It seems the days of wondering if crypto is here to stay are becoming a thing of the past as signs are emerging that the cryptocurrencies and blockchain industry are consistently growing stronger. With the cryptocurrency space having gained so much interest, its increasing pace of adoption, and the willingness of both individuals and companies alike seeking to gain exposure, many are shifting their mindset and are now wondering – where is it going?

Control & Understanding

Cryptocurrencies are alternative assets that not only have real value, as they can be used to buy and sell things, but also intrinsic value as they have the potential to store and grow value. Although we’ve seen crypto’s value fluctuate which is driven by investor’s belief in its value, we should remember this is still based on speculation. With no clear track record to assess long-term value, we see its value rise and fall based on an unpredictable demand cycle. As an asset, the evaluation is more about the technology behind it rather than the belief that it will become a popular currency. And its volatility, in essence, works against its use as a currency. Without widespread adoption, its use as a currency will remain limited.

Future / Hybrids

The future of crypto is riddled with the misunderstanding of what it is as well as attempts to control it (ex: Chinese Government), tax it (ex: The IRS), and profit from it (ex: JP Morgan, Goldman Sachs, etc.).

The want to control crypto comes from fear of not having its users and transitionary history be visible, traceable, and enforceable. Countries with mass control over their citizens, such as China, have drawn lines in the sand against crypto even back to 2017 when they banned initial coin offerings and banned local exchanges from using it. Another large nail in the proverbial “coffin” landed in May of 2021 when they put a soft ban on mining crypto. This push for control will always be in opposition to the goal of crypto, which was created as a self-governing-like system with no user or central system “having the keys”.

Taxing crypto will provide a steady revenue stream for Tax Collection agencies such as the IRS, but also grant them, control over who owns crypto.

Profiting from Crypto has been the most important race of all. With companies snatching up all of the BTC (Bitcoin) that they can and the average joes still scrambling to find out where they can buy it, it is easy to see that the market to buy or sell will continue to be – shaky.

Buy?

Our clients and our client’s kids have been and will presumably continue asking – should they buy crypto? The answer is – in short – up to you. If you choose to buy, buy it because you believe it will gain widespread acceptance as a digital currency. As a long-term asset, it’s more likely a risky pricing game. Keep in mind though that it is up to you to keep meticulous records of the cost basis of your purchases, sales prices, as well as lots that you hold, buy and sell. You will need this information for future tax return filings.

Sources:

https://www.coindesk.com/political-china-hates-bitcoin-loves-blockchain

https://www.investopedia.com/articles/forex/042015/why-governments-are-afraid-bitcoin.asp

https://www.urdesignmag.com/technology/2020/11/09/five-ways-that-cryptocurrencies-are-changing-the-world-we-live-in/

https://www.nasdaq.com/articles/10-ways-cryptocurrency-will-make-the-world-a-better-place-2018-01-16

https://www.investopedia.com/articles/forex/091013/future-cryptocurrency.asp

https://www.forbes.com/sites/ninabambysheva/2021/06/08/the-future-of-crypto-and-blockchain-fintech-50-2021/?sh=532cd02453b1

https://online.stanford.edu/future-for-cryptocurrency