What Is The Future Of Cryptocurrency Investments?
For the future of cryptocurrency investments, unlike other types of investments, I can say that I have some impressions today. Cryptocurrency investments are directly related to technology. Therefore, the development of technology, new tools in the internet world, the spread of artificial intelligence tools, and digital transformation in almost every sector will positively shape the future of cryptocurrency investments.
Making future predictions on financial issues should not be evaluated independently of sociological developments. Globalization will have a significant impact, especially on the future of cryptocurrency investments. As globalization increases, which is accelerated by digital transformation, the interaction between people in different countries will increase and some new financial needs will arise. Blockchain technology and cryptocurrency investments will provide effective answers in this regard.
Although cryptocurrency investments are a very popular investment model today, their share in the markets will increase shortly. Cryptocurrency investments, which are a type of digital asset, may become the only valid currencies in the future.
What Are The Key Factors Shaping The Future Of Cryptocurrency Investments?
Investment types can be affected by many different factors. Not only financial developments and political events but also sociological changes and digital transformation have an impact on the future of investment models. In addition, technology is one of the most influential factors.
Technology is particularly effective for the future of cryptocurrency investments. However, not only technological developments but also other factors shape the future of blockchain technology and digital asset classes. The main factors affecting the future of cryptocurrency investments, which are products of blockchain technology, can be listed as follows:
–Regulations: Regulations and legal arrangements will be more suitable and flexible for cryptocurrency investments in the future.
– Development of Blockchain technology: Developments in Blockchain technologies directly affect the future of cryptocurrency investments.
–The widespread use of the DeFi concept: The increasing interest in decentralized finance ecosystems will also increase the use of cryptocurrencies.
– Entry of traditional investors into the market: The development of investments and projects in this field by traditional financial institutions such as banks will positively affect the future of cryptocurrency investments.
How Will Cryptocurrency Investments Evolve In The Next Decade?
As of 2025, I can foresee that the next decade will be a good time for cryptocurrency investments. In the next decade; I think that cryptocurrency investments will be a widespread and popular investment model, just like gold, real estate, and fiat currencies. The increase in the number of state-supported projects, the flexibility of regulations, and the spread of globalization and digital transformation will make the next decade profitable for cryptocurrencies.
State-backed digital currencies called CBDC have already become popular and well-known. This is a good sign for the future of cryptocurrency investments. Between 2025 and 2035, the development of blockchain technology, the spread of artificial intelligence-supported tools, and the relaxation of legal regulations will allow investors in almost every country to allocate a place for cryptocurrencies in their investment portfolios.
For this reason, it may be very important advice for investors who want to maintain their financial stability shortly to allocate space to cryptocurrency investments in their diversified portfolios.
What Trends Are Defining The Future Of Cryptocurrency Investments?
Some trends that directly affect the future of cryptocurrency investments can be listed as follows:
NFTs: Each NFT has a digital signature that prevents it from being replaced by another equivalent or exchanged for another NFT. What cryptocurrencies like Bitcoin and NFTs have in common is that they are based on blockchain infrastructure, which is created using encryption, or cryptography.
Metaverse Integrations: Different examples such as the shopping frenzy that emerged with e-commerce, remote working, and distance education are evidence of digitalization in human life. Such developments show that the concept of the Metaverse, which has rapidly entered human life, can become a reality. Although it is known that the universe expressed by the Metaverse has not yet become a reality, the rapid development of new communication technologies increases the potential for this universe to fully emerge in the future.
Carbon-neutral crypto projects: To prevent damage to the crypto technology sector, it is necessary to continue to investigate how to promote its environmentally sustainable development. Different variables can be included in the model to address the damages it causes other than CO2, which is used as an environmental pollution indicator. Policy tools aimed at reducing energy consumption, laws, and fiscal policy approaches for digital currencies should continue to be produced.
DeFi applications: One of the sectors where the use of blockchain technology has emerged is the finance sector. With the use of blockchain technology in the finance sector, the finance sector has begun to be reinterpreted and named. Traditional finance and its institutions have begun to be called CeFi. Finance applications using blockchain technology have begun to be called decentralized finance. DeFi applications are also an important factor for the future of cryptocurrency investments.
