In the eleven years since the birth of Bitcoin, the development trend around cryptocurrencies and blockchain technology has formed, which helps us predict the development of the digital asset field in the next ten years.
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The development of the cryptocurrency ecosystem has stimulated interest in this area. Among them, the most important catalysts are the rise of cryptocurrency exchanges and the upsurge of initial coin offering (ICO).
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Cryptocurrency field is accelerating
Nowadays, cryptocurrency users have too many exchanges to choose from when trading, and it is easy for them to ignore the huge impact that cryptocurrency exchanges brought to this field when they first appeared. The Bitcoin mainnet went live in January 2009, and shortly thereafter (February 2010), the world's first cryptocurrency exchange opened. Other exchanges are close behind, including the infamous Mt. Gox. Less than a year after the emergence of the Bitcoin exchange, the price of a single bitcoin reached a dollar.
In 2016, Ethereum released the ERC-20 token standard to the world, and it quickly evolved into the ICO boom of 2017/2018. No matter how people evaluate it, the ICO boom may be the most important moment in the history of the cryptocurrency industry. After those tech entrepreneurs realized how easy it is to create and issue a token, the so-called "blockchain of everything" scenario, accompanied by the soaring price of Bitcoin, became a hot topic.
Before Bitcoin hit a peak of $ 20,000 in December 2017, there were rumors of an ICO bubble bursting. In an emerging industry, the so-called unique value proposition of many blockchain companies is often just a replica of other projects, and these companies will inevitably eventually fail.
It is often assumed that the potential technical value of cryptocurrencies matches their market value. After the winter of cryptocurrencies, cryptocurrencies have plummeted. Since the price of Bitcoin has remained low from early 2018 to the spring of 2019, people's enthusiasm for blockchain has also declined, and at the same time, the value of most token projects issued in 17/18 It also declined. Some studies report that less than half of the projects are still active after half a year of token sales.
Cryptocurrencies cannot be developed solely by hype
Since the crypto winter in 2018, the pure hype has obviously failed to support the entire industry. The vast majority of projects that have promised to "transform" by introducing tokens have failed, which has led to outside criticism and doubts about the blockchain industry.
Despite this review, Bitcoin and many altcoins are still alive. Those projects that survived the cold winter of cryptocurrencies have, without exception, kept their promises and provided real use cases:
Supply chain is one of the areas where the blockchain can play its part. It promises to provide a transparent record from the factory to the end consumer. But in mid-2019, Gartner reported that more than 90% of blockchain-based supply chain projects have failed.
However, there are several notable examples of multinational companies using blockchain in supply chains and logistics, demonstrating that the use cases of the technology are indeed valuable. Maersk implemented the blockchain solution TradeLens based on 2018, which now has 90 partners and was adopted by Thai customs in August last year. Coca-Cola expanded its blockchain pilot solution partners from two companies to 70 at the end of last year.
Games are another example of how blockchain adds real value. The virtual goods market is worth more than $ 50 billion. However, without the blockchain, these assets themselves have no potential value and are under the control of game developers and publishers. Just like games like CryptoKitties, irreplaceable tokens are likely to change the game industry, allowing users to fully own unique assets.
Blockchain technology has other applications in the field of games. Royalty payments have always been a challenge in the gaming space, and developers of Microsoft Xbox are working to resolve payment delays of up to 45 days due to manual calculations and distribution difficulties. Currently, Microsoft has partnered with Ernst & Young to develop a blockchain-based automation solution for its royalty payments, thereby creating a more efficient and streamlined process.
Earn "after-sleep" with cryptocurrencies
Since the financial crisis of 2008, it has been almost impossible to achieve considerable returns from traditional savings accounts. Now, the interest-earning accounts of cryptocurrencies have opened up new passive income channels. It does not involve pure speculation on volatile crypto markets, nor does it involve active investment strategies.
One of the most popular is loans, which allows holders of cryptocurrencies to deposit funds into a lending platform so that other users can make loans and provide interest on the loans. At the same time, staking provides another method of generating revenue: the blockchain's proof of stake (PoS) distributes tokens equivalent to mining rewards to network participants.
Regardless of which option the cryptocurrency holder chooses, the return is usually much higher than the return of depositing funds into a traditional bank savings account. Of course, the risks may vary depending on the type of investment and the platform chosen.
Means of value storage
Bitcoin was originally used as a means of value storage, and value storage has also been one of Bitcoin's largest growth drivers. Throughout the winter of cryptocurrencies, citizens of Venezuela, Argentina, and Iran have adopted Bitcoin as a means of protecting wealth from the effects of hyperinflation. Global political events may also affect the attractiveness of cryptocurrencies as a store of value.
The use of blockchain property as a real use case against hyperinflation builds a bridge between this emerging technology and current economic issues.
Cryptocurrency has more room for improvement
Despite good progress in cryptocurrencies, there is still much room for improvement in this area. Excessive barriers to new users remain a major problem in the cryptocurrency space. Even by 2020, owning digital currencies still means driving unfamiliar technologies and platforms. This may be unpleasant for users with less technical capabilities, and of course, organizations such as Skrill are working to remove barriers for new users to enter the cryptocurrency space.
In addition, the cryptocurrency field needs to build a good reputation. In 2019 alone, there were 12 attacks against cryptocurrency exchanges, and at the same time, scams were common. Many of the headlines reported by the mainstream media are about scandals in the cryptocurrency space, which is an issue that the industry urgently needs to reverse. Of course, for many people who are unfamiliar with cryptocurrencies, such stories let them know for the first time that there is such a thing as cryptocurrencies.
Building a reputation for cryptocurrencies
Major companies in the cryptocurrency space have been working hard to build a more reliable reputation.
The entry of existing reputable payment companies and banks into the cryptocurrency space is critical to increasing new user adoption.
First, their entry establishes a concrete link between the existing financial world and the new world of digital assets. As mentioned above, building a real-world bridge between any particular industry and the blockchain is a reliable way to succeed in emerging technologies. In addition, reducing the barriers to entry for new users is critical if cryptocurrencies are to be widely adopted.
Another less obvious, but equally important benefit is that building a bridge between mature and trusted financial services and cryptocurrencies will further enhance the reputation of cryptocurrencies.
In the 11 years since Bitcoin's inception, for anyone involved in this field, their experience has been like a roller coaster. But in the meantime, Bitcoin has evolved from a niche in cryptopunk to a reliable investment vehicle. In addition, the potential of blockchain technology has only just begun to play a role in industrial and economic fields. Further eliminating the barriers to entry for newcomers will greatly help cryptocurrencies occupy a place in existing financial infrastructure. As a result, cryptocurrencies will soon be widely adopted.
The views, ideas, and opinions expressed above are the views of the author.
Lorenzo Pellegrino is the CEO of Skrill, Neteller and Income Access, part of the Paysafe Group. Prior to that, Lorenzo was Executive Vice President of Digital Development at Optimal Payments from 2012 to 2015. He has held executive positions at Skrill; he initially served as vice president of sales and customer management in the UK, then vice president of business development in the United States, and earned degrees in public administration and international agency management from Bocconi University in Milan. He also studied marketing at the University of Westminster in the United Kingdom and obtained a certificate and diploma in business English.