crypto market making strategy Free Course #12

 

The future of cryptocurrencies and the crypto world

It is impressive when we look back at how far cryptocurrencies have come and how quickly they have developed since Satoshi Nakamoto. 

Hardly anyone could have predicted the evolution of cryptocurrencies and their impact on the wider world, particularly in relation to blockchain technology and its benefits. 

Many people say that the 2008 economic crash was one of the main reasons behind Bitcoin’s creation. It showed the world how almost everyone was affected by the consequences of the actions of a few people who control fiat currencies. 

Bitcoin and other cryptocurrencies offer a decentralized financial system no longer controlled by a central authority, thus giving users independence and autonomy.

The history of crypto/ digital currencies—a timeline 

Despite what many people think, Bitcoin wasn’t the starting point of cryptocurrency. Its origins began much earlier. 

• 1982 – David Chaum first proposed the concept of e-cash, an anonymous electronic money system. 

• 1990 – Chaum tried to implement his idea by creating DigiCash. It was an attempt to create a safe and secure online currency. Unfortunately, the idea never caught on, and DigiCash was bankrupt by the end of the ‘90s.

• 1997 – Adam Back invented hash cash, a cryptographic hash-based proof-of-work algorithm that was originally used to limit spam emails and denial-of-service attacks. It is very similar to Bitcoin’s proof-of-work algorithm.

• 1998 – This year saw the development of two similar proposals. Wei Dai released an essay outlining his idea for “b-money,” an anonymous, distributed electronic cash system. It was one of the early proposed cryptocurrencies, although it was never officially launched. 

Also, in 1998, Nick Szabo put forward his idea, Bit Gold. He wanted to create an alternative currency that didn’t require a third party, like a central bank, to manage it. Because Bit Gold’s protocol has so many similarities to Bitcoin’s, many people thought that Nick Szabo was Satoshi Nakamoto, Bitcoin’s anonymous creator, something which he denied.

• 2008 – Our next big date is October 31, 2008. That’s when Satoshi Nakamoto published Bitcoin’s whitepaper.

• 2009 – In January 2009, the first-ever block of bitcoins was mined, and on January 12, Nakamoto made the first Bitcoin transaction, sending 10 BTC to Hal Finney, an esteemed computer programmer and developer.

• 2010 – In May 2010, we witnessed the first Bitcoin purchase. Laszlo Hanyecz, a Florida-based programmer, sent 10,000 BTC to a man in London in exchange for two pizzas worth $25. Also, in 2010, the first Bitcoin exchanges, like Bitcoin Market, appeared, and in November, the market cap passed the $1 million mark.

• 2011 – Bitcoin reached a value of $1 for the first time, and Litecoin was established. 

• 2015 – Ethereum, the second-largest cryptocurrency by market cap, was launched. This move also gave birth to what is known as Blockchain 2.0. Ethereum was the first to use blockchain technology to execute computation in the form of transactions. It was the first time people saw it being applied to something other than currencies.

• 2017 – We saw the rise of ICOs, with new projects emerging as Bitcoin’s popularity grew. Bitcoin ended the year valued at almost $20,000.

• 2018 – Bitcoin crashed significantly at the beginning of 2018, with its value dropping by around 80%.

• 2019 – Bitcoin recovered slightly, rising back up to around the $10,000 mark.

• 2020 – The crypto boom of 2020, driven by the Covid-19 pandemic, had people looking for new ways to make and earn money. There was considerable growth in the number of both miners and investors.

• 2021 – In November, Bitcoin hit a new all-time high of almost $70,000. 2021 also saw the appearance of ETFs and the expansion of the NFT market. 

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An exchange-traded fund (ETF) is a fund comprising different cryptocurrencies. Like common stocks, they are traded daily. They can track a single cryptocurrency or several digital tokens and coins. The benefits of ETFs include low cost of ownership, diversification, and outsourcing time-consuming and mentally intensive functions related to selecting individual crypto tokens/coins.

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Non-fungible tokens or NFTs are blockchain cryptographic assets with unique identification codes and metadata that distinguish them from one another. They cannot be replicated, so unlike cryptocurrencies, they cannot be traded or exchanged equivalently. They can be used to represent real-world items like works of art and real estate, as well as property rights, people’s identities, and much more. By tokenizing these real-world assets, NFTs can be easily bought, sold, and traded while also improving security and reducing the chance of fraud.

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Potential uses and development of blockchain technology

From this timeline, we can see how quickly cryptocurrencies have grown and developed, particularly since 2008. 

The growing demand for blockchain experts in the job market has recently reflected this worldwide. Its application in industries, such as healthcare, voting, supply chains, public records, and banking & finance, shows how versatile and useful blockchain technology can be. 

