September 24, 2022

The year is 2027. It is a time of great innovation and technological advancement, but also a time of chaos. What will the crypto market look like in 2027? (For those unfamiliar, this is a line from the 2011 video game, Deus Ex.)

Long-term predictions are notoriously difficult to make, but they are good thought experiments. One year is too short a period for fundamental changes, but five years is enough to change everything.

Here are the most unexpected and outrageous events that could happen in the next five years.

1. The metaverse will not ascend

The metaverse is a hot topic, but most people don’t have the slightest idea what it actually entails. The metaverse is a holistic virtual world that exists on a continuous basis (without pauses or resets), operates in real time, hosts any number of users, has its own economy, is created by the participants themselves and is characterized by unprecedented interoperability. A variety of applications could (theoretically) be integrated into the metaverse, including games, video conferencing applications, driver’s license services — anything.

This definition makes it clear that the metaverse is not such a new phenomenon. Games and social networks that include most of the features listed above have been around for quite some time. Certainly, interoperability is a problem that needs to be taken seriously. It would be a very useful feature to be able to easily transfer digital assets between games—or digital identities—without being tied to a specific platform.

But the metaverse will never be able to meet every need. There is no reason to include some services in the metaverse. Some services will remain isolated due to the reluctance of their providers to hand over their control.

And there is also the technical aspect to consider. The cyberpunk culture of the 1980s and 1990s argued that the metacomplex meant total immersion. This immersion is now considered possible only with the use of virtual reality glasses. VR hardware is getting better every year, but it’s not what we expected. VR remains a niche phenomenon even among hardcore gamers. The vast majority of ordinary people will never wear such glasses to call their grandmother or sell some crypto on an exchange.

True immersion requires a technological breakthrough, such as smart contact lenses or Neuralink. It is highly unlikely that these technologies will be widely used five years from now.

2. Wallets will become “super apps”

An active decentralized finance (DeFi) user is forced to deal with dozens of protocols these days. Wallets, interfaces, exchanges, bridges, lending protocols — there are hundreds of them and growing every day. Having to live with such an array of technologies is inconvenient even for advanced users. As for the prospects for mass adoption, such a state of affairs is even more unacceptable.

For the common user, it is ideal when a maximum number of services can be accessed through a limited number of universal applications. The optimal choice is when they are integrated directly into their wallet. Saving, exchanging, transferring to other networks, betting — why bother visiting dozens of different sites to access such services, if all the necessary operations can be performed using a single interface?

Users don’t care which exchange or bridge they use. They only care about security, speed and low fees. A significant number of DeFi protocols will eventually be converted into back-ends serving popular wallets and interfaces.

3. Bitcoin will become a unit of account equivalent to the US dollar or the Euro

Money has three main roles — acting as a means of payment, as a store of value, and as a unit of account. Many cryptocurrencies, mainly stablecoins, are used as a means of payment. Bitcoin (BTC) and — to a much lesser extent — ether (ETH) are used as stores of value between cryptocurrencies. But the United States dollar remains the main unit of account in the world. Everything is valued in dollars, including Bitcoin.

The real victory for sound money will be announced when cryptocurrencies take on the role of a unit of account. Bitcoin is currently the leading candidate for this role. Such a victory will mark a major mental shift.

What needs to happen in the next five years to make this possible?

The sharp decline in confidence vested in the dollar and euro is a necessary condition for cryptocurrencies to assume the role of a basic unit of account. Western authorities have already done much to undermine said trust by printing trillions of dollars in fiat money, allowing unusually high inflation to soar, freezing hundreds of billions in a sovereign country’s reserves, etc. This may just be the beginning.

What if actual inflation turns out to be much worse than predicted? What if the economic crisis is prolonged? What if a new epidemic breaks out? What if the conflict in Ukraine spills over into neighboring countries? These are all possible scenarios. Some are extreme, of course — but they are possible.

4. At least half of the top 50 cryptocurrencies will see their fall

There is a high possibility that the list of top cryptocurrencies will change radically. Unmasked zombies like Ethereum Classic (ETC) will be kicked off the list and projects that now seem to hold unshakable positions will not only be dethroned but may also disappear altogether.

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Some stablecoins will definitely sink. Young people will take their place. Cardano (ADA) will slide down the list to officially become a living corpse. The work is progressing anxiously slowly. Developers not only fail to see this as problematic, they even seem to see it as a benefit.

5. The crypto market will fragment along geographic lines

Cryptocurrencies are global by default, but they are not immune to the influence of individual states. The state always has an edge and an extra trick up its sleeve. Some regions (US, European Union, China, India, Russia, etc.) have already introduced or are threatening to introduce strict regulation of cryptocurrencies.

The factor of international competition is superimposed on domestic state incentives. When heavy sanctions were imposed on Russia, some crypto projects started restricting Russian users from accessing their services or even blocking their funds. This scenario may repeat itself in the future in relation to China.

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It’s not hard to imagine a future in which parts of the crypto market work in favor of some countries while shutting out others. We already live in such a future, at least to some extent.

The views expressed are solely the author’s and do not necessarily reflect the views of Cointelegraph. This article is for general information purposes and is not intended and should not be construed as legal or investment advice.

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