- The heyday of NFT
- Regulation of cryptocurrencies
- The future of mining
- Web3 continues to evolve
- Metaworlds - a new reality
- Capital flight to altcoins
- P2E games
The rise of NFT
In 2021, NFT created a worldwide furor. Tokenization attracted thousands of people, allowing them to fully own and dispose of physical or virtual assets. Many large companies have entered the NFT market. For example:
Pepsi launched its first NFT collection, Pepsi Mic Drop;
Ubisoft launched its own NFT marketplace, Quartz;
Adidas announced partnerships with NFT projects Bored Ape Yacht Club (BAYC), GMoney and Punks Comic.
Today, NFT is experiencing massive proliferation and continues to grow in volume, attracting more sellers and buyers. The new industry may soon be fully incorporated into the material world, simplifying many processes into a single transaction. For example, without unnecessary actions, ownership of a house, a car, a work of art, and so on can be transferred using NFT.
In the Russian Federation, the regulation of cryptocurrencies is currently an obstacle. Despite the fact that it is possible to sell and buy crypto-assets without difficulty, doing business with digital assets remains questionable.
It all started in December 2021, when the Central Bank proposed banning cryptocurrencies and then investment in them by mutual funds. The idea of banning digital coins was supported by several deputies, among others. Criminal liability is proposed for their use.
Nevertheless, such innovations can shake only small investors, large owners surely will not want to leave promising cryptocurrencies unattended.
When the bill on cryptocurrencies is adopted, there will likely be capital outflows, anonymous trading in digital currencies on decentralized exchanges, as well as finding other places to mine cryptocurrencies, which will affect the economy. Today, cryptocurrency mining in Russia accounts for more than 2% of total electricity, and the country's share of bitcoin hashtray is in third place.
On the other hand, the adoption of bitcoin and other coins in the rest of the world is only growing. According to Chainalysis, the global cryptocurrency acceptance index is up 881% in 2021 alone. Among the countries with positive attitudes toward cryptocurrencies, the 5 most loyal ones stand out:
Today, the growth of interest in traditional money is not as visible as in digital money. Many users are turning to cryptocurrencies, especially in countries where there is increased inflation.
The future of mining
Thirteen years ago, the first block of bitcoin was mined. Since then, the hash rate of the first cryptocurrency has continued to grow. It has been suggested that interest in the PoW algorithm may wane after Ethereum moves to PoS-algorithm mining. However, this doesn't mean much for bitcoin.
Its price will rise, and with it, so will the interest of miners to increase capacity. For example, if the bitcoin price reaches $100,000, the hash rate will increase to 300 EH/s. While the PoS algorithm may seem less risky to some, it is possible to get about 5-7% per annum from storing the leading cryptocurrencies, which is not very attractive to miners using PoW.
In the current environment, bitcoin is trading at reduced prices, but this is short-lived. Major mining companies understand this and are not going to suspend the operation of equipment. A similar drop in the rate was in 2020. Back then, according to analyst company Glassnode, there were more than 1.82 million BTC in the wallets of miners, and none of them wanted to sell the cryptocurrency below $12,000.
In addition, the cost of the country's mining equipment itself has dropped. For those who have been thinking about mining cryptocurrencies for a long time, this is a great chance to enter the market and start mining now.
Web3 continues to evolve
In 2014, Gavin Wood, co-founder of the Ethereum blockchain, proposed a different concept of the Internet called Web3, whose main goal is complete decentralization. In the current reality, most information is concentrated in the hands of five centralized corporations:
- Alphabet (Google);
They are leading the way in advertising, online commerce, streaming and more. The new concept of the Internet on blockchain presents itself differently. As Bloomberg writes, blockchain embeds financial assets in the form of tokens into the inner workings of almost everything you do online.
Many large companies are taking an interest in this today, conducting various studies. Some have already considered integrating Web3 into their platforms. For example, Discord, but the implementation did not take place because of the negativity from the users of the service. Since the main feature of Web3 is anonymity, this can cause an increase in fraud.
Nevertheless, there are already a few projects working towards Web3:
- Internet Computer;
Expect tremendous progress in Web 3.0 technologies and cryptocurrencies that support those technologies. This will be an area of tremendous growth to watch out for in 2022, according to Revix investment analyst Hope Robertson.
Metaverses as the new reality
In 2021, Meta* launched its own meta-universe called Horizon Worlds. This unification of VR-application with social networks and payment system in a single ecosystem lifted the veil of a new way to interact with people, causing genuine interest not only among consumers, but also among competitors of a large corporation.
This year, we should expect the development of this industry. For example, the Metaverse Standards Forum has already been established, the main goal of which is to develop standards for meta-universes. The participants helping in this endeavor include companies of various orientations:
- Epic Games;
- Alibaba; and others.
Big companies see potential in this industry. Some tech giants, such as Apple and Google, are already developing AR/VR gadgets that could play an important role in accessing the meta universe.
Capital flight into altcoins
Although bitcoin reached $68,000 that year, thereby renewing its all-time high, the cryptocurrency's dominance index is declining. Investors are turning their attention to other assets and moving capital into them.
At a time when bitcoin is fluctuating in a certain range, interest in altcoins grows. The volatility of coins becomes higher, but the growth potential remains due to the use of new technologies.
This year, the dominance index of the most popular cryptocurrency will continue to decline due to the lack of development of the coin. Bitcoin was created more than 10 years ago, but during the whole time of its existence there have been no global changes. Young projects today are developing rapidly, with an emphasis on technology and presenting possible solutions to existing problems.
The emergence of the new "play to earn" model of video games has attracted the attention of millions of people around the world. The secret of this popularity is simple: unlike traditional computer games, in P2E the in-game assets are tokens that can be earned and owned.
The first crypto game was CryptoKitties, released in 2017. Each "CryptoKitties" was an NFT, with a price tag of $100,000 in some cases. Today, more sophisticated video games are being developed on blockchain platforms, such as Gods Unchained, a card strategy game, and Chainmonsters, an RPG.
P2E is tugging at its heartstrings largely because it gives users ownership. Neither Steam, Microsoft nor Sony Playstation have the ability to convert game currency into fiat currency. In addition, Steam imposes a 13% fee on the seller. This leads to the creation of marketplaces where it is quite possible to exchange virtual assets for real ones, although the commissions here can be overpriced.
The cryptocurrency market is developing. New projects and full-fledged decentralized applications appear. Today blockchain technology allows to develop not only cryptocurrencies, but also other valuable and useful things. Web3, NFT and meta-universes are developing. Bitcoin, as the very first cryptocurrency, has long shown its worth. Clearly, the main coin has high growth prospects ahead.
* Meta is recognized as an extremist organization and is banned in Russia.