Although the price of bitcoin and the popularity of Dogecoin are in the headlines once again, this does not tell us much about crypto other than the fact that it remains a popular form of speculative asset.
Sure, we know that Elon Musk's tweets are capable of sending Bitcoin's value to the moon and back, but does that really matter for the wider economy?
If you look past the noise and clickbait, you will notice that some quiet shifts have been taking place that have the potential to cement the position of cryptocurrencies in global finance and the everyday economy. Here's what you need to know.
The DeFi Revolution
One of the most important shifts towards making crypto mainstream in recent years has been the explosion of so-called DeFi or decentralised finance apps. These apps constitute an entire cryptocurrency financial architecture. They can be used to generate smart contracts and allow anyone to buy and sell crypto in the same way that you would do with any other mainstream financial product. DeFi apps are changing how crypto is perceived and are helping make it more legitimate and palatable to investors.
Institutional Capital Cares
Once upon a time, bitcoin only made headlines when quirky millionaires or eccentric tech bros bought into it. Nowadays, the landscape couldn't be more different. Goldman Sachs, Citibank, Grayscale.com, SoftBank, and JP Morgan are just a few of the top-tier financial institutions that have been making major, multi-billion-dollar investments into cryptocurrencies and crypto assets in the past year alone. As influential and established institutions such as these become more involved with crypto, it shows the general public that it is trustworthy and potentially lucrative.
From Speculative Asset to Passive Income
Another sea change that is taking place in the crypto world concerns how investors are actually using crypto to make money. Instead of simply buying in and hoping to sell the asset at an inflated price once the bubble blows up a bit more, some investors are taking the longer view by earning interest from cryptocurrencies and building a passive income. As explained on BuyBitcoinWorldwide.com, there is now a wealth of trustworthy crypto accounts that you can use to store your coins and earn interest from - interest rates that are significantly higher than anything you will find at the bank.
Central Banks Are Paying Attention
Although central banks were once sceptical and suspicious of cryptocurrencies, attitudes now appear to be softening. According to EuroNews.com, central banks in many of the world's richest economies are now finalising plans to launch their own digital currencies that operate in a similar way to crypto, known as Central Bank Digital Currencies (CBDCs). These are partly designed to counter the influence of crypto and lure customers back, while also allowing people to make the kind of blockchain-backed and secure electronic transfers that bitcoin allows. If CBDCs are a success, it could serve the unintended purpose of legitimising crypto even further.
We are currently witnessing an unprecedented and potentially generation-defining shift in how we view money. If current trends continue apace, we could be living in a crypto world before long.
* This is a contributed article and this content does not necessarily represent the views of techtimes.com
