Dec 22

2022 Insights: The Crypto Party Has Just Begun

Cryptocurrency is having a moment. In 2021 alone, we saw Bitcoin prices skyrocket to unprecedented levels, skeptics converted into crypto fanatics, and financial institutions, fintechs, and neo-banks jumped on the digital currency bandwagon with new services and offerings. Early adopters have said for years that cryptocurrency would change the money game forever, and we’re finally seeing the beginnings of that future.

What might be in store for crypto in 2022 and beyond? Let’s take a peek into our crystal ball.

From Totally Geek to Totally Chic

Blockchain analytics firm, Chinalysis, revealed an 880% rise is global crypto adoption in August 2021. Soon after, El Salvador became the first country to make Bitcoin a national currency, a controversial move that has failed to take off so far. The rise in worldwide crypto activity illustrates how far digital assets have come. Ten years ago, Bitcoin was still an obscure concept popular only in underground forums with “geeks” the could understand it. Now, it’s transformed as both “chic” and “on trend” with Gen Z and Millennials.

A few days ago, Robinhood launched a crypto gifting feature and consumers rushed to purchase NFTs and other digital currencies as holiday gifts.

 

Yes, crypto is finally cool, and it’s looking like it’ll surpass our expectations in terms of usage and popularity in 2022.

The Next Frontier is DeFi 

After cryptocurrency, decentralized finance (DeFi) is considered the next frontier of the financial revolution. It has the potential to disrupt if not completely re-write the rules of banking, financial services, wealth management, and well, everything that has to do with money.

Pat White, CEO of Bitwave, a digital asset tax and accounting software for businesses, predicts enterprise DeFi and protocols will add new features to make it even more palatable to hold crypto on company balance sheets.

This will be a big piece of the DeFi puzzle that both organizations and regulators will need in order to achieve mainstream adoption. Many enterprises don’t have a grasp of the DeFi ecosystem just yet. More education is needed for mass adoption to take place. In 2022, we’ll start to see this unfold among investors, policymakers, brands, and across the enterprise. In the next five to ten years, we’ll see more technologies and APIs develop so that DeFi becomes as ubiquitous as the Internet.

The Year of the Dog

The year 2021 brought us meme coins – highly volatile, meme-inspired cryptocurrencies like Dogecoin (DOGE) and Shiba Inu (SHIB). Sure, they sounded ridiculous at first and a lot of people lost money on them, but that doesn’t mean meme coins lack staying power. In fact, 2022 will likely bring with it more dog (and cat!) inspired meme coins that will make the crypto community go bananas. Many businesses are eyeing this trend with skepticism, but others are embracing it with open arms and are willing to experiment. Collin Plume, founder and CEO of My Digital Money, attests to this.

“We’re already seeing this starting to unfold with AMC Theaters who announced [in 2021] that they will start to accept Shiba as payments.” It’s an attractive coin due to its low cost and huge supply. Retail investors can buy and hold millions of meme coins with just a few dollars, and with enough market hype (See: The Gamestop Fiasco of 2021), investors can make lots of money very quickly or lose it all without feeling too much pain.

What started out as a joke has turned into a real investment option. Today, there are hundreds of meme coins to choose from and we’ll see companies take advantage of its popularity. In 2022, we expect to see companies widely accept crypto – and meme coins – as payments. 

Uncle Sam Arrives Tardy to the Crypto Party

Like death and taxes, one thing we can be sure of is that Uncle Sam will intervene in some shape or another. Policymakers have kept a close eye on the cryptocurrency market this year. It’s still unclear how they can regulate such a new and volatile market, but we can all agree that it’s coming.

This is good news. The crypto world remains a Wild Wild West of sorts, meaning investors are especially vulnerable to shady tactics, hackers, and business practices. It’s likely that central banks will issue their own digital currency as China was aiming to do. But in order to do so successfully, rules, regulations, and compliance standards must be formed and met. We foresee the U.S. government playing a bigger role in the crypto markets and bringing together the best and brightest crypto leaders to create a universal standard or protocol. 

It feels like cryptocurrency is already mainstream but we’re not quite there yet. This is still the beginning of a whole new financial ecosystem. Thankfully, we have front-row seats to this evolution. Crypto will continue to make strides in 2022; that’s one prediction we can be sure of. 

Cormac Kinney, CEO and Founder of Diamond Standard sees a future for alternative blockchain-based investments, particularly one where hard assets and commodities will be fully digitized and traded in the metaverse.

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