Despite the growing pains, the ongoing evolution of the digital assets industry until 2024 has left minimal doubt that the overarching pattern towards the wider use of cryptocurrencies and decentralized systems is intact.
Undoubtedly, there is powerful proof that blockchain technology implementation is progressing like the days before the internet, with earlier releases and progress impeded by many identical rough patches, including a shortage of talent, unreliable communications, flawed design and implementation, and a low craving for risk.
While the massive increase of the entire cryptocurrency market cap (which briefly reached $3 trillion in November 2024) was partly driven by fund managers’ continued warm embrace of both bitcoin and altcoins, the broader advances in adoption have been fueled by other important forces.
The emergence of the metaverse and the expansion of NFT use cases, especially, have been headline topics, which have shown to be a perfect match for blockchain technology and have propelled crypto adoption.
Venture capital firms are making record investments in blockchain startups who are willing to partially sell an internet business. On the other hand, Blockchain enterprises do not follow the SaaS model. Rather, their products and services are centered on Decentralized Applications.
Blockchain is much more than simply the basis upon which cryptocurrencies like Bitcoin are built. In reality, the spectrum of blockchain applications is broadening with each passing day.
The special features of safe and transparent data exchange provided by blockchain technology provide compelling arguments for its implementation in various application scenarios. Nonetheless, the blockchain scene changes with each New Year.
Is the year 2024 bringing fresh opportunities for blockchain growth or new challenges? Here are some of the top trends to watch in 2024 and beyond.
Non-fungible tokens, or NFTs, have been one of the biggest topics in blockchain technology this year. NFTs are created on the blockchain as one-of-a-kind tokens that cannot be replicated, bringing the concept of rarity to digital assets for the first time.
NFTs open up a slew of new blockchain applications besides art and digital artifacts. Artists began tokenizing their tracks and selling them straight to their fans, making the music sector one of the first to adopt NFTs.
An additional benefit for the music sector is that NFTs can allow automatic payouts to record labels, musicians, managers, and other parties.
The quick acceptance of NFTs by artists, celebrities, professional athletes and clubs, musicians, and organizations was one of the defining themes of 2024.
It is now playing a critical role in cryptocurrency implementation.
Unlike bitcoin and other crypto assets’ resembling interchangeability, NFTs are distinct digital tokens that may be employed to verify the authenticity and reflect digital ownership of nearly any piece of artwork, documentation, or object.
Until now, NFTs have largely taken the digital art format, with the latest prominent sale occurring in March when the artist Beeple’s ‘First 5000 Days’ computer artwork was auctioned off for $69 million.
NFTs were initially created by artists, singers, and celebrities ranging from Martha Stewart to Snoop Dog and organizations such as PepsiCo Inc.
This trend is evident in the tremendous trading volume rise seen on OpenSEA, one of the largest NFT platforms, which increased 646 times from $21.7 million in 2020 to $14 billion at the end of 2021.
The bitcoin network was the first to reveal blockchain technology to the universe in 2009, and it has been a major impact on crypto stock market behavior ever since.
Nevertheless, 2021 saw a significant escalation of the counter-cyclical shift , with bitcoin dominance (the total amount of crypto market valuation owned by bitcoin relative to altcoins) continuing to fall year-round.
BTC Market Cap Dominance – Image Credit: Wixstatic
It shows the decreasing influence on the larger cryptocurrency industry of macro inputs (e.g., FED policy, inflation, stock market performance) that generally affect the value of bitcoin owing to its reducing market share.
Furthermore, it shows that more people grasp the operational contrast between Proof of Stake (PoS) and Proof of Work (PoW) protocols, as indicated by increased participation.
Simultaneously, this decoupling has become visible between various markets, with bitcoin demonstrating a considerable inclination to decouple from stock market performance in an extremely uncertain macro environment.
Whereas the S&P500, gold, and other markets all fell in September and October owing to concerns about a probable EverGrande collapse and the FED’s sooner announcement to halt asset purchases, bitcoin was able to rally more than 50%.
S&P500 Stock Market – Image Credit: CNBC
Suppose bitcoin’s market valuation grows and its unpredictability stabilizes over time.
In that case, traders will constantly seek returns on investments in the altcoin market, making a return to days of 70%+ bitcoin domination exceedingly implausible, especially as general uptake of production-grade decentralized systems accelerates.
Most people argue that the initial purpose of blockchain-based cryptocurrencies is fundamentally opposed to stocks, treasuries, and other liquid assets under the centralized control of the state and financial intermediaries.
