- According to 2022 reports, the global cryptocurrency market is valued at $4.67 billion.
- The most well-known crypto operators are Binance, Ripple, NVIDIA, Intel Corp, BitGo, etc.
- DeFi is one of the top cryptocurrency trends to look for in the future of crypto in the next 5 years!
- NFTs are unique tokens that exist on a single blockchain that cannot be replicated.
- Banks that are researching blockchain finances to manage user data and transactions.
With the rise of brokers offering crypto trading, the popularity of digital currency has skyrocketed. As a result, statistics forecast an increase in crypto trading as well as a wider application of crypto across industries.
Some of the advantages of investing in crypto include protection from inflation, cost-effective transactions, secure and private funds, and self-managed finances. Investing in cryptocurrency also comes with its risks, like a complete loss of funds or value.
If you are finally hopping on the crypto wagon, this article’s for you. We’ll elaborate on the current state of crypto, the potential, trends, challenges, and the AI uprising. Scroll down to learn about the future of crypto in the next 5 years.
The Current State of Cryptocurrency
Evaluations in 2022 show that the global cryptocurrency market was valued at $4.67B, with expectations to expand at a CAGR of 12.5% from 2023-2030. While these are long-term predictions that are easier to track, the cryptocurrency market is at full throttle daily.
Currently, the global crypto market is capped at $1.14T, with 19M Bitcoins in circulation, which means there are 2M left to be mined. The price of BTC has fallen under $28k, and ETH has dropped below $1.9k. According to stats, USDC is currently the most stable cryptocurrency, along with USDT.
Major Players in the Crypto Industry
Besides the US, the cryptocurrency industry has players from the rest of the world. Specifically, the future of cryptocurrency in India comes close to comparison with the users in the States.
The industry has experienced a tremendous rise recently since Bitcoin and other digital currencies offer many investment opportunities for new businesses. Several lucky opportunists have amassed quite a wealth through crypto, and they are the first crypto billionaires.
The most well-known are Binance, Ripple, NVIDIA, Intel Corporation, Bitfury Group Limited, BitGo, Advanced Micro Devices, Inc, Xilinx, Inc and Xapo Holdings Limited.
Want to know more about the men behind most of those corporations? Meet the 5 reigning crypto billionaires:
- The richest crypto holder on our list is Changpeng Zhao, the founder of Binance. Crowned the crypto king, Zhao is the top richest crypto owner in the world, with a measured net worth of $10.5B.
- The next contender to be included in this year’s Bitcoin billionaires list is the co-founder of Coinbase, Brian Armstrong. The CEO has a net worth of $2.4B as of 2023.
- Sam Bankman Fried, the youngest crypto billionaire, resides in the Bahamas in a collaborating cryptocurrency community. His current net worth is $4M, a massive drop from his peak at $26.5B, which came after users started rapidly withdrawing their FTX investments.
- Chris Larsen is the executive chairman and former CEO of OpenCoin, worth $2.6B. Larsen has demonstrated his technical prowess by creating a global decentralized network called RippleNet.
- Gary Wang is the CTO and co-founder of FTX and is among the richest crypto billionaires, with an estimated net worth of $5.9 billion. He also has 16% ownership of FTX’s international cooperations.
Recent Trends and Developments
Like all industries, the cryptocurrency industry is not immune to change. New trends spring by the minute, and investors need to catch up if they want to maintain their coins’ value.
The following are among the most popular predictions for the future of cryptocurrency:
Defi Advantages
DeFi refers to “decentralized finances” – a common term used on the cryptocurrency market. DeFi power means traditional financial transactions on the blockchain using smart contacts.
According to 2022 reports, the “TVL” or total value locked of cryptocurrencies covered by DeFi smart contacts has reached $15 billion. This is a huge jump considering the last estimate in 2019 was $1 billion. You might recognize DeFi applications if you used yield farming. This process involves lending crypto to other platforms for new crypto or interest. Through yield farming, you take advantage of DeFi systems to maximize returns.
DeFi’s popularity made it one of the top cryptocurrency trends to watch out for in the future of crypto in the next 5 years.
