The way forward for cryptocurrencies

Cryptocurrency known as virtual currency, employs cryptographic techniques to transmit digital information, ensuring valid and legitimate transactions.

There is no central authority involved. In the cryptocurrency market, there are thousands of cryptocurrencies with various design objectives.

The design objectives include offering a digital currency alternative to cash (Bitcoin, Monero, and Bitcoin cash), enabling low-cost payment systems (Ripple, Particl, and Utility Settlement Coin), and enabling the underlying platform or protocol to function correctly (Ether and NEO). Blockchain is the technology that underpins cryptocurrencies. This ‘open, distributed ledger’ allows for fast and transparent recording of transactions between two parties.

The market overview 
The cryptocurrency market size was $1.49bn in 2020 and is expected to reach $4.94bn by 2030, increasing at a compound annual growth rate of 12.8 per cent for the forecasted period. In November 2020, the cryptocurrency market reached $3 trillion. Bitcoin, the most valuable cryptocurrency, in February 2021 reached $1 trillion in market value; Ether, the second largest, reached record highs, while Altcoins, including meme inspired Dogecoin, soared in popularity. Transparency or distributed ledger technology and an increase in venture capital investments are the primary reasons driving the sector forward.

Cryptocurrency users are increasing at 113 per cent every year. Even if it slows to the 63 per cent growth rate seen by the internet simultaneously, analysts believe it would result in four billion users by 2030 or before.

The Middle East cryptocurrencies market 
In the Middle East, cryptocurrency adoption is at an all-time high, and regulatory framework supporting crypto-related financial services are expanding. The region’s crypto ecosystem is increasing, while the regulatory policy is being crafted in response to the
growth in demand for crypto-related financial services.

The UAE has been one of the most welcoming regions to establish cryptocurrency trading agencies and other cryptocurrency verticals. Numerous policies have been implemented in Dubai to boost investment in blockchain technology enterprises. According
to a recent expert poll, institutional investors and wealth managers in the country want to strengthen their exposure to digital assets between now and 2023.

Top predictions for 2022 and 2023 
Predicting the market by cryptocurrency types, experts say Bitcoin has the possibility of topping $100,000 by the end of 2023. According to analysts, Binance Coin (BNB) might reach $1,000 by the end of 2022. However, some analysts believe that even a price objective of $100,000 is too low. Furthermore, within this year, analysts predict that the Solana (SOL) price will stabilise and hit $300, if not more. Following a relatively slow increase in June and July last year, its value pushed through in mid August and kept rising until mid-September.

Dogecoin (DOGE) is estimated to increase up to $3 in 2022. Shiba Inu (SHIB) jumped in May 2021, but was quickly pushed down by DOGE. Shiba could reclaim its past highs, with a predicted price of $0.000084 in Q1 2022, continuing to increase to $0.000088 by Q3 2022. Analysts predict that the average price of LUNA might cross the $105 mark by 2022 with a maximum value of more than $120.

Ethereum also gained momentum during 2021, and it is important to note how its market value soared with the announcement of the ETH 2.0 upgrade. This upgrading initiative is projected to continue in 2022 according to experts, which is one of the primary factors that will drive ETH price to $6,000 by the end of 2022. BNB is one of the most popular cryptocurrencies today, with more than $1bn daily trading volume.

Nevertheless, the greatest threat to it is extreme volatility, with some experts predicting a price collapse. However, analysts believe BNB will surpass the $1,000 milestone by the end of 2022.

The fast-evolving cryptocurrency market 
On the rapidly developing cryptocurrency sector and consumer acceptance of cryptocurrencies, the FTFTX team attributes this to the appeal of peertopeer transactions in a decentralised system such as Bitcoin or a centralised system such as Ripple, the
absence of a central authority, the anonymity and security cryptocurrency offers, as well as the speed of transfers, particularly international transfers.

Another reason contributing to the adoption of cryptocurrencies is blockchain technology.

Blockchain is reshaping and revolutionising the financial industry and profoundly impacting sectors like healthcare, real estate, e-commerce and others.

The proliferation of crypto exchanges 
Cryptocurrency exchanges facilitate trading cryptocurrency assets between a buyer and a seller. The assets can be traded for other assets or fi at.With the continued expansion and acceptance of cryptocurrency, dozens of new digital currencies are introduced each month; consequently, cryptocurrency investors require cryptocurrency exchanges to trade, invest, and store their digital assets.

There are centralised exchanges (CEXs) owned and managed by a single entity. CEX exchanges handle over 95 per cent of transactions. Decentralised exchanges (DEXs) enable users to conduct peer-to-peer transactions without the assistance of a third party or an intermediary. Due to some of the drawbacks of centralised exchanges, some users prefer decentralised exchanges.Besides the rising adoption of cryptocurrency and the monthly increase in the number of new cryptocurrencies added, the increased use of exchanges is also due to the anonymity and peer-to-peer exchange of cryptocurrencies, eliminating the possibility of fraudulent trading associated with decentralised exchanges.

The appeal of centralised exchanges is user-friendliness, providing new investors with a familiar, comfortable platform for trading and investing in cryptocurrencies.

Overall, cryptocurrency investors will need to sift through a plethora of information to make knowledgeable investment decisions.

Investors must make essential decisions about where and how to deal with cryptocurrency investments.

Ola Lind is the director of FTFT Capital 

Taken from GB Invest February 2022 edition