It lets people transact with anything from money to music, votes, or even their identities peer-to-peer. According to many experts, blockchain can change our entire future, with Jack Ma, the founder of Alibaba Group, saying that “blockchain is going to be a very critical technology for the future development of the world.” 

A lot of our current systems have changed very little over the past 100 years. Blockchain can be applied to virtually any system. Some say that blockchain will have a bigger impact on society than Bitcoin or any other cryptocurrency, that its impact will be spread across all areas of our lives, and that it could even have a greater influence on the world than the internet has so far. 

ETFs & NFTs

In 2021, we saw the rise of ETFs and NFTs. The NFT trend is visible in a range of sectors, particularly the music and film industries, gaming, and art. 

These digital jpegs of unique images have brought what some describe as a new era of art, while others believe it is only just a bubble that will eventually burst. No matter what, for the moment, NFTs are here, the current It thing in the art world. With the prices some of these pieces are being sold for, it’s hard not to see it as more than just a trend. 

For example, Mark Winkelman, a digital artist better known as Beeple, sold a piece for $69 million in March 2021 at the world-renowned auction house Christie’s. The fact that such well-known and distinguished auctioneers are jumping on board is a sign that NFTs aren’t just short-term; perhaps this will be the future of art. But in terms of the crypto market, we will probably see some new trends appear and take over from NFTs and ETFs.

Predictions

Given the volatility of the cryptocurrency sphere, it is difficult to predict what exactly will happen in the future, but there are some general questions that we can ask.

1. Will Bitcoin break $100,000? Most experts believe it is more a question of “when” rather than “if.” As the popularity and adoption of Bitcoin and cryptocurrencies keep growing, the price will steadily keep rising. 

2. Will cryptocurrencies fully replace fiat currencies? Again, it is difficult to say for sure. It will probably take at least a couple of generations for it to happen and for coins and cash to disappear completely. If central banks don’t develop their digital currencies quickly and the current rate of inflation of fiat currencies worldwide continues as it is, then it is likely that crypto will take over. Perhaps in 50–100 years, cryptocurrencies may totally replace fiat currencies, but that’s quite a way down the road. In the short term, say 15–20 years, it is more likely that we will see cryptocurrencies become a popular means of payment in online marketplaces and stores, possibly coexisting alongside centralized digital currencies issued by central banks. 

3. Will we see cryptocurrencies get regulated by governments and become taxable? If this happens, the popularity and the adoption rate of cryptocurrencies could shoot up to levels never seen before. The majority of people are still unsure of crypto. They have this stigma attached to it and see it as some illegal black market currency. Many of these people say that they will invest once it is regulated or becomes taxable. Even if just half of those people accept and start using cryptocurrencies once this happens, it will quickly become the most popular payment system. However, one key reason why this may not happen is that cryptocurrencies may lose their independence and freedom. Governments may try to control them, which is why we will likely see centralized digital currencies appear rather than cryptos becoming regulated and taxable.

4. Will Bitcoin remain the number one coin, or will something else come along and take over? In terms of store-of-value coins and payment coins, it looks like Bitcoin is going to stay the top dog for a long time. However, some people predict that once Ethereum switches to the PoS system and blockchain 3.0 is released, it will overtake Bitcoin and replace it as the number one coin in the market. As smart contracts become more widespread and popular, they could also help Ethereum establish itself as the new number one cryptocurrency.

5. Can the major current trends continue? It is unlikely we will see one trend dominate for too long. In daily life, we can see how the development of technology has affected the lifespan of trends, with most trends now lasting only a couple of weeks/months at most, whereas before, they could keep going for years. The cryptosphere is no different. In 2017, there was a boom due to a sudden rise in the popularity of ICOs. In the past two years, we’ve also witnessed booms due to an increased interest in mining as well as EFTs and NFTs. It is impossible to predict the next trend, but you can be sure that something new will appear to take over eventually.

We can be sure that cryptocurrencies aren’t slowing down anytime soon. We’ve gone on a journey together in this guide, starting from the basics of what cryptocurrencies are, going all the way through to investment strategies, mining, and how to create your own cryptocurrency. We tried to provide you with information that will help you in the crypto sphere, but it is a vast, wide-open place where anything can happen. We hope that our advice will aid you on your journey and help keep you and your investments safe. If there’s one thing to take from our chapter on security and scams, it’s that you should always be cautious, do your due diligence, and carry out your in-depth analysis on any project you are thinking of investing in. 

If you’re not tired of us rambling on about all things crypto, then you’re in luck because we have two bonus topics available. The first focuses on fun and curious facts and videos, while the second topic provides investors with some useful extra literature.

Our goal was to create something fun and interesting yet informative and helpful for crypto enthusiasts and investors of all levels. We would like to finish by thanking you for taking the time to read this guide, and we wish you all the best on your journey to the moon.

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