MicroStrategy's Significant Bitcoin Impairment Losses May Mislead: Berenberg
Turkish Crypto Exchange Thodex CEO Faruk Özer Sentenced to 11,196 Years in Prison for Collapse
DeFi and Credit Risk
It is the year 2025. It's a period of enormous scientific growth and creativity, but it's also a period of unrest. In 2025, how will the cryptocurrency market look like?
Even though making long-term predictions is notoriously challenging, it makes for interesting thinking experiments. Five years is the perfect amount of time for everything to change, whereas one year is too short for significant changes.
The most unlikely and ridiculous things that could occur over the next three years are listed here:
1. The metaverse will not rise
Although the metaverse is a big topic, the majority of people have no concept what it actually entails. The metaverse is a comprehensive virtual environment that is developed by its users and features unheard-of interoperability. It operates in real-time, supports any number of users, has its own economy, and never pauses or resets. In theory, a wide range of programs, such as games, video conferencing tools, services for granting driver's licenses, or anything else, might be integrated into the metaverse.
It is evident from this definition that the metaverse is not a particularly new phenomenon. Most of the aforementioned characteristics are present in games and social networks, which have been around for a while. Interoperability is undoubtedly a challenge that requires considerable attention. The ability to quickly move digital items across games or a digital identity without being bound to a particular platform would have been a very helpful feature.
However, no need can ever be fully satisfied by the metaverse. Some services shouldn't even be included in the metaverse. Due to their operators' reluctance to give up control of them, some services will continue to be isolated.
The "metaverse" is going to happen but I don't think any of the existing corporate attempts to intentionally create the metaverse are going anywhere. https://t.co/tVUfq4CWmP
— vitalik.eth (@VitalikButerin) July 30, 2022
Additionally, there is the technical consideration to make. The metaverse, according to the cyberpunk movement of the 1980s and 1990s, implied complete absorption. Virtual reality glasses are currently thought to be the only way to achieve this level of immersion. Every year, VR gear improves, but it's not what we anticipated. Even among die-hard gamers, VR is still a niche phenomenon. Most regular folks will never don these spectacles just to contact their grandmother or sell some cryptocurrency on an exchange.
A technology advance like smart contact lenses or Neuralink is necessary for true immersion. Five years from now, it is quite improbable that those technologies will be extensively employed.
2. Wallets will become “super apps”
These days, a decentralized finance (DeFi) user must contend with dozens of protocols. There are hundreds of them, and the number of interfaces, exchanges, bridges, and lending protocols is increasing constantly. Even for experienced users, having to live with with a variety of technologies is annoying. An unfavorable situation is made worse by the likelihood of broad adoption.
It is preferable for the average user when the most services are accessible through the fewest possible universal applications. The best option is when they are already included in their wallet. Why go to numerous websites to get services like storing, exchanging, transferring to other networks, and staking when everything can be done through a single interface?
Which exchange or bridge they utilize is irrelevant to the users. They simply care about timeliness, security, and affordable prices. Many DeFi protocols will eventually evolve into back-ends that support well-known wallets and interfaces.
3. Bitcoin will become a unit of account on par with the U.S. dollar or Euro
A unit of account, a store of value, and a medium of exchange are the three primary functions of money. Numerous cryptocurrencies—most notably stablecoins—are employed as payment methods. Among cryptocurrencies, Ether (ETH) and, to a much lesser extent, Bitcoin (BTC), are utilized as stores of value. But the world's primary unit of account continues to be the US dollar. Bitcoin is valued in dollars, just as everything else.
The adoption of cryptocurrencies as a form of unit of account will mark the true triumph of sound money. Right now, Bitcoin is the leading contender for this position. Such a triumph will mean a profound change in perspective.
Wheat up 43% in the first 5 months this year
— Pentoshi 🐧 (leading cattle to butcher) (@Pentosh1) June 6, 2022
Nat Gas 155% since Jan, +10% today
Gasoline 96%
Let's see how long the "consumer remains strong" as this whittles away at what little savings they have left and as debt racks up
Fight inflation w/ inflation, just print more lol pic.twitter.com/b19becqa2x
What needs to occur during the next five years in order for this to be possible?
For cryptocurrencies to serve as a primary unit of account, there must be a significant decline in trust in the US dollar and the euro. By printing trillions of dollars in fiat currency, allowing unusually high inflation to rise, freezing hundreds of billions of a sovereign country's reserves, and other actions, Western authorities have already done a lot to weaken this confidence. This could only be the beginning.
What if inflation actually worsens considerably more than expected? What if the financial crisis lasts for a long time? What if a fresh outbreak starts? What happens if the war in Ukraine spreads to nearby nations? These are all eventualities that could happen. Of sure, some are absurd, but they are all conceivable.
4. At least half of the top 50 cryptocurrencies will see their standing decline
The likelihood of a significant shift in the top cryptocurrencies ranking is considerable. The list will be cleared of outright zombies like Ethereum Classic (ETC), and projects that currently appear to have unassailable places may not only be dethroned but also might disappear completely.
Undoubtedly, certain stablecoins will decline. They will be replaced with fresh ones. Cardano (ADA) will drop to the bottom of the list and formally turn into a living corpse. The undertaking is progressing excruciatingly slowly. Developers don't just ignore this as an issue; they even appear to perceive a benefit in it.
5. The crypto market will fragment along geographic lines
Although cryptocurrencies are by nature international, they are not immune to the influence of other states. The state always has a competitive advantage and a secret weapon. Numerous nations, including the United States, the European Union, China, India, Russia, and others, have already enacted or are threatening to enact tight regulation of cryptocurrencies.
Internal state motivations are combined with the influence of global competition. Some cryptocurrency projects started limiting Russian consumers' access to their services or even freezing their funds when Russia was subjected to severe sanctions. In the future, this scenario might recur in relation to China.
It is not impossible to picture a scenario in which specific regions of the cryptocurrency economy may benefit some nations while excluding others. In some ways, we are already residing in such a future.
=========
