The crypto market is an ever-expanding industry. At a market size of nearly $2.5 trillion, the market boasts of more than 15,000 assets, sold across more than 400 exchanges. While Bitcoin and Ethereum dominate a little more than 60% of the market together, the rest of 40% is the story of a long tail, where several assets thrive in pursuit of augmenting their share, presence, and leadership.
An expanding market grows on innovation, and the crypto industry is no exception. Here we will look for five trends and predictions we expect to gain traction in the market in the year to come for 2022.
Blockchain Going Green
Bitcoin mining is known for a highly energy-intensive process. It wastes as much electricity to add 40 million tons of carbon dioxide to the atmosphere a year. The core issue to be resolved here is that of Bitcoin’s consensus algorithm. To secure its network, Bitcoin leverages the proof-of-work consensus algorithm. This consensus algorithm expends massive quantities of electricity owing to the computing power it demands. According to its critics, the use of electricity is so high that it equals the electricity use of an entire country like Denmark and Ireland.
For all these reasons, making blockchain go green is going to see a deep emphasis in 2022. Experts and product developers are trying out different ways to achieve the required reduction in Bitcoin’s energy use, including carbon offsetting or moving to less energy-intensive models of mining. The development of a proof-of-stake consensus mechanism is one such avenue. Another way to reduce carbon emissions could be by investing in renewable energy sources.
The Advent of New Institutions and Regulations
The expansion of any market naturally implies more institutions and more money pouring into its companies and other forms of constituents. A high volume of funds pouring into any business requires regulatory initiatives from the institutions involved. In 2022, we will see more regulatory efforts in the crypto world. The European Union, for instance, is already up for ratifying its proposed framework for crypto regulation. There is also the MiCA framework that stands for Markets in Crypto-Assets. The MiCA framework intends to make it more convenient, seamless, and hassle-free for the crypto industry to expand through diverse geographies using a portable license. One can be reasonably sure, looking at the growth of the crypto market, that such innovative regulatory regimes will be dominating the phenomenon in 2022.
The Diverse Use of NFTs
Non-fungible tokens or NFTs form a significant market already. In the third quarter of 2021 alone, the NFT sales volume had surged to $10.7 billion. It witnessed an increase of more than eight times, compared to the quarter before. As we know, NFTs leverage blockchain technology to record the ownership of images, videos, collectibles, and even land or real estate.
NFTs are changing digital art, sports collectibles, media and more. In 2022, experts believe this trend will explode, and NFTs will increasingly find more use in other areas. Currently, it is having a great impact on reshaping the arts, specifically the music world. Global music stars, like the Kings of Leon, Shawn Mendes, and Grimes, are releasing songs in the NFT format.
It’s easy to see that the entire NFT ecosystem is experiencing booming growth across many industries. One hot area is in gaming. Some gaming companies are allowing players and participants to mint their NFT creatures. World-famous clothing and fashion brands have created their own NFTs. And NFTs are even being leveraged by distillers. There have been instances where distillers have sold years-old whiskey alongside NFTs. Here, the use of NFTs is proving each bottle’s provenance.
In 2022, NFTs will keep experiencing a boom—it’s not over yet. NFTs will proliferate more into diverse use areas, and global big shots like Meta, Microsoft, and Nvidia won’t be able to resist expanding NFT opportunities to the market through their multiverse efforts.
Advanced Technology Integration
Being an advanced technology itself, blockchain gels well with other technological advancements. One such area is the Internet of Things. The collaboration helps create records of interactions and transactions between machines. The successful merger of blockchain and IoT will result in enhancements in many areas, including security and scalability.
Yet, there is another vital use area of the blockchain-IoT combo. One can use it for machine-to-machine transactions, making it possible to have micropayments be made through cryptocurrencies when one machine or network needs to procure services from another network. Data transactions in blockchain have several facilities, including automation, encryption, and immutability. These facilities make it eligible for efficient use in any data-intensive application. Data transactions in the ongoing 5G rollout will also see increased use of the technology in 2022.Â
Mainstreaming of Crypto
Finally, more and more countries will start incorporating crypto transactions into the financial mainstream in 2022. The Latin American nation of El Salvador has already adopted Bitcoin as legal tender. Cities like London, New York, Miami, Vilnius, Singapore and San Salvador are emerging as global crypto hubs.
The Eurozone is also ready to define digital assets as representations of rights or values that can be transferred and stored electronically. Regularizing crypto assets would mean more countries showing faith and trust towards blockchain and crypto assets, eventually leading to the formation of more CBDCs and legal tenders.
Overall, in 2022, we will see regularization of crypto assets and more sustainable and planned use of the currencies. At the same time, it will proliferate in diverse use areas, and newer technologies will merge with it to make it more scalable and multi-layered in application potential.
The future of crypto is here, and we expect even more exciting trends happening just around the corner.Â