So, what is the future of cryptocurrency? What will 2022 bring to the crypto holders and crypto traders? In any case, there is nothing to be afraid of for those who are into Exness broker trading with the marvelous MT4!
While the majority of demand for cryptocurrency is driven by a long-term promise of new technology, the most variable demand (whose entry or exit determines the price in this illiquid market) views crypto as an asset “at-risk”.
That is an asset for which investments increase when users are willing to take risks, unlike “risk-free” assets, such as gold.
What is the future of cryptocurrency? Is cryptocurrency the future of money? What does the future of cryptocurrency look like? We will show you everything in this article!
Cryptocurrency Achievements in 2021
Investing in cryptocurrency in 2021 remains a risky bet, none of them having a stable value. So, which cryptocurrency to invest in? We take stock of the two main virtual currencies on the market.
Bitcoin, the first cryptocurrency put on the market in 2009 following the subprime crisis, is the best known and the most expensive.
Each year, the production, also called mining, is reduced by half. In all, the creation of 21 million Bitcoins had been planned as early as 2009. This decrease in the production of Bitcoins led, at least between 2012 and 2016, to a drastic increase in its value, also called halving.
Ethereum (ETH) is just behind Bitcoin. Put on the market on July 30, 2015, Ethereum designates a decentralized exchange protocol which, via a Turing-complete language, allows users to set up pre-established contracts, called “smart contracts”.
For example, thanks to Ethereum a user can establish a future contract stipulating that he will buy something only when certain conditions are met, and this, without going through a notary, and therefore, without paying additional costs.
Deployed using the blockchain, these contracts can be viewed by anyone.
At the beginning of 2020, Ethereum was worth $150, its market cap is now worth more than $150 billion.
Ethereum has allowed the development of many projects and many applications.
The Ethereum blockchain technology has notably enabled the creation of Decentralized Finance, also called “deFI”. Decentralized finance refers to the use of the concept of decentralization specific to cryptocurrencies in the finance sector. Therefore, the financial products of the future are innovating based on the cryptocurrency system!
Some other cryptocurrencies that showed a great achievement in 2021 are:
- Tezos (XTZ). It is a smart contracts platform (which aims to be the competitor of Ethereum) which works by proof of stake, also called Proof-of-Stake. Alternative to Proof-of-Work used in Bitcoin and other cryptocurrency networks which requires users to repeatedly run hashing algorithms or compute mathematical puzzles according to algorithms to validate electronic transactions, proof staking requires the user to prove possession of a certain amount of cryptocurrency in order to be eligible to validate additional blocks in the blockchain and to be able to collect the reward, if any, at the addition of these blocks. Since its launch, like Binance or Kraken, Tezos remains on a long-term bullish trend. Moreover, the XTZ has continued to climb in 2019!
- Cosmos (ATOM). Still at the experimental stage, but very promising from a technical point of view, the Cosmos works with blockchain network technology. Nicknamed “the Internet of blockchains”, the Cosmos is an ecosystem that makes it easy to develop your own blockchains.
- Stellar Lumens (XLM). A decentralized platform with free access, it allows currencies and assets to be exchanged thanks to an autonomous stock market. Its value has not stopped increasing since its launch in 2014. It stands at the start of 2021 at around $0.40.
- Kleros (PNK). Decentralized dispute resolution project, it allows you to act as a juror in a decentralized court. Therefore, you profit from conflicting parties.
- MakerDAO (MKR, DAI). This cryptocurrency is three years old. In 2021, it could become the reference currency within the Ethereum network.
What to Expect from the Crypto Market in 2022?
With the Omicron variant, it seems that we have entered a “riskless” cycle, but in a world where economies and finance have been transformed since March 2021 by unprecedented monetary growth. And it is the first hint of the future of cryptocurrency!
Demand for crypto from risk-aware investors is sure to decline while it is likely to increase from investors who believe we are entering a new monetary model, where investments will be beneficial.
In addition, Bitcoin will experience a new wave of buyers: institutional investors who have been watching it closely in 2021 given its all-time highs. Many have gone even further and have already developed strategies and selected service providers.
The big question is whether the institutions that entered the fourth quarter of 2020 and the first quarter of 2021 (the majority of recent new institutional buyers) will decide to sell to this next wave of buyers. If so, then the pressure on prices will be mitigated, knowing that the new demand is offset by sales.
If they don’t, then price pressure could increase significantly as the supply of bitcoins available for purchase is recorded at an all-time low.
Regarding DeFi protocols in 2022, their financial part will become less relevant, even if the use of smart contracts for more common decentralized actions will come to develop.
This year, discussions will take place around “Layer 1” type chains, in particular, to know if they are sufficiently decentralized to be considered as a technology, or if on the contrary, they are a platform that can be regulated.
Some “Layer 1”s abandon decentralization in favor of bandwidth: thus, they are less like a neutral technology than a centralized platform, like Meta (Facebook). If tech giants’ concerns shift to blockchains, Layer 1s that aren’t decentralized enough might need regulatory policy.
Today, the race is on to determine who will be the first company to set up the “cryptocurrency app store” and therefore the big winner of 2022.
In 2021, the options available to consumers to buy cryptocurrencies were more numerous than ever, with fintechs competing with cryptocurrency exchanges.
But also in 2021, DeFi and NFTs have demonstrated that you can do more than just investments with cryptocurrencies. However, these use cases are only available outside of the main consumer services.
Web 2.0 has demonstrated that platforms are highly valued by consumers, and this will surely continue to be the case in Web 3.0. Currently, there is no cryptocurrency platform that has customer relationship management and aggregates suppliers.
In 2022, many companies will certainly try to build this platform, in particular Coinbase which already integrates DeFi and NFTs.
But does this mean that we are heading back into the closed areas of Web 2.0? Not quite. Web 3.0 platforms operate on open protocols: the blockchain.
This does not mean that consumers will switch suppliers since competition has always been just a click away, but few of them are committing to it.
The difference this time around is that all new platforms can onboard vendors using an always-open and often standardized smart contract, whether the vendors are on an existing platform or not.
The lack of vendor coercion means consumer-facing cryptocurrency platforms could be more like Uber, connecting customers with smart contracts across multiple platforms, unlike an “app store,” where vendors have to face a high cost to be present on many platforms.
When all platforms offer the same providers, the big winner is usually the one that offers the lowest costs with the best experience and performs the best marketing campaign. So my final prediction is that Venture Capital’s (VC) record investment in cryptocurrencies in 2021 is sure to be spent quickly.
Yes, no doubt, cryptocurrency is the future of money, and by analyzing the crypto achievements in 2021, you may see the cryptocurrency of the future.
Despite occasional drops, all the lights seem to be green for the future of Bitcoin in 2021. Since last December, BTC has indeed broken all records and is attracting more and more interest from neophytes and more seasoned traders alike. .
In the long term, we can expect Bitcoin to continue to appreciate in value, in particular thanks to the halving system: in order to avoid inflation of Bitcoins, mining rewards are halved every 4 years. The next halving is scheduled for 2024.
On the other hand, the growing credibility of virtual currencies thanks to the possibility of paying in crypto currencies on more and more sites suggests that these currencies should continue to attract investors!
However, it is impossible to say this with certainty. Bitcoin is far too unpredictable to be firm on its next move.