Since the world got introduced to Bitcoin in 2009, cryptocurrencies as a concept has evolved significantly. In a little more than a decade, we have seen an explosion of new players in the crypto space, coupled with an interest bordering on public frenzy, and of course, significant developments in its underlying blockchain technology.
More importantly, an increasing number of people have begun to trust and utilize cryptocurrencies on a day-to-day basis. Deutsche Bank predicts a 4x growth in public cryptocurrency usage - with 200 million cryptocurrency users by 2030. It’s closer to the mass adoption scenario that crypto enthusiasts - or maximalists dream of. Many cryptocurrencies like Bitcoin have even been performing relatively well compared to the financial markets amidst the deadly Covid-19 pandemic.
However, this is not to say that crypto in its current state is in any way perfect, or even close to being perfect. There are several limitations faced by the industry currently, which should ideally iron out over the next few years. What to expect, you ask? Well, Besides the $50,000 Bitcoin, $1 million Bitcoin, and other predictions we see nearly every week, here are the trends that will shape and drive the crypto industry over the next decade.
#1 Government and Institutional Adoption
By 2030, almost all governments may plan for, create, and adopt their own cryptocurrency. The road for any fiat currency should inevitably lead to a crypto counterpart sooner or later. A few countries like Venezuela (with Petro) and Dubai (with emCash) have formally announced their plans to launch cryptocurrencies
Government regulations regarding crypto will be one of the first steps that we may witness in the short run, with some governments possibly issuing a blanket ban on crypto (ahem, India), till all the kinks get ironed out. We must concede though - cryptocurrencies in their current form are not in a state to be adopted by governments as an alternative to fiat currency. But without a doubt, once governments start regulating the sector, and with considerable tech developments, nations across the world should begin massive adoption in the upcoming years, as cryptocurrencies are too distinct an incoming paradigm to avoid forever.
- Reduced settlement times,
- Lower transaction costs, and
- High levels of traceability, making it incredibly alluring, compared to fiat money.
However, it may be naive to expect all government cryptocurrencies to decentralize like Bitcoin. Governments would need to exert some control over their currencies for price manipulation - which in itself isn’t necessarily a negative idea. How the governments achieve it is not still evident, but introducing monetary policies to alter the number of tokens and stablecoins (cryptocurrencies tethered to a real-world asset), can be one of the ways to do it.
There will be multiple attempts in the next 4 to 5 years, most of them likely to be unsuccessful. But we remain incredibly optimistic that over the next decade, the concept of ‘national crypto’ is undoubtedly something that shall shape the crypto industry.
#2 AI And Blockchain Will Converge
Both AI and the blockchain enjoy the title of being arguably the most hyped technologies of our time. New technologies and whitepapers attempt to shoehorn either AI, blockchain, or both into their descriptions in an attempt to generate attention and be taken seriously. As the oft-repeated joke in tech startup circles goes - keep saying blockchain fast enough until people in suits get confused and throw you money.
But in all seriousness - the two technologies will likely see considerably more synergy and useful applications in the next decade. Artificial intelligence and machine learning rely heavily on large data sets to optimize their performance - something that cryptocurrency blockchains boast in plenty. On the other hand, with blockchains being encrypted blocks of data, they almost certainly demand the resources of an intelligent system for analysis, insights, and even forensics. Governments themselves may channel AI and ML resources into blockchains as they look to increase their hold on cryptocurrencies and track transactions, wealth, and more.
Other issues, such as the enormous amounts of energy crypto mining consume - may be a problem best left to our AI tools to solve and optimize.
On the consumer side, too, there would be exciting applications. Brands and stores may be able to share customer data in encrypted ways using blockchains, on which AI can deploy AI tools for targeted advertisement, product recommendations, and more. Silicon valley may hail this as the balanced answer to privacy concerns and data monetization.
#3 Market Stability
One of the characteristics that many people, initiated and uninitiated, associate with cryptocurrencies is market volatility. This is set to change in the upcoming years. Its tech continues to evolve at a rapid pace, and broad stability in the market should logically follow these massive tech advances over the next decade.
Blockchain technology, in general, is not perfect. There are issues with scalability; there’s certainly the issue of privacy (as wallets on blockchains like Bitcoin are publicly viewable). As we move towards mass adoption, along with clear government regulations and an increase in institutional support, market stability may be the new defining characteristic of cryptocurrencies. and an increase in institutional support, market stability may be the new defining characteristic of cryptocurrencies.
Signs of an increase in market stability have already started to reveal themselves with major tech giants like Facebook and Wells Fargo formally entering the crypto space. Stablecoins are already plenty in numbers and widely popular. Many would agree that this is the natural course in the life-cycle of cryptocurrencies, and market stability is inevitable.
#4 Cryptocurrencies & The Internet of Things Will Converge
The Internet of Things (IoT) has been another relatively young technology with its fair share of hype and interest. However, it’s maintained an edge over cryptocurrencies, with more adoption and more prominent real-world use cases. The technology can be found in all spaces - from sensors and analyzers in industrial environments, to refrigerators and smart bulbs in our homes. According to McKinsey, the economic impact of the IoT sector could touch $11.1 trillion by 2025.
Moving forward, cryptocurrencies and IoT may exhibit a close relationship for the following reasons:
- Cryptocurrencies may become the default currency for IoT devices to execute their processes: Your refrigerator, for example, may automatically order milk when you run out. And it may choose to do this via cryptocurrencies stored in a smart contract, designed to execute when certain conditions are met. This would be more efficient and safer than integrating payment gateways and adding our cards to the system.
- Blockchains are a logical integration for IoT devices: IoT devices will generate humongous volumes of data - from financial transactions to every piece of communication, logs, and more. Blockchains are well-positioned to be the storehouse of all such information, readily accessible and immutable. Cryptocurrencies should logically come in as these integrations evolve.
- Micro transactions make IoT a testbed for crypto: IoT devices will primarily work by engaging in microtransactions. Your electric car may pay charging points for energy by itself. Your refrigerator would need to pay for milk, as we just discussed. As machine-to-machine (M2M) transactions continue to rise (modest estimates suggest a $26 billion market by 2025), IoT could become the testbed for crypto’s eventual mainstream adoption in regular point of sales gateways and devices.
#5 Potential For Alternatives to Crypto?
Blockchain tech is growing at a rapid phase, and there might be an off-chance that something new and exciting could potentially be in the works ten years from now. But fantasies and dreams aside, it is possible that blockchain undergoes significant evolution as communities of developers work to improve the technology
Already, Directed Acyclic Graphs (DAGs) is being hailed by some as the successor to the blockchain. It is perceived to have solutions to blockchain’s significant shortcomings - featuring faster transactions, no requirement for mining, and more. We already see more than a few call them the future of the blockchain.
Moving forward, there may even be attempts to combine different ideas to offer consumers a superior alternative than what we can theorize. Only time can tell.
There are several other fascinating blockchain applications like truly immutable ID systems that promise to eliminate identity theft and even blockchain voting that should, in theory, reduce voter fraud. The possibilities are endless, and 2030 looks beyond exciting when seen from this perspective.