Crypto and Green Energy
Crypto ownership continues to drive the adoption of green energy to reduce carbon emissions. According to recent experiments, It was estimated that mining for bitcoins releases 57 million pounds of carbon emissions in the US alone. Crypto miners are often looked down upon for the negative impact their job has on the environment.
To decrease the amount of emissions, the Proof of Work, or POW, insists on the use of fossil fuel-generated energy. This field of the industry is still evolving as emerging blockchain networks incorporate more eco-friendly mechanisms.
NFTs Blowing Up
Non-fungible tokens, or NFTs, are blowing up in the cryptocurrency market. They are one-of-a-kind tokens that exist on a single blockchain and cannot be replicated. NFTs can be anything from real-world items like real estate, cartoon characters, artwork, caricatures, and more.
Unlike cryptocurrency, NFTs can be both physical and digital. Some of the most popular tokens online include domain names, video games, digital graphics, physical art, etc. Once you tokenize or turn these assets into NFTs, you can trade, sell or buy them without fearing fraud.
The year 2021 saw the biggest rise in popularity with NFTs, and since then, they have become an integral, irreplaceable part of the cryptocurrency market. In October 2022 alone, NFT sales were through the roof, with around 850 million.
Institutions Switching to a Cryptocurrency Ecosystem
This trend shows what the future of cryptocurrency will look like. At first, corporations and financial institutions did not trust the entire cryptocurrency system, but due to the rise in popularity, they were forced to collaborate. Institutions cooperate with the crypto market to allocate a lot of capital and keep it safe in cryptocurrency form.
In 2020, $15 billion worth of assets were moved from institutions to the crypto market, and the numbers will continue to rise. PayPal data showed that since the platform allowed crypto transactions, the app has seen twice as many logins as before. Users use PayPal to buy cryptocurrency, so it proves that the money management industry needs to keep up with the digital.
Predictions for the Future of Cryptocurrency
Here are some of the most probable crypto future predictions for the next five years:
Prediction: Will Crypto Rise or Crash?
The biggest question concerning crypto owners is whether the crypto industry is headed for a climb or failure.
Yuya Hasegawa, a crypto market analyst, did not predict negative outcomes for crypto in 2022. While working for the Japanese digital asset exchange bank, Bitbank, Hasegawa learned that the biggest risk factor is quantitative tampering.
According to Analyst Insight, Sayantani Sanyal reported that many factors prove that Bitcoin prices will go higher due to their expansions. More businesses accept Bitcoin, and there’s a higher demand for Bitcoin ETFs.
Prediction: Bitcoin ETFs Are in High Demand
There’s a prediction that the first spot Bitcoin ETS will get approved in the next few years. Most crypto investors think that the first Bitcoin ETF or exchange-traded fund can get approved later this year. If the Bitcoin ETF gets approved in the US, the investors get direct exposure to the cryptocurrency itself.
In 2022, the Securities and Exchange Commission allowed the launch of a ProShares’ Bitcoin Strategy ETF. It works by tracking Bitcoin’s future contracts, and to be approved, the market needs to be large and mature enough to support it.
Prediction: Investors Will Turn To Bitcoin
The founder of the Digital Assets Council of Financial Professionals, Ric Edelman, stated that there would be more than 500 million people around the world owning Bitcoins by the end of 2022. The goal is to provide an understanding of the industry, driving cryptocurrency adoption and crediting regulatory clarity. More institutions are also adopting crypto to relocate their assets online.
Impact of New Technologies: Blockchain and Smart Contracts
New technologies like smart contracts and blockchains have had a great impact on the cryptocurrency industry. Cardano, Polkadot, Polygon, Ehterum, and the well-known Bitcoin are only estimated to get bigger in the next five years. Other more centralized projects like the BNB chain are too big, and we can’t imagine a world without it.
Each one of the above-mentioned is a public blockchain, but there are private ones as well. Companies and networks are implementing private blockchains before getting started with their digging.
Automation & Smart Contracts
Automation via smart contracts and programmable blockchains provides the key to the future. Blockchains function as the decentralized ledger of all transactions across a community network. By using blockchains, participants can confirm transactions without alerting centralized issuers.
