Cryptocurrency has moved from being the exclusive domain of a few tech wizards or privileged users. It has today attracted investors from virtually every sector of life who also want to benefit from the virtual money revolution.
Are you considering investing in cryptocurrency over the long haul? Understanding the potential outlook of cryptocurrency in the next 5 years can go a long way in boosting your financial intelligence and preparedness. This guide presents the top 5 trends that look poised to transform the digital assets market by 2030.
- More Institutional Exposure to Virtual Currencies
Traditional banks like JP Morgan are blazing the trail already in this space by opening their borders to more crypto-related projects, especially facilitating cryptocurrency holdings and exchange-traded funds (ETFs). Meanwhile, some global financial institutions are already running pilots for tokenized currencies and settling real trades via public or private blockchains.
However, we can safely expect more companies to follow this trend over the next five years, and beyond ETFs. For instance, we can expect a broader shift in institutional interest in this sector, as companies transition towards using blockchain infrastructure actively in moving funds, storing value, and creating new investment offerings. We can also foresee asset managers to launch crypto funds using longer-term strategies while insurance brokers take on crypto investments to hedge their assets in a low-rate environment.
- Blockchain Adoption for Digital Identity and Compliance
Private enterprises and government establishments are already investing in blockchain-based ID systems to reduce fraud, meet growing regulatory demands, and streamline verification. In the future, we can expect these decentralized IDs to offer users control over personal data while facilitating secure compliance.
- Improved Environmental Concern on Crypto Activities
There are already concerns over the energy costs of proof-of-work blockchains, which thankfully draw interest from all sides of the regulatory space. On the side of Bitcoiners, developers and miners are increasingly embracing green mining initiatives by gravitating towards renewable energy sources like hydro, solar, and wind.
Texas-based Bitcoin miners, for instance, are already working with local grids to absorb excess energy and even return power during peak demand. Meanwhile, Ethereum’s shift to proof-of-stake reduced its energy use by over 99% in a move that has immensely changed how users, regulators, and businesses in a move that has immensely changed how users, regulators, and businesses think about the industry’s sustainability.
Over the next five years, there’s no doubt that energy transparency will be an increasingly significant metric. Investors may prioritize projects based not only on performance but also on carbon footprints. Such transitions could push more innovation into low-energy consensus models and incentivize greener operations across the industry.
- Growing Partnership between Blockchain and AI
The growth of AI has brought with it highly pertinent questions of transparency, data sourcing, and ownership. Blockchain can help anchor the field’s reliability by tracking data provenance, decentralizing computing, and verifying agent behavior, and increasingly so over the next five years.
Many of AI’s biggest questions are poised to be answered in emerging blockchain partnerships like SingularityNET and Fetch.ai. While SingularityNET is hosting an open marketplace for AI tools, Fetch.ai is facilitating the exchange of data and services by leveraging blockchain for usage, tracking, coordination, and payments.
- More CBDCs across Major Economies
Some of the world’s leading economies, including China and the EU, are preparing to roll out their Central Bank Digital Currencies on a full scale. While China’s digital Yuan project has already gulped billions during its development phase, the European Central Bank (ECB)’s digital euro plans have reached advanced phases.
In the United States, the Federal Reserve is conducting active research on a digital dollar, with increased nationwide calls for an innovative and secure blockchain framework. Going forward, we can expect additional advances in CBDC adoption and deployment across these major economies over the next five years.
The nascent asset class might have lingering questions surrounding data privacy, interoperability, and potential influence on commercial banks. But in the face of global economic and technological developments, we can expect CBDCs to play broader roles in the financial system by 2030.
Conclusion
The role of blockchain technology is growing across various sectors, thanks to growing real-world cases and improving institutional trust. As 2030 approaches, we can anticipate an additional shift in the use and adoption of cryptocurrency products globally, with the asset class becoming more mainstream in policy-making and financial discussions globally.