The future of cryptocurrency can affect your retirement account.
- Cryptocurrency continues to be a hot asset class
- Using retirement funds to invest may be the best bet
- The future is bright for new technology
Cryptocurrency is a digital asset formed on blockchain technology that exists online. Contrasting traditional currencies, Crypto is not reliant on governmental or centralized authorities, such as banks or governments. Although Crypto is an expanding market that is still maturing with time. The metric of its maturity is the use cases that are flowing in the crypto space by day. DeFi, NFTs, governance tokens, and Bitcoin are some examples. The direction where crypto steers to in the future is also determined by these use cases. Initially, there was a debate whether cryptos would end up becoming assets or everyday currencies but with the innovation coming into the crypto space, the debate is settled and has shown the world that there is much more to these digital currencies than that. In the future, we’ll see cryptos being adopted, classified in the following categories:
Currencies like Bitcoin have very limited supplies, the supply is supposed to exhaust in 2140, which means that the digital currency is a scarce commodity. So, Bitcoin might be used as a transactional currency for now, but due to the limited supply and increasing demand, there will only be price hikes in the future which makes it an asset to invest in.
Transactional currencies need to be non-volatile in nature. This is where stable coins come into play. Stable coins are tokens that maintain a 1:1 peg with an underlying asset which in most cases is a fiat currency. Tether, for example, has stood at $1 ever since it came into existence. These currencies can be used to make payments as they are not prone to the volatility of the market.
Governance Tokens – Decentralized Democracy:
Governance tokens are tokens in a blockchain ecosystem that are held by users to get the power of governing changes in that system. These changes are usually related to the technological aspects of the project through voting but the use cases can expand with time.
These governance tokens can be used to form entire voting systems on blockchain which also includes the US presidential elections. Apart from that, governance tokens can be characterized as equities of a certain project. The more tokens you hold; the more stake you have in the company.
Collectibles, gaming, and royalties:
Even if you aren’t a blockchain geek, chances are that you might’ve heard of NFTs or Non-Fungible tokens. These tokens are unique and indivisible due to which they have a lot of utility. Rare gaming rewards, rare collectibles, digital identities, and royalties for artists are being introduced on multiple platforms. The use cases will be diversified which would bring many more exciting applications for these NFTs.
Interest and fixed ROIs:
We know that blockchain eliminates the need for banks and central parties. So, the masses would move towards “saving accounts” in crypto rather than banks. These saving accounts are essentially tokens locked in the system to provide liquidity for which you get a fixed percentage of return monthly. This service is available on platforms that are secured and validated by the Proof-of-Stake algorithm.
Most people who dive into the crypto space are here for investments, savings, and other financial benefits. Another thing that’s making its name in the financial aspect of blockchain are the Individual Retirement Accounts (IRAs). Due to worldly events, the financial markets are gaining volatility over time due to which investors are always looking to diversify their investments that can pay back after their retirement. This includes Bitcoin-based IRAs and other cryptocurrencies IRAs as well. The bullish trend and the increasing market cap of cryptos suggest that these Retirement accounts would certainly gain a lot of popularity due to decreased volatility, better returns, security, and experience.
Much like other IRAs, holders require custodians to manage their crypto IRA accounts. Depending on your initial budget, you can get access to different kinds of IRAs.
Those who want to manage their funds on their own can also make cold storage wallets where they keep their deposits which can be accessed far ahead in the future. This not only helps saving but also, looking at the current behavior of the market, it is safe to say that these savings would also yield high returns in the future.
All in all, the crypto market is attracting a lot of innovation and use cases which would make this a huge financial market that would garner the attention of the traditional traders and investors as well. While predicting the future of cryptocurrency is challenging, this emerging asset presents multiple benefits. However, we cannot give investment advice. Instead, this article is meant to educate users on cryptocurrency and the future of this emerging currency.