How Do Market Regulations Impact The Future Of Cryptocurrency Investments?
When we look at Europe in general, the regulations regarding digital assets regulated by Malta are a pioneering and comprehensive regulation in the world. The relevant regulation came into force in 2018, and with the regulation in question, digital assets and related services are divided into groups, and different licensing processes are maintained for services in different classes. The license fee, minimum capital obligation, requested reserves, and documents of the services vary depending on the group.
Malta has regulated laws regarding digital assets, however, obtaining permits and licenses for such activities is quite difficult and the vast majority of applications to the competent authority (MFSA) are seen to be rejected. Cryptocurrency is legal in most of the European Union (EU), but exchange management is up to individual member states. Taxation varies between 0% and 50% in EU member states.
In recent years, the EU’s Fifth and Sixth Anti-Money Laundering Directives (5AMLD and 6AMLD) have come into force, tightening KYC/CFT obligations and standard reporting requirements. In September 2020, the European Commission proposed the Crypto-Asset Markets Directive (CMA) with the aim of protecting consumers, establishing clear crypto conduct, and setting licensing requirements. This text was approved in October 2022 after two years of intensive work and officially became law on May 31, 2023.
Thus, the European Union has gained broad legal regulation. MİCA does not regulate crypto assets alone and refers to other regulations such as data protection, as we will refer to in the detailed review below. Shortly, these regulations will be even more flexible for the future of cryptocurrency investments.
What Role Does Blockchain Technology Play In The Future Of Cryptocurrency Investments?
Although the blockchain came to the fore with Bitcoin, the transactions that can be carried out through the blockchain have gone beyond cryptocurrencies over time. So much so that the blockchain is expressed as a technology that is potentially more powerful than the internet. The use of the blockchain for cryptocurrencies was first and is the most well-known application, but not the only and most important application. In this context, it is possible to define the technological development of the blockchain with three stages: “Blockchain 1.0”, “Blockchain 2.0” and “Blockchain 3.0”.
Blockchain applications that allow smart contracts have emerged in Blockchain 2.0. Blockchain 2.0 makes it possible to record, approve, and transfer contracts or properties. Smart contracts, supported by most blockchain infrastructures, are programs that automatically transmit predetermined basic rules and standards. Although smart contracts are not directly related to legal contracts, they are transactions carried out with commands that will be automatically processed by machines included in the blockchain when the terms of the contract are met. It is not possible to change the transaction after it is made.
With smart contracts, which have a very wide scope, it is possible to carry out many transactions such as stocks, bonds, futures, loans, and mortgages. The blockchain used by the cryptocurrency Ethereum allows smart contract applications. Blockchain 3.0 is a blockchain application for health, science, culture, and art beyond money and financial markets. Blockchain applications that have shown successful use in many areas such as insurance, auctions, machine-to-machine communication (machine-to-machine), and the internet of Things (IoT) are effective for the future of cryptocurrency investments.
How Can Investors Prepare For The Future Of Cryptocurrency Investments?
Investors cannot be 100% prepared correctly for future cryptocurrency investments. However, the past process can inspire. The first product purchased with Bitcoin was a pizza ordered in May 2010. The pizza was purchased for 10 thousand Bitcoins, $41 at that time. As of May 1, 2021, 10 thousand Bitcoins are worth $578 million. There has been an extraordinary increase in the value of Bitcoin in just ten years.
There are many factors that play a role in the long-term upward trend in Bitcoin prices. These include Bitcoin being increasingly accepted in global markets, being a financial investment instrument based on information and technology, being trusted by a wide range of people, being transferable with lower commission rates compared to fiat currencies, and being convertible into international currencies.
Bitcoin’s increasing popularity triggers Bitcoin price increases. As the interest in Bitcoin increases by economic units, the price of Bitcoin increases. In other words, the value of Bitcoin comes from people turning to Bitcoin for speculative reasons.
What Are The Risks And Rewards Of The Future Of Cryptocurrency Investments?
