January 30, 2023

The year is 2027. It is a time of great innovation and technological progress, but it is also a time of chaos. What will the cryptocurrency market look like in 2027? (For those unfamiliar, this is a file Line From the 2011 video game, Deus Ex.)

Long-term predictions are notoriously difficult to make, but they are well thought out experiments. One year is too short a period to make fundamental changes, but five years is enough to change everything.

Here are the most unexpected and gruesome events that could happen over the next five years.

1. The metaverse will not rise

The metaverse is a hot topic, but most people don’t even have a clue what it actually includes. The metaverse is a comprehensive virtual world that exists on an ongoing basis (without pause or reset), runs in real time, accommodates any number of users, has its own economy, is created by the participants themselves, and features unprecedented interoperability. A variety of applications can (in theory) be integrated into the metaverse, including games, video conferencing applications, driver’s licensing services – anything.

This definition shows that the metaverse is not a new phenomenon. Games and social networks that include most of the above features have been around for quite some time. Admittedly, interoperability is an issue that needs to be seriously addressed. It would have been a very useful feature to be able to easily transfer digital assets between games – or digital identity – without being tied to a particular platform.

But the metaverse will never be able to satisfy all needs. There is no reason to include some services in the metaverse at all. Some services will remain isolated due to the unwillingness of their operators to relinquish control over them.

There is also the technical aspect to consider. The cyberpunk culture of the ’80s and ’90s assumed that the metaverse meant total immersion. This immersion is now visualized as much as possible only with virtual reality glasses. Virtual reality devices are getting better every year, but that’s not what we expected. Virtual reality remains a niche phenomenon even among hardcore gamers. The vast majority of ordinary people would not put on such glasses in order to call their grandmother or sell some cryptocurrency on the exchange.

True immersion requires a technology breakthrough like smart contact lenses or Neuralink. It is highly unlikely that these technologies will be used on a large scale five years from now.

2. Wallets will become “cool apps”

Active Decentralized Finance (DeFi) user has to deal with dozens of protocols these days. Wallets, interfaces, exchanges, bridges, loan protocols – there are hundreds of them, and they are growing daily. Having to live with such a set of technologies is inconvenient even for advanced users. As for the prospects for mass adoption, such a situation is totally unacceptable.

For the average user, it is ideal when the maximum number of services can be accessed by a limited number of universal applications. The best option is when they are integrated directly into their portfolio. Storage, exchange, switching to other networks, storage – why bother visiting dozens of different sites to access these services if all the necessary operations can be performed using a single interface?

Users don’t care what exchange or bridge they are using. They are only interested in security, speed, and low fees. A large number of DeFi protocols will eventually turn into backends that cater to popular wallets and interfaces.

3. Bitcoin will become a unit of account on par with the US dollar or the euro

Money has three main roles – serving as a means of payment, as a store of value, and as a unit of account. Many cryptocurrencies, especially stablecoins, are used as a means of payment. Bitcoin (BTC) and – to a much lesser extent – Ether (ETH) are used as stores of value among cryptocurrencies. But the United States dollar is still the main unit of account in the world. Everything is valued in dollars, including bitcoin.

The true victory of the healthy money will be announced when the cryptocurrency takes over the role of the unit of account. Bitcoin is currently the lead candidate for this role. Such a victory would signify a major mental shift.

What needs to happen in the next five years to make this possible?

A sharp drop in confidence in the US dollar and the euro is a prerequisite for cryptocurrencies to assume the role of the primary unit of account. Western authorities have already done a lot to undermine said confidence by printing trillions of dollars of paper money, allowing abnormally high inflation, freezing hundreds of billions of sovereign country reserves, etc. This may be just the beginning.

What if actual inflation becomes much worse than expected? What if the economic crisis is prolonged? What if a new epidemic breaks out? What if the conflict in Ukraine spreads to neighboring countries? All of these are feasible scenarios. Some are extreme, of course – but they are possible.

4. At least half of the top 50 cryptocurrencies will witness a significant downturn

There is a high probability that the list of the best cryptocurrencies will change radically. Outright zombies like Ethereum Classic (ETC) will be kicked off the list, and projects that seem to hold unshakable positions will not only be eliminated, but may even disappear altogether.

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Some stablecoins will surely sink. They will be replaced by new people. Cardano (ADA) will slide down the list to officially become a living corpse. The project is moving very slowly. The developers not only fail to see this as a problem, they seem to see it as a benefit.

5. The cryptocurrency market will fragment along geographical lines

Cryptocurrencies are global by default, but they are not immune to the influence of individual countries. The country always has an advantage and an extra trick up its sleeve. A number of regions (US, EU, China, India, Russia, etc.) have already entered or threaten to introduce strict regulation of cryptocurrency.

The factor of international competition is imposed on the internal motives of the state. When heavy sanctions were imposed on Russia, some crypto projects began to restrict Russian users from accessing their services or even block their funds. This scenario may be repeated again in the future with regard to China.

Related: Is there a way for the crypto sector to avoid bear markets linked to the Bitcoin halving?

It’s not hard to imagine a future in which parts of the cryptocurrency market will work for some countries while getting closer to others. We live in such a future already, at least to some extent.

The opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph. This article is for general information purposes and is not intended and should not be considered legal or investment advice.

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