The future of cryptocurrencies in the next 5 years

Cryptocurrencies have come a long way since the publication of the bitcoin whitepaper in 2008. From a niche community establishing a digital cash network to a major global asset class coveted by banks and investment firms, the landscape has changed dramatically .

So what's next for the crypto industry? Where will cryptocurrencies be in 5 years?

<h2 class="wp-block-heading" id="crypto–technology-will-become-more-advanced”>Cryptographic technology will be more advanced

In some ways, it is nothing short of a miracle that cryptocurrencies have become as big as they did between 2010 and 2020.

The ICO craze of 2018 raised around $15.7 billion for crypto projects. Now seen as something of an economic bubble, the trend saw many projects with little to no unique selling proposition raise massive sums as the buzz continued to grow.

Much like the Internet bubble of the '90s, many of these projects failed, but the hype wasn't entirely unfounded. Funds were accumulated based on the promise of what blockchain and cryptocurrencies could potentially achieve, and that's where the value lay: in the potential.

Today, we don't need to wonder if blockchain will change things. We are seeing real-world integrations of numerous blockchain and crypto technologies that demonstrate that the technology has become practical.

For example, Fetch.ai is used to optimize the performance of a smart city project in Munich. Europe's busiest port, Rotterdam, now uses blockchain to track its shipping containers.

From here, progress is unknown. There is talk of integrating blockchain into voting systems for more secure elections, medical records systems, and many more applications. The Federal Reserve Bank of St. Louis issued a statement praising some of the achievements of the decentralized finance sector, and we can expect to see continued advancements in DeFi technology as time goes on.

Companies like Visa and Mastercard have integrated crypto payments, a big step forward in adoption. Countries around the world are also considering introducing central bank digital currencies (CBDCs), a type of cryptocurrency minted and controlled by federal governments.

In five years, it seems likely that cryptocurrencies and their associated technologies will be much more intertwined in the daily operations of many industries, from supply chain tracking, finance, manufacturing, information technology, and more.

<h2 class="wp-block-heading" id="the-crypto-market-looks-likely-to-increase-in-value”>Cryptocurrency Market Likely to Increase in Value

This is the type of statement that can be easily misinterpreted. There is never a guarantee that the value of a specific cryptocurrency will increase, not even bitcoin, which has been outperforming expectations for years.

However, the direction the overall market capitalization of cryptoassets is taking can perhaps be more easily assessed. With bitcoin ETFs introducing more avenues for institutional investment than ever and cryptocurrencies becoming less volatile as the industry matures, the future is bright for cryptocurrency investing.

The amount of money invested in bitcoin ETFs on May 21 was $300 million, demonstrating the purchasing power of heavyweight investors now getting involved in cryptocurrencies.

Cryptocurrencies in 5 years could even surpass current figures. Of course, it all depends on the regulation.

Regulations will affect the future of cryptocurrencies

One of the most talked about topics when it comes to cryptocurrencies is international regulation.

The SEC doubled the number of lawsuits it filed against crypto projects between 2021 and 2023, notably suing Ripple and Coinbase, and plans are now being discussed to sue decentralized trading platform Uniswap.

American regulation against cryptocurrencies has a large impact on regulations around the world, with smaller countries often taking inspiration from the SEC's guidelines.

So how exactly could regulation influence cryptocurrencies?

<h3 class="wp-block-heading" id="crypto-and-unlicensed-securities”>crypto and Unlicensed Securities

Let's take ethereum as an example. SEC Chairman Gary Gensler recently stated that the SEC has deemed ethereum a security, although specific actions still need to be taken. If the eth cryptocurrency is officially designated as a security, that would mean that exchanges that have been selling the currency would be liable for selling unlicensed securities.

Buyers may also be held legally responsible, as well as decentralized exchange services that allow users to exchange eth for other assets. This would, of course, extend to the DeFi industry, which is primarily based on the ethereum network.

SEC litigation against the ethereum community is by no means a certainty, nor do many cryptocurrency users consider it likely at this time. However, the examples serve to highlight the risk of crypto projects failing to comply with national and international regulation.

In China, of course, the sale and even mining of crypto assets is completely illegal, while the United Kingdom prohibits British companies from selling crypto derivatives to residents of the country.

Cryptocurrency enthusiasts are often concerned about the impact that regulation could have on the future of cryptocurrencies. It's worth noting, of course, that a complete lack of regulation could be equally detrimental to the longevity of the industry because bad actors are given free rein without oversight.

What is the future of cryptocurrencies?

All the above factors that we have mentioned so far are strongly interrelated. If recent years are anything to go by, advancements in cryptocurrency technology and adoption are likely to continue. If this happens, it's open season for cryptocurrency investing as more and more people look to cash in, with the help of developments like cryptocurrency ETFs.

On the other hand, if global regulation strongly restricts the sale or development of cryptocurrencies, then the industry will have to face a huge hurdle, as this would be a blow to both the market capitalization and the funding available for cryptocurrency research. and blockchain in general.

Are cryptocurrencies the future?

In our opinion, yes, cryptocurrencies are very well positioned to play an important role in key industries in the near future. It is rare to see a new technology adopted as quickly as blockchain and cryptocurrencies, and progress is likely to continue as it has.

Governments around the world know that their residents, industries and even national banks are now investing in the crypto industry in one way or another, and one would expect a balance to be struck between overly restrictive regulation and overly lax regulation, allowing the industry flourishes while protecting its users from harm.

If technology, investment and regulation can achieve a balance in the next five years, there is no telling what the future of cryptocurrencies will hold.