The progression of crypto in the last decade has been nothing short of exciting. But what do the next ten years look like?
Some of the most popular cryptocurrencies today, like Bitcoin (BTC -0.33%) and Ethereum (ETH -1.09%), have a chance to remain in the driver's seat of the crypto asset class. Their dominance over the market isn't likely to change much.
But even smaller cryptocurrencies that serve niche roles in the development of Web3, like Arweave (AR -2.16%), could end up being a necessity for further development in the future of the internet. Let's see what the following three Motley Fool contributors have to say about these cryptocurrencies.
The original cryptocurrency is here to stay
Neil Patel (Bitcoin): Probably the first and most obvious digital asset that investors think of when asking which cryptocurrencies will shape the future is none other than Bitcoin. Launched in January 2009, the world's most valuable digital currency, with a market capitalization (as of July 1) of $367 billion, has produced a remarkable return of 709% over the past five years despite falling 58% in 2022.
Many other cryptocurrencies, most notably Ethereum, are programmable blockchains with smart contracts built into the system that allow for the development of a wide range of decentralized applications. But Bitcoin is different. It was designed purely as a groundbreaking, decentralized, global internet currency.
And this directly undermines the power of governments to print money. Therefore, it's no wonder that Bitcoin's founder(s), Satoshi Nakamoto, remains anonymous. If the identity of that person (or group of people) were discovered, it's highly likely authorities would press charges for tax evasion and any number of financial crimes. But this is precisely what makes Bitcoin so special compared to other major cryptos out there. A central group doesn't control it, and it is really decentralized, as the top 10,000 wallet addresses own only 58% of the outstanding circulation.
While Bitcoin today is mainly viewed as a store of value and digital gold, it's true objective is to become a medium of exchange. Block's (SQ 0.62%) co-founder and CEO, Jack Dorsey, thinks that the internet, which will only become a bigger part of people's lives going forward, needs a native currency. And he believes Bitcoin can be just that.
Citizens in developed countries, who have established and well-functioning financial systems, might not exactly see the potential that Bitcoin has. In nations that have corrupt governments, for example, owning and transacting with Bitcoin might be the best hope for economic security. But even in places like the U.S., where soaring inflation impacts purchasing power, Bitcoin can be an attractive asset to own.
As far as actual payments are concerned, Bitcoin is pretty slow, with capacity to process just three transactions per second. A promising layer-2 solution, called the Lightning Network, can speed up payments between two parties by storing data off Bitcoin's main network. Only when the two parties end their transaction relationship will data be posted to Bitcoin's blockchain. This substantially speeds up throughput.
Bitcoin's first-mover advantage and worldwide popularity give it the best chance of the more than 20,000 cryptocurrencies out there to still have a sizable impact on society well into the future. It not only has become a legitimate financial asset to own, but it could also have a permanent place in an economy increasingly driven by the internet. What's more, Bitcoin's success at challenging the status quo and the most important shared belief in the world, money, makes it a powerful phenomenon.
This DeFi favorite isn't going anywhere
Michael Byrne (Ethereum): You really can't discuss cryptocurrency impacting the future without talking about Ethereum, the second largest cryptocurrency by market cap and the system that underpins much of the smart contract and decentralized finance ecosystems today. NFTs (non-fungible tokens) on the Ethereum blockchain are a major part of what brought crypto into the mainstream. While NFTs have become a billion-dollar asset class, they are still evolving, from profile picture artwork of apes and owls to tokenized real-world assets, such as real estate and mortgages. This is a key way crypto will shape the future of finance. Imagine an asset like a rental property or a hotel being tokenized into 100 or even 1000 NFTs. While other blockchains, like Solana, also feature thriving NFT markets, Ethereum's scale and first-mover advantage give it a significant cache and head start in this department.
Ethereum critics have bemoaned the fact that transacting on Ethereum can be impractical because it can be slow and expensive. But Ethereum's upcoming transition to proof-of-stake consensus in a long-awaited process known as "The Merge" should help to improve transaction times and lower transaction fees. Furthermore, it will allow more users to earn rewards by staking their Ethereum.
Another key reason Ethereum will shape the internet's future is that it is the standard that many other promising cryptocurrencies are built on. For example, Chainlink (LINK -0.29%), an oracle network that enables smart-contract platforms to access information from the outside world, is an ERC-20 token built on Ethereum. So are Uniswap (UNI -3.92%), Shiba Inu (SHIB -1.34%), and USD Coin (USDC 0.01%), a major dollar-denominated stablecoin with a $55 billion market cap.
As a foundational piece of smart contracts, NFTs, and much of today's crypto ecosystem, Ethereum will continue to be a major cryptocurrency over the long term.
RJ Fulton (Arweave): One cryptocurrency that is positioned to gain market share and change the cryptocurrency landscape in an increasingly digital world is Arweave. The goal of Arweave is to permanently store an infinite amount of data by using a blockchain. This data can be news articles, pictures, financial reports, and much more. Pretty much anything that is found on the internet or your average computer can be stored on Arweave. Once added to the blockchain, this information cannot be changed, manipulated, or removed. To store data, users are charged a fee that must be paid in its native AR token. Payments are used to buy gigabytes of data. It is a one-time payment and has no recurring charge.
The Arweave blockchain has attracted a unique group of users in the last few years. Not only have regular people begun to use Arweave, but other cryptocurrencies have started to utilize the blockchain. Cryptocurrencies like The Graph (GRT -3.94%), Near Protocol (NEAR -1.50%), Polygon (MATIC 1.33%), Avalanche (AVAX 1.43%), Solana (SOL 2.23%), and Polkadot (DOT -2.78%) all integrate with Arweave to store transaction data permanently. These cryptocurrencies choose to offload their transaction data to help free up storage on their own blockchains while also ensuring that all transaction history remains permanent.
Arweave is also smart contract compatible. Smart contracts are the building blocks that developers use to create decentralized apps (dApps) that make up the DeFi economy. This means that developers can leverage data on Arweave in various DeFi applications and further increase its use cases in crypto.
This unique combination of long-term storage and flexible development has positioned Arweave to become more prevalent in the next generation of the internet, known as Web3. Web3 aims to be everything Web2 isn't. Web3 hopes to be decentralized and secure. It also aims to promote seamless interoperability between different applications and platforms, have no downtime, and remain open source. A project known as the Web3 Index has ranked which networks are supporting the most development of Web3 with a unique algorithm. Unsurprisingly, at the top of that list is Arweave due to the expansive repertoire of systems that it supports.
In the future, it is likely that more blockchains and projects will decide to utilize Arweave's permanent and infinite data-storage solution. It offers a reliable, secure, and unique answer to one of the internet's oldest problems. As Web3 progresses, Arweave has the chance to fill a needed gap and grab market share in a rapidly developing sector of the internet.