Cryptocurrency is taking the world by storm. But some hurdles still seem to stand in the way of mass adoption. We’ve compiled 6 tough questions for crypto fans to ponder about its future.

Over the last year or two, governments have begun looking into regulating crypto. While people are still a bit hesitant about crypto, it is without a doubt that these digital assets are only just getting started. But given the wide gap from such assets to regular monetary systems, how far can crypto eventually go? Keep reading to find out more about some of the current key developments that are deciding the future of cryptocurrency.

Does Government Regulation Spell Doomsday for Crypto?

More and more governments across the world are starting to show an interest in cryptocurrency, particularly with regard to regulating it. On 8 September 2021, Ukraine became the fifth country in the world to implement a law on cryptocurrency. Under the new law, crypto is legal in the country and the government will be regulating all virtual assets. El Salvador is one of the most recent countries to have adopted Bitcoin as legal tender, through new legislation titled the Bitcoin Law.

Why the sudden interest from governments to regulate crypto? Without government regulation, there isn’t any transparency and accountability in crypto. The rise of hacking and theft of crypto strengthens governments’ cases that it should be regulated. On the bright side governments are opening themselves up to the idea of accepting crypto as legal tender. Yet, as with anything, there are pros and cons to this.

Unfortunately, the cons are quite game changing and threaten to spell the end of the crypto “fad”, as some may call it. I mean, the crypto intrigue does kind of depend on the fact that it’s a free currency, right? With government regulation comes taxes, control, and a process that’s a whole lot more complicated. Many crypto enthusiasts wish for no government intervention when it comes to cryptocurrency because they feel like their traditional government currency has failed in a sense. Some even suggest that the current banking system would benefit from having an unregulated virtual equivalent. Definitely a Catch-22 situation!

Unfit for the Masses?

Every country’s economy needs a stable currency and monetary creation to function well. Cryptocurrency lacks in these areas because firstly, it’s volatile in nature, and secondly, the volume of crypto coins are fixed and cannot be increased. Without monetary creation, loan systems would have to adapt to remain functional. The decentralized aspect of crypto doesn’t allow for central banks to influence the money to run economic policies.

Moving onto crypto fraud, there’s almost no way to detect and trace any laundering with crypto, posing a huge risk for an increase in theft. Price manipulations, insider trading and pump-and-dump schemes are also harder to counter in the crypto ecosystem. If there are so many reasons indicating the incompatibility of governmental processes and regulations with that of cryptocurrency, how will it benefit the masses? If cryptos are unfit for how today’s economies and societies’ function, how can they become mainstream tomorrow?

How Much Greener?

A major point of contention doing the rounds is the environmental impact of crypto coins due to its high energy consumption during mining. A high energy consumption may cause increased carbon emissions and add to the disastrous effects of climate change. Due to the amount of flack received for its environmental footprint, cryptocurrencies are now taking into consideration ways to improve their ecological impact.

With the new “green” factor coming into play, there’s an increase in competition, with the “greener” coins taking the lead. This newfound competitive spirit is bound to influence the crypto market in the years to come. This is especially true on the tech side, with the proof of stake protocol on the rise, being much less energy-intensive than the proof of the work model, upon which Bitcoin is based. Yet, will all crypto coins eventually become green enough for the whole game to be worth it?

Truly a Better World?

The great thing about cryptocurrencies is that they’re universal coins and have no geographic boundaries. They’re pretty much free for all humanity to enjoy. Unfortunately, the twist in the tale becomes clear when we start to take into consideration the social inequalities and lack of access to this type of technology in certain countries, especially third world ones. 

This sparks the debate of unequal coin wealth distribution across the world. Despite the supposed freedom for everyone to use crypto, is it meant for just those who have access to the latest high technology? And if not, what’s being done to ensure the highest possible crypto outreach in the world? Technology might not have all the answers there.

It’s not all bad news though, because cryptocurrency improves the banking world considerably. Through cryptocurrency, people who don’t have access to banks, which is roughly one-third of the world’s population, have a new financial tool to try out.

Are NFTS the Next Coin Price Killer?

Alongside cryptocurrency we have the trending NFTs that are becoming increasingly popular by the day. NFTs are very similar to cryptocurrencies because they’re both based on the same technology, thus their properties, advantages and disadvantages are essentially the same.

While crypto is understood to be a type of digital currency, the value of NFTs rests in digital, one of a kind, collectible items and goods. For example, pieces of digital artwork can be sold at exorbitant prices because of the underlying technology that certifies and guarantees its authenticity, thereby raising its value. Digital assets like NFTs allow for instant transactions with almost no middlemen.. 

This makes NFTs attractive investments as an alternative to crypto. Crypto funders and supporters, made up mostly of technology fanatics and speculators who saw an advantage at tax season, could very well jump across to the land of NFTs when the right offer comes around. Where would that leave crypto? It’s totally possible that crypto trade could drop without these two groups.  

Cyber Security: Nothing New?

With new technological advancements, especially regarding money and high value assets, there is sure to be newfound opportunities for hackers and cyber thieves to strike. The cyber security risk factor involved is definitely not to be taken lightly. Over the years, there have been numerous accounts of security breaches in the crypto world, with billions gone missing. That includes good old Ponzi schemes.

For example, two South African brothers pocketed $3.6 billion from those who invested in their “cryptocurrency investment platform”. As unique as cryptocurrency is, unfortunately the same cyber security challenges faced when dealing with traditional currencies and assets apply to it as well. In some cases, the decentralized and open code aspects of cryptocurrency might actually work against its favor. 

Extra Time : Will Crypto Find Its Own Space ?

Cryptocurrency is controversial in nature because it’s just so different to what the world has already seen and experienced before. There are some people who absolutely swear by the value of cryptocurrencies, and then those who swear wholeheartedly against it, deeming it to be a scam. Each one to their own, but with the constant transformation of industries and economies to keep abreast with the digital age, it is highly unlikely that cryptocurrency will be going anywhere anytime soon.

With the incorporation of cryptocurrency and blockchain technology in sectors such as sport tech and retail, I wouldn’t be surprised if crypto trade is (still) booming a decade from now. Simply put, all that could possibly happen without crypto ever turning into a day to day massive retail and exchange utility. The world is large – and so is its monetary side. Here’s a wild guess : fiat money and crypto might coexist eventually, by serving very different purpose.

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Written by Prenelle Pillay.
Photos by CardMapr and Mika Baumeister