Where Is Crytocurrency Headed in The Long Term?
Future Of Crypto
October 03, 2022 00:16
Cryptocurrencies, particularly Bitcoin, have experienced a hard time recently. For instance, the U.S. dollar/Bitcoin exchange rate fell from close to $70,000 in early November 2021 to below $20,000 in late June and dipped to $19,733 on September 15. Bitcoin is a benefit to those who have invested in it. The exchange rate was low 5 years ago, because Bitcoin is the most popular form of cryptocurrency. It was around $3,000 five years ago. The use of bitcoin as a widespread means of payment has failed and it also turned out to be a poor defense of purchasing power. Bitcoin is limited to 21 million units. Since more than 19 million units have already been "mined," 90% of bitcoin are now in circulation, which led most people to believe that Bitcoin will increase in value. What will happen in the future It's important to clarify certain key points, in order to predict the future of cryptocurrencies. Bitcoin is a cryptocurrency and Tether and TerraUSD are both crypto derivatives. These are "derived" from cryptocurrencies and/or pegged to dollar. A financial investor gives you "dollars" and you give them a derivative in return. The company converts your dollars into cryptocurrencies and lends them to borrowers on the global market A company may exchange the derivatives on demand for a predicted cryptocurrency amount that is set by you. If you have purchased cryptocurrency, you will win or lose based on the cryptocurrency's exchange rate. If you have bought a derivative, and it turns out to be backed by an insufficient quantity of cryptocurrencies or has a barely convertible guarantee, the derivative will end up worthless. What has been going on in the crypto derivatives world for the past few months The companies issuing cryptocurrency related products on the market are very active in contributing to volatility. Their promises of stellar returns can boost demand, but if their underlying assets are poorly collateralized, investors will be scared away when it is bad times. The drop in the crypto market has mainly impacted derivatives, as well. Crypto's are currently used as a store of wealth, rather than a means of payment. Just like stocks and bonds, their value can fluctuate substantially. For example, more than 60% of the total bitcoins in circulation are held by people with greater than 100 Bitcoin accounts and rarely traded. In late July, less than 250,000 Bitcoins were traded daily and it is likely that the majority of them were for commercial purposes. Some cryptocurrency holders are holding onto their cryptocurrency through the turbulence. Shrimps and whales are buying during the dip. It seems that the best strategy is to regulate rather than ban them. Without any immediate threat to fiat money and without a risk of taxes being included, the only true concern is regulation. This is the single item on which the regulator is likely to focus. It has nothing to do with the decentralized feature of cryptos, but rather how it can make it difficult for tax collectors to know an individual's wealth and if they have an account. In the future, regulation will become more stringent around this form of wealth, with the aim to track and tax it. The European Parliament approved a proposal to stop all crypto-assets from being provided if they didn't have authorization. Investors will legally require authorization to use our tamper-proof protocol. This will function as the risk of fraud, with the outcome of forcing their accounts to be visible in theory. A sign that may indicate that dealers are going to go out of business
Cryptocurrencies, particularly Bitcoin, have experienced a hard time recently. For instance, the U.S. dollar/Bitcoin exchange rate fell from close to $70,000 in early November 2021 to below $20,000 in late June and dipped to $19,733 on September 15. Bitcoin is a benefit to those who have invested in it. The exchange rate was low 5 years ago, because Bitcoin is the most popular form of cryptocurrency. It was around $3,000 five years ago. The use of bitcoin as a widespread means of payment has failed and it also turned out to be a poor defense of purchasing power. Bitcoin is limited to 21 million units. Since more than 19 million units have already been "mined," 90% of bitcoin are now in circulation, which led most people to believe that Bitcoin will increase in value.It's important to clarify certain key points, in order to predict the future of cryptocurrencies. Bitcoin is a cryptocurrency and Tether and TerraUSD are both crypto derivatives. These are "derived" from cryptocurrencies and/or pegged to dollar. A financial investor gives you "dollars" and you give them a derivative in return. The company converts your dollars into cryptocurrencies and lends them to borrowers on the global market A company may exchange the derivatives on demand for a predicted cryptocurrency amount that is set by you. If you have purchased cryptocurrency, you will win or lose based on the cryptocurrency's exchange rate. If you have bought a derivative, and it turns out to be backed by an insufficient quantity of cryptocurrencies or has a barely convertible guarantee, the derivative will end up worthless. What has been going on in the crypto derivatives world for the past few months The companies issuing cryptocurrency related products on the market are very active in contributing to volatility. Their promises of stellar returns can boost demand, but if their underlying assets are poorly collateralized, investors will be scared away when it is bad times. The drop in the crypto market has mainly impacted derivatives, as well. Crypto's are currently used as a store of wealth, rather than a means of payment. Just like stocks and bonds, their value can fluctuate substantially. For example, more than 60% of the total bitcoins in circulation are held by people with greater than 100 Bitcoin accounts and rarely traded. In late July, less than 250,000 Bitcoins were traded daily and it is likely that the majority of them were for commercial purposes. Some cryptocurrency holders are holding onto their cryptocurrency through the turbulence. Shrimps and whales are buying during the dip. It seems that the best strategy is to regulate rather than ban them. Without any immediate threat to fiat money and without a risk of taxes being included, the only true concern is regulation. This is the single item on which the regulator is likely to focus. It has nothing to do with the decentralized feature of cryptos, but rather how it can make it difficult for tax collectors to know an individual's wealth and if they have an account. In the future, regulation will become more stringent around this form of wealth, with the aim to track and tax it. The European Parliament approved a proposal to stop all crypto-assets from being provided if they didn't have authorization. Investors will legally require authorization to use our tamper-proof protocol. This will function as the risk of fraud, with the outcome of forcing their accounts to be visible in theory. A sign that may indicate that dealers are potentially going to go out of business.
