Crypto Global

Crypto 2022

Jan 11, 2022

The year 2021 was a real roller coaster ride for the cryptocurrency market. After hitting its highs in April to its lows in May and July, the market has seen it all this year. Nonetheless, Bitcoin ended 2021 with a huge price gain. Investors are already excited to see how the industry will react in 2022. So let's take a look at some trends that we think may define the cryptosphere this year.

Increasing Bitcoin Acceptance

A year ago, investors like Michael Sailor and Elon Musk announced that they had invested in Bitcoin. In 2021, the first country to accept Bitcoin as a means of payment and to rely entirely on Bitcoin became known. We expect more of this in 2022, namely that, in addition to well-known investors, more and more countries are betting on Bitcoin. When you look at the adoption, growth, and even media attention, everything grows. Now we even have countries changing economic policies to match crypto and Bitcoin.

Right now we know that inflation is no longer transitory. Companies and institutions are looking at hedging inflation with Bitcoin. In terms of short-term price volatility, there will be some price swings as Bitcoin sometimes tends to react to what the stock markets do as well. In the long run, inflation will be a persistent problem and Bitcoin is considered one of the best anti-inflation measures right now. Even JP Morgan and Goldman Sachs have published studies that say institutions are even favoring Bitcoin over gold at this point in time.

Ethereum - soon from PoW to PoS?

Ethereum had a great year in 2021. We've seen insane network adoption, flourishing use cases like DeFi, NFTs, Gaming, EIP 1559 went live and now we're burning ETH. We have also seen many different Layer 2 scaling solutions rolled out that are gradually gaining acceptance. So what are the next highly anticipated events on Ethereum's roadmap?

The upcoming change in Ethereum 2.0 took years and it is taking place in several phases. We had phase 0 essentially creating the ETH 2.0 beacon chain, so Ethereum 2.0 now kindly exists. Beacon Chain is a separate chain that works alongside the ETH 1.0 that we use today. Users can actually stake ETH by moving it over the Beacon Chain, but you can't get it back until the merge happens.

The arrival of Ethereum 2.0, specifically the merge event where Ethereum activates the Proof of Stake, becomes a staking asset and Ether becomes inherently deflationary.

The Ethereum alternatives

Ethereum’s token Ether is the second largest cryptocurrency, but will 2022 tilt the balance toward other promising blockchain networks? Here is a quick view of some blockchains that can mount a formidable challenge:

  • Solana (SOL): Solana is a relatively young blockchain network that was launched in 2020 and has made its way to the top. There are some strong arguments for this. Solana uses a proof-of-history protocol and therefore claims to have superior processing speed. Solana offers its users almost all services, including the execution of smart contracts and the development of DApps.
  • Binance (BNB): Crypto exchanges are a place to easily buy and sell cryptocurrencies. Binance is one of the leading names. It has entered many fields and Binance Chain is now a top blockchain network. Ironically, this Ethereum rival began its journey as an Ethereum-based altcoin. From an ERC-20 token to an altcoin that runs entirely on Binance's own blockchain, BNB is also the third largest cryptocurrency by market capitalization. Binance's influence in the crypto exchange industry makes this blockchain a worthy competitor to Ethereum.
  • Cardano (ADA): Cardano uses the proof-of-stake protocol, which Ethereum is now gradually introducing. This blockchain has proven its expertise in using the protocol, which gives it an edge over Ethereum. In the second half of 2021, Cardano introduced smart contracts and support for non-fungible tokens (NFT). This means that most NFTs no longer rely solely on Ethereum's blockchain services. The rise of blockchain gaming and metaverse could lead to another boom in NFTs, and Cardano could find more buyers in 2022.
  • Polkadot (DOT): Polkadot offers multi-chain support services, which means that web-based applications can work on multiple blockchains. The concept has its own advantages, such as the self-scalable network capability that does not require a fork. It uses a unique nominated proof-of-stake mechanism to validate transactions.
  • Avalanche (AVAX): The USP of Avalanche lies in its multi-layer blockchain capability, which consists of three separate chains. The network claims to solve various problems with three different blockchains all running on a single network. The services are more or less the same as Ethereum, but the functionality is spread across different chains within the network. The other unique feature of Avalanche, by far the most significant difference, is the DAG (Directed Acyclic Graph) -optimized Avalanche consensus mechanism.

Ethereum continues to be the most widely used blockchain system at the moment as it enables the creation and execution of applications, smart contracts and tokens. These features have made Ethereum a true innovator in the blockchain world. The fact is that there are more projects on Ethereum than Solana, Cardano and Polkadot combined. Ethereum's popularity is also being driven by the recent boom in non-fungible tokens (NFTs).

Web 3.0

Web 3.0 undoubtedly has enormous potential to transform the Internet as we know it. We have seen a number of Web 3.0 applications already and believe that we are just scratching the surface of what is possible on this exciting new thing. But what exactly is Web 3.0?

Web 3.0 can be seen as the next wave of the internet. We started with Web 1.0, which was largely like static websites and email. With Web 2.0, interactive websites such as social networks, mobile applications, etc. have emerged. And Web 3.0 is basically an Internet that creates an Internet of value, where you can actually own things digitally, made possible by an Internet of blockchains. It has various advantages like censorship resistance, transparency and lack of trust. One of the great advantages of this is that it is completely reinventing the Internet model. In Web 3.0, the participants in the applications can actually benefit directly in monetary terms and even obtain ownership of the thing that they use themselves.

Some Web 3.0 applications already exist today. One is cryptocurrency. This is technically Web 3.0 in that it is censorship resistant money, it is trustworthy, transparent, runs on a blockchain, and people participating in the network are financially rewarded for mining blocks and validating transactions. The same applies to NFTs and also to decentralized finance or DeFi. This is the status quo!

We believe Web 3.0 is gaining enough momentum to likely serve as the dominant technology theme for this new year. Indeed, it has the potential to build a more sovereign and open internet. It's a new hybrid of the Internet that is set to become the decentralized version of this virtual world.

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