2023 was a notable year for bitcoin and other cryptocurrencies. Bitcoin and Ethereum (the second most popular cryptocurrency) saw an all time price hike. Bitcoin and cryptocurrency in general thus have become a popular topic of discourse in business circles and popular culture due to many celebrities being vocal about it. So the natural question which comes to our minds is: What Next?
Ideally, cryptocurrency is known as a trustless system. This is so because, theoretically, cryptocurrency is not bound by any nation, state, or government body. The rules of a standard financial system thus do not apply to this particular currency. It is only valid to an extent, and changes in policy are very much possible in the future. Especially if China wants to do something about it.
The reason why China features in this debate is that the infrastructure currently powering significant cryptocurrencies like Bitcoin is based in China. In the future, changes in the primary working could be undertaken, which can influence the way cryptocurrencies and mining currently work. It would be better if you were looking for more information.
As mentioned above, since cryptocurrency is theoretically a trustless system, it is something many governments aim at regulating. In the coming days, there might be some specific regulations related to the safety of the investors. Many crypto finance experts are in favor of regulations to make the use clear as per the nation’s discretion.
For instance, while China has not legalized any crypto-related activities, the US is not clear about its stand in relation to cryptocurrencies. The regulation will definitely offer safer financial transactions. However, filing taxes for virtual currency is more likely to become the norm with stricter regulations. Tracking crypto transactions and investments would thus become easy for governments.
Higher Level of Institutional Adoption
A lot of mainstream institutions have invested in cryptocurrencies in 2023, which will pave the way for other institutions in the future. The trends were started by AMC, which announced that payments in bitcoin would be accepted by the company. PayPal and Tesla are likely to participate too.
In 2023 and coming years, experts predict an even higher influx when it comes to institutional adoption. Ideally, it would take a corporate giant with a multinational base to make crypto more widespread amongst different areas of the world. While spending bitcoin or other cryptocurrencies as means of payment for material necessities does not seem like a great idea, there is a good chance that institutional interest in cryptocurrencies will impact prices in the future.
ETF approval of cryptocurrency was a significant step in making bitcoin and other cryptocurrencies more easy to invest in without having to scour the internet for the right way. In October 2023, the New York Stock Exchange featured a bitcoin ETF. This paves the way for any and all investors who are used to investing via the conventional method.
But even if this changes the general scenario, there are some details that cannot be overlooked. One of the major factors is that the ETF will not hold bitcoin directly. All you will be investing in bitcoin futures. While the appearance on the New York Stock Exchange fueled fervent trade in the beginning, it is too soon to know how it will hold in the future. Another important aspect that will impact future investment in crypto funds is that the risk factors remain the same.
Stable coins are the medium to make cryptocurrency connect to the material world as a real world asset. This approach follows the same concept as that of traditional currencies, which seems to defeat the point of a virtual currency like bitcoin. It also makes investors and everyone involved more prone to fraud. It will also become more difficult to audit as cryptocurrencies are still not like traditional currencies.
Will Libra Matter?
No, we are not talking about the zodiac sign. Libra is Facebook’s solution to help conduct international transactions in relation to cryptocurrencies. The idea behind the introduction of this platform was to introduce an alternative that would not charge additional fees for transactions.
But adding another cryptocurrency to the mix just tries to replace the traditional banking system rather than creating an entirely new system. Libra could thus have been made to cater to users of different nations, binding them through one platform which acts as a primary financial institution. In the future, there is an excellent chance that a new primary banking system emerges, which is customized to the particular needs of different continents and nations as per their crypto regulations (if they are ever implemented).
How Much Does Bitcoin Matter?
Being the most prominent cryptocurrency, Bitcoin shows the majority of trends in the crypto finance world. By the end of 2023, the price of bitcoin reached its peak at $68,000. But just because bitcoin saw an unprecedented rise does not mean that there were not any fluctuations in the price. It had dipped to $30,000 in July 2023, which is why prudence in investment will always be advised.
The limited quality of bitcoin makes its prices higher, and it is likely to rise even further in the future. However, volatility will remain a big factor in crypto investments. All the investors who are willing to invest as a long-term process do not have to think about small term fluctuations. Keeping a steady mind is the best approach while investing, which will help you gain a profit on your capital.
There is no shortage of speculations related to the future of bitcoin and other cryptocurrencies in the year 2023 and even after that. Volatility will keep on making the value of bitcoin fluctuate, which will cause investment approaches to change and cryptocurrencies to change hands. Institutional investment will also cause cryptocurrencies to become more commonplace and maybe even used as physical currency. Centralized regulations, on the other hand, are a real possibility in the future.