Robert J. Shiller is a Nobel laureate economist, a Sterling Professor of Economics at Yale University, and a best-selling author, and one of the most influential economists in the world. In short, when it comes to the economy, his opinions have value. When he was asked about the future of cryptocurrency, in general, in an interview on CNBC last year, he depicted a rather grim outlook for what many hope will replace traditional currency. If bitcoin is even around in 100 years, he said, it will be a completely different iteration of what it is today.
There are many who wonder what the future of Bitcoin may look like – and this is a more complicated matter than it seems, considering how different cryptocurrency works from “real” money. The regulatory chaos surrounding the matter adds even more confusion to the mix. Add this to the mixed interest of investors and the massive fluctuations of its exchange rate and you have a perfect storm coming.
Authority and control
What makes cryptocurrency very different from “real” money is that it exists without a central authority governing it. The entire network can contribute to its creation and exchange, without any interference from authorities. While this makes it immune to government manipulation, it also makes it much more volatile than a traditional currency, without its safety nets. Its future is either bright or grim, depending on who you ask: its supporters, the so-called “evangelists”, expect it to soar beyond imagination, others see it as a bubble ready to burst. And there are enough voices in between these two extremes that expect it to be around for quite some time but to settle at a value that’s much lower than what the evangelists predict.
One of the factors that threaten the future of cryptocurrency is government scrutiny. After all, it is not only a completely decentralized system but one that’s also anonymous. This makes it perfect for illegal activities ranging from money laundering to weapons trade. This is the reason why some governments have simply banned its use, while others are trying to elaborate methods of controlling it. This scrutiny may be one of the factors that could hamper the spread and use of cryptocurrencies: the more popular they become, the more regulation they attract, and this will gainsay their very essence.
There is, in turn, another factor that can hamper the spread of cryptocurrency: complexity. Paying with traditional money is simple, a process we’ve all been using for ages. Paying with Bitcoin is much more complicated, though, which deters many potential users. One of the challenges of the future will be turning cryptocurrency into a user-friendly tool anyone can understand and use while keeping it as decentralized, untraceable, and secure as it is today. All this while satisfying regulators by making it unfit for use in illegal activities, and implementing safety nets similar to those of the traditional financial system.
Josh
