ripple is both a currency and a payment system. The component of the coin is XRP, which has a mathematical basis like Bitcoin. The payment mechanism allows the transfer of funds in any currency to another user on the Ripple network in seconds, in contrast to Bitcoin transactions, which can take up to 10 minutes to confirm. 12 \

MintChip: A difference from most cryptocurrencies, MintChip is actually the creation of a government institution, specifically the Royal Canadian Mint. MintChip is a smart card that has electronic value and can be safely transferred from one chip to another. Like Bitcoin, MintChip does not need personal identification; Unlike Bitcoin, it is backed by a physical currency, the Canadian dollar.

Some of the limitations cryptocurrencies are currently facing, such as the fact that a person's digital fortune can be erased by a computer crash or a hacker looting a virtual vault, can be overcome over time through technological advances. What will be most difficult to overcome is the basic paradox that haunts cryptocurrencies: the more popular they become, the more regulation and government scrutiny they are likely to attract, eroding the fundamental premise of their existence.

While the number of merchants accepting cryptocurrencies has been steadily increasing, they are still a minority. For cryptocurrencies being used more frequently, they must first gain widespread acceptance among consumers. However, their relative complexity compared to specific currencies is likely to deter most people, except for the technologically savvy.

A cryptocurrency that aspires to be part of the conventional financial system may have to meet various divergent criteria. It would have to be mathematically complex (avoid fraud and hacker attacks) but easy for consumers to understand; decentralized but with guarantees and adequate consumer protection; and preserve the anonymity of users without being a conduit for tax evasion, money laundering, and other nefarious activities. Given that these are formidable criteria to satisfy, is it possible that the most popular cryptocurrency in a few years may have attributes that are found between heavily regulated fiat currencies and cryptocurrencies today? While that possibility seems remote, there is little doubt that, as the leading cryptocurrency today, Bitcoin's success (or lack thereof) in handling the challenges it faces may determine the fortune of other cryptocurrencies in the coming years. years.

Should you invest in cryptocurrencies?

If you are trying to invest in cryptocurrencies, it may be better to treat your "investment" in the same way as treating any other highly speculative company. In other words, you acknowledge that you risk losing most, if not all, of your investment. As stated above, a cryptocurrency has no intrinsic value other than what a buyer is willing to pay for it at any given time. This makes it highly susceptible to large price changes, which in turn increases the risk of loss for an investor. Bitcoin, for example, plummeted from $ 260 to about $ 130 in a six-hour period on April 11, 2013.14 If you can't bear that kind of volatility, look for investments that are more suitable for you. While opinion remains deeply divided on Bitcoin's merits as an investment, supporters point to its limited supply and growing use as value drivers, while detractors see it as yet another speculative bubble - this is a debate that a conservative investor well to avoid.



Bitcoin's emergence has sparked a debate about its future and that of other cryptocurrencies. Despite Bitcoin's recent problems, its success since its launch in 2009 has inspired the creation of alternative cryptocurrencies like Litecoin, Ripple, and MintChip. A cryptocurrency that aspires to be part of the conventional financial system that meets widely divergent criteria. While that possibility seems remote, there is little doubt that Bitcoin's success or failure facing the challenges they face may determine the fate of other cryptocurrencies in the coming years.

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