As more businesses start accepting digital currencies, the market is starting to feel safer. There are still many questions about the future of cryptocurrency, including the potential for economic and political change, the rise of stablecoins, and the impact on financial markets. Read on to find out more about what lies ahead.
In addition to the questions raised above, the future of cryptocurrency is full of opportunities for both brands and investors, let alone the online gaming industry. These days, more and more online gamblers, whether in search of playing online roulette or trying to get hold of the most lucrative casino bonuses, more often resort to cryptos.
Yet still, what about the upcoming trends? Let’s check together.
There has been a lot of talk about cryptocurrency regulation since former SEC chairman Jay Clayton declared bitcoin and ether weren’t securities. That sentiment has been backed by some, but it remains unclear whether the SEC will take action on these cryptocurrencies. Recently, SEC commissioner Hester Peirce released a proposal for discussion, which seeks to give digital currencies a three-year exemption from securities regulation. This proposal could make the cryptocurrency industry less attractive to investors.
In addition to a lack of regulation, the use of cryptocurrency has spawned pump-and-dump schemes. The frequent use of cryptocurrency has raised legislators’ hackles. In addition, if a ransom is paid in cryptocurrency, it’s much harder to trace. This has led to a call for more legislation to protect consumers. This debate will likely continue, and the future of cryptocurrency regulation will remain a complex one.
Rise of stablecoins
In the past, the rise of crypto has been a mixed bag. While some people have been able to make a profit from stablecoins, others have not. Generally, stablecoins make poor investments, but they can help decentralized finance applications. For example, stablecoins are more suited for converting digital assets than they are for transactions. However, this doesn’t mean that stablecoins won’t be a good investment option in the future.
Moreover, the rise of private-sector networks over stablecoins has led to an increase in expectations for central banks. While there are a number of concerns associated with stablecoins, they are a natural evolution of money. As such, regulators must provide a compelling vision for the cryptocurrency industry before it can reach maturity. And it is not just the monetary system that will be affected.
Potential for economic and political transformation
While cryptocurrencies are still largely an opaque system, local governments should consider their economic and political implications and the implications for local residents. For example, tax incentives for crypto businesses could result in escalating housing costs and displacing low-income residents. In Miami, tax incentives for crypto companies may drive up the cost of living while undermining promised growth of tech jobs. Local leaders might be tempted to focus on attracting new companies and workers while neglecting to invest in their existing workforce. The hype around cryptocurrency has been fueled by diverse actors: technologists, governments, banks, start-up entrepreneurs, coders, hackers, ecologists, and even international organizations.
Impact on financial markets
The growing popularity of cryptocurrencies has led to an increase in the correlation between crypto assets and traditional assets. While this may limit their perceived risk diversification benefits, it can also increase the risk of contagion across financial markets. Before the crypto pandemic, crypto assets exhibited little correlation with major stock indices, which prompted investors to view them as a hedge against swings in other asset classes. However, the correlation has since declined to around $2 trillion, after experiencing a four-fold increase in market cap.
Governments use capital controls to regulate the flow of capital and levy high taxes. However, cryptocurrency can also be used as a way to skirt capital controls and avoid paying taxes. The widespread use of cryptocurrencies in illicit markets has caused governments to tighten regulations and crack down on their use. As a result, naive retail investors may be left with financial risks if they invest in crypto. In addition to financial risk, cryptocurrencies have increased inequality.
Impact on brands
Blockchain technology is transforming how we pay for products, and brands are starting to jump on the crypto bandwagon. Brands that facilitate trades and educate intenders can be great bridges to a cryptocurrency future. For example, the peer-to-peer payment service Venmo is educating its users with clear and concise content. Establishing finance brands and fintech disruptors are creating new ways to engage with consumers and help them make informed decisions.
While many companies are wary of the risks associated with crypto, there are many benefits for brand-conscious consumers. Consumers are interested in being “in the know” and eagerly awaiting any updates on the latest crypto. Brands that leverage the hype can attract new customers by offering discounts or benefits. If a brand can make a simple update, it can generate tons of engagement. This kind of engagement is especially powerful for brands in the luxury sector, where socially conscious consumers are often at the forefront of decisions.