Some also argue that participatory automobiles for institutional investors are critical for the market’s long-term consistency and effectiveness.
Irrespective of one’s perspective, there is no doubt that institutional interest has been growing for some time and is usually regarded as a positive development for the market’s general health.
As a result of the institutional desire to facilitate broader market involvement through pensions and investments, the demand for regulatory clarity rose to the top of the list in 2024.
There is no doubt that it demonstrates the majority view that governed products will hugely benefit general health.
For instance, while only 9.4% of over 1,000 financial advisers indicated they allocate to cryptocurrencies in client accounts, 47% said the release of a Bitcoin ETF would make them extra confident with cryptocurrency exposure.
Moreover, institutional investors and private equity are progressively obtaining digital asset exposure from sector excess returns and preparing investors for the present economic reality of chronically loose monetary policy and rampant inflation.
This subject is spotlighted in Goldman Sachs’ global family office survey, wherein 40% of family offices worldwide demonstrated that they are considering currency debasement, with 42% making investments in digital assets as a fundamental part of plans to orient themselves for these macro realities.
Family Office Investment Insights – Image Credit: Goldman Sachs
This data is compared to only 37% in precious metals. Another evidence of the crypto market’s “institutionalization” was FTSE Russell’s announcement in December.
Forty-three assets had been vetted to be added to the FTSE Digital Assets (DA) index in 2022, highlighting the importance of accurate pricing data as more institutional participants enter the market.
Whereas those working in the crypto sector were fully conscious of the buzz and action emerging around the metaverse in 2021, the unveiling of Facebook’s renaming to ‘Meta’ drew it to the spotlight of the broader population.
It is worth noting that Facebook’s metaverse plans have caused substantial chaos in the crypto community due to concerns that a centralized, big-tech edition of the metaverse could profoundly contradict and nullify the prospects of the open, public blockchain infrastructure that has so much transformative power.
Predictably, Facebook’s unexpected announcement had an immediate and severe influence on the valuations of Decentraland, Sandbox, and other metaverse ventures, as investors flocked to the news.
First, Bitcoin was released as the first decentralized, peer-to-peer transfer of value and the initial blockchain application, followed by the DeFi revolution, enabling individuals to use staking/liquidity pools and gain access to additional decentralized financial products.
Then came the unexpected appearance of NFTs, which boosted crypto acceptance by recognizing the utility of the software’s data structure in forging unique biometrics that can be used to signify both physical and ethereal goods in the art world and beyond.
The metaverse is indeed a synthesis and combination of these evolutionary phases. Still, these qualities have also shown to be a natural symbiotic relationship with what is likely the world’s biggest economic sector.
Admittedly, with the gaming sector currently valued at more than $180 billion and on track to reach $200 – $300 billion by 2025, it is the games and play-to-earn aspects that mark a considerable change from traditional AAA (triple-A) games that are so crucial to the metaverse sector.
Forecast of Video Games Revenue – Image Credit: Statista
The metaverse, which is now strongly established at the junction of VR and Web 3.0, has been identified as one of the important trends for the future and is still in its infancy in terms of acceptance.
Web 3.0 & the Metaverse Illustration
Furthermore, there is no doubt that the Covid-19 pandemic accelerated the emergence of games in general, as lock-downs, travel limitations, and social distancing tactics compelled an increasing number of people to live out more of their lives in virtual space.
With the widespread recognition that an open metaverse will be impossible without NFTs and blockchains, their long-term development and adoption will be inexorably interwoven.
The DAO applies the initial principle of bitcoin, which was to disperse the usable power of a payments system to its members via a cryptographic consensus method to remove central authorities.
DAOs were created in 2013 by Ethereum co-founder Vitalik Buterin.
They are hierarchical organizations whose regulated rules and architecture are auto-enforced on blockchain digital currencies and agreed on by participating stakeholders (i.e., the token holders).
It increases transparency and insight into making decisions – a direct digital democracy.
After a rocky start for various reasons, these crypto field forms of unions have gone a long way since their first voyage, the ill-fated “The DAO ” created by Slock in 2016, and DAO budget war chests displayed strong development in 2021.
They are already worth billions of dollars. They are not only spreading into every section of the digital assets arena, but they are also increasingly viewed as actual businesses with cash flows and assets under management.
For instance, the top five DeFi DAOs (Uniswap, Lido, Radicle, Compound, and Olympus DAO) control about $45 assets worth, so it’s worth keeping an eye on.
