2021 made it loud and clear that crypto, DeFi and web 3.0 are becoming mainstream and allowing for entirely new possibilities of value creation and value exchange.
With the new year just around the corner, let’s see what Slash’s CEO Andries De Vos thinks about 5 global crypto trends in 2022. We will write separately about the broader more strategic discussion around Web 3.0 and the open metaverse.
#1: Acceptance & Support from Traditional Financial Institutions
In 2021, the world witnessed the involvement and interest of many traditional financial institutions in the cryptosystem.
One of the best examples is Morgan Stanley. In March 2021, all the bank’s wealth management clients could access Bitcoin funds. Opening doors for their clients to buy and sell traditional shares and participate in conventional trade practices on the value of Bitcoin.
Three months earlier, BlackRock, the world’s biggest asset manager, announced the addition of Bitcoin Futures in two of their funds. Thus, helping potential Bitcoin investors to see and analyze the outcomes of the market. Players like Wisdom Tree, one of the largest ETF providers, are already launching crypto-related services to benefit investors in 2022.
As a matter of fact, in November 2021, the US federal banking regulators, including OCC, FDIC, and Fed, have announced sharing of detailed guidelines with all the US banks interested in offering Bitcoin-related services in the upcoming year.
2022 will be a year where numerous more traditional financial institutions will step into the crypto market.
#2: Crypto Integration into Countries Financial Systems
The rise of Central Bank Digital Currencies (CBDC) experiments will change the financial landscape and impact geopolitics.
What exactly is a Central Bank Digital Currency (CBDC)? A CBDC is virtual money backed and issued by a central bank. As cryptocurrencies and stablecoins have become more popular, the world’s central banks have realized that they need to provide an alternative—or let the future of money pass them by.
87+ countries are exploring the creation of CDBC and the EU is working on MiCA, the ““Markets in Crypto-Assets” – a crypto regulation covering all European Union countries.
China is launching a digital currency, controlled by its central bank and designed to be untethered to the global financial system, called the digital yuan. The project to find a digital currency started in 2014, after the growth of bitcoin started to raise concerns in China. China is way of ahead of other major economies.
China’s experiment has key ramifications. The digital money is trackable, and not anonymous. It is also programmable and Beijing has tested expiry dates on money as a tool to jump-start consumer spending. It could even soften the ‘bite of US sanctions’ abroad.
CBDCs targeting consumers will have a mixed impact in different countries. In advanced economies with efficient payment networks, unlikely to be a big deal. In poorer countries where payment rails are expensive, retail CDBCs will be attractive – point in case in September 2021, El Salvador became the first nation to embrace Bitcoin as a legal tender. In authoritarian countries, regardless of the current cost of consumer payments, the control afforded by a CDBC will be appealing.
#3: Crypto Savings Accounts for High Profits
Although you can deposit (staking) Ethereum, Bitcoin,and stablecoins to your crypto savings to earn high profits, this isn’t an ordinary practice when it comes to enjoying yields on savings accounts.
People usually believe in saving regular currency (paper money) or tangible assets in traditional savings accounts to generate revenue. However, in 2022, people will be attracted more towards making “crypto savings accounts” to earn more significant amounts.
According to a report, staking generates around $9 billion each year, but once Ethereum 2.0 is out in the open, more people will be engaged in this practice. And as the JPMorgan experts also believe that 2022 will be an excellent year for staking, the figures are expected to reach $20 billion and would reach $40 billion by 2025.
Undoubtedly, it’s a great way for people to utilize their digital assets to get high returns. And 2022 will be the year that will help grow this staking trend and mindset.
There are already numerous institutions educating about crypto with the help of their content. Financial platforms like Dezy, Crypto, and Real Vision are a few out of many names, helping people understand how crypto works.
#4: NFT Will Be More Than Just “Art”
Non-Fungible Tokens or the NFTs have been all the rage in 2021. This new kid in the block allowed artists to grab some mind-boggling prices for their artwork through blockchain technology.
Next, NFT has already entered the gaming industry. The prime example is the “Axie Infinity” game. Here, the players are permitted to create their own NFT characters and send them on the battlefield. Currently, there are 300,000 players. The popularity of NFT is giving rise to an entirely new economic model of game play called “play to earn” which will change the gaming industry, leisure and impact global cultural trends. For a good video on this, see Real Vision’s deep dive on play to earn.
Last but not least, luxury brands and large FMCG players such as Nike and Dolce & Gabbana are developing NFTs to showcase their new footwear and clothing line. Likewise, giants like Facebook, Nvidia, and Microsoft are also shifting their attention towards NFT, to create entirely new experiences inside their metaverse projects. Shopping malls and retail are about to be changed dramatically.
#5: Environmental-Friendly Blockchain
Remember how Elon Musk rejected Bitcoins payments for Tesla at some point due to environmental concerns?
Crypto mining and blockchain may be moving from environmental laggards to environmental innovators and enablers. A broad-based movement to “greenify” blockchain is under way.
The crypto industry has been under the weight of the energy demands that the blockchain infrastructure requires to operate. Now a coalition of more than twenty private companies has come together to set standards for decarbonising the industry. One of the imperatives of the Crypto Climate Accords is to transition all blockchains to be powered by 100% renewable energy by the 2025 COP event.
This is more than a lobby group; we’re seeing a relatively nascent industry pro-actively police itself where most governments wouldn’t have the mandate to act. And the challenge is enormous. The use of Bitcoin blockchain protocol in China may peak in 2024, and generate 130.5 million metric tons of carbon—the annualised emission output of some countries. A recent paper in Nature outlines policies that could help curb this.
To illustrate in practice what companies can do. In November 2021, a US-based tech company “Lancium” announced that it would create a Bitcoin mining platform in Texas with $150 million funds that will entirely run on renewable energy resources.
Recently, Solana released its annual energy report, and it’s fascinating. A single Solana transaction uses roughly the same amount of energy as a single Google search. Ethereum is set to be shifted on a POS model during the New Year 2022.
The greenification of blockchain technology and the blockchain industry is a welcome trend!
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