There’s a dilemma about whether automation will be decentralized and transparent or the government will control it. But central banks and governments will not be able to take over without a fight. This is why true transparency and decentralization can take more than five years to happen. There’s proof that CBDcs or central bank digital currencies are being developed, but there are no predictions for how the adoption will proceed.
Potential Effects of Regulatory Changes
Regulatory changes are bound to occupy the cryptocurrency market. The potential effect is expected to cause an issue in 2023, especially with stablecoins. Stablecoins are a primary area of regulatory interest to investors since they are looking for clarification around the gray zone of cryptocurrencies.
The biggest potential new regulations bring to the crypto industry is the ability for investors to record their capital gains, as well as losses of their crypto assets. If new rules are implemented, the investors will easily report crypto transactions and make depositions with zero errors!
Regulatory changes can affect the crypto price when they are placed in existing volatile markets. Regulation is necessary to keep the space safe from cybercriminals.
Opportunities in Cryptocurrency
There are plenty of beneficial opportunities for investors in cryptocurrency, such as crypto saving, farming, staking, trading, mining, and more:
Crypto Mining
Through crypto mining, investors grow their cryptocurrency assets by providing computer power to a blockchain network. With mining, you can find new tokens or earn transaction fees to help validate transactions. To start your crypto-mining journey, understand how blockchain technology works and how to get access to specialized crypto-mining hardware.
Crypto Saving
Crypto saving is saving money in cryptocurrency form. This whole money-saving process is done by using a crypto savings account. The crypto savings account is a digital currency account that lets you earn interest on deposited funds.
Crypto Staking
Crypto staking is one sure way to increase your crypto assets, but you need to participate in the inner workings of the blockchain network. You stake tokens on a network that earns rewards for helping secure and validate transactions. To properly stake cryptocurrency, you need to understand the inner functions of blockchain technology.
Crypto Trades
Crypto trading allows the owners to have an active way to expand and grow their crypto assets. Through it, investors can buy and sell crypto tokens on exchanges, with a chance to profit from price fluctuations. To accomplish a successful crypto trade, you need some understanding of the market dynamics and risk tolerance. The best choice for trading is Nomoex, which allows you to choose over 800 cryptocurrencies.
Crypto Farming
With crypto farming, you set up multiple computers that spend hours or days mining for cryptocurrency. Farming can be done solo or as a part of a mining pool, but each type of cryptocurrency has its algorithm. The most popular cryptocurrency for farming is Bitcoin, and the mining process for them involves solving complex mathematical equations and problems.
Different Investment Strategies for Cryptocurrency
To have an effective crypto investment strategy, you need to consider margin trading and sound investment decisions. The goal is to maximize returns on crypto investments, and all crypto investors need to diversify their assets by investing in both digital currency and traditional assets.
If you are wondering about the number one practiced strategy when investing in crypto, know that yield farming and NFTs are among the top picks. With yield farming, you deposit crypto into DeFi, and you have a chance to maximize yields. To successfully increase yields, the crypto-owner needs to provide liquidity, which is proven through depositing or staking their crypto into a lending platform.
Potential Risks and Rewards of Investing in Cryptocurrency
There’s always a chance that the crypto market could drop, but that’s highly unlikely. The risk is a total loss of assets, a decrease in value and cyber criminals. The reward is a growing business that can reach billions.
Emerging Trends in Cryptocurrency
Besides the ones mentioned above, there are tons of other emerging trends in the cryptocurrency industry. The most likely to further develop are:
- Banks that are investing more time researching blockchain finances to manage user data and transactions. This will lead to blockchain banking, where businesses use the option for cloud data storage and streamlining financial records.
- Bitcoins are getting a hedge asset status and becoming more widely accepted to fight against inflation.
- Paypal announced that it would facilitate crypto purchases through its networks.
- More businesses will accept crypto payments for products and services.
- DeFi solutions for lending, a chance to be devoid of traditional banking.
- Merging of crypto and fintech for faster transactions and lowers costs.
Impact of Decentralized Finance (DeFi) and Non-fungible Tokens (NFTs)
NFTs are the most sought-after aspect in the cryptocurrency industry, and last year was a strong indicator that it’s the first sector to recover in the next year. The major investments from Web2 brands like Disney and Starbucks boosted the popularity, and more reputable businesses are considering NFTs as a marketing strategy.
