What is the future of Bitcoin?
The invention of Bitcoin and subsequently other digital currencies was met with lots of excitement and hope for the financial system. However, what we have experienced has been a decade filled with price fluctuations, uncertainties, missteps, and scandals. Although the Bitcoin price rose to $63 000 in April 2021, it has since fallen by more than 24% to $48 000 by the end of August.
As a result, investors and experts aren’t as excited about cryptocurrency as they were before the crash. With all of these, what then is the future of Bitcoin? While we can’t be so certain, as the industry is still growing, we can predict what the future holds for bitcoin and other cryptocurrencies following organizations' acceptance of blockchain technology. Here is what we came up with:
Regulation of cryptocurrency
In the near future, the blockchain industry is likely to get regulated. Already, conversations around the regulation of cryptocurrency are starting to get more serious as lawmakers in the U.S and other countries are trying to figure out ways to create laws and regulations to ensure the safety of digital currency for investors.
Although in late September 2021, the Chinese government declared all digital currencies illegal, the U.S senators on the other hand are considering new ways to boost the cryptocurrency tax reporting system.
According to Jeffery Wang, he says that "regulation is probably one of the biggest overhands in the crypto industry globally” the head of Americas at Amber Group, a crypto firm further says “we would very much welcome clear regulation”.
Certainly, there will be hurdles in trying to create regulations as “there are different agencies that may or may not have jurisdiction to oversee everything and it differs state by state” Wang says.
Already, several agencies have declared interest in creating cryptocurrency regulations including the federal reserve, the Security and Exchange Commissions, and the Commodity Futures Trading Commissions. The IRS isn't left out as they have shown an interest in ensuring investors can report virtual currency while filing their taxes.
The establishment of clear regulations will remove “significant roadblock for cryptocurrency” . Wang submits, as currently investors and organizations operate without guidelines.
The possible impact of new regulation on investors
If the legislature goes ahead and creates guidelines for the cryptocurrency market, then it would make it easier for the IRS to discover cases of digital currency tax evasion. However, it is expected that investors should at this time have records of gains and losses regarding their crypto assets. With the new rules, investors can better and properly report blockchain transactions.
But if the bill passes, then the price of the cryptocurrency in a market that's already volatile can also alter. The volatility of the cryptocurrency market is the reason experts advise that investors should only buy bitcoin cash and other digital currencies that’s not more than 5% of their total net worth. They also advise you don’t invest if you can’t stand losing.
Overall, many experts agree that regulating digital currency is the right move to make. As the co-founder and CEO of CoinFlip Ben Weiss says "sensible regulation is a win for everyone. It gives people more confidence in crypto, but I think it's something we have to take our time on and we have to get it right” and we agree with him.
The future of Bitcoin
Bitcoin being the largest digital currency by market capitalization is a good indicator of digital currency. It’s become the standard and the market often follows this standard.
Bitcoin mining has never been stable, as we have seen; there is no telling how the price of the digital currency can be. According to the author of Cryptocurrency Investing for Dummies, he says "Bitcoin is volatility short term and growth long term". But others like the Chief technical analyst TokenMetrics Bill Noble, the price of Bitcoin will keep rising throughout 2021. In his words “I think it is more likely Bitcoin goes to $75 000 than $25 000”.
We can keep speculating on what the bitcoin future will be in the coming months and years, but the reality is that the blockchain industry is new, and with no long history to base predictions on, there is no way to tell.
Overall, the future of cryptocurrency is unpredictable, this is why we advise you to invest in cryptocurrency only when you are comfortable losing, and if you are looking to build wealth in the long term, then it's best to stick to more conventional means of investments.
“If you were to wake one morning to find crypto has been banned by the developed nations and it becomes worthless, would you be ok?” This question was asked by Frederick Stanfield, an expert wealth management advisor. The answer to this should help you make the right decision.