The crypto industry has grown from a relatively low baseline to one of the biggest and most disruptive trends in financial services in a short period of time. Because of how nascent this technology is, it’s difficult to contextualise the industry’s rapid burst of growth.
So what exactly does the future hold in store for crypto, and how far can the technology go?
Let’s start with the numbers. Various research reports show that cryptocurrency ownership today sits at about 200-300 million people, with Vietnam often touted as the most mature market when it comes to crypto adoption.
According to Allied Market Research, the value of the cryptocurrency market is predicted to treble by 2030, reaching a value of almost US$5bn. The main drivers will be remittances and global payments, Allied says.
So there is the proof, if any were needed, that cryptocurrency is going to continue to grow and become one of the central aspects of our financial lives in the future.
But what exactly does Crypto 2050 look like? Will we be paying for goods on a daily basis using virtual coins? Will cryptocurrencies be a cross-generational concept, as easily understood by young adults and their grandparents alike, or will it be the preserve of the tech-savvy?
In the aftermath of recent market volatility and the collapse of some crypto players, Daniele Servadei, CEO of e-commerce solution Sellix, told FinTech Magazine that weaker operators would inevitably be shaken out in the longer term.
“As crypto enthusiasts and believers, we need to start looking at our own industry more critically,” Servadei said. “We need to remove the weeds of scammers and swindlers from the very foundation that makes up crypto as we know it today.”
He believes the future of the crypto industry will be defined by trust, and giving the companies who have already established their trust credentials the room to grow while subjecting newer entrants to inevitable rigour and scrutiny.
“Some regulatory tightening is unavoidable but perhaps that’s a good thing because it can increase industry trust and make investors feel more secure,” Servadei contemplates.
Increased regulation of crypto now unavoidable
In an 18th-century letter, the American founding father Benjamin Franklin once wrote that “nothing can be said to be certain, except death and taxes”. Perhaps, for the modern era, this should be changed to “death, taxes, and an increase in regulation for crypto”.
It now seems unavoidable that digital assets will continue to evade the clutches of regulators for much longer, having been allowed to emerge from a nascent position during a regulatory ‘observe and monitor’ phase.
Crypto industry stakeholders should prepare for tighter regulation because this seems to be the reality in nearly every jurisdiction. This needn’t be a bad thing, though. Some regulations may stifle innovation and limit innovation, but most crypto regulation will likely be quite rudimentary because the industry has not been regulated much until now.
Expect safeguards for customers and the setting of minimum standards for crypto operators – something which recent events, like the collapse of crypto exchange FTX, have proven necessary.
“In the immediate next few years, we can expect to see more countries developing and implementing their own regulatory and legal frameworks for the use of crypto,” explains Daniel Seely, financial services lawyer at Freeths specialising in cryptocurrency.
“Different countries will inevitably take different approaches to this. Some are already using cryptocurrencies as formal legal tender, meaning it is becoming increasingly embedded into those countries’ economic systems, and also directly exposing more people to crypto itself.
“Other countries may take more stringent approaches, or indeed reject crypto entirely, which may be down to any number of economic or political reasons. However, given that crypto appears here to stay and will see increasing global use, these governments will eventually need to embrace crypto if they are to compete on the world stage.
“Over time, we may see situations where countries develop formal treaties and international frameworks to oversee the use of crypto. A directive from the European Union, for example, would result in all member states ending up with the same economic arrangements, creating a consistent approach that provides greater opportunities for those looking to use and exchange crypto internationally.
“From this perspective, crypto could be seen as similar to the euro, in the sense of being a single, common form of currency.”
NFTs will be a huge component of crypto growth
One form of crypto asset that will continue to grow in popularity is NFTs, which have been used up to this point as the basis for digital artwork, but which have potential use-cases and applications in many practical applications from sport to entertainment.
NFTs allow companies not traditionally involved with crypto to offer collectible, tradable merchandise that increases customer loyalty and brand engagement – meaning they could become one of the most visible forms of digital assets.
“I believe very strongly that by 2050 the concept of ‘owning your digital content’ will be standard,” assets Alun Evans, Co-Founder & CEO of Freeverse, a technology company that is helping to power the future of digital ownership.
“I compare it to the evolution of the internet: 30 years ago, to get online you needed to decide on which ISP to use, how modems worked, what a router was, and so on. This meant that only enthusiasts managed to get online. These days, fast internet, even on mobile devices, is taken as a given straight out of the box.
“In a similar vein, truly owning digital content in the current paradigm requires knowledge of which blockchain to use, which marketplace to use, which cryptocurrency to use, and how to use a Web3 wallet. Currently, most of the general public has no idea what a blockchain is. By 2050, all of that confusion will have been ironed out.”
Evans believes that success for NFTs between now and 2050 will be defined by the percentage of the population who ultimately own and use a Web3 wallet, which is the basic requirement to interact with anything on the blockchain.
This will be proof of how simple the industry manages to make blockchain participation, in much the same way that most people today have an email account.
He accepts, though, that in the adoption of these emerging technologies, many use cases will require “large-scale, institutional change to industries with very entrenched positions”.
“Take, for example, any creative publishing industry like music, film, books or games. Digital distribution has already revolutionised those industries, but in a very limited way that has arguably devalued the rights of the end-user. By 2050, I suspect there will be further disruption thanks to blockchain and true digital ownership.”
Hope that ‘more deserving’ crypto projects shine
Evans says it’s hard to predict which markets or regions will be furthest ahead in terms of NFT adoption by 2050, but accepts that the US and Asia have historically led the way in terms of adoption. “Europe is being very active in providing a clearer legal framework, but I think there is a huge opportunity for developing nations as well,” he adds.
We’ll save the final word for Sellix’s Daniele Servadei, who is optimistic about the future of cryptocurrencies more generally. “I hope that what will emerge from the ashes of FTX may be a more honourable, more transparent and sturdier version of what we all believed it was.
“That the so-called crypto winter may be on its way to a spring defrosting, and that this year may be kinder to the crypto space than 2022 was. I believe that better, more deserving projects will rise out of the collapse of FTX, and I hope I’m right. Only time will tell.”