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Bitcoin, Blockchain, Cryptocurrency, Featured

Cryptocurrencies and Money: A Forecast for the Future

2021 has been all about cryptocurrencies. The global boom in bitcoin prominence has kept economists and finance experts wondering about the future of the traditional fiat denominations, and the role of central banks. Opinions are varied, and a crystal ball may or may not predict the future accurately. The only thing that is left for certain- the upcoming years will see remarkable changes on a global scale. 

Factors Behind the Bitcoin Rise

The United States has long enjoyed a strategic advantage with the dollar’s position as the global currency for trade and finance. Among the main benefits, it has allowed the US to skip past import taxes. Other nations accepted dollar supremacy, till the introduction of the petro-dollar. Yes, the dollar is no longer backed by gold. And, a majority of people in countries like Venezuela and Nigeria are still poor despite being oil-rich.

While the 2008-09 global recession was responsible for the birth of bitcoin, the pandemic became a potent catalyst for worldwide crypto adoption. People around the world recognized the discrepancies in centralized banking and the power vested upon the institutions. The growing prominence of cryptocurrencies stemming from poor macroeconomics, low credibility, and inefficient local banking systems challenge the existing systems, and multiple emerging economies have already switched ships.

Future Predictions on Cryptocurrencies and Fiat

  • Blockchain will be the Main Avenue for Remittance

Exorbitant remittance charges by financial institutions, with backing from the central banks, are a significant factor behind the adoption of cryptocurrency in developing economies. Running on a peer-to-peer decentralized blockchain network, bitcoin skips past remittance fees, which can rise as high as 25%. In fact, global remittance exceeds foreign direct investment and overseas development assistance combined at $589 billion in 2021. Already a popular choice among expatriates from Asia, Africa, and the Latin Americas, the trend will increase further.

Also Read: Crypto Remittance Soars Across the Middle East and South Asia

  • Stablecoins will Increase in Popularity

In earlier days, high inflation and a failing economy led to dollarization, or the use of the dollar in addition to the domestic denomination. The arrival of Bitcoin and other futuristic forms of money has helped in the popularity of Stablecoins. The IMF suggests that steady-value digital tokens deemed useful for savings or commerce may pose a challenge for effective dollar reinforcement. Central banks would remain wary of permissionless stablecoins inducing crypto-dollarization as a measure against hyperinflation. 

  • New Coins and Smart Contracts will Boost Demand for Programmers

The proliferation of digital objects translates to a worldwide demand for programming skills. In regards to its growing importance, it is not an exaggeration to say that the ability to code will soon be equivalent to general literacy. The upcoming future will witness the creation of hundreds and thousands of coins or tokens annually, each having a price value, trading capabilities, and certain financial properties. Programmers will be integral in their creation.

In addition, the ability to comprehend and communicate through smart contracts will increase the value of programming as a key employable skill. Money will transform into an entity attached to digital work and self-expression. Digital programmable currencies will also provide the financial backing for efficient use of global resources- be it for solar energy farms, or education.

Also Read: Conceptualizing Smart Contracts: Things Every Blockchain Enthusiast Should Know

  • Cash and Fiat Currencies will not be Eliminated Altogether

Fiat currencies will take a heavy hit. This will be mainly due to the arrival of better alternatives built upon trade requirements. However, cryptocurrencies will not be able to completely eliminate the use of traditional currencies. 

It is easy to notice that bitcoins and other crypto tokens rely on the existing monetary system for their valuations. The option of counter-trading back into existing fiat currencies will always exist. For the same reasons, cash will remain in existence, as it has always been. 

  • Tokenization and Other Innovations will Spread everywhere

Tokenization will drastically change the global perception of money. NFTs are the gateways, and innovations like Web 3.0 will provide opportunities for people around the world. Tokenization will also trigger the birth of digital microeconomies. 

Also Read: Blockchain Tokenization Beyond Enterprises: Things You Need To Know

Final Words

Blockchain and cryptocurrencies have already started making a significant impact on world finance. With further adoption, they are likely to stimulate wealth redistribution unlike central banks, which only create a perception of wealth. Blockchain network systems are already in use in multiple countries, while nations like El Salvador are betting everything on Bitcoin. A day may not be far where the monetary net worth of a person will not be equivalent to his/her actual worth.

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