2021 has been an exceptional year for blockchain. A lot of the global news has revolved around blockchains, vaccines and other pandemic byproducts. During that time, the total market value of cryptocurrencies surged above $2 trillion, receded, and then retook the milestone. Now that 2022 is getting closer, Kimberly Rosales, a specialist in the crypto space, took the task of informing what blockchain and cryptocurrency trends we would soon be witnessing.
Decentralized applications (DApps) have thrived on Ethereum and other blockchains. Non-fungible tokens (NFTs) have delivered a legion of new users to the industry. Bitcoin set a new record following the appearance of the world’s first bitcoin ETF; blockchain-based gaming took flight, and the world’s largest digital asset exchange is listed on Nasdaq.
“Developments in the blockchain world induced something of a breathing hardship this year, and there is no reason to anticipate a slowdown in the near term,” Rosales indicates. “On the contrary, it looks like it was the early days of NFT, GameFi, CBDC, and blockchain technologies in general. Big banks are getting into crypto escrow while social media giants are transitioning to metaverse companies.”
Layer 2 and multi-chain DeFi platforms are witnessing record inflows while DLT-based privacy-preserving solutions are proliferating. In summary, there are many reasons for optimism as we look to 2022 and beyond.
Financial products built on blockchain rails only came to the forefront with the rise of decentralized finance in 2020. The DeFi sector, which aims to recreate the traditional financial system with fewer intermediaries, took center stage and ended the year with 2,000% growth since January.
The total value locked up (TVL) in DeFi protocols is $257 billion, up ten times since the beginning of 2021. While many DeFi protocols are speculation-oriented (Degen traders launching small-cap coins), one promising area is credit lending, where the unbanked and underbanked can gain access to credit on the blockchain.
“Dedicated credit history blockchain, such as Creditcoin, facilitate peer-to-peer lending without users having to prove excessive collateral, something that is common with DeFi protocols,” Rosales asserts. “Thanks to this decentralized credit lending infrastructure, the network provides microfinance and fintech providers with greater access to capital, while ensuring instant settlement for borrowers. Meanwhile, smart contracts built on top of Creditcoin can be used to aid contract execution within the ecosystem.
Creditcoin’s vision of a blockchain-to-blockchain lending marketplace is ambitious. However, if it can meet the needs of the millions who cannot access a reliable credit system, it will likely prove to be one of blockchain’s best use cases.
The privacy credentials of cryptocurrencies are not uniform: while bitcoin is pseudonymous, Monero is much more anonymous. However, blockchain technologies have the potential to level up privacy and prevent data leaks.
A blockchain managed by validators decentralizes actions for the entire Nym network, including mixnet membership and configuration, issuance of credentials, and distribution of crypto benefits. Chainalysis, a blockchain forensics firm that often works with governments and tax agencies to de-anonymize cryptocurrency users, has a verified name in the Nym whitepaper warning against private companies that “monitor not only the data available on blockchains but also the metadata of peer-to-peer traffic on a blockchain to discover network addresses and make presumptions about private transactions even on blockchain-protected systems,” Rosales notes.
If the digital asset industry continues on an upward trajectory, institutions must be confident that their funds are secure. Custody is big business in crypto, with key players Coinbase and Gemini protecting billions of dollars in assets for a number of major institutional clients. In fact, Gemini claims to have more than tripled its cryptoassets under custody this year.
In truth, it’s hard to predict which innovations will be the talk of the town in crypto over the next 12 months. After all, it’s an industry that moves at breakneck speed; one that ridicules self-proclaimed clairvoyants more often than any other.
