cryptocurrencies bring a lot of potential, they also have their downsides

Bitcoin (BTC) and other cryptocurrencies are back

The values are rising again. And because of the upcoming Halving, it is likely that they will rise even more. In the future, there will also be a lot of differences on the capital market because of the digital coins. But how will these changes look like? How will the capital market change? And what can we expect from bitcoin in the future?

The chance of a comeback

Since approximately one month, it goes rapidly upwards for most cryptocurrencies, including bitcoin and ethereum. A few days ago, they have reached the highest value in the last year. Bitcoin increased from about 22,000 £ to 30,000 £ within only 30 days. Between the middle of october and the middle of november the popular cryptocurrency therefore gained a value from 8,000 £. Decisive for this are in all likelihood the Middle East conflict as well as the rising interests.

Though, rumours about the approval of bitcoin ETFs arose. These are also a reason for the value increase of bitcoin. ETFs are exchange-traded funds and should also be available on the basis of bitcoin in the future. A short while ago, there circulated a hoax in which it said that these are already authorised by the US Exchange Supervisory Authority SEC, although this was not the case. 

As soon as the trading with bitcoin ETFs gets permitted, one can assume a further surge of the prices. Such an admission would be like an accolade for bitcoin, because it would depart partly from being an object of speculation. Still, the popular cryptocurrency furthermore is highly speculative. This would devolve to the respective ETFs. The exchange-traded funds would for now only be permissible in the USA. Will the application on the other hand not get approved, it is possible that the bitcoin priced will fall again. 

Bitcoin in the future

The next bitcoin halving takes place in April 2024. In the process of halving, the reward of the bitcoin miner for prospecting the blocks are halved. The bitcoin blockchain namely is using the proof of work procedure. That means that every coin on the market is generated by the contribution of energy in the form of computational power. The computational power is provided by the miner. The miner obtains a reward as soon as he attached a new block to the blockchain.

These rewards are getting halved with every halving. This leads to the circumstance that fewer bitcoins incur in circulation prospectively. So the value can rise. A halving takes place regularly every four years. That means that miner only in the year 2140 do not get rewards anymore because the value then adds up to zero. After the next halving in 2024, a miner receives 3,125 BTC. 

Regarding the future of the bitcoin, there are different prognoses. The majority of crypto experts proceed from a further rise in the next five years. Some even say that it can reach a value from 130,000 £. How probable this really is, can only show the future. Eventually, every unexpected event can also let the prices sink again quickly. Currently, there are more reasons for a surge of the cryptocurrency. These include the upcoming halving as well as the probable approval of the bitcoin ETFs.

But also the development of the capital market constitutes a decisive reason. The digitalisation is the actuator for the fact that currently everything is developing to digital processes. Also, the tokenization makes a lot of progress. More and more possibilities are arising due to this, which will have an impact on the finance system. In future, one can reckon that digital currencies like bitcoin are getting more applications. Some factories already offer a usage of bitcoin for their products and services.

How the capital market will change

More possibilities for bitcoin means a big change for the capital market. Additionally, it is conceivable that banks and asset managers soon will offer cryptocurrencies. Based on the unstable past, they are still a bit apprehensive about this. But when the values are rising again and stay stable for a certain period of time, they will possibly take bitcoin in their offer. Most of the investors namely still face cryptocurrencies positively, despite the bygone crypto winter. Data of the European Union show that the market capitalisation has multiplied by eight between 2020 and 2022. This shows how much potential cryptocurrencies really have. 

Although, cryptocurrencies bring a lot of potential, they also have their downsides. More and more countries see them as a threat to the finance system because they are classified as highly speculative. For that reason, regulatory attempts circulate currently. These are though unlikely because cryptocurrencies have a decentralised network technology. And this decentralisation makes a legal adjustment nearly impossible.


Maximilian Schmidt is CEO of the CPI Technologies GmbH. The company is specialized in software development in the areas artificial intelligence, blockchain and digital product development.


Statements of the author and the interviewee do not necessarily represent the editors and the publisher opinion again.


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