Cryptocurrencies were in the headlines from 2021. Their proponents touted them as a technology that could change the world, create new economies and empower people without access to bank accounts. Their opponents denounced their huge carbon footprint and their popularity with cybercriminals. An ideological divide that will be difficult to bridge.
Much of the cryptocurrency industry is fueled by a hype that plays on pseudo-hipcodes passed on by technical experts. But it also enjoys massive financial backing from powerful investors and genuine technical innovations that could revolutionize the way we handle money. Our colleagues at CNET.com interviewed experts to shed light on the prospects and challenges surrounding cryptocurrencies in 2022. Here are their predictions.
1-Cryptocurrencies Will Continue Their Democratization
When cryptocurrencies make headlines, it’s often about Tesla CEO Elon Musk’s tweets about people becoming millionaires overnight, expensive digital art, and hacks. But bigger, more fundamental changes are often less flashy and attract little attention. So, most major companies are working on integrating cryptocurrencies into their business. From hedge fund managers to executives of major retail chains, everyone is taking steps that could impact the use of digital currencies this year.
“Hopefully we’ll see a lot more focus on utilities,” said Denelle Dixon, CEO of Stellar Development Foundation. † Instead of focusing on a few use cases that create a lot of hype, we will see more focus on use cases that create real value. And more discussions about financial inclusion. †
2-NFTs Create New Possibilities for Ownership and Redefine Ownership
NFT (non-exchangeable token, non-fungible token), is a buzz term that many of us first heard in 2021. An NFT is a virtual object whose authenticity and traceability are guaranteed by a blockchain. This type of cryptographic token is currently very popular among collectors and art lovers. One of the most notable NFT collections of 2021 is called the Bored Ape Yacht Club.
But the potential of NFTs goes way beyond wacky digital artwork. They are also used for purchasing digital land in virtual worlds and for owning, licensing and publishing music. Some observers see a future where NFTs offer access to special sales or limited edition products. What about using an NFT as a concert ticket? Or when you connect to your favorite video game online? This is what we need to see happen in 2022.
† The possibilities of NFTs are endless as they can be used to record ownership of each unique asset explains Alex Atallah, co-founder of OpenSea. † We are already seeing the first use cases for NFTs, such as show tickets, software licenses, fan club memberships or other interactive experiences. †
Some of America’s biggest brands, including Nike, are already expanding the use of NFTs. But its use in consumer products may be just the tip of the iceberg. What about using an NFT to prove your identity?
† We have seen some shift from art-oriented NFTs to access or authorization-oriented NFTs », analyzes Denelle Dixon. † There was a party recently in New York where diners could gain entry by purchasing an NFT. So I wonder if we won’t be interested in using NFTs for digital identity. †
The $85 billion video game industry is arguably one of the most promising sectors for NFTs. Some of the biggest studios are already experimenting with it. And with all the talk of the metaverse, NFTs could serve as the foundation for a next-generation digital world. † We see some exciting developments when it comes to the intersection between NFTs, games and the metaverse », says Alex Atallah.
3-Greater Hacks and Ransom
Digital currencies have features that make them attractive to cybercriminals. They are difficult to trace, have no boundaries and once payment has been made, it is virtually impossible to reverse them. For example, cryptocurrencies have been used to facilitate payment of millions of dollars worth of ransomware in 2021.
† We would expect more criminals to turn to cryptocurrencies and services that promise to embezzle illicit funds due to the misconception of complete anonymity. says Gurvais Grigg, senior technical manager at Chainalysis. † Bitcoin appeals to criminals for the same reasons as those who use it for legitimate purposes: it is cross-border, direct and liquid. †
This expert and others expect that decentralized finance, an emerging but thriving industry on the fringe of cryptocurrencies, will be a prime target for cybercriminals by 2022. Decentralized finance, or DeFi, operates independently of any authority or central institution. Rather than relying on a network of banks or credit cards, users can connect directly to DeFi products on a distributed network. While the industry is still in its infancy, DeFi is a rapidly evolving industry, highly technical and with huge potential. It has attracted a lot of attention and investment, making it conducive to criminal activity.
According to Gurvais Grigg, ” criminals are likely to explore DeFi as a target for hacking and as a means of laundering money. Due to the novelty and explosion in adoption in developed markets, DeFi platforms are an easy target for experienced criminals who have performed similar hacks before. †
4- The Rise of Stablecoins
Bitcoin and other cryptocurrencies have made headlines for their volatility. you can become a millionaire or lose everything to the hyper speed of the internet. This is where stablecoins, or stablecoins, come into play. This sub-category of cryptocurrencies, which is linked to an underlying asset (fiat currency or exchange-traded product), largely mitigates this volatility. Stablecoins can play a vital role in transforming cryptocurrencies into a means of payment that can be used to carry out everyday transactions.
† We need to start paying attention to stablecoins, both as a means of payment and as a digital dollar currency. Use cases for cross-border payments, waivers, instant settlement payments started to bloom in 2021 and we’ll see more of them in 2022 Rachel Mayer, vice president of fintech company Circle, predicts.
Transferring assets more efficiently is one of the core values of a stablecoin. It is a powerful asset for businesses that need to move digital assets and cash quickly and efficiently. † More industries will start using stablecoins as a more efficient way to make payments thinks Omid Malekan, author of The Story of the Blockchain and professor at Columbia Business School. † Stablecoin volumes will continue to grow, but the portion of that volume only involved in cryptocurrency exchanges will decrease. †
5-New Cryptocurrency Regulations Threaten
Lawmakers are still struggling to understand the cryptocurrencies phenomenon to decide how to frame it. Stablecoin Issuers Should Be Considered Banks? When should cryptocurrencies be taxed? How to develop functional rules in a highly technical and complex industry? These are all sensitive topics for which the development of appropriate standards will take time.
For Denelle Dixon, “ there will be much more discussion about cryptocurrencies and blockchain This should promote the progress of exchanges between policy makers, legislators and the companies involved.
† It is important to understand that the cryptocurrency industry wants to be regulated, but to ensure that the proposed regulatory frameworks are workable. » emphasizes Gurvais Grigg. † Governments around the world are working with industry players to create legislation that protects consumers and promotes innovation. †
It is still difficult to predict how the cryptocurrency industry will evolve. But one thing is certain: it will be part of our future.
CNET.com article edited by CNETFrance / Image: Robert Rodriguez/CNET