As the year comes to an end, the blockchain industry can appreciate the tremendous growth it has seen in the last twelve months and look forward to the endless possibilities in the coming year.
In 2021, blockchain and its technologies grew to $4.9 billion as the industry enjoyed a surge in mainstream adoption and found favor with financial institutions and governments. Experts predict these numbers to grow at a CAGR of 38.5% to reach $67.4 billion by 2026. This growth has caused some to go so far as to label 2021 as the ‘breakthrough’ year for the cryptocurrency market.
Currently, the cryptocurrency market has over 13000 cryptocurrencies with a total market cap of over $2 trillion as of September. While the year has been phenomenal, the coming year holds a lot of potentials.
Here are a few crypto trends to look out for in 2022:
#1. Crypto as a Legal Tender
Indeed 2021 was a game-changer for Bitcoin and other cryptocurrencies as they surged to reach new all-time highs. For instance, Bitcoin rose to surpass the $68,000 mark earlier this year, with analysts predicting the price to rise to $75,000 by the end of 2021.
This prompted many, including financial institutions, to adopt cryptocurrencies as a valid form of payment, especially within the growing eCommerce industry. In addition, increased adoption recently forced countries like El Salvador to adopt Bitcoin as a legal tender. As cryptocurrencies continue to gain traction in the coming year, more and more will be forced to take the same decision as EL Salvador.
Despite losing its dominance, experts predict that Bitcoin could stage a resurgence. Many now believe Bitcoin will rise to challenge the largest stocks in the market today. Bitcoin currently ranks seventh, measured against the likes of Apple, Microsoft, and Google.
#2. Growth of the NFT market
Led by The First 5000 Days artwork by Beeple, Non-Fungible Tokens (NFTs) have been trending in cryptocurrency circles for the better part of 2021. Initially, like their predecessors, these digital artworks were regarded by many as a fad. However, months later, NFTs have launched an entirely new economy, especially with the recent introduction of the metaverse.
These digital artworks began in the art industry and rapidly moved to the music, gaming, and clothing industries. These unique innovations are now being used to establish ownership and provenance of just about anything.
For example, Distillers William Grant & Sons recently sold bottles of 46-year-old Glenfiddich whisky for $18,000. Each piece was sold alongside its NFT impression of the bottle that acts as a counterfeit-proof certificate of ownership. Nike and Dolce & Gabbana have also created NFTs for their clothing and footwear collections.
According to data by Messari, the number of NFT wallets grew more than 1000% in 2021. Given the current trajectory, experts predict the NFT market will go even higher as the market grows beyond online art.
Must Read: Role of Rising NFT & DeFi Hacks in the Evolution of Cryptocurrency Industry
#3. Clear Regulations and Guidelines
Regulations have always been a major concern for many within the cryptocurrency industry. However, the different jurisdictions have taken different approaches to clarifying the cryptocurrency industry.
As per a recent report by Bloomberg Intelligence (BI) titled “Incentivized by China’s ban and the proliferation of revolutionary technologies such as crypto dollars and non-fungible tokens (NFTs),” the coming year will see the increased embrace of cryptocurrency by regulators in the United States. This will ensure that there are proper regulations and related bullish prices implications. In addition, the European Council recently announced its stance on the Markets in Crypto Assets (MiCA) framework that seeks to increase regulatory clarity over decentralized finance and crypto-assets.
Unlike when cryptocurrencies were first introduced, regulatory authorities now have more insight into the technologies, which will go a long way in shaping crypto regulation systems. With clear regulations, cryptocurrencies will, without doubt, see mainstream adoption, with some analysts predicting the price of Bitcoin to go as high as $100,000.
#4. CBDC comeback
Central bank digital currencies (CBDCs) were popular discussion back in 2020 as governments sought to create stable crypto environments for their citizens. While there have been few discussions on these digital currencies in the last twelve months, they could make a huge comeback in the coming days.
The world will soon become a cashless community, as recently demonstrated by the COVID 19 pandemic. CBDCs will offer central banks the opportunity to provide citizens with a safe, liquid, and stable digital currency that fits the digital future.
According to a recent study by the Bank of International Assessments, central banks representing a fifth of the world population will soon be persuaded to issue their CBDCs in the next three years. CBDC’s will allow central banks to preserve the best elements of the current financial systems while creating a secure system for the imminent change.
So far, several central banks are still experimenting with CBDC. Some countries are still in the early stages, while others like China, Sweden, Japan, and Nigeria have commenced CBDC trials.
#5. Tokenization of assets
Tokenization is the process of creating digital tokens that represent ownership of assets. For example, users can tokenize equities, debt, copyrights, bonds, real estate, art, or collectibles.
Tokenization has truly redefined the investing process by making it simple and affordable. Moreover, it democratizes access to markets while ensuring fairness and security for participants. According to the Frankfurt School Blockchain Centre (FSBC), the market for tokenized assets in Europe is expected to grow to $1.5 billion, with the global tokenization market reaching $4.8 billion by 2025.
What seems to be fueling the tokenized market is the numerous benefits of blockchain technology, customer satisfaction, and growing regulations as SEC (The U.S. Securities and Exchange Commission) and CFTC (The Commodity Futures Trading Commission) continue to consider new regulations for tokens.
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