After a long lull in the cryptocurrency market, there is a revival. The era of Web 2 is gradually coming to an end, and it is being replaced by the era of Web 3. NFT, DeFi applications, GameFi, new crypto coins, and DAO are all harbingers of the beginning of this irreversible process.
Thanks to the arrival of new players — from global corporations to ordinary gamers — big changes are expected in the cryptocurrency market in the coming months. They will also affect new developments.
Let's look at 6 trends that experts today call the future of cryptocurrency.
The metaverse is a hypothetical network of three-dimensional virtual worlds, where you can immerse yourself with the help of AR and VR technologies. Many companies consider it the next stage in the development of the Internet and the mobile ecosystem and offer exciting projects of virtual universes.
It's no secret that at the end of 2021, against the background of Zuckerberg's statements and the renaming of Facebook to META, interest in the metaverse has grown noticeably. Human interaction is reaching a new level as social networks, payment systems, and augmented reality applications become part of the same ecosystem.
Read more about META in our article.
Experts are confident that buying digital real estate in virtual worlds will no longer be confusing.
New crypto projects in the field of metaverse include De central, Sandbox, and Axis Infinity.
Another striking example is the Cosmos project. New blockchains in the metaverse can become part of a separate infrastructure. Decentralized exchanges, stablecoins, and DeFi are already connected to the Cosmos ecosystem.
Large companies, such as Google, may announce the creation of their virtual worlds after Facebook.
2. NFT and DeFi
Many experts are confident that NFTs, which experienced a big boom in popularity in 2021, will remain more than in demand due to the development of metaverses. Non-interchangeable tokens will provide proof of ownership when purchasing virtual objects. Tokenization will continue to increase in volume — not only individual users but also entire companies are already resorting to it. A new industry for business relations was born out of a fleeting hobby. DeFi will be responsible for the convenience of economic relations in the metaverse.
There is a "competition" going on in the wallet market right now: who will be the first to create a multi-chain wallet that will allow for cheap transactions between blockchains without using bridges and without overloading funds through additional layers of the network
The market of NFT and decentralized finance will develop, as it has not reached its peak indicators, but a large percentage of the NFT segment will not be of particular value, the founder of Amir Capital Group Marat Mynbayev is sure. Nevertheless, developments in these areas allow the market to develop.
3. Legal Regulation
In 2022, members of the crypto community may face increased activity related to the regulation of the digital asset market. The authorities can no longer ignore the growing interest of market participants in cryptocurrencies.
The legal status of cryptocurrencies varies significantly in different countries. In some countries, transactions with cryptocurrencies are officially allowed: in Germany, bitcoin is recognized as a settlement currency, in Japan, Bitcoin is a legal property with a purchase tax.
Currently, almost nowhere in the world is there a regulatory framework that establishes reference rules for conducting cryptocurrency ICOs. It follows from this that there are no legal protection mechanisms for both investors and persons issuing cryptocurrency tokens.
Now in some countries, there are attempts to include crypto investment in the legal field and give cryptocurrencies an official status. The market is moving towards centralization, which will be marked by the emergence of services and control mechanisms. On the other hand, in 2022, market participants may expect new mechanisms for the legalization of a financial instrument and taxation.
The first forecast of Messari CEO Ryan Selkis for 2022: the situation in the "real" world will worsen before it gets better. With a 70% probability, the US inflation rate will remain above 5% throughout the year. At the same time, an increase in interest rates will slow down the dynamics of the stock market and hurt rising stocks. For cryptocurrencies, this is good in the short term. But in the medium term, risks arise, as crypto companies will begin to be increasingly censored by Western technology and banking platforms in the face of the suppression of cryptocurrencies by the Joe Biden administration.
However, not all experts believe that market participants should expect serious legal changes and stricter regulation in the new year. The authorities can only limit themselves to spreading rumors in the media to intimidate inexperienced investors.
4. Web3 and Blockchain Platforms
Web3 is the concept of a new, third-generation Internet, decentralized and powered by blockchain and token economy. It is contrasted with the Web2 World Wide Web, which operates based on centralized platforms for social interaction between users.
