Cryptocurrencies haven’t gone mainstream just yet, but they have most certainly become a mainstream topic of discussion over the past few years. We’ve become accustomed to hearing about the latest innovations in the field, the cycle of bear and bull markets keeping traders and investors on their toes, predictions regarding Bitcoin’s industry dominance or the fluctuations in Ethereum price every time we go on the internet.
14 years have passed since digital currencies became part of the financial scene and a lot of things have happened in the meantime. Probably the only thing that hasn’t changed much is the unpredictability of this asset class and the uncertainty regarding its future. So, as we’re nearing the end of the year and getting ready to close another chapter in crypto’s short but eventful history, one can’t help but wonder if crypto remains a relevant financial tool or if it’s lost its shine.
An asset class like none other
In order to understand the impact that digital currencies have on our world, we have to go back in time to crypto’s humble beginnings and look at the attributes and events that have helped crypto thrive and kept it alive for so long despite all odds.
Crypto is one of the most interesting and fascinating success stories in the world of finance. Bitcoin, the original crypto, was created in the wake of the global financial crisis of 2008. Opinions remain divided on whether it was a calculated move or just a stroke of luck that the birth of the first-ever crypto coincided with the economic downturn, since Bitcoin’s mysterious inventor, Satoshi Nakamoto, vanished without a trace in 2011, leaving many unanswered questions behind.
Huge growth potential
Despite its opportune timing, crypto got off to a rough start. Neither financial experts nor tech buffs were thrilled about its emergence. In fact, most people either ignored the project or regarded it with skepticism. However, slowly but surely, the world started to wake up to the innovative concept that Bitcoin proposed and the huge potential it held. And so, it began. In less than a decade, Bitcoin’s price went from $0 to almost $20,000 (December 2017). By this time, the crypto craze was in full swing and the market was already populated by numerous other digital coins – although none as powerful or appealing as the flagship crypto.
Decentralization
So, what exactly propelled crypto to stardom? For starters, digital currencies, with Bitcoin leading the way, offered not just an alternative to fiat money – one that was not under the control of a central entity – but also presented themselves as a very profitable store of value.
All of a sudden, people who were unhappy with the injustices and shortcomings in the traditional financial system, which back in 2009 were many, found a great substitute in digital currencies. Crypto’s decentralization put the power back in the hands of users by allowing them to bypass banks, governments, and other financial institutions that are usually the ones pulling the strings.
And for those who wanted to put their money into a safe and inflation-proof asset class that could help them yield great returns in the long run, crypto provided the perfect investment venue. With blockchain technology serving as its backbone, crypto managed to check the box for greater financial inclusion, offering a viable solution for the unbanked and underbanked populations of the world, and thus turning into a major disruptor to finance.
Blockchain technology
Blockchain technology, although popularized by digital currencies, didn’t remain confined to the crypto sphere. It spread out and became a driver of innovation in many other fields and areas of activity, unrelated to digital assets and financial services. These days, blockchain has penetrated domains like healthcare, supply chain management, energy markets, fashion and more.
Institutional Adoption
Institutions and organizations all over the world took notice of the scale of the crypto phenomenon and the benefits that this asset class brought to the table, so an increasing number of companies decided to use digital assets in their operations alongside conventional money, or started investing in crypto.
Ongoing developments in the crypto market
If you’re up to date with the latest crypto news, you already know that the cryptocurrency market is currently going through a bit of a rough patch as it’s trying to recover from the aftermath of the latest crypto winter. But that doesn’t mean that digital currencies are stagnating.
Real-world use cases
There’s a lot of commotion in the industry at the moment, as the assets are paving their way into numerous sectors, being used for online payments, on-chain governance, staking, gaming, smart contract deployment and so on.
Regulatory advancements
Apart from the ever-expanding real-world use cases of digital assets, there are also major transformations taking place in the crypto regulatory landscape. In its early days, crypto was compared to the Wild West due to the lack of regulations which gave way to numerous risks like fraud and money laundering.
Nowadays, as digital currencies are becoming increasingly popular, the crypto market has entered regulators’ radar. Many countries have already introduced rules and guidelines in this respect, while others are currently working on developing their own regulatory framework. Authorities’ interest in regulating crypto and the ongoing efforts to make the crypto sphere a safer space for all stakeholders prove that this novel asset class is gaining ground in the financial space, despite all the hurdles it has faced over the years.
Updates and upgrades
It’s also worth mentioning that there are new projects emerging constantly, while already established coins are taking steps forward through regular updates and upgrades, with Ethereum being the most relevant example in this respect.
Final thoughts
Crypto has been through numerous ups and downs over the years, and that got people wondering about its relevance and strength. The mere fact that the industry is still standing tall after so many challenges is a testimony to crypto’s power and resilience. There are still many unknown factors in the equation and no one can predict how the market will evolve in the years to come, but for now, we can safely say that crypto is still a force to be reckoned with.