In the last twenty years, technology has developed tremendously, bringing many new possibilities and new challenges to our lives. Especially the internet and the resulting digitalization have brought a great deal of change to all areas of human life. Many things are way easier and faster now, while new problems occurred that were not even known until this point.
The rise of cryptocurrencies is one of the most current evolutions and has a high potential to change the entire market and trade system worldwide. Many places and websites already work with cryptocurrencies and use them, for instance, as a comfortable and fast way for gambling in online casinos like stake reviewed by Casino.Guide recently.
Some people see many opportunities in the new digital currencies and regard them as the future money. Others are voicing concerns about Bitcoin and its siblings and see not much more in it than a highly speculative investment option that has no place in the daily life of our society.
It is impossible to make a reliable forecast for what is coming and how cryptocurrencies will potentially shape the market and the way we deal with money. However, there are some different scenarios of the future of cryptocurrencies. We have compiled some of the most important scenarios for you.
Scenario 1: Cryptocurrencies Replace Formal Money
One scenario that many people regard as likely and which is, of course, the aim of cryptocurrencies is that they will replace all common money at some point. At some places, attempts to decrease the diversity of different currencies to establish a universal currency that many people can use have been made already.
The European Union and the Euro is the best example for that. Cryptocurrencies could be a global solution for a unified global currency system. What would happen if cryptocurrencies surpassed fiat currencies at some point in the future and what could be the advantages of a total shift to cryptocurrencies?
One important consideration is that cryptocurrencies are working globally. The vision of those in favor of the new digital currencies is that at one point, one or a small group of currencies unifies the entire world market. Another important advantage is that cryptocurrencies cannot be manipulated as easily as common currencies as they work with a decentralized system and their unregulated status.
Furthermore, the new system could help avoid intermediaries for transactions which could cut a lot of costs for businesses and private consumers. Of course, the shift to those new currencies would require an entirely new international infrastructure to which the world would have to adopt. The change towards such a new system would furthermore outpace cash, and traditional currencies would lose their value dramatically without a chance of a comeback.
Scenario 2: National Cryptocurrencies Occur
Also, amongst international governments, cryptocurrencies have been gaining interest. In fact, there are already some countries that have established such national digital currencies. Currently, digital currencies are used in China, Ecuador, Singapore, and Japan. More and more countries reportedly show increasing interest in establishing their own digital currency. Some concerns have appeared speculating that further adoption of national cryptocurrencies could impact the international monetary system seriously.
If governments use cryptocurrencies before an entirely new and digital system has been established, these new currencies can also be used for their own profit as they operate outside of the common system. Some countries like Iran and Venezuela have already used cryptocurrencies to evade sanctions imposed on them by the international community.
Therefore there is a lot of speculation about how it will affect our current international monetary system. While our system nowadays relies on some institutions, norms, and rules, cryptocurrencies work in a decentralized system. The heart of the cryptosystem is the usage of blockchains which work as a public financial transaction database. If countries established their own digital currencies, they could easily operate outside of the banking system until the shift to a new digital system has been made.
Experts still have divided opinions about the future of national cryptocurrencies. While some believe that cryptocurrencies will replace banks entirely and eliminate all third-party service providers, others see a small chance of national digital currencies taking over more than 25% within the next decade.
How much of a currency to print in response to external and internal pressures. Rather, the generation of new coins or tokens would be dependent on independent mining operations.
And, how investors feel about the change from standard cash to cryptocurrencies is likely out of anyone’s hands. Of course, as per the ample speculation that says, crypto industry is a bubble that is destined to pop, it is possible that predictions of a crypto future could be overblown. And difficulties for investors will be related to all crypto things, as changes happen quickly and predicting them is always tough.
Scenario 3: Cryptos Stay Play Money and Highly Speculative
Another less optimistic scenario about the new idea of blockchain and mining is that cryptocurrencies will never reach the status of a real currency and stay a highly speculative abstract investment object instead.
A major argument here is that the cryptocurrencies which are established so far lack a great deal of scaling. Although the system operates increasingly fast, it is still dwarfed by the number of international transactions required to take over a part of the world market. VISA and Mastercard still operate on completely different scales of daily transactions.
Furthermore, many concerns have been voiced about the sustainability of cryptocurrencies. The servers needed to operate such a giant data system leave a huge carbon footprint in our atmosphere. Without regulation by the government or the international community, cryptocurrencies may neither be controlled and secure nor sustainable.
Without further development, the whole idea of cryptocurrencies could implode or simply stay an insignificant and highly speculative investment object.
Scenario 4: Bitcoin Paves the Way for the Blockchain While Staying Behind
When cryptocurrencies first appeared, Bitcoin seemed to be the unquestioned leader. Until last year Bitcoin occupied a vast deal of the industries market. Within a few weeks, others like Ethereum and Ripple rushed up. While Bitcoin is still in the lead, the quick turnover has caused concerns about cryptocurrencies being actually currencies.
Bitcoin is still leading, but those fast changes in the market suggest the possibility of Bitcoin being outplayed by newcomers in the future. While the star of cryptocurrencies has paved the way to the blockchain and inspired others to develop their own solutions, it may stay behind.
In this case, which is almost reality already, the newcomers must find a way to divide the market amongst themselves and deal with possible regulation and participation of the international community of governments.