What will the crypto market look like in 5 years?

In recent years, the crypto industry has been in a period of great innovation and technological progress, but also a period of chaos. In a short period of time, it is difficult for the fundamentals of the crypto industry to change dramatically, but if we extend the time to 5 years, we may be able to guess some development trend changes.

The Metaverse is still far from widespread adoption

The Metaverse has been a hot topic in recent years, but most people don't have a very good idea of ​​what the Metaverse actually consists of. In fact, the Metaverse is a complete virtual world that persists (no pause or reset), works in real time, can accommodate any number of users, has its own economy created by the participants themselves, and has unprecedented interoperability characteristics. Various applications can be integrated into the Metaverse, including games, video conferencing applications, etc.

This definition makes it clear that the Metaverse is not a new phenomenon. Games and social networks that include most of the above features have been around for some time. Of course, interoperability is an issue that needs to be seriously addressed, and being able to easily transfer digital assets or digital identities between games without being tied to a specific platform would be a very useful feature.

However, the Metaverse cannot satisfy all needs, as some services will not find a reason to be included in the Metaverse for the time being. Some services will remain isolated because their operators are unwilling to give up control of the services.

At the end of July this year, Ethereum co-founder Vitalik Buterin said that the "Metaverse" will happen, but he does not think that the attempts of companies in the current market to deliberately create a Metaverse will succeed. Indeed, the realization of the Metaverse still needs to consider technical support.

The cyberpunk culture of the 1980s and 1990s believed that the metaverse meant a fully immersive experience. Now, this immersive concept can only be realized by using VR glasses. VR hardware is upgraded every year, but among hardcore gamers, VR is just a decorative appearance in the crypto industry. The vast majority of ordinary players are unlikely to wear such glasses to trade on a trading platform. True immersion requires further technological breakthroughs, such as smart contact lenses or neural links. At the current rate of development, these technologies are unlikely to be widely used within 5 years. Therefore, the metaverse will continue to be in an awkward stage where the concept is faster than the technical support.

Crypto wallets will become “super apps”

In the current market, active DEFI players have to deal with dozens of protocols on a daily basis. There are hundreds of applications such as wallets, interfaces, trading platforms, cross-chain bridges, lending protocols, etc., and the number is growing every day. Even for advanced players, it is very troublesome to use so many technologies on a daily basis. From the perspective of large-scale adoption by ordinary users, this situation is even more unacceptable.

For ordinary users, it is ideal to get the most comprehensive services through a limited number of general applications. The best option is when all these services are directly integrated into the wallet. If a single interface can be used for all necessary operations such as storage, transactions, cross-chain, staking, etc., the user experience will definitely be better than visiting dozens of different sites.

Essentially, users don’t really care about which trading platform or cross-chain bridge to use, they care more about decentralization, security, speed, and transaction fees. A large number of DEFI protocols will eventually become backends that cater to mainstream wallets and interfaces.

BTC will become the unit of account in most countries and regions

Currency has three main roles: as a means of payment, as a store of value, and as a unit of account. Currently, in cryptocurrencies, mainly stablecoins are used as a means of payment, while BTC and ETH are used as a store of value. The US dollar is still the main unit of account in the world. All financial assets are denominated in US dollars, including BTC. In the future, cryptocurrencies may become the unit of account recognized by most countries and regions, and BTC is currently the cryptocurrency most likely to achieve this status.

What needs to happen in the next five years to make the above a reality? A sharp decline in market confidence in the US dollar and the euro is a prerequisite for cryptocurrencies to play the role of basic accounts. The printing of trillions of dollars in fiat funds by European and American sovereigns has already undermined people's confidence in fiat currencies, caused inflation to spiral, and frozen the reserve funds of multiple sovereigns. This may become the norm in the future.

The Western world will continue to face a series of problems - what if the actual inflation rate is much worse than expected? What if the economic crisis cycle is prolonged? What if a new epidemic breaks out? What if the conflict in Ukraine spreads to neighboring countries? All of these are possible scenarios. In this case, as an emerging anti-inflation target, the cryptocurrency field may absorb a certain share of funds.

The top 50 cryptocurrencies by market value are reshuffled

There is a high probability that the top 50 cryptocurrencies will see a dramatic change in their rankings. Old projects such as ETC will fall out of the top 50 in terms of market capitalization, and the copycat projects that currently seem to have an unshakable position may also be eliminated or even disappear completely. The market capitalization of some stablecoin projects will shrink, and new stablecoin projects will take their place. High-market-cap public chains with slow development progress, such as ADA, will drop significantly in the rankings, because the ecological disadvantages of these projects are already difficult to reverse, and it will be difficult to attract more users in the long run.

Cryptocurrency Market Will Split Along Geographic Lines

Cryptocurrency is a global asset by default, but its impact on different countries varies greatly. Each country has some special means to deal with cryptocurrencies. The United States, the European Union, China, India, Russia and other countries have different attitudes towards cryptocurrencies. Some countries are actively introducing cryptocurrencies, while others are strictly regulating and preventing them.

The factors of international competition can also be superimposed on internal national motivations. For example, when Russia was subject to strict sanctions, some crypto projects began to restrict Russian users from accessing their services or even blocking their funds. It is entirely possible that similar situations will occur again in other countries.

It is not difficult to imagine that while some countries and regions are shutting out the crypto market, some countries will actively embrace the crypto market and strive to become the center of global cryptocurrency development. Recently, countries and regions such as Singapore and the United Kingdom are actively planning and developing the crypto industry, which shows that there are still many sovereign countries that have strong confidence in the development potential of the crypto industry. Therefore, the geographical differences of cryptocurrencies will be further enhanced over time.