From hitting the $3-trillion market cap to the complete ban on crypto trading and mining by China, multiple events made 2021 a truly dramatic year for cryptocurrencies.
2021 was the year like never before for cryptocurrencies. From hitting the $3-trillion market cap to the complete ban on crypto trading and mining by China, multiple events made 2021 a truly dramatic year for cryptocurrencies. It was also the year when prices for Bitcoin and Ethereum reached an all-time high, non-fungible tokens (NFTs) turned digital images into digital assets, more financial institutions and corporates got into experimenting with Bitcoin, El Salvador became the first country to adopt Bitcoin as a legal tender, meme coins like Dogecoin and Shiba Inu gained momentum – thanks to Elon Musk’s tweets to a great extent, first futures-based ETF was launched, 90 per cent of all bitcoins were mined, Tesla bought $1.5 billion in Bitcoin, and more.
There’s much more that the crypto world is expecting in 2022 as Bitcoin continues to gain more mainstream adoption globally even as governments across the world remain sceptical about it. Below are some of the key trends that crypto pundits in India believe would emerge or gain momentum in 2022:
Decentralised Finance (DeFi) will continue to grow driven by innovations in automated market-making and other liquidity-providing solutions leading to attractive yields on cryptocurrencies, according to Swapnil Pawar, Founder at blockchain startup ASQI told Financial Express Online. Moreover, with the emergence of platforms like Olympus decentralized autonomous organization (DAO) and subsequent forks like Wonderland, a new DeFi commonly known DeFi 2.0 is likely to gain momentum.
“Complex derivative products and innovative financial instruments are being created daily. Early participants are being rewarded with returns in the 1000s of percentage Moreover, with the DeFi 2.0, institutions can no longer ignore the returns and would look for safe methods to participate in the wild west of crypto,” Arjun Khazanchi, Co-founder and Chief Legal Officer at crypto and digital asset management suite provider Rooba Finance told Financial Express Online.
Metaverse’s interaction with web 3.0 is expected to become more concrete as investors are pouring money into digital real estate in the future digital world. For instance, New York-based metaverse real estate firm Republic Realm bought a plot of digital land worth $4.3 million in one of the virtual world portals The Sandbox earlier this month. In November Canadian crypto firm Tokens.com had bought digital land for $2.4-million on Decentraland.
Also read: NFTs generated over $23 billion in trading volume in 2021 amid craze for digital assets
“The next phase of the web or web 3.0 will represent a big paradigm shift. This innovation will give users control and ownership over their data, making the internet more secure, decentralized, and easy to monetize for the end-user. We can expect to see massive advances in web 3.0 in the coming years,” Amit Nayak, CEO and Co-Founder, Sahicoin told Financial Express Online.
Polkadot will become a major contender for ‘large-cap’ status with its launch of parachains – making the idea of chain interoperability concrete, according to Pawar. Parachains are essentially custom and project-specific blockchains that are integrated within the Polkadot (DOT) and Kusama (KSM) networks and are responsible for the shared security of the network. The first parachain was launched by Polkadot earlier this month and is expected to usher in the next phase of web 3.0.
Central bank digital currency (CBDC) — the digital form of a country’s fiat currency issued and regulated by the monetary authority or central bank of that country – is likely to be launched by multiple countries. “A number of countries will open up their CBDCs in the coming year. We will see major economies launching their CBDCs that will ease global trade. With respect to India, our country is going to be the most-watched country for innovation, talent, and scale. Demand for crypto and blockchain expertise across domains will surge in 2022 and more qualified talent entering this space will help develop it much faster than 2021,” said Nayak.
Projects building and solving for digital identity on the blockchain to enable a host of potential projects like voting for countries are also likely to gain traction. “These projects will align with governments wanting regulatory supervision on applications of the blockchain,” said Khazanchi.
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