• Sun. Oct 6th, 2024

5 Trends That Could Change Cryptocurrency

Crypto

Crypto

The world of cryptocurrency is as fluid as ever, with blockchain in finance becoming one of the most powerful pieces of financial technology due to its tradability and value. The trajectory of crypto over the past half a decade or so is creating a strong alternative to fiat currency.

While crypto is not replacing cash and credit any time soon, it is creating entire parallel economics. Trends are changing the trajectory of the industry and influencing its direction towards the future. Here are 5 trends that could change cryptocurrency and create paradigm shifts in the years to come.

1. Cybercrime and Cybersecurity

Cryptocurrency is known to be among the most secure technologies in the world. Furthermore, the combination of digital ledger technology, together with the use of private keys, create modern asymmetric encryption methods. This makes a parallel trend with global cybersecurity trends. 

The use of blockchain technology in cybersecurity is not as prevalent as everyone predicts it. Regardless, cybersecurity measures are growing due to the need to protect digital assets from phishing and ransomware incidents. There’s also the connection of crypto to illegal activities on the internet.

Crypto trends point towards more organizations improving their cybersecurity measures to protect any assets within the cryptocurrency space. Of course, more individuals will also be at risk of financial fraud, but fintech companies will move towards more robust anti-fraud measures.

Cryptocurrency is slowly creeping its way onto mainstream platforms, and it’s only a question of “when” rather than “if.” Cybercrime and cybersecurity are two sides of the same coin. It’s only a matter of determining if cybersecurity measures through the blockchain are worth all the buzz for companies to take it seriously soon.

2. Non-Fungible Tokens or NFTs

The non-fungible token or NFT is taking the world by storm, and it’s a growing industry. For a long time, cryptocurrency did not have a ton of value outside of having it as a tradable resource. Much like stocks, it had no inherent value as it is. Now, crypto and NFTs have more practical uses than ever before.

NFTs are some of the most traded digital assets in the world due to their value as collectibles. As they are unique digital products, people can buy and sell NFTs similar to how baseball cards are sold. The trends go towards better utilization of the technology as time goes by.

For starters, NFT gaming companies and play-to-earn systems are becoming the norm. They are excellent products that encourage players to build their own micro-economies within the game. Outside NFT gaming, non-fungible tokens are also powering a billion-dollar digital collectibles market.

More prominent organizations will follow suit, with entire industries built around creating a marketplace for trading such assets. Companies beyond sports markets will adopt NFT technology, and more pocket economies will grow every step of the way.

3. Crypto Tax Regulation

The original idea for cryptocurrency was to build an alternative to fiat currency. While that is a pipe dream for some and an idealistic view of the world for others, taxation doesn’t stop. 

In the current landscape, the government taxes crypto the same way that it taxes the fair market value of products. Crypto is treated as property, usually as capital gains – either long-term or short-term. The taxation of cryptocurrency will evolve soon.

Taxation trends will likely become tighter regulations over the coming years, if not more streamlined. As the government further understands blockchain technologies and more mainstream organizations adopt them, the federal government will improve the overall fit of their laws.

The IRS will further improve its process of catching taxpayers who under-report their crypto-profits. If you plan on eventually cashing in on your investments, the federal government will find ways to tax you.

4. Crypto Mining Regulations and Legislation

Cryptocurrency and crypto mining is not something that national governments like to deal with. Major countries wouldn’t want an alternative to their fiat currency, and more don’t want to draw specific lines toward taxation.

Big countries and multi-national organizations are trying to shut down crypto operations. China, for example, banned crypto-mining to stop fraud and money laundering and keep their people’s money under control. Countries like Sweden are also concerned that crypto mining threatens the details of the Paris Climate Accord.

The entire cryptocurrency industry is slowly moving away from crypto mining. Ethereum, for example, will start using proof of stake to screen their validators and improve the cryptocurrency’s scalability. Bitcoin will move away from its current state of volatility once everyone mines the entire blockchain.

As for its long-term viability, crypto mining can only survive once it shifts to green and renewable sources. Solar, wind, and hydroelectric sources that generate cheap energy can make crypto mining more viable long-term.

5. Crypto Accounting Automation

As we noted before, cryptocurrency is slowly becoming a bigger part of the public psyche. As knowledge about crypto is becoming more ubiquitous, more and more services will grow to accommodate it. 

Much like how tax regulations will zero onto crypto and other digital assets, automation will become the norm towards accounting too. Tax strategies built around reducing your crypto tax bill mean more personalized care. All these point to more complex, even AI-powered, tax automation.

Smarter software will account for crypto investors’ moves and what can be done to increase losses and offset gains. Automation will account for the volatility of the crypto, going beyond the traditional spreadsheets and going towards more robust itemized accounting.

Machine learning for crypto accounting will create a staple of needs-based strategies. Sure, accountants will have a simpler time tracking the breadcrumbs, mostly due to the digital ledger that is inherent within blockchain technology. This will provide further clarity and ways to improve accounting efficiency for digital assets.

The Bottom Line

Cryptocurrency is an entirely new financial technology, and it’s taking the world by storm. In this age of the internet, the industry will just grow much bigger and more mainstream. Details such as tax regulation, cybersecurity, and mining efforts are vital trends that predict the future of this financial technology.

Much like any investment, knowing is half the battle. Cryptocurrency can help give you profitable investments when it’s exceptionally high or financial ruin when it’s extremely low. In addition, knowing the trends can give you a good idea of where you should stand on this technology as it makes its way towards mainstream society.

Kevin Moore - E-Crypto News Editor

Kevin Moore - E-Crypto News Editor

Kevin Moore is the main author and editor for E-Crypto News.