The year 2022 has seen several significant developments in the world of cryptocurrency. The market started off strong at the beginning of the year but was impacted by macroeconomic conditions later on. One major event was the failure of TerraUSD (UST) and Luna, which caused significant disruptions and resulted in losses of up to $45 billion for investors. This failure raised concerns about the risks and benefits of cryptocurrencies and led to a decline in the value of other cryptocurrencies like Ethereum and Bitcoin.
Another significant event was the bankruptcy of FTX, a major cryptocurrency exchange. The CEO and associates were found to have engaged in financial mismanagement, theft, nepotism, and corruption, leading to the bankruptcy of other companies like BlockFi and Celsius. The impact of this event was felt globally.
Reserve Bank of India (RBI) continued its warning against investment in crypto. In December, RBI Chief Shaktikanta Das was quoted in media as saying that the next financial crisis will come from private cryptocurrencies. “It is 100% speculative activity and I would still hold the view that it should be prohibited because if it is allowed to grow, please mark my words the next financial crisis will come from private cryptocurrencies,” Das said.
On the positive side, the transition of Ethereum to proof-of-stake, also known as “The Merge,” reduced the energy consumption of Ethereum by 99.95% and had a positive impact on market sentiment. The G20 has also been working towards building a global consensus on cryptocurrencies and their potential uses.
In India, the Web3 startup ecosystem has remained active, with 450+ startups and $1.3 billion in funding flowing into Web3 startups. However, the announcement of 30% taxation and 1% TDS also led to a decline in crypto trading volume.
Institutional adoption of cryptocurrencies on the rise
Institutional adoption of cryptocurrency is expected to continue to drive growth in the industry in 2023. Companies such as AMC, PayPal, Square, Blackrock, JP Morgan, and Tesla have already shown interest and many have begun investing in crypto assets. As more retailers and institutions adopt cryptocurrency, it could create more use cases for everyday users and potentially increase demand and value. While it may not make financial sense for most people to spend crypto on goods and services at this time, further institutional adoption could change that in the future.
Explosive growth in adoption of DeFi
There are several trends expected to shape the future of DeFi in the coming years. One of these trends is the increasing use of blockchain as a service (BaaS). BaaS allows companies to use distributed ledger technology to create financial products, often without the need for setup or installation. Another trend is the rise of stablecoins, which are designed to be less volatile than cryptocurrencies like bitcoin. Stablecoins are expected to reach an all-time high in the coming years, and their use is likely to continue growing.
The increasing mainstream adoption of cryptocurrencies is also expected to have an impact on DeFi. Additionally, the development of the Metaverse, a virtual reality space where users can interact with each other, is expected to create new opportunities for DeFi applications. The Metaverse is likely to be powered by non-fungible tokens (NFTs), which can be used to represent ownership of virtual assets.
Overall, DeFi is expected to continue growing and evolving as it becomes more widely adopted and as new technologies and trends emerge.
Blockchain technology showcasing diverse range of applications across 200 companies
Blockchain has numerous potential applications, with a recent report identifying 64 different uses across 200 companies. Its ability to facilitate secure and streamlined contracting and transactions will drive its commercial use.
AI Integration into NFTs: A new trend emerges in the Digital Asset space
NFT can be created with artificial intelligence, but in 2022 a new trend began to emerge, which will continue in 2023: the integration of AI into NFT. This could provide a wholly unique and dynamic experience, with no way to replicate it with other technologies.
One company, Alethea AI, is using AI to create intelligent avatars that can interact with society, such as the iNFT “Alice,” which has self-learning capabilities. The company has received over $16 million to scale its technology and is working towards creating a Metaverse, a virtual world accessed through the internet, where AI can learn from each other.
In addition to the ownership rights, authenticity is established, and a new community is formed around NFT and music, providing musicians with autonomy. By 2025, the NFT music industry is expected to reach over $80 billion in capitalization.
Blockchain poised to revolutionize supply chain management
Blockchain technology has the potential to transform supply chain management by making it more transparent and efficient. It can do this by using smart contracts and keeping an immutable record of transactions. This could lead to lower costs and better tracking of goods and materials. Blockchain technology could revolutionize supply chain management by increasing transparency and efficiency through the use of smart contracts and immutable record-keeping. This could result in reduced costs and improved tracking of goods and materials.
Decentralized identity solutions using Blockchain to empower individuals and enhance security
Blockchain-based decentralized identity solutions have the potential to give individuals more control over their personal information and make identity verification more secure. These solutions could be used in various industries, including healthcare, finance, and government. They could revolutionize the way personal information is managed and verified.
Additionally, the future of decentralized autonomous organizations (DAOs) looks promising, with keyless self-custody and multi-chain functionality becoming more viable. It is also likely that the distinctions between Web2 and Web3 will become less pronounced, making it easier for mainstream users to access and utilize crypto applications.