Changes Coming to Cryptocurrency in the Near Future

The cryptocurrency world has always been hotly debated. But both sides of the debate, those for and against these decentralized currencies, can’t deny how these alternative currencies have changed our financial landscape. Some crypto investors have even poured their entire life savings into these digital currencies with the hope of cashing out big one day. It remains to be seen if these digital currency platforms will withstand the test of time, and there are some changes coming along that will cause ripple effects in cryptocurrency financial markets.

Keep reading for an introduction to cryptocurrency and hypotheses about its future. While these unique cryptocurrencies may not totally replace banks as some advocates hope, it could still prove to be a viable and universally accessible alternative one day.

What is cryptocurrency?

A cryptocurrency is a decentralized currency system that’s managed through encryption processes called cryptography. It started out as just a theory but became a reality and created a digital transformation in 2009 when Bitcoin hit the scene. It reached a height of an incredible $266 per bitcoin and the company had a total market value of $2 billion at its highest valuation. Unfortunately, it experienced a crash right after that and plunged the entire world of cryptocurrency into uncertainty.

Although proponents of cryptocurrency say it’s a way to avoid the pitfalls of big banks, it’s also been subject to intense scrutiny as it’s the choice currency for illegal activities like procuring weapons, buying drugs, and money laundering.

Advocates of crypto like Bitcoin are still optimistic about its future, hedging their bets that the industry will explode into the trillions of dollars in the future.

As it stands, there are 25 Bitcoins generated every ten minutes and the total number of Bitcoins will be limited to just 21 million total. Bitcoin experts have calculated that that volume will be reached by 2140. The issue, as pointed out by economists, is that it’s a volatile currency because its value is rooted in transactions, it risks a bubble collapse.

In addition to its association with crime, Bitcoin is also getting put closer under the microscope by regulatory agencies like Financial Crimes Enforcement Network (FinCEN), the SEC, and the FBI. In 2013, virtual money was ruled as a money service business, and therefore under the purview of the federal government and government regulation. As more and more regulation is involved with the digital currencies, Bitcoin and other cryptos start to lose their hold as decentralized assets that don’t bend to governing bodies.

Crypto currencies available today

Besides Bitcoin, there are a few other cryptocurrencies making waves and creating a powerful alternative to centralized banking institutions:

1. Litecoin: Considered Bitcoin’s main competitor, it’s been called the silver altcoin whereas Bitcoin is gold. It was launched in 2011 and, like Bitcoin, is not controlled by a centralized institution. Instead, it utilizes a script that can be decoded by CPUs. Its main benefit over Bitcoin is that is has a faster block chain generation rate and because of this, it boasts a faster transaction rate.
2. Ethereum: This unique crypto currency uses blockchain tech to replace internet third parties like servers that store data and transfer financial transactions. The main purpose of Ethereum is to put control of data back in the hands of the user rather than numerous third-party providers.
3. Zcash: Zcash boasts a safer, more private transaction model. While it’s true that all transactions are published on the blockchain, there are certain details that remain private like the sender’s information, the recipient’s information, and the full amount being transferred.
4. Ripple: If you need instant, international payments, Ripple might be the crypto for you. It’s allows businesses to make transactions across borders and oceans for a low cost.

The future

Cryptocurrencies currently face a few limitations like the lack of consumer protections associated with traditional banking institutions and the criminal potential for using money that can’t be traced. Another major obstacle is the wild volatility of the altcoin markets which could mean a cryptocurrency investor could lose everything practically overnight. However, while Bitcoin currently grapples with these difficulties and other challenges associated with the alternative currency market, what happens with Bitcoin will likely have ripple effects for other altcoins currently available. Is Bitcoin the future or just a fad? Only time will tell.