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How Crypto Could Change the World — Or Not: Three Potential Outcomes
Crypto, while not yet mainstream, has carved out a respectable place for itself in the financial world. For its proponents, the dream is to see it achieve global recognition as a legitimate currency at par with fiat money in the future. But that’s just one possibility.
We don’t have a crystal ball to predict the exact future of crypto. But we can be certain of at least one of three outcomes: a bearish, neutral or bullish future.
In this feature, we’ll explore each of those scenarios.
The Crypto Investor’s Nightmare - A Bearish Outcome
A bearish outcome would mean low adoption, with crypto being on the fringes of mainstream finance and mostly a pastime for crypto enthusiasts. In this scenario Bitcoin would likely never experience new all-time highs and instead settle in a much lower price range than it is today. This situation could arise due to a series of events, including a sustained regulatory onslaught, a deliberate anti-crypto campaign, or a dramatic drop in prices.
Regulatory Onslaught
The crypto industry has never not operated under regulatory scrutiny. But an unrelenting regulatory crackdown could drive the sector to its knees.
For instance, a number of crypto firms such as Ripple, Coinbase, and Binance are currently fighting lawsuits brought by the Securities and Exchange Commission (SEC), which has cited violation of securities laws.
An aggressive barrage of such regulations could feasibly send the industry into a state of decline.
Targeted Anti-crypto Campaign by Governments
Around the world, jurisdictions have had different reactions to cryptocurrencies. Some have embraced them, others are ambivalent, while countries like China, Saudi Arabia, and Qatar have explicitly banned or placed extremely strict restrictions on them.
What if more countries joined forces to restrict or ban crypto? In such an event, the industry could be staring at a bleak future.
Sharp Decline in Crypto Prices
Cryptocurrencies are inherently volatile, which is paradoxically part of why they can be lucrative investment opportunities. At the same time, a particularly devastating drop in prices can prove too much for the ecosystem.
Such a drop could trigger a negative feedback loop, with people selling, potential investors getting scared away, and demand decreasing — further pushing prices downwards. This could make it difficult for the market to recover.
This is an unlikely permanent outcome, but has occurred time and again marking the end of previous bull market cycles.
The Lukewarm Possibility - A Neutral Outcome
In this instance, crypto doesn’t sink but doesn’t become a raging success either. That’s, for example, precisely the situation market participants are hoping the industry doesn’t find itself in. Crypto has struggled to bounce back from the devastating price crash that happened after the fall of the TerraUSD stablecoin in May 2022.
In the event that prices never pick up, crypto would remain stagnant. Other scenarios that could result in that include adoption rates staying the same and crypto mining continuing to be unpopular.
Crypto Adoption Rates Don’t Rise Again
In this instance, adoption rates don’t move the needle at all. Like any technology, crypto adoption falls into a classic bell curve pattern: innovators lead the way, followed by early adopters, then the early majority, the late majority, and finally, laggards.
Estimates show that after 14 years, crypto is still at the “early majority phase” of global adoption. If this doesn’t change, the status quo remains.
Bitcoin and Crypto Mining Remains Unpopular
One thing holding crypto back is some institutions are wary of wading in because they consider the industry’s environmental credentials to be shaky. That’s what played out when Tesla, the electric car company, backed out of accepting BTC payments.
At the time, CEO Elon Musk pledged the company would resume Bitcoin transactions “as soon as mining transitions to more sustainable energy.” However, it’s hard to predict what level of sustainable mining would pacify critics who are hard set on Bitcoin being an incorrigible disaster for the environment.
Institutions that would adopt Bitcoin (the most successful cryptocurrency) wouldn’t want to go there either. In such a scenario, crypto may never crack the ceiling.
The Crypto Investor’s Dream – A Bullish Outcome
The most ideal scenario for crypto proponents is a bullish future that would manifest as strong prices, increased mainstream adoption, and crypto becoming an integral part of the global financial landscape.
Some of the events that the crypto world believes could help the industry get there include the following:
Increased Awareness
The thing with crypto is most people know about it but don’t know how it works, as demonstrated by this study by Pew Research Centre.
This gap between people hearing about crypto and actually using it is a major hurdle to its widespread adoption. In addition, most people view crypto as a gambling asset that they wouldn’t touch with a ten-foot pole.
For crypto to realize a bullish future, it would have to achieve more awareness, starting with dispelling the many misconceptions that surround it.
Increased Institutional Involvement
In recent years, crypto has witnessed more institutional engagement than ever. But it hasn’t been quite enough to help catapult it to the mainstream.
Some crypto quarters are looking to the introduction of exciting products, such as the highly anticipated Spot Bitcoin ETF — to help achieve this. It helps that big-time companies such as BlackRock are some of the companies vying to release the product.
The mere optics of a company of such stature rubber stamping Bitcoin this way could help usher crypto into a new level of legitimacy.
Regulatory Acceptance of Cryptocurrency
It’s easy to think crypto can thrive despite what regulators are dishing, but the reality is regulatory behavior affects the trajectory of crypto. If regulators adopted a more collaborative approach towards crypto, the industry would stand a better chance to flourish and gain broader acceptance.
Final Thoughts: The Future is Unwritten
The future of crypto is anyone’s guess. It might just remain a niche interest for the true believers, or things could stay exactly as they are.
The best-case scenario, of course, is that crypto goes fully mainstream. No matter how it all plays out, it’s undeniable that crypto has made an indelible mark on finance.