Opportunities and Challenges Presented by Crypto Trends
DeFi, too, has an enormous impact and potential to grow because it eliminates the bank fees for its services and promotes P2P transactions.
Benefits of NFT strategies include new monetization options for existing IPs, a growing market for new content, brand stories, new forms of community building, and customer engagements.
Incorporating DeFi too comes with some advantages, like allowing users to lend money without the use of a middleman. Users obtain loans without providing collateral or undergoing credit checkups. The only risk with DeFi is faulty smart contracts, while with NFTs, it’s fraud risks and cyber security.
The Role of Artificial Intelligence in Cryptocurrency
Artificial intelligence is set to have a major role in cryptocurrency due to its machine-learning capabilities. You can adjust AI crypto trading strategies after getting info on market data.
With AIs, investors have access to better performance and profitable trades. The AIs are exposed to new data, and they adapt their decisions and predictions accordingly.
The biggest role AIs play in cryptocurrency is analyzing vast amounts of data accurately and quickly. With the data, traders can make informed picks based on market trends and market movement predictions.
Similarly to how most things work in crypto, AI implementation into cryptocurrency comes with its fair share of benefits and risks.
Benefits:
- Better security
- Reduced costs
- More privacy
- Accurate data
- Improved efficiency.
Risks:
- Severe complexity
- Hacking
- Over-reliance
- The volatility of the crypto market.
The Future of Cryptocurrency in Different Industries
Crypto is present in a wide variety of industries, like healthcare. Crypto is used to entice service within the healthcare industry. Medical crypto variations already exist, and you can purchase and spend them. You can also monetize items within the industry in crypto, like drugs or purchased research, or PHI.
Another industry is the gaming one, where players trade virtual currency for weapons. These crypto tokens can be exchanged for real-world cash, which provides an incentive for players looking to monetize their gaming.
In the finance industry, crypto provides benefits in terms of transparency, record-keeping, data delivery and improved security through its blockchains.
Current Use Cases for Cryptocurrency in Industries
A use case in the gaming industry functions through the blockchain, where users have real ownership of in-game assets. This includes cards, equipment, characters, skins, weapons, lives, etc.
Use cases in the healthcare field include medical record management, drug development, prescription drug traceability, personalized medicine, telemedicine, medical device management and more.
Finance use cases in crypto include crypto banking, decentralized digital currency, asset tokenization, online payments, crypto staking, etc.
Benefits and Challenges Of Cryptocurrency Adoption Across Industries
Benefits of crypto in healthcare, finance, and gaming industries include:
- Secure funds
- Accurate data analysis
- More medical developments.
- A chance for gamers to profit from their activities.
- The ability to borrow money without traditional banking checkups.
However, some of the challenges are:
- Hackers and cybercriminal
- Volatility of prices
- Chance for a total loss of value.
Challenges and Risks of Cryptocurrency
There are some dilemmas to investing in crypto, like a huge risk of loss. Since cryptocurrency is volatile, it can easily become illiquid, and investors can lose the entire value of their investment.
There’s also the lack of a regulatory framework, meaning there are no laws that limit the use of crypto.
Security Risks and the Importance of Protecting Cryptocurrency Investments
Protecting your crypto investments is crucial if you don’t want to experience a total loss of value. The biggest security risk in crypto is hackers. Because the crypto activity is untraceable, scammers attempt to access individual accounts or crypto platforms. There they steal private keys, pins and passwords to gain access to your crypto wallet.
If you are a budding business, it’s best to wait until you’ve gained recognition to invest in crypto. The crypto industry is highly volatile, meaning there could be sudden massive price swings that you need to be prepared for.
A sharp decline in Bitcoin prices increases investor risk aversion, which can result in a fall in investment and stock markets.
Conclusion
We went over the future of crypto in the next 5 years. Cryptocurrency seems like a good investment in the future since more and more institutions are digitizing their funds. Before investing, you must accumulate knowledge of blockchains, crypto mining, trading, saving, and staking.
All in all, crypto is a risky investment that could either make you rich or bleed your finances dry. It’s important to keep up with market updates and growth spurs to know exactly when to strike and start your crypto journey!
