Predicting the future of cryptocurrency is a difficult task as it constantly fluctuates and is different to traditional financial systems. The increased modification requirements, government interest, PayPal’s relationship with crypto and the launch of new cryptos by Facebook will result in many events that will affect the entire crypto market.
First Trend: The Crypto Tax
Currently, cryptocurrency is not being taxed in all countries but will most likely happen in the near future. Taxes on crypto is not widespread at this point of time but will cause countless issues for cryptocurrency websites and services. Although it has been springing up in numerous countries as these markets have reached a matured stage while these governments identify that the revenue potential will be overwhelmingly increasing over the years.
Trend Two: The Crypto Harbour Crisis
The development and creation of “offshore crypto havens” have recently appeared in recent years due to the growth of cryptos being taxed. These havens will allow users to legally reduce the costs of owning digital assets, which include cryptocurrencies. Countries where IT and financial markets that are matured would consist of; Switzerland, Korea and Japan.
Trend Three: The Crypto Trust Crisis
While cryptocurrency matures it will not only become more transparent to consumers but also regulated and increasingly secured. These factors will lead to an increasing range of adverse economic events and challenges for crypto providers and users. The biggest current crisis taking place is criminals taking part in cybercrime and fraud.
In December 2020, Bitcoin broke its record by hitting $34,000, although BTC itself was not just growing in demand but accordingly an oversupply of stable coins Tether (USDT) in the market. For Tether to increase the capitalisation of their coins, they must register it within the British Virgin Islands, as it is increasingly growing their emission. While market players who are invested in Tether have serious doubts of their long term success, as it is unclear if their stable coin is backed up by US dollars or not. There is currently a class-action lawsuit that investors have filed against the company that owns Tether, iFinex.
The result of countless crypto crises will also be influenced when the United States government start-up printing presses within the current ecnomony; while an excess of the fiat money supply will cause inflation in the US Dollar. The depreciation of USD will counteract and affect the crypto market with the USDT also depreciating in value as well, leading to the costs of goods rising and BTC being affected.
Trend Four: Cryptocurrency Risk Assessment Model
Within the crypto market, there is a burning need for a sustainable risk assessment model due to the difficulty for consumers to identify an advantageous crypto investment plan. There are very few services that offer a practical working system and not just predictions within the market. This will lead to an increase of new users to feel more comfortable in their trading, resulting in more trades occurring.
Here are two relevant risks that users should consider that can result in coins value rising or collapsing;
- Technical: Errors within the coding of blockchains can lead to weak security of users information leading to a growth of cybercrime and fraud.
- Organisational: Not following your countries legal regulations for cryptocurrencies can lead to criminal charges and in rare cases your assets to be frozen by the government.