In the year 2017, the total market capitalization of global cryptocurrency industry was pegged at $574 million and now, according to a recent report by Transparency Market Research, the crypto industry is likely to grow with a compound annual growth rate of 31.4% and expected to reach a market cap of $6.7 billion by 2025. The research agency predicts that this growth will be obtained on the back of the ability of various cryptocurrencies to save the time and cost involved in the transactions. Compared to the conventional transaction system, the use of cryptocurrency allows the user to have low transaction time as well as cost, a point which is going to favor their crypto usage for the payment and transaction systems. In addition to these positive remarks, the research agency also emphasized that the crypto industry needs to allay the doubts and fears of some of the governments across the globe which continues to doubt their potential while maintaining a hostile stance towards their adoption.
Growth with Turbulence
The report predicts that while there is good future growth for the crypto industry, one must prepare for the tumultuous and cyclical behavior of the crypto market. The research agency has also predicted that in due course of time, the crypto industry will go under consolidation with many companies taking the route of merger and acquisitions to fend off the competition. It is also expected that big names from the financial industry will come into the crypto market and emerge as crucial players in the time to come. We have already witnessed the development of the JPM Coin by the banking major JP Morgan group. Further, the example of Gibraltar blockchain exchange can be cited as this is the first blockchain exchange in the world which is owned by a stock exchange. Despite all the mainstream players coming into the cryptocurrency industry, doubts and skepticisms around cryptocurrencies are still lingering in many parts of the world.
Lack of Regulations
Experts agree that it is a lack of sound legal framework in some of the global markets which have led to some infamous incidents of crypto fraud or hacking. There is another case of QuadrigaCX exchange which apparently suffered major losses due to non-access to its cold wallet owing to the sudden death of its founder. As a result, investors of the exchange have lost money due to poor internal policies and control of the organization. According to estimates around 115,000 investors have allegedly lost about $137 million worth of cryptocurrency in the QuadrigaCX case. Market analysts and experts are unanimous on the fact that if cryptocurrency is to climb up the ladder of success and investor adoption, it has to eliminate the incidents of thefts, scandals, or other irregularities that shake up the confidence of the customer on the system. The need of the hour is to ensure investors as well as customers that cryptocurrencies are as safe as the current financial system consisting of banks and financial institutions. Governments, as well as Central banks, can also perform an important role in widening the adoption of cryptocurrency by controlling the digital currencies through a proper legislative framework. This will help in assuaging the fears of the users who will take this government control as a reassuring factor for the safety of their hard-earned money.
We have many examples of countries like Australia, Venezuela, Japan, UK, and European Union which have been very positive about the adoption of cryptocurrencies on their home turf. These countries have regulated the crypto with the help of proper legislative frameworks, and although it initially caused some pain to the crypto industry, things improved considerably after the first phase of regulations implemented by the government. We have witnessed an enhanced use of digital coins in these countries, and this positive trend has started basically due to customers increased confidence in the crypto industry. As users are sure that crypto industry is well regulated and under the watch of government and various other regulatory agencies, their confidence in the investing and usage of cryptocurrency has increased over the period.
Some other countries like China and India – often credited as the powerhouse of next global growth phase – continue to remain skeptical about the prospects of adopting cryptocurrencies. The common viewpoint of these governments is the fear that adoption of cryptocurrencies may lead to a weakening of their fiat currency. The Reserve Bank of India which is India’s central bank is not very positive about cryptocurrencies and has already issued notices to the banks and financial institutions not to deal with the organizations which are using cryptocurrencies for their financial transactions.