The Future of Cryptocurrencies: What’s Coming Next?

What’s my take on what’s next with cryptocurrencies? Simply put: This is just the beginning. In fact, we are just scratching the surface of what could be. Crypto has come a long way since Bitcoin was created as a response to the financial crisis in 2009 as an alternative to banks and centralized currency. It makes sense that people see crypto as an unstable fad that only nerds would want to use or invest in. And yet, I think it’s just getting started. Here’s why…

Introduction to Cryptos

Cryptocurrencies are digital or virtual assets used as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. There are many types of cryptocurrencies, but the most popular is bitcoin. Cryptos are decentralized, meaning they are outside the control of any single entity, like a government. They provide a new way for individuals and businesses to transact and save money. The decentralized nature of cryptos also means that cybercriminals can’t steal money from a central bank or one bank from another.

Decentralized Technology

The technology that allows for the creation of decentralized currencies is called blockchain. It’s a digital public ledger that keeps track of all transactions ever made on the network. Every transaction is confirmed and verified by the network and then added to the public ledger. Imagine a group of people standing in a circle with a football in the middle. Each person in the circle is a “node.” The football is the information being shared among the nodes. Each person passes the ball to the person next to them and then receives it back in a closed loop. One person initiates the transfer of money. That person sends a signal to the nodes on the network, who confirm the transaction and add it to the public ledger. The nodes then send the money along to the nodes on the network adjacent to them, who confirm the transaction and add it to the public ledger. The transaction continues in this way until it reaches the person who initiated it.

Institutional Adoption of Cryptos

Over the last year, we’ve seen strong signs of institutional interest in cryptocurrencies. There have been reports that Goldman Sachs is exploring a new trading operation focused on cryptocurrencies. Other mainstream financial institutions have been hiring crypto talent and investing in blockchain initiatives. Institutions are likely exploring these opportunities because they see an opportunity to make money, as well as help people move money more easily and cheaply. Cryptocurrencies represent a new way of storing and transferring value, and financial institutions want to be a part of that. For example, if you want to send $100 to your friend in Mexico City, you can use a service like TransferWise or MoneyGram, which will charge you a significant fee. Or, you can use a crypto service like Xendpay, which charges a small fee and is much faster. However many of the local, federal governments are more concerned about nature of such transfers, owing to Money laundering, terrorist financing etc.,

The Problem With Transaction Speed and Costs

There are a few issues with the current blockchain technology. First, transactions can take anywhere from 10 minutes to an hour to be verified by the network and added to the public ledger. This is an issue, because people need to know that their money was actually sent or received. While some cryptocurrencies, like XRP, have proposed solutions to the processing time, others have proposed solutions to the cost issue. XRP is a great example of too much cost. It takes about 4 seconds to send money via XRP, and it costs about $0.00001 per transaction, which is a huge difference from Bitcoin’s $0.40 transaction fee.

What Is Improving?

The good news is that many players in the crypto space recognize these issues and are working to improve transaction speed and cost. – Ripple – Most of the cryptocurrencies use the blockchain technology, and Ripple’s blockchain technology has been used by many banks and financial institutions. The Ripple network can process 1,500 transactions per second, and it’s able to do this with very low cost. – Stellar – Stellar is an open-source protocol based on the idea of connecting people and payment systems. It’s created by the creator of Ripple. The Stellar network can process 1,000 transactions per second, and it charges a very low fee. – EOS – EOS is a blockchain protocol that allows decentralized applications to be built and run on the network. EOS can process millions of transactions per second with a transaction fee that is extremely cheap. – IOTA – IOTA is a blockchain-like technology that can process millions of transactions per second and has a transaction fee that is very cheap. IOTA is designed for Internet of Things (IoT) applications.

Where Is The Real Value?

In order for any cryptocurrency to be successful, it has to solve real problems that people have. Cryptocurrencies can help reduce transaction fees and make international money transfers cheaper and faster. But they also need to be accessible to all people, not just the people that own them. Until now, the vast majority of people have had little reason to adopt cryptocurrencies because they don’t solve a pressing problem for them. Sure, people who send money internationally may see some benefit from a cheaper or faster transaction. But the average user who doesn’t send money overseas doesn’t have any reason to adopt cryptocurrencies.

Conclusion

Simply put, this is just the beginning. In fact, we are just scratching the surface of what could be. Crypto has come a long way since Bitcoin was created as a response to the financial crisis in 2009 as an alternative to banks and centralized currency. And the real value of cryptocurrencies will be determined by how these platforms adapt to changing market conditions and integrate new technology that solves real problems for people in line with regulations of respective governments.

24 thoughts on “The Future of Cryptocurrencies: What’s Coming Next?

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