Where will cryptocurrencies go in the next 5 years?


As the tech industry moves from Web2 to decentralized Web3, where data is owned by individuals, people will have more freedom to choose where they belong.

The decentralized internet of the future will be run by and for communities.

After the recent crypto crash of many known entities (Earth/Moon, Celsius, Voyageur, FTX, etc.), we need to look into how they can rebuild thriving crypto projects. These collapses have highlighted, once again, the importance of solid foundations and integrity. We’ve learned that in a world full of nervous bunnies, it pays to be a sturdy Swiss tortoise. Greed and avarice always have a price and therefore the market is in the healing phase.

Cryptocurrency is no stranger to boom and bust cycles. In this bear market, both high inflation and federal interest rate hikes have led to the stock and cryptocurrency markets taking the hit as they are both risk assets.

There is, it seems, a consensus that the current bear market is a good time to build stronger products. The FTX crash and its fallout are stress tests in the crypto space. As innovators raised in an open source culture, we especially welcome transparency testing.

Many seem to agree that regulation can be a way to minimize the recurrence of many of the issues that have been plaguing several cryptocurrency players as of late. For example, the European Council (made up of representatives of EU national governments), the Parliament and the Commission agreed on the “Cryptocurrency Markets Regulation” (MiCAR).

In the UAE, the Virtual Business Regulatory Authority was formed in April 2022, and the Dubai and Abu Dhabi Virtual Business Regulatory Authority launched the Crypto Hub in November.

Experts also point out that real decentralized finance (Defi) projects have not had the same problems as centralized finance (Cefi) projects that failed. Defi, which aims to redefine traditional financial products without intermediaries and Decentralized Autonomous Organizations (DAOs), which may soon become a new Internet community, is set to become the biggest growth area for cryptocurrencies.

As of early November 2022, the total value locked up in Defi protocols was approximately $56 billion, which represents a CAGR of 141% over the past two years. In a world of instant gratification and services, there is a dire need for a financial system that can match the pace of its transactions to the pace at which information is exchanged. In this respect, Defi will play a key role.

Finally, the next wave of cryptocurrency adoption will surely come from a better balance of investment between utility tokens – where there is sometimes a lack of understanding of the project and technology – towards security tokens or other tokenized assets.

We expect security tokenization to drive more financial institutions to tokenize off-chain assets. For example, the real estate market can benefit enormously from asset tokenization. Imagine a world where an apartment could be tokenized, someone would be able to buy a portion of the apartment they are currently renting (10 percent for example) while paying rent for the rest.

It will help reduce risk for banks and maximize turnover with more loans. Today the process is super binary, you either rent your apartment or own your own apartment. To own your own apartment, if you don’t have the money, the bank will look at your financial profile and approve or deny your loan application.

In a world where real estate is tokenized, instead of a binary “yes” or “no,” the bank will tell you that it can lend you a fraction of the fixed value (e.g. 43%) that you can become a fractional owner of. In a world of ever inflated property prices, it will become very welcome.

For cryptocurrencies in 2023, we expect there will be a stronger push towards regulation of the space. And, if that’s the case, there’s also an emerging debate about how regulated crypto exchanges (CEX) can move forward in the space, such as how many crypto projects will actually survive over the next five years.

How many of these projects will have sufficient liquidity in the next five years? Will there be massive adoption of security tokens/tokenized assets on CEX? Many players have already capitalized on this trend.

For this, future doors all over the world must open, like ours. As CEX, we want to foster a sense of ownership for anyone who wants to take ownership of their wealth and help build the future of finance.

While the noise around cryptography is high, it is an essential long-term investment and is the building block towards a cashless and highly digitized society, providing the opportunity to scale the exchange of value with the speed at which information is exchanged today and building the society of the future.

Anthony Lesoismier is the co-founder and chief strategy officer of SwissBorg

Read: UAE developer to facilitate property purchases using cryptocurrencies

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