What’s the future for crypto?

The questions are many.

Will crypto-currencies go down in 2021? Will they go up? Will they eliminate physical currencies? Will they be stateless and mean people can interact financially wherever they want? What will governments do to respond to what many view it as a competitor to fiat power?

The answers aren’t clear but what is certain is that we should be asking them.

2021 has been a landmark year for the decentralized digital currency that promises (or not – depending upon whose opinion you believe) to disrupt traditional finance.

What does the Bank of England think? Cryptocurrencies “are extremely unpredictable” it states on its website. “If you’re thinking of investing in one you need to be prepared for your investment to go up or down. It’s even possible its value could fall to zero… making it worthless.”

Banks have every reason to be sceptical. They have a lot to lose. Many have systemic concerns over decentralized crypto-currencies’ potential to destabilize or undermine the authority or control of central banks. The truth is that here is still a real lack of knowledge around crypto and many governments are slowing down adoption by portraying crypto assets as risky.

But like it or not, despite the cynicism and the dizzying volatility of cryptocurrency (Bitcoin has lost over 80% of its value on several occasions but at the time of writing is on the rise again, hovering around $50,000), it is unquestionably gaining mainstream credibility.

The combined value of the world's cryptocurrencies (the main part of these are bitcoin and ethereum) hit $2 trillion in August. The valuation of all bitcoins combined is around $700 billion, equating to 6% of the valuation of gold.

Clearly, crypto deserves serious attention.

And it’s getting it. The adoption and deployment of blockchain solutions by financial institutions, crypto-enterprises, and world governments are underway.

Many venture capitalists believe that the digital asset industry will prove revolutionary. El Salvador has even adopted it as an official currency in recognition of its undeniable advantages of portability, divisibility, inflation resistance, and transparency.

Significantly, even traditional industry players such as Fidelity and Mastercard are beginning to embrace digital assets.

S&P Dow Jones Indices now produce cryptocurrency benchmarks and a number of Wall Street’s biggest trading companies have indicated that they will now be active participants in the crypto markets.

One of these is Jane Street – it actively trades $8-13 billion worth of equities, bonds, futures, options, and other investments – which has stated it is now ‘in’.

“We’ve seen institutional interest grow significantly and we are actively sharing our expertise to support more efficient crypto markets,” its head of institutional strategy, Mina Nguyen, told the Financial Times in September.

Bitcoin and other cryptocurrencies have emerged as a new asset class that has seen extraordinary returns – and increasing legitimacy – over the past decade.

And with the big ongoing debate among regulators from the US to the EU in 2021 being about how much regulation to apply to crypto, it’s clear it’s worth taking crypto seriously…