Time and again, there have been some digital technologies that have disrupted the way we function.
Internet was the first and the biggest one and now there are a few others like artificial intelligence, AR/VR, etc. which will change the way we operate in the future.
Blockchain is one such technology. Though it can be used for multiple purposes and in multiple industries ranging from Health tech to Agri tech, the most common use cases till now have been crypto and smart contracts. (Of course, we can't forget NFTs and how Twitter founder Jack Dorsey sold his first tweet, which launched the popular social media platform, as a $2.9 million NFT or memes like disaster girl that sold for $401,718)
Crypto got a big push last year and made it more mainstream than ever. The number of crypto traders surpassed 100 Mn in the world and is even becoming significant in countries like India (~15 Mn) which had previously banned it. Just to put this number in perspective, the number of equity traders in India is ~40-50 Mn.
Bitcoin has reached ~$879Bn in market cap (Increased by ~360%- from Aug'19 to Aug'20) and Ether is at ~$382 Bn. Coinbase IPO with a market value of ~$65 Bn was also a remarkable moment for the industry.
However, there is much more to the crypto world than just Bitcoin and Ether (And, I am not talking about Doge Coins). While Bitcoin and Ether are the decentralized volatile coins, used primarily as store of value, stable coins and CBDCs are coming up to take care of other use cases:
Stable coins: Stable coins are coins whose value is attached to an asset. Thus, the volatility attached to them is limited. They can act as game-changers in terms of cross-border transactions because volatility was one of the key reasons why people were afraid to transact in crypto (Regulation is the other big one that still needs to be resolved). The most common stable coin is USDT- Tether (there is an ongoing case against it that it is not fully backed by fiat) with market cap of ~$64Bn. USDC is another big one that runs fully on USD.
Central Bank Digital Currencies(CBDCs): As the name suggests, these are currencies created by the governments of different countries. Who is leading the way, you ask? Who other than China. China is the first to create its own CBDC and the whole world is taking note. Other countries that are also on the path are Japan and South Korea. The whole premise of CBDCs is to make the currency digital and ensure a smooth flow of payments across nations. This also removes the regulatory risk which is there with private coins, leading to an increase in the adoption of crypto. Bank to bank payment is still a hassle in a lot of places because of the complex system of SWIFT(a messaging system to facilitate cross border transitions)
There is also a huge opportunity in the space of decentralized financing-DeFi(another application of crypto) which is proving to be very disruptive. Wiki definition of this is: Decentralized finance is a blockchain-based form of finance that does not rely on central financial intermediaries such as brokerages, exchanges, or banks to offer traditional financial instruments, and instead utilizes smart contracts on blockchains, the most common being Ethereum. One major reason behind DeFi is it can help in providing financial services to the unbanked. However, this topic requires a separate article altogether.
Crypto obviously has challenges like regulations still WIP, AML, security which is being figured out but seems like we have barely scratched the surface, and in a few years, some form of crypto(majorly a store of value today) can come to the transaction side.