Cryptocurrency turned out to be a big hit last year with the overall market capitalization now exceeding $1.6 trillion. The cryptocurrency world is constantly evolving with over 300 million crypto users worldwide. The huge user base is what makes every new Bitcoin high capable of big drops as well. It is quite difficult to predict the future of cryptocurrency in the long run but to get a better sense of the market, experts are now following themes from increased adoption within the traditional financial systems to crypto regulations.
Cryptocurrency that mostly attracted its audience to Bitcoin which holds the largest market valuation of around $580 billion. The performance of bitcoin is being tracked publicly by MicroStrategy Inc. and Tesla Inc.
Cryptocurrency Trends Changing Crypto Future
However, the possibility to achieve the exact predictions is impossible. Here are top 5 trends in the crypto space in 2023 that are here to stay.
Increased adoption of cryptocurrency in existing financial models
Many nations are looking to generate their own central government-backed crypto assets. This suggests that in the future more and more countries will incorporate some form of crypto into their existing financial models. In 2021, El Salvador adopted Bitcoin as a legal tender becoming the first nation to do so. Other countries like Saint Kitts and Nevis, Ukraine, Venezuela, US and Russia are adopting crypto currencies.
Increased adoption of cryptocurrency within the traditional financial system will help in building trust among potential crypto users and also create more familiarity. By adopting crypto currency, there will be reduction in transaction fees and increase in efficient payments. Also through this new customers can use digital platforms for payment.
Incorporation of non-fungible tokens (NFT)
Fungible tokens, such as Bitcoin do not represent any claim to an asset or physical things making it easily tradable. Whereas, NFTs represent claims to physical or virtual things. Non-fungible tokens have a huge potential considering their usability for both physical and virtual property. Event organizers will soon mint NFT tickets onto a chosen blockchain and will sell them at a set price or auction them.
Big brands now looking for NFTs are evidently the most significant developments in 2023. This in turn will provide companies the opportunity to explore the emerging NFT space. In this, we will talk about brands that have been successful with their NFT strategies.
Coca-Cola designed a NFT which is a virtual-world spin on the company’s merchandise. Coca-Cola even auctioned a “loot box” which included four NFTs in the package. Through this, the NFT won the bid of $575,663.61, which the company donated to charity.
When NBA Top Shot – an NFT marketplace for sports fans is taken into consideration, fans can buy, sell or even trade basketball GIFs. NBA Top Shots offer different challenges to their fans and ask them to collect the top five scorers in the NBA Finals. Then the collectors buy more packages or even in the secondary market, player’s GIFs are bought. Fans receive another NFT package of GIFs after the completion of the challenge.
In this way, NBA Top Shots uses different strategies, challenges and packages for its fans.
Cross-blockchain bridges for trading cryptocurrencies
Cross-blockchain bridges help connect different blockchains together, enabling users to transfer cryptocurrencies from one chain to another. Cross-blockchain bridge protocols facilitate more peer-to-peer swaps.
As of now, there are about 20 popular cross-chain bridges. Overall, cross-blockchain bridge possibilities are expected to grow as they are connected to the Ethereum network due to Ethereum Virtual Machine (EVM) compatibility. This further boosts the process of making the multi-blockchain projects and interoperability to be the main theme for cryptocurrency.
In order to explain the Cross blockchain bridge, consider for example you have bitcoin and want to transfer some to Ethereum, then the blockchain bridge will create equivalents of Ethereum, putting your bitcoin in hold. After this process is complete, you can use your Etherium. There is a smart contract which is locked till the equivalent of Ethereum is converted and the access is given to you. Later , when you want to convert it back then, an equal amount of Bitcoin is credited back to your wallet.
Rise of DeFi – Decentralized Finance
DeFi provides financial services without centralized intermediaries. This is possible through automated/smart protocols on blockchains making the need for financial intermediaries almost unnecessary. DeFi has great potential and can be used to complement the current traditional finance system. Last year the DeFi ecosystem grew very popular in the crypto community. The growth of decentralized finance is still at the beginning stage as currently it has around 17% dominance in the crypto market.
Several finance processes will be done in a fraction of second by the DeFi, such as owning assets, gaining revenue from those assets, borrowing, lending and many more. Through DeFi, users will be able to control their assets by protecting their sensitive data. Also, the primary element behind the rise of the DeFi market is that it has transparency in financial transactions.
Cryptocurrency regulations will become unavoidable
The cryptocurrency regulations have been and will become unavoidable in the coming months. Last year the crypto world witnessed significant regulations being imposed on cryptocurrency trading. From China banning all crypto-related activities to the U.S. authorities regulating some aspects of cryptocurrency. These significantly effective regulations were implemented to exercise authority to reduce the high volatility of the crypto market.
In future, cryptocurrency regulations will become unavoidable as they help minimize the use of crypto for illegal businesses and simultaneously help in mitigating the damages associated with sell-offs. Regulators are now investigating the DeFi (decentralized finance) space as well making cryptocurrency regulations unavoidable and to play a significant role in the crypto market.
Conclusion
Cryptocurrency is trending in the modern world because of its portability. The growth of these coins have gained humongous traction in the global system. As cryptocurrency is still in its nascent stage, trust is driving the whole digital currency sphere today when people are still hesitant to trade in it. Therefore, there’s a huge risk for cryptocurrency in the financial market but its potential is driving people crazy.
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