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- Bitcoin: What history reveals about its future
- What Does the Future Hold for Cryptocurrency? | Stanford Online
- Is cryptocurrency the future or a risky gamble?
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Fair enough. And this is all preamble to say that these scenarios are not meant to be mutually exclusive, they are not exhaustive and they are certain to spark dissent and debate. But given the renewed mainstream interest in bitcoin — which is impossible, of course, to untangle from its explosive bull run — this felt like a good moment to pause, reflect and consider a range of potential outcomes. Bitcoin is a forward-looking idea. There are some who cherish what bitcoin can do today, but most of its champions point to what it might do tomorrow. So what will tomorrow look like?
Specifically, how about ? The simplest scenario. But price is only part of the story. Alex Gladstein, chief strategy officer of the Human Rights Foundation , believes this scenario alone would be a win. Today there are million account holders of bitcoin, and he thinks that by the total could swell to 1 billion. You do not need to buy coffee with bitcoin for it to succeed. Nigeria and India are cracking down on bitcoin. What if the rest of the world does the same? See also: s-era Prohibition or the War on Drugs.
And yet. See also: The Paris Climate Agreement. This is something of a compromise scenario. You click a button. Or you scan a QR code. The currency is irrelevant. Clicking to buy a book on Amazon is one thing; buying a slice of pizza is something else. That would give local merchants some added upside: global customers. More specifically, they block users from withdrawing their funds.
Bitcoin: What history reveals about its future
Would this sort of ban be even legal? But even a light touch could be crippling. Treasury Secretary Janet Yellen has floated the idea of an unrealized capital gains tax, so the idea has at least a tie to reality. Such a tax would be gutting to all bitcoin HODLers, who patiently wait for their bitcoin to moon. And it might prevent the Teslas and Squares and MicroStrategys of the world from parking cash in bitcoin because suddenly they would bleed taxes. Bitcoin is valuable because people believe it is valuable; the inverse could also be true. Gladstein considers it a long shot.
States can be competitive. He adds that even in the bleakest scenario where the U. Most agree that for bitcoin to succeed as digital cash, it must first succeed as digital gold. Will that change by ?
What Does the Future Hold for Cryptocurrency? | Stanford Online
Most of the biggest use cases 10 years from now will be things that would sound insane to us today. On the one hand, Gladstein says that in the transaction fees of sending bitcoin on the base layer are likely to be exorbitant. They almost need to be. Raoul Pal, the former Goldman Sachs exec who now heads Real Vision Group, considers this a material impediment to spending bitcoin. Pal suspects that by the price volatility of bitcoin will have moderated, but not quite enough to make it an appealing choice to use for ordering a bagel.
Is cryptocurrency the future or a risky gamble?
On a volatility scale of 1 to — where a bond is a 3 or a 4, and the stock market is in the ballpark of 20 to 30 — Pal pegs the current bitcoin volatility at a 70, and thinks it will decline to a 30 in the next decade. An improvement, yes, but still problematic. While most agree that using bitcoin as we view it today to buy a round of beers in might be a stretch, they see this next scenario as far more promising.
Enter the Lightning Network.
I have no idea. But it works. Stark thinks money will function in the same way, with bitcoin as the foundation. Quick context: a barbell investment strategy is one where a portfolio contains a mix of extremely safe assets and volatile speculative assets … with not much in the middle.
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Then bitcoin is the cheapest way to do it. Gladstein views this kind of layered solution as the latest chapter in a much longer economic story. That was one layer. More layers soon followed. This is what he thinks might happen with bitcoin in the next decade. And how, exactly, does the dawn of decentralized finance DeFi figure into all of this? Does DeFi come to bitcoin, or does bitcoin go to DeFi? Pomp is quick to point out that bitcoin is DeFi. Securities and Exchange Commission regulations, limiting investment opportunities. John Collins , founder of First State Fintech Lab , a nonprofit dedicated to nurturing the fintech ecosystem in Delaware, said that despite its increasing attention in financial media and its rising investments, he still sees cryptocurrency as a burgeoning niche product.
Collins has seen the industry grow from its earliest days. As a senior professional staffer for the U. While individual retail investors have largely been responsible for driving up the value of cryptocurrencies to date, Collins said that the biggest hurdle to future growth is the acceptance by institutional investors like hedge funds that have more dollars in play. Banks have long been wary of keeping such volatile assets on their books, even though the federal Office of the Comptroller of the Currency ruled last summer that they legally could.
Lee personally holds Ethereum , the second most-popular cryptocurrency behind Bitcoin, because he believes its underpinning technology has a brighter future.
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Not everyone is convinced though. As research on cryptocurrency continues, more nations are exploring the creation of central bank digital currencies, or CBDCs, essentially a government-backed, centralized digital version of fiat.
China and Sweden are among those furthest along in their development of such digital money, and America is largely trailing its peers. In February, Federal Reserve Chairman Jerome Powell said that the American public would be engaged on the issue starting later this year, and Treasury Secretary Yellen has been supportive of the idea. Although discussions around CBDCs are evolving, Collins noted that many people already conduct their banking online and wholesale transactions between banks occur digitally as well.
The advent of a central digital currency would not likely spell the end of cryptocurrencies like Bitcoin though. Lee and Collins agree that the biggest potential for cryptocurrency comes from the idea of decentralized finance, or banking done without the need for banks. While Bitcoin is the most-tracked cryptocurrency today, Lee said that other coins under development right now will likely one day become more important.
In order to be competitive with a Visa or MasterCard, a cryptocurrency will have to process 50, or 60, transactions per second, Lee said. Save my name, email, and website in this browser for the next time I comment. Jacob Owens March 16, John Collins.