The Future of Cryptocurrencies and Should You Invest in Them?

We have already discussed about the history of currencies and the benefits of cryptocurrencies and blockchain, if you haven’t read them already, it is suggested that you do read them before you go ahead with this blog as it is required for you to understand everything written below.

The Future

Some of the limits that cryptocurrencies currently face – such as the fact that one’s digital wealth can be removed by a computer crash, or that a virtual vault may be looted by a hacker – may be overawed in time through technological developments. What will be harder to overcome is the basic paradox that bedevils cryptocurrencies – the more prevalent they become, the more parameter and government scrutiny they are possibly could attract, which corrodes the essential evidence for their presence.

While the number of merchants who take cryptocurrencies has gradually amplified, they are still very much in the minority. For cryptocurrencies to become more widely used, they have to first gain extensive receipt among consumers. However, their comparative complexity likened to conventional currencies will likely deter most people, excluding the technologically adept.

A cryptocurrency that seeks to become part of the conventional financial structure may have to content widely conflicting criteria. It would need to be mathematically intricate (to avoid fraud and hacker attacks) but easy for customers to comprehend; decentralized but with passable consumer safeguards and protection; and reserve user anonymity without being a conduit for tax elusion, money laundering and other reprehensible activities. Since these are arduous criteria to satisfy, is it likely that the most popular cryptocurrency in a few years’ time could have attributes that fall in between heavily-regulated fiat currencies and today’s cryptocurrencies? While that likelihood looks remote, there is little hesitation that as the leading cryptocurrency at present, Bitcoin’s success (or lack thereof) in dealing with the challenges it faces may determine the wealth of other cryptocurrencies in the years ahead.

Should You Invest in Cryptocurrencies?

If you are considering investing in cryptocurrencies, it may be best to treat your “investment” in the same way you would treat any other highly hypothetical venture. In other words, identify that you run the risk of trailing most of your investment, if not all of it. As detailed earlier, a cryptocurrency has no intrinsic value apart from what a buyer is willing to pay for it at a point in time. This makes it very liable to huge price swings, which in turn upsurges the risk of loss for an investor. Bitcoin, for example, plunged from $260 to about $130 within a six-hour period on April 11, 2013. If you cannot digest that kind of instability, look to another place for investments that is better matched to you. While belief continues to be deeply separated about the qualities of Bitcoin as an investment – factions point to its limited supply and mounting usage as price motorists, while detractors see it as just another notional bubble – this is one debate that a traditional investor would do well to evade.

A cryptocurrency that seeks to become part of the mainstream financial system would have to satisfy very wide variety of criteria. While that option looks remote, there is little uncertainty that Bitcoin’s success or failure in dealing with the challenges it faces may regulate the fortunes of other cryptocurrencies in the years moving forward.