The interest in cryptocurrency has grown exponentially over the past years, especially as more people begin to understand what it is and why investing in it could be beneficial for them.
Bitcoin and Ethereum have hit all-time highs over the past year, but that’s not to say it’s been plain sailing. There is still a lot of uncertainty around the future of cryptocurrency.
By its very nature, the crypto industry is fast-paced and constantly evolving – as buzz around the legitimacy (or illegitimacy) of NFTs continues to flood the media, along with fraudulent and failing coins frequently coming to light, some investors are still wary, even if they’re intrigued.
Is there a legitimate long-term future for blockchain-based assets, and can businesses benefit from the adoption of cryptocurrency?
The Continued Rise of Cryptocurrency
For now, at least, it looks like cryptocurrency is here to stay. Experts estimate that the global crypto market will hit $4.94 billion by 2030, more than tripling since 2020.
What started as a niche interest for anti-establishment investors is becoming a globally-recognised power. Trading cryptocurrency is no longer just the realm of those few hobbyists; the average consumer and larger-scale institutions are becoming increasingly more likely to put money into crypto.
This rising popularity comes with both benefits and drawbacks, often creating paradoxes that put the precise future of cryptocurrency into question; regulation, something investors and policymakers are calling for, is an increasing likelihood, but many are worried about the effects new regulations will have.
The Direction of Cryptocurrency Regulation
The concept of cryptocurrency was founded on the notion of decentralisation and being unregulated, but as more people and businesses invest, it seems that increased regulation is inevitable.
While investors are conflicted about the promise of increased regulation, many support the idea of regulations to further legitimise the form of currency, provided current freedoms afforded by crypto aren’t compromised.
Crypto experts cite that investors are in support of regulation from payment companies and exchanges rather than governments. But government bodies are already thinking about how to introduce legislation to put a stop to crypto crime and tax evasion.
Mainstream Institutional Cryptocurrency Adoption
Again, experts are stating that a robust ‘regulatory framework’ is what is needed as cryptocurrency makes the push to mainstream institutional adoption. This relies on legislators being educated about the potential future and widespread uses for crypto.
Price volatility has also been highlighted as one of the biggest barriers for entrants.
However, a recent study found that over half of institutional investors surveyed already had digital investments. Additionally, 7 out of 10 said they ‘expect to invest in or buy digital assets in the future’.
The Eco Issue
Another major concern for the future of cryptocurrency deals with the detrimental environmental impacts of the mining process. ‘Mining’ (the process by which new ‘coins’ are created) bitcoin and other cryptocurrencies requires the use of incredible amounts of energy.
The Cambridge Bitcoin Electricity Consumption Index estimates that energy consumed by the Bitcoin network in one year could power every kettle used to boil water in the UK for 30 years.
Investors are catching on to the need to address this issue, with Tesla’s brief stint into accepting bitcoin as payment in 2021 ending after a couple of months because of significant environmental concerns. There has been some hint they may resume the practice once cleaner energy is used during mining.
If the crypto market is to have a sustainable future, widespread environmental impacts need to be addressed. Developers are looking at less damaging systems of validation that don’t require the same energy levels as ‘proof of work’, which is currently the most popular way of mining new coins.
The Benefits of Using Cryptocurrency in Business?
According to a Deloitte study, more companies are starting to use digital assets for ‘a host of investment, operational, and transactional purposes’.
There are several ways adopting crypto can put your organisation ahead of the competition:
- Attracts more new customers who want to pay with crypto, increasing your business’s reach.
- More and more high-profile clients want to engage using crypto.
- Increases customer privacy.
- Puts your company at the heart of an emerging technology.
- Allows for easier cross-border transactions.
- Allows for real-time transactions not associated with a financial institution.
- Cuts out the financial middleman.
The last few years have made the adoption of digital business practices a clear priority, and investment in cryptocurrency and the facilitation of digital asset transactions could be the next step for forward-thinking organisations.
The future of the crypto market is still largely uncertain, especially as questions about regulation and the environmental concerns hang in the air. However, even if there are risks and potential drawbacks involved in crypto-investment, there are clear practical benefits for businesses (and individuals).
The adoption of cryptocurrency is just one possible way to improve operational efficiencies.
Here at Expense Reduction Analysts, we can work with you to develop numerous cost reduction and optimisation strategies to ensure the continued growth and success of your business.
Get in touch with the ERA team today to find out how we could support you.