'Cryptocurrency' may sound like something out of a semi-lawless universe. However, it's a relatively new phenomenon regarding how products and services are traded. It changes the tech industry, but it also greatly impacts how modern society views currency. To better understand it, let’s examine the history of cryptocurrency and what the future holds for it.
Brief History of Cryptocurrency
Many people assume that the concept of cryptocurrency was conceived and began to be introduced in the previous decade. It is not; thus, let’s break the history of crypto into several timelines to get a clearer picture.
1. The 1980s – Idea of Cryptocurrency
The idea of cryptocurrency dates back to the 1980s when cryptographer David Chaum introduced the first-ever digital cash with cryptography for verifying and securing transactions. While the term was only coined in the 1990s, the early efforts of the American cryptographer provided crucial groundwork for today’s means of trading.
2. 2009 – The Birth of Bitcoin
The price of coins and gold plummeted drastically following the global financial crisis in 2008. In late 2008, Satoshi Nakamoto (an anonymous) published a paper that proposed a digital currency system that did not require the involvement of third parties. This system is best known to this day as Bitcoin. Satoshi Nakamoto developed and launched the Bitcoin protocol as open-source software a year later.
3. 2010 – The Downfall of the Crypto Market
Bitcoin became popular and the only digital currency in early 2010. Also, its cost was highly affordable at that time. However, the prices of Bitcoin fluctuated in tandem with those of other new digital currencies that hit the market during the following several years. Due to this condition, many investors started losing all trust in cryptocurrencies.
4. 2017-2018 – The Growth of the Crypto Market
Late 2017 can be deemed the era where the crypto market rose significantly. The price of all digital currencies, including Bitcoin, skyrocketed in the same year. However, the growth of cryptos was followed by the rise of fraudulent acts targeting investors in this industry.
In January 2008, the total market capitalization of all the existing digital currencies hit $820. While it collapsed again in the following month, the crypto market has continued to grow steadily.
Future of CryptoCurrency
Knowing the history of cryptocurrency elaboration above leads to a question; What the future brings for digital currencies? Cryptocurrency, which was initially only known by a small group of unconventional investors, is gradually gaining popularity. More and more people develop a great deal of interest in uncovering what this modern-day invention offers.
Many crypto experts try to come up with their predictions regarding the future of this digital currency. Many estimate that the global market cap of crypto will triple or maybe more in value by 2030. Analysts predict the market will reach roughly $5 billion in value.
For all investors, brands, and businesses, the growing wave of this digital currency is unavoidable, whether you would like to buy it or not. Despite that, contradictions tend to follow crypto everywhere. Most investors support regulation, but the impacts it will have are their primary concerns.
How Are Cryptocurrencies Important for Economic Growth?
What Are the Obstacles
The cryptocurrency industry is still in its early stages and is continually growing with many potentials worth exploring. That's why it's hard to predict where this crypto market will go. However, experts will be watching issues like regulation and the like. Global lawmakers are attempting to develop cryptocurrency-related regulations to make it safer for people who want to invest in cryptos. Well-established laws can also assist in reducing the risk of cyberattacks.
The Amber Group’s president, Jeffrey Wang, mentioned that regulation is one of the most significant crypto projects that the community would welcome warmly. Jerome Powell, the chairman of the Federal Reserve, doesn't even intend to ban cryptos. Meanwhile, SEC Chairman Gary Gensler argued that investors are ‘prone to hurt’ if there’s no stricter regulation.
Besides, the Internal Revenue Service of the US has an apparent interest in ensuring that crypto investors are aware of how to report all of their digital assets while filing taxes. The statements of both Powell and Gensler are so much in line with the US lawmakers and the Biden administration's growing consensus that stronger regulation pertaining to cryptocurrency is required.
However, anything related to cryptocurrency is always fraught with difficulties, and so is regulation. Authorities in the US and across the world have different jurisdictions. They do not always have the power to supervise everything.
If regulation is explicitly implemented in the US, it would be the most potent weapon to remove all significant obstacles for cryptos. That's because many US investors and firms have no clear guidelines for their operation.
Then, what crypto regulation means for investors? For cryptocurrency investors in the US, implementing crypto tax regulations makes it easier to report their digital assets. Even before its enactment, many experts have suggested investors keep track of all their crypto assets' gains and losses.
On the other hand, the announcement of regulation can gravely affect the value of cryptocurrencies, which is already volatile. The volatility of the crypto market is the primary reason experts advise investors to limit their crypto investments to somewhere under 5% of the entire portfolio they have. Crypto enthusiasts are also advised never to invest anything they can't afford to lose.
Many experts in the crypto space agree that regulation provides many benefits to the industry. CoinFlip's CEO and co-founder, Ben Weiss, even said that everyone would benefit from reasonable regulations for it can help in increasing people’s trust in cryptocurrency. Of course, sensible regulation is not something that can’t occur in a blink of an eye. It takes a lot of effort and time to make it right.
The history of cryptocurrency has shown that this digital invention has been through a lot. It's still essentially at its infancy stage. No matter how experienced the experts are in predicting the future of this modern-day invention, cryptocurrency remains tough to be accurately predicted. Cryptocurrency has so much potential that people have not yet wholly uncovered it. Perhaps, in the future years, those potentials will be unveiled.