What is the future of cryptocurrencies?

Making smart investments is the best way for any man to safeguard
his future. This could mean investing in real estate, the stock market, shares
in a company, or even commodities like gold. There is one other area of
investment that an increasing number of men are turning to – and that is
cryptocurrencies.

For many people, the crypto boom of 2017 and subsequent bust of 2018 passed by before they fully got to grips with what it all meant and how it all worked. With Bitcoin – hands down the biggest of all cryptocurrencies – now trading at a relatively stable rate (between $10,000 and $10,600), [MG1] we thought it would be a good time to assess the current state of cryptocurrency, where it looks to be heading, and most importantly, your investment options.

What is a cryptocurrency and how
do they work?

A cryptocurrency is a digital currency that is managed and
monitored through encryption techniques known as cryptography, while using
blockchain technology to monitor and track all transactions.

This allows cryptocurrencies to remain decentralized, which means
they are not controlled by a central bank like traditional currencies.

Cryptocurrencies, particularly Bitcoin, have predominantly been in the news over the past few years due to the crazy fluctuations in value. In 2017, for example, Bitcoin jumped from $997 to an incredible $19,665, creating a number of accidental millionaires in the process. On the flip side, many people got in too late, and in 2018 when Bitcoin’s value plummeted, thousands of investors lost a great deal of money.

However, all these dramatic market changes have distracted from
the fact cryptocurrencies can be used exactly as the name says: as a currency.

Thousands of merchants accept bitcoin and other leading cryptocurrencies to purchase goods. Overstock became the first major online retailer to accept bitcoin, allowing users to purchase any items on their website using the digital currency. You can also book flights or buy jewelry, and there are even cryptocurrency-only online casinos.

What does the future of cryptocurrency
look like?

To answer this question, it really depends which side of the fence
you are on. Pro-cryptocurrency advocates insist the future is bright, pointing
to the vast amount of money and resources being spent to enhance the blockchain
technology to make cryptocurrencies even more secure in an attempt to further
legitimize digital currencies and attract more people.

Harvard University Professor of Economics and Public Policy Kenneth Rogoff told Investopedia that “market capitalization of cryptocurrencies could explode over the next five years, rising to $5-10 trillion.

However, professor Rogoff tempered
that ambitious forecast by predicting bitcoin’s surge in market value will be
caused by an increase in users rather than a large spike in value, suggesting
the currency’s long-term value would be closer to $100 than $100,000.

On the other side of the proverbial
fence are the cryptocurrency naysayers, who believe that any currency that
wants to become a mainstream asset needs to be centralized in order for it to
gain an intrinsic value. It is a fair point – after all, the value of one
bitcoin is only what someone is willing to pay for it. While the same is
technically true for Fiat currencies, the fact they are tied to a central bank
makes them far less volatile, particularly strong currencies like the US
dollar, against which all leading cryptocurrencies are valued.

Will cryptocurrency ever go
mainstream? And how?

The biggest obstacle facing cryptocurrencies should they wish to
become a mainstream currency is that it will only be possible with increased
regulations and government involvement. However, the very thing that has made cryptocurrenciesso popular – decentralization and deregulation – would be diluted were this
to happen.

Mainstream status could also be earned on its own simply by having
the majority of people making transactions using cryptocurrencies. Once there
are more people using bitcoin than dollars, for example, then the landscape has
shifted. However, the mind-bending complexities of cryptocurrencies can put
anyone off and only people with a vested interest can begin to understand how
it all works.

It means, in all likelihood, that if a cryptocurrency was to break
through and become a mainstream currency, it would need to adhere to a number
of regulations set by a established financial system, and strike a balance
between the features offered by cryptocurrencies and the regulations required
for a central bank-operated currency. At present, none of the leading
cryptocurrencies can match both criteria, but that’s not to say a future
currency will not.

The big question – to invest or
not to invest?

The markets may have calmed somewhat in recent months, but
investing in cryptocurrencies remains a highly volatile game. That’s not to say
that you shouldn’t invest, but we recommend you only invest if you fit the
following criteria:

You can afford to lose:
Like with any highly volatile investment opportunity, you could win big or lose
everything. If you can afford to lose what you put in without it making much of
an impact on your life, then give it a go.

You can play long-term:
If you are looking for a quick and easy profit, then cryptocurrencies are not
the place to be. Similar to the stock market, you can only succeed if you can
stomach the plunges without panicking and cutting your losses. Ride out the
lows and see where the highs take you.

You understand cryptocurrencies:
Knowledge is power when it comes to investing and that applies to any
investment avenue. Whether it’s real estate, start-up businesses or
cryptocurrencies, understanding the intricacies of that industry is vital. Even
if today is the first time you began to learn about cryptocurrencies, you are
already increasing your knowledge. Stay on top of any new developments and
trends – this will help to inform you of the best time to take the
cryptocurrency plunge.

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 [MG1]Note (please don’t delete): This should be updated when getting
published, it might change.