Cryptocurrencies have come a long way in the last decade. It hasn’t all been smooth sailing, but the fact of the matter is that it has grown by leaps and bounds on every front.
Despite its growth, many people are still unsure about the future prospects of cryptocurrencies – and the direction they’ll end up going. For every person that thinks it will eventually go mainstream and replace conventional currencies, there is another who views it is a passing fad.
While it is difficult to predict the shape that cryptocurrencies will take in the future, there are some developments that are very likely to play a key role.
Rise of Cryptocurrency in the Gaming Industry
Are you aware that cryptocurrencies are already being used in the gaming industry? It is a very natural fit, seeing as many video games nowadays already use virtual in-game currencies.
‘Tokenizing’ virtual in-game currencies into cryptocurrencies is really not that big of a leap and will make them much more versatile.
However some game developers are starting to use cryptocurrency for more than that. For example, the idea of using blockchain technology to indelibly record in-game inventory is gradually gaining popularity.
For now most of the experiments involving cryptocurrency are being carried out by startups and indie developers. That is likely to change in the future however, as entities such as Sony and Epic Games have indicated they are looking at ways to adopt the technology too.
Regulation (Almost) Inevitable
Due to the popularity of cryptocurrency it will inevitably need to be regulated. In fact many countries have already taken steps in that direction, and some have resorted to outright banning it or declaring it illegal.
Opinions are split as to whether or not regulating cryptocurrencies would be good or bad in the long run. The lack of regulation definitely did help cryptocurrencies to grow tremendously at the start, but increasingly it may be what is holding it back and preventing it from truly becoming mainstream.
Right now the regulations that exist are split between those designed to monitor crypto exchange platforms, and those that aim to directly control the trading of cryptocurrencies. In either case it is definitely preferable to banning trading or making it illegal.
Ideally there will be sufficient regulation to curb scams, money laundering, tax evasion, and other issues. At the same time hopefully there will not be too much regulation that it stifles the progress of cryptocurrencies.
Introduction of More Stablecoins
Stablecoins are a new class of cryptocurrencies that have recently been introduced. Unlike Bitcoin and other conventional cryptocurrencies, the value of stablecoins are tied to real-world assets.
One of the biggest problems with conventional cryptocurrencies that makes them unsuitable for everyday use is their volatility. However because stablecoins are tied to reserve assets they are normally able to remain more stable.
Already there are several stablecoins have been introduced such as Gemini Dollar that is tied to the US Dollar. Many other planned stablecoins have been announced, including a possible WhatsApp stablecoin integration.
Overcoming the Bottleneck?
Aside from the threat of an outright ban on cryptocurrencies, there is one other major hurdle that it needs to overcome: The bottleneck.
The bottleneck that cryptocurrencies face is in terms of the speed of processing transactions. Even Bitcoin itself can only process up to 7 transactions per second, which pales in comparison to Visa that is capable of hundreds of thousands of transactions per second.
In other words if cryptocurrencies were to replace conventional currencies, the time that it takes for a transaction to be verified would be significantly longer. That is unacceptable, which is why newer cryptocurrencies such as Ethereum 2.0 have been looking into ways to overcome it and can handle 10,000 to 100,000 transactions per second.
Needless to say more cryptocurrencies are likely to follow suit, which will put them one step closer to becoming a viable mainstream currency.
Starting to see what the future of cryptocurrency may look like? Keep in mind that this scenario is based only on the current trends – and it may very well change drastically in the years to come.
The only thing that is certain is that the future of cryptocurrency is bound to be exciting – one way or another.