Large Internet companies, for example, Alphabet (Google), Meta (Facebook), Amazon, and Apple, consolidated most of the information. They occupy leading positions in online advertising, e-commerce, streaming, etc. In 2014, Ethereum co-founder Gavin Wood proposed a new concept, which includes decentralization. According to it, companies embed financial assets in the form of tokens into the inner workings of almost everything you do on the network. As part of the strategy, users interact without being tied to specific servers, data centers, and databases.
Web3 will allow you to create platforms that no one controls, but that everyone can trust because of their underlying algorithms and protocols. It is proposed to achieve this with the help of advanced technologies such as blockchain, machine learning, big data, and artificial intelligence. Tokens and cryptocurrencies, independent of traditional financial systems, should become fuel for the third-generation Internet economy.
Among the promising tokens of this sector, analysts call IOTA (MIOTA) and HNT (Helium); FIL (Filecoin) and BTT (BitTorrent); (OCEAN) Ocean Protocol — the fundamental token of Web 3.0; BAT (Basic Attention Token) — a project that allows you to receive remuneration for viewing ads.
In general, all projects are united by the fact that they solve the main tasks of the Internet of the future — the decentralization of the network, in which data and information fully belong to their owner, and in which the user and his rights have the main value.
5. P2E Games
Play-to-Earn (P2E) is a new term for video games where gamers can earn cryptocurrencies and NFT tokens through their gaming activities. In the last few months, the Play-to-earn trend has gained great momentum.
Gaming itself is a huge global market. There are more than 2.7 billion gamers in the world. At the same time, analysts expect that in the next few years the value of the industry will exceed $ 300 billion.
Today there are two important problems in the industry:
- Players do not own their purchases in the full sense of the term.
- In-game items increase the player's productivity and enjoyment of the game but do not serve any other purpose.
As a result, they fall into the category of entertainment expenses, not investments;
However, as new business models for game developers become available (for example, commissions from secondary sales of NFT), new forms of gameplay will also appear.
The number of games has already exceeded 200, while they occupy up to 45% of the traffic of all decentralized applications. As a result, the trend is even singled out in a separate direction of GameFi (Game Finance).
The main idea of such games is still not the possibility of quick earnings, but the right to own digital property. With the development of the metaverse, such games will appear more and more often. Perhaps this will become one of the main ways to attract users to the new environment.
Modern large companies in the field of gaming, such as Steam or Microsoft, will be able to apply new crypto technologies on their marketplaces or, conversely, suffer from the outflow of users to other sites where the commission is lower, the purchase is safer, there is the possibility of converting virtual items into real money and their subsequent withdrawal.
DAO is a decentralized autonomous organization that is controlled by software code and does not depend on the human factor. There is no hierarchy in such systems, all decisions on changes in the protocol are made by all participants on an equal basis with each other. Each digital community is centered around a common cause: it can be the management of a library, a united workforce, a social club, an NFT collection, and so on.
The most famous example of such a community is a crowdfunding organization, which is called The DAO. In 2016, the company attracted more than $150 million in investments, becoming the largest crowdfunding project in history. However, it was closed in the same year due to the theft of funds by hackers. But developers continue to learn from their mistakes and improve the technology. Now DAOs are popular in narrow circles of crypto specialists, but their potential is huge — automation of management will greatly reduce bureaucracy and the human factor in almost any company.
Experts identify the key features of the DAO:
- The band members are independent parties;
- Availability of SmartContract — open source code on the blockchain;
- Open Membership;
- A token is used to manage the community, which distributes funds according to priorities, encourages participation, and punishes violations of the rules;
- The group has internal capital to automate the market, prevent collusion and stimulate the creation of upward communities.
Of course, these are not all the trends of cryptocurrencies that we expect in 2022. The growth of investments in this segment is rightfully considered the main trend not only in 2022 but also in subsequent years. The emergence of new exchange-traded funds (ETFs) based on digital assets and the development of WebFree can also be attributed to developing areas.