When the components that make up the concept of risk are examined, the existing uncertainty and the state of enduring this uncertainty are seen. The measurable amount of uncertainty creates risk, if we can measure it, there is an opportunity to intervene. If the probability of an unrealized situation regarding uncertainty is estimated from a personal perspective, uncertainty occurs, if it is done from an objective perspective, a measurable situation, namely risk, occurs. This situation becomes even more complicated for the future of cryptocurrency.
The total risk that investors have to bear is composed of two factors: systematic risk and unsystematic risk. The risk that concerns financial elements all over the world and that managers cannot have the power to influence is called systematic risk, and the risk that can be reduced and taken precautions by the management is called unsystematic risk.
However, these types of financial risk definitions are not decisive for the future of cryptocurrency. However, developments such as the development of technology, new tools in the internet world, the spread of artificial intelligence tools, and the rapid continuation of digital transformation in almost every sector will enable cryptocurrency investments to be safe havens like today’s real estate investments.
Which Cryptocurrencies Are Expected To Lead The Market In The Future?
Bitcoin is undoubtedly expected to be the most important market leader for future cryptocurrency investments. In addition to Bitcoin, Ethereum and Litecoin will also be important cryptocurrencies. Even today, these examples are the safest in terms of volatility. Bitcoin, which is not a company or institution; is a virtual currency used via the Internet, has no management center and official representative, and is not connected to any central authority, intermediary institution, or person.
With this virtual currency, individuals or institutions can spend or receive money just like they do with real money. With Bitcoins or in other words Virtual Currency (VC), all HC transactions can be made, including precious metal purchases and sales, product exports, services, and most importantly other HC conversions.
In the Bitcoin system; there are no delays in payments, problems with bank transfers, EFT/Money Transfer/SWIFT expenses, account management, and credit card fees.
How Will Global Adoption Influence The Future Of Cryptocurrency Investments?
Global adoption is the biggest factor influencing the future of cryptocurrency investment. Bitcoin’s anonymity and digital backup of transactions, without being dependent on a single center, through majority approval of those in the network, raises the expectation that it will change many habits.
Bitcoin, which is thought to contribute to economic democratization in this way, does not have any equity behind it, which also poses a certain risk factor. Many countries do not want Bitcoin because it creates a substitution effect, weakens physical money control, and therefore affects inflation, money printing, and trade. On the other hand, Sweden, Denmark, and Estonia aim to issue state cryptocurrencies.
Thus, they think that the virtual form of money indexed to the existing physical money will also be easier to control. The IMF is working on issuing a cryptocurrency where all reserve currencies are tied to a certain ratio in a basket. In this context, it is increasingly necessary for almost all official states to produce a state virtual currency tied to their currency and under the control of the Central Bank. Thus, the conveniences brought by it can be used through a virtual currency that can be exchanged with other Bitcoins and their derivatives in the world.
What Are The Predictions For Cryptocurrency Investments In 2025 And Beyond?
Although a 100% accurate future analysis is not possible for cryptocurrencies, I can say that good years await us for the future of cryptocurrency investments. Historically, Bitcoin is no different from the seashells used instead of money in barter economies. Because any asset that is generally accepted by society and is deemed appropriate to be used as a means of exchange and change has been used as money in barter economies. If we go into more detail, Bitcoin and other cryptocurrencies are much more functional than seashells. When cryptocurrencies are compared to the digital versions of fiat currencies issued by central banks today, it is seen that they are different from fiat currencies issued by a central authority.
Moreover, the extreme volatility of cryptocurrency prices today has brought into question the function of money as a medium of exchange in terms of cryptocurrencies. Another problem is the time delays experienced in transactions.
So much so that a Bitcoin transfer between two people takes approximately 10 minutes today. Similarly, although the goal is for each block to be produced in 12 seconds in Ethereum, this is still a long time. Therefore, although the number of institutions accepting transactions with Bitcoin and similar cryptocurrencies has increased recently, it is not feasible for transactions to take this long in the purchase and sale of goods and services. In 2025 and beyond, it will be possible for many services to be provided by states to be carried out with the blockchain.
See you in the next post,
Anil UZUN