2024: The year to rewrite monetary history

As we enter 2024, the global financial environment is facing tremendous changes. This year will be a watershed in the evolution of money, reshaping the way we perceive and interact with fundamental aspects of our daily lives. This change is driven by a confluence of factors, including significant advancements in blockchain technology, the rise of digital currencies, increased institutional adoption of Bitcoin, regulatory developments, and global economic challenges.

evolution of money

Historically, Money evolved from physical objects such as seashells or coins., from banknotes to electronic finance. Each transition has been driven by the need for more efficient, secure and accessible means of financial transactions. Today we stand on the verge of another major change brought about by digitalization.

In recent years, the transition of money from physical to digital currencies has accelerated due to consumer habits shaped by COVID-19 and major financial institutions entering the digital currency space. The shift from physical to digital currency is not just a trend, it is a change that will have a profound impact on the way commerce is conducted.

Disadvantages of the current financial system

Traditional financial systems, dominated by centralized banks and paper-based currencies, suffer from issues such as inefficiencies, lack of access for the unbanked, vulnerability to fraud, and high transaction costs. These shortcomings have been particularly highlighted by recent economic difficulties and the need for a more transparent and efficient financial system.

economic difficulties and instability

The world is currently struggling with economic obstacles such as inflation, exchange rate fluctuations, and financial exclusion. These challenges have been exacerbated by geopolitical tensions and the COVID-19 pandemic, which has soared public debt and weakened the economy. These challenges highlight the need for a more resilient and inclusive financial system, which digital currencies can potentially deliver.

Blockchain mainstreaming and institutional interest

Poorvi Sachar, Head of Operations, Tezos India, emphasizing that 2024 is the year when blockchain is expected to become mainstream. This surge is driven by increased institutional interest, regulatory clarity, and consumer-friendly solutions.

“Major financial institutions are exploring blockchain applications for payments, alternative finance and asset management,” says Poorvi. Additionally, governments are developing their own cryptocurrency and blockchain frameworks, indicating wider acceptance and integration of these technologies into existing systems.

Digital Currencies – Bitcoin and Ethereum

Cryptocurrencies such as Bitcoin and Ethereum have gained attention due to their decentralized nature and potential to provide reduced transaction fees and increased transparency.

Bitcoin, was a topic of particularly heated debate. According to Eswar Prasad, an economics professor and senior fellow at Brookings, Bitcoin is an interesting form of currency created to allow transactions without a trusted institution such as a central bank.

The emergence of CBDC

Central Bank Digital Currency (CBDC) It also emerged as a government response to the rise of cryptocurrencies. This digital form of fiat currency aims to modernize the current financial system, providing benefits such as lower transaction costs and improved financial inclusion. However, CBDCs face criticism over potential privacy issues and centralization of control.

CBDC represents a significant change in the digital currency landscape. According to the Bank for International Settlements, 93% of central banks are exploring CBDCs.Half of them are already in the experimental or pilot stage.

Impact of CBDC and NFT expansion

CBDC is expected to disrupt the traditional financial system. As Poorvi explained, this would make cross-border payments faster and cheaper and give governments greater control over the money supply. Additionally, the expansion of non-fungible tokens (NFTs) beyond collectibles is expected. This expansion is exemplified by Airchains’ partnership with India’s New Town Kolkata Development Authority, which leverages blockchain for land mutation tracking to improve the efficiency and security of government operations.

CBDC as a catalyst for Bitcoin growth

Interestingly, the emergence of CBDCs may inadvertently spur the growth of decentralized cryptocurrencies such as Bitcoin. As people become more comfortable with digital currencies through CBDCs, they may also explore decentralized options that offer greater privacy and autonomy.

Bitcoin’s role in the financial system

Bitcoin plays an important role in solving the challenges of the current financial system. Its decentralized nature has the potential to reduce dependence on traditional banks and democratize access to finance, especially in underserved areas. Moreover, their inherent scarcity and resistance to inflation make them a potential hedge against economic instability.

Digital currencies to stand out in 2024

2024 is expected to see a significant increase in the adoption of digital currencies, especially Bitcoin. As trust in traditional financial institutions continues to waver, individuals and businesses alike are increasingly turning to cryptocurrencies.

Market Catalysts and the Future of Bitcoin

Gracy Chen, Managing Director, Bitget, outlines six market catalysts for positive developments in 2024. This includes SEC approval of a Bitcoin ETF, expected in January 2024, and an Ethereum ETF. The Ethereum Cancun upgrade is set to further unlock the potential of Ethereum and the L2 ecosystem. Stablecoin USDC issuer Circle is preparing for an IPO that could bolster the adoption of cryptocurrency stablecoins. additionally, Bitcoin is approaching its halving eventThis will increase scarcity.

The FTX case is moving toward resolution and new retail funds are expected to enter the market as regulations become clearer. Lastly, the end of the U.S. interest rate hike cycle and the increasing likelihood of a rate cut in May 2024 are likely to strengthen positive sentiment in the cryptocurrency market, increasing Bitcoin’s attractiveness.

Regulatory developments surrounding Bitcoin and cryptocurrencies

The growing importance of Bitcoin and other cryptocurrencies has led to increased interest from regulators. Regulations for digital assets are becoming clearer around the world.Governments and financial institutions are working to establish a framework to regulate and integrate these new forms of currency into the existing financial system, especially with the SEC’s firm stance in the United States. These regulations aim to promote innovation while addressing issues such as money laundering and financial stability.

The regulatory environment is driving the narrative towards legitimacy, with security tokens backed by real assets and aligned with international regulatory frameworks becoming the new standard.

Widespread Cryptocurrency Adoption

Gracy Chen predicts a real bull market for cryptocurrencies after Mt.Gox’s liquidation of Bitcoin excess and the US government’s seizure of Silk Road. These market changes are expected to be accompanied by widespread adoption of cryptocurrencies and the introduction of new innovations.

Cryptocurrency taking major strides toward maturity in 2024

The digital asset industry is expected to take major strides toward maturity in 2024, marked by regulatory clarity and increased institutional adoption of Bitcoin and regulated security tokens. Additionally, integrating real-world assets into decentralized finance (DeFi) and accelerating CBDC initiatives are important trends shaping the industry.

2024 will be a period of transformation for the financial world, marked by the mainstreaming of blockchain technology, the emergence of CBDCs, and pivotal developments in cryptocurrency markets. These changes, driven by technological advancements and regulatory changes, are redefining the nature of money. At the center of this change is Bitcoin, which embodies the principles of decentralization, privacy, and autonomy. As we witness these changes, Bitcoin’s role in enhancing financial privacy and autonomy in a decentralized environment has become increasingly important, paving the way for a new era in the global financial system.

Read more: Cryptocurrency: What’s Making It So Popular?