The DeFi space grew further in 2021, with major companies improving their gaming by polishing their technology and applying scaling strategies to encourage efficiency.
The creation of the ‘DeFi 2.0’ narrative in the latter part of the year was fueled by the increasing popularity of a fresh wave of products such as the Olympus DAO, Rari, and Tokemak.
Although there is some discussion about whether the DeFi 2.0 label is legitimate, it is symptomatic of the continual evolution of the DeFi field and the technology underlying decentralized banking.
This trend will continue in 2022, as technological advancements enable developers to create new products and improve liquidity models.
We may also witness the first genuine moves to move the industry outside its self-contained shell and attach it to the wider economy.
This year will also witness a growth in the appearance of DeFi goods on networks other than Ethereum.
Pancakeswap’s success on Binance Smart Chain last year showed that, whereas Ethereum is the uncontested champion in the area, it is not the only game in town.
The introduction of blockchain solutions and cryptocurrencies appeared improbable a few years ago. Furthermore, it was nearly impossible to see any jurisdiction accepting bitcoins as a recognized form of payment.
However, the answer to the question “what is the future of blockchain?” can reveal many intriguing answers.
In 2021, El Salvador became the first country to recognize Bitcoin as legal money.
Businesses might use Bitcoin to settle their employees’ salaries, and Bitcoin can be used to pay for goods and services all over the country. According to industry analysts, several other countries will follow El Salvador’s lead in 2022.
Blockchain forecasts for 2022 indicate that emerging countries may embrace Bitcoin as legal tender. The rising remittance fees for international money transfers and worldwide inflation would be the primary motivators for the acceptance of cryptocurrencies as legal tender.
The idea of a national cryptocurrency is another interesting area for blockchain growth in 2022. State cryptocurrencies are similar to CBDC (Central Bank Digital Currencies), implying that central banks will generate their coins instead of decentralized currency.
Projects to build national currencies typically focus on digital currencies that can coexist with existing traditional currencies.
As a result, blockchain developments may enable users to conduct financial transactions and control the custody of their assets.
Surprisingly, users are not required to rely on third-party providers, and central banks might even exert control over the circulating supply.
For this reason, central banks may keep the price of the national currency token stable alongside the country’s traditional currency.
One significant example of such blockchain movements in 2022 is Bitcoin, which has the support of the UK government.
Even though it will not be ready for debut until 2022, many other states have made aggressive attempts to introduce blockchain-based national currencies.
One of the most significant roadblocks to a successful blockchain future is utilizing vast amounts of electricity.
As a result, blockchain innovation provides with it the risks of steadily increasing amounts of carbon emissions.
Elon Musk, CEO of Tesla, declared that the company would no longer accept Bitcoin as payment for Tesla vehicles in 2021. As a result, blockchain trends in 2022 will be heavily focused on establishing a greener blockchain.
Several new inventive alternatives, such as carbon offsetting, are emerging as solutions to such difficulties.
On the other hand, carbon offsetting is more of a corrective remedy for an occurrence that should not have occurred in the first place.
Another promising approach for implementing an eco-friendly blockchain among this year’s blockchain developments would be to concentrate on less energy-intensive blockchain network topologies.
For instance, blockchain networks may transition from Proof-of-Work models to Proof-of-Stake models to achieve consensus. Ethereum, one of the largest blockchain networks, is expected to switch to a Proof-of-Stake consensus architecture in 2022.
Another example of the movement toward eco-friendly blockchain networks is the tech-focused hedge fund Ark Invest.
Blockchains with greener operating models may fuel blockchain growth in the future. How? According to the models, rising energy demand can increase investments in renewable energy generation for blockchain operations.
Blockchain is undoubtedly one of the fastest advanced digital technologies available today. Compared to traditional networks, it provides greater safety, transparency, data integrity, and accessibility.
Whereas blockchain has proven crucial in driving many improvements across several domains, it is still in its early stages.
Keeping a close eye on blockchain trends is critical for navigating the complexities of the blockchain world.
The characteristics of blockchain demonstrate its ability to serve as a prospective technological intervention. Simultaneously, the blockchain trends for 2022 highlight how it evolves with each passing year.
The shift toward eco-friendly blockchain systems is one of the major topics that may impact blockchain in 2022.
Furthermore, the rising use cases of NFTs will be a major highlight in 2022. Similarly, the acceptance of cryptocurrency as legal cash will be a significant milestone for the blockchain scene in 2022.
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