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No longer a speculative gambling hobby of tech cowboys and computer geeks, crypto has become a major part of modern popular culture in 2021. Next year, crypto will make up a greater proportion of the world economy, changing the way we trade and store value in all spheres of life. Though Bitcoin is likely to retain the greatest market capitalisation, the major factor to this popularisation will be the rise of Ethereum (ETH)-based tokens and applications which are set to ride the wave of Web3 and the crypto metaverse in 2022.
Dave Abner, head of global development at Gemini, has characterised 2021 a “breakthrough” for the industry, and stated that next year’s trajectory for the sector is the subject of huge “focus and attention” for every industry in the world.
As we approach Christmas, having basic crypto knowledge has become almost essential for festive mealtime debates. Although Bitcoin has hogged the headlines, with an almost 100% growth in the past year, Ethereum’s growth rate of over 500% is the real story heading into the New Year. According to ‘Hive’, people are taking notice, even mainstream institutions such as J.P. Morgan and Bank of America have openly endorsed Ethereum.
Ethereum is a smart-contract blockchain focused on building a decentralised environment to host multiple applications. The benefit of ETH-based applications is that they function within an open-source public blockchain, that supports a secure, coordinated, and sophisticated digital ecosystem. Their increased interest has been underpinned by the popularity of non-fungible-tokens (NFT’s), payment systems and is considered by many to be more pertinent to the scalability of decentralised finance (DeFi) than Bitcoin.
Though competing blockchains have highlighted some weaknesses with ETH, pertaining to its speed high-fees, on December 1st new upgrades to the system (ETH 2.0) were launched. The changes aim to improve efficiency and scalability, as well as increase transaction capacity. Applications which are compatible with this upgraded network have huge potential for success in 2022.
Firstly, the majority of NFT’s (digital art, collectibles, and music) are minted on Ethereum, which brings colossal financial and cultural interest and credibility to the platform, particularly as they are set to be amongst the first manifestations of crypto metaverses. Awareness of these projects has skyrocketed due to increased mainstream backing.
Established corporations have shown their interest in the space, with companies like Coca-Cola raising $575K in an NFT auction for charity. Nike has also expressed its intention to sell virtual goods, combining NFT’s with selling shoes, while Playboy Brands is using the technology to support their intellectual property.
ETH-based NFT apps such as Nifty Gateway, Foundation and SuperRare will continue to benefit indirectly from the credibility brought by big institutions, as well as the backing of more celebrities and industry leaders like Tom Brady and the Winklevoss twins.
Secondly, the decentralisation of digital art and collectibles on ETH has had a cross-over to the gaming world, whose future is intimately integrated with blockchain technology. Companies such as Cryptovoxels and Decentraland are creating environments which allow gamers to own their digital assets, including NFT’s, in the form of skins, avatars, or weapons. Crypto metaverses like Decentraland put their users in control of the game’s future, including driving change and updates through voting. According to Gemini “in this way, the metaverses can be more than just crypto games – they can grow into entire societies with economies and democratic leadership”.
The global gaming market is currently worth $180 billion and by 2025 experts predict the number of streamers to rise to $1 billion – with a continued shift of this economy to the ETH blockchain, the ecosystem will be bustling with active users.
Thirdly, we are beginning to see the emergence of next-gen Ethereum-based cryptocurrencies whose remit is far more ambitious than the first generation of digital coins. The recently launched Himalaya Exchange is aiming to create world’s first true crypto ecosystem, not just a coin or an exchange, but an infrastructure. It is the first and only company building an end-to-end, blockchain-based integrated financial system, encompassing a unique cryptocurrency (Himalaya Coin), a stable coin (Himalaya Dollar), an exchange platform (Himalaya Exchange), and a payment application (Himalaya Pay).
If successful, its promise to combine seamless integration across applications while operating with high-speed efficiency will set a new bar for crypto exchanges, making crypto trading more accessible and intuitive for new starters. The test of its scalability is likely to rest on the success of its payment application, set to launch by the end of January 2022.
Finally, we are seeing partnerships between companies like crypto.com and Mastercard, who are creating crypto payment systems. There will be a sustained focus on financial inclusion in the future where users are able to make transactions entirely in crypto, rather than into a fiat currency before making a transaction. The more collaborations that take place between the like of retailers and property companies willing to accept Ethereum-based crypto payments, the greater the network effect and the more common these currencies will become.
Crypto in 2022 is looking to be a thriller, particularly as we rebound from a turbulent end to the year. With the full roll-out of ETH 2.0, new developments will be around each corner and those applications compatible with the updated blockchain are looking to be in for a ride.
One thing is clear – Bitcoin’s little brother is hitting a growth spurt. We should take note.
The content in this feature is brand produced. This article is provided for informational purposes only and should not be interpreted as investment advice. All investments involve risk of loss. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.Any predictions expressed in this article are based on simulated or hypothetical performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have under-or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated or hypothetical trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to these being shown.