Crypto has come a long way since the release of the Bitcoin whitepaper in 2008. From a niche community establishing a digital cash network to a major worldwide asset class coveted by banks and investment firms, the landscape has changed drastically.

So what comes next for the crypto industry? Where will crypto be in 5 years?

Crypto technology will become more advanced

In some ways, it’s nothing short of a miracle that crypto became as big as it did from 2010 – 2020.

The ICO craze of 2018 raised around $15.7 billion for crypto projects. Now seen as something of an economic bubble, the trend saw many projects with little to no unique selling proposition raise massive sums as the hype continued to grow.

Like the net bubble of the 90s, many of these projects failed, but the hype wasn’t totally unfounded. Funding piled in based on the promise of what blockchain and crypto could potentially achieve, and that’s where the value lay — in the potential.

Today, we don’t need to wonder whether blockchain will change things. We’re seeing real-world integrations of numerous blockchain and crypto technologies that prove that the tech has become practical.

For example, Fetch.ai is being used to optimize the performance of a smart city project in Munich. The busiest port in Europe, Rotterdam, now uses blockchain to track its shipping containers.

From here, the progress is anyone’s guess. There are talks of integrating blockchain into voting systems for more secure elections, medical records systems, and many more applications. The Federal Reserve Bank of St. Louis issued a statement lauding some of the achievements of the decentralized finance sector, and we can expect to see continued advancements in DeFi technology as time goes on.

Companies like Visa and Mastercard have integrated crypto payments, a massive step forward in adoption. Nations around the world are also considering introducing central bank digital currencies (CBDCs), a type of cryptocurrency minted and controlled by federal governments.

In five years, it seems likely that crypto and its associated technologies will be far more interwoven into the day-to-day operations of many industries, from supply chain tracking, finance, manufacturing, information technology, and more.

The crypto market looks likely to increase in value

This is the kind of statement that can be easily misunderstood. There’s never a guarantee that the value of a specific cryptocurrency will increase, not even Bitcoin, which has been surpassing expectations for years now.

However, the direction that the overall market capitalization of crypto assets is headed can perhaps be assessed more easily. With Bitcoin ETFs now introducing more avenues for institutional investment than ever before, and crypto becoming less volatile as the industry matures, the future is bright for cryptocurrency investment.

The amount of money invested in Bitcoin ETFs on May 21 was $300 million, showcasing the buying power of heavy-weight investors now getting involved in crypto.

Crypto in 5 years could outpace even the current figures. Of course, it all depends on regulation.

Regulations will impact the future of cryptocurrencies

One of the most talked-about issues when it comes to crypto is international regulation.

The SEC doubled the amount of lawsuits it was bringing against crypto projects from 2021 – 2023, most notably suing Ripple and Coinbase, with plans to sue decentralized trading platform Uniswap now under discussion.

US regulation against crypto has a major impact on regulations worldwide, with smaller nations often taking inspiration from SEC guidelines.

So, how exactly could regulation influence crypto?

Crypto and Unlicensed Securities

Take Ethereum as an example. SEC Chairman Gary Gensler recently stated that the SEC has considered Ethereum to be a security, although specific action remains to be taken. If the ETH cryptocurrency is officially designated a security, that would mean that exchanges that have been selling the currency would be liable for selling unlicensed securities.

It’s possible that buyers would also be legally liable, as well as decentralized swap services letting users swap ETH for other assets. This, of course, would spill out into the DeFi industry which is primarily built on the Ethereum network.

SEC litigation against the Ethereum community is by no means a certainty, nor is it even considered likely by many crypto users at this time. However, the examples serve to highlight the risk of crypto projects falling foul of national and international regulation.

In China, of course, the sale and even mining of crypto assets is completely illegal, while the UK prohibits UK companies from selling crypto derivatives to the nation’s residents.

Crypto enthusiasts are often concerned about the impact regulation could have on the future of cryptocurrency. It’s worth noting, of course, that a complete lack of regulation could be just as damaging to the longevity of the industry due to bad actors having free reign with no oversight.

What is the future of cryptocurrencies?

All of the above factors that we’ve mentioned so far are heavily interlinked. If the past few years are anything to go by, advancements in crypto technology and adoption are likely to continue. If this happens, it’s open season on crypto investment as more and more people seek to cash in, aided by developments like crypto ETFs.

On the other hand, if worldwide regulation heavily restricts the sale or development of cryptocurrencies, then the industry will have a huge obstacle to face, as this would deal a blow both to the market cap and the funding available for crypto and blockchain research overall.

Is crypto the future?

In our view, yes, crypto is extremely well-positioned to play a major role in key industries in the near future. It’s rare to see a new technology become so quickly adopted as blockchain and cryptocurrency, and progress will likely continue as it has.

World governments know that their residents, industries, and even national banks are now invested in the crypto industry in one way or another, and one would hope that a balance will be sought between overly restrictive and overly lax regulation, allowing the industry to flourish while protecting its users from harm.

If technology, investment, and regulation can strike a balance in the next five years, there’s no telling what the future of cryptocurrency holds.