Five Crypto Trends For 2022
The blockchain space moves fast, but zooming out from the day-to-day noise can give a clearer picture of where things might be headed. Looking back over 2021 and the first month of this year, a number of big themes are readily identifiable.
There are many trends that could be pointed out. Increased regulation is an obvious one, and the way that countries including Russia, India, and the US are clarifying their positions on crypto. Alongside this, crypto is becoming more politicised, as industry leaders lobby politicians and actively support pro-crypto candidates.
There’s the rise of DAOs as an alternative organisational structure, and the critical importance of Layer 2 solutions, bridges and interoperability.
There’s the continued expansion of DeFi – although perhaps this year with a more sophisticated user base that is more skeptical of forks and clones that offer unsustainably high APYs. There’s the intriguing development of protocol-owned liquidity, which promises to free DeFi from its reliance on mercenary capital.
These are all important, of course, but they matter most to DeFi natives who live and breathe crypto. What about the ways blockchain is starting to change the lives and habits of regular people, on a global scale?
Here are five emerging trends to watch for 2022.
1. More nations consider bitcoin strategies
When El Salvador made bitcoin legal tender in September 2021, it set a precedent that would have been unthinkable just months earlier. The controversial move was pitched as a means of boosting economic development and job creation for the struggling Latin American country, which is weighed down by its foreign debt payments.
To date, no country has followed suit – but there are indications that is going to change, as other nations suffering economic hardship look to stabilise their balance sheets, promote financial inclusion, and find ways of clawing back independence from the countries and institutions that have lent them money. A number of Central American countries are rumoured to be considering following El Salvador’s lead. And Turkey, which is suffering from high inflation, may be on the same path; President Recep Tayyip Erdogan recently met with El Salvador’s President Nayib Bukele, with bitcoin said to be on the agenda. It’s not just low-income countries, either. A proposal to make BTC legal tender in Arizona is currently working its way through the state senate.
2. Play-To-Earn goes mainstream
P2E was one of the stand-out blockchain success stories for 2021, as games like Axie Infinity actually paid gamers to play them, on-boarding millions of new people into the crypto world in the process. Blockchain games have proven particularly successful in low-income countries, where users can earn substantially more by playing their favourite titles than they would in a conventional job.
Key to the development of the space have been Guilds: large, organised groups of gamers who band together to share resources, including valuable NFTs that can boost success rates and increase earnings. ‘Scholarships’ are granted to make NFTs representing characters and in-game items available to players, in return for a percentage of daily earnings. Large guilds like Yield Guild Games (YGG) can number tens of thousands of users. Crypto Gaming United (CGU.io), which was funded and launched last year, has almost 100,000 players, in countries as diverse as the Philippines, Russia, Poland, Lebanon, Africa, Bangladesh, Sri Lanka, Papua New Guinea and Indonesia, with over 6,000 users earning through scholarships. Guilds often have DAO structures, and can raise significant funds to invest in digital assets. The 40,000-strong Play It Forward DAO raised $6 million last month to help scale its scholarship programme.
The P2E sector is only just getting started. Expect it to continue to expand, especially in parts of the world where there are high rates of youth unemployment.
3. NFTs expand beyond digital art
Non-fungible tokens may have gained popularity as a means of trading digital art, but their potential is far greater than buying and selling JPEGs. As noted above, in-game assets and characters represented by NFTs are already driving the P2E movement, providing players with a means of monetising their work and experience – either by selling high-value NFTs, or renting them out to other gamers.
Beyond this, there’s the trend of NFTs being integrated into DeFi and used to create new financial instruments. Projects including Teller Finance and Charged Particles are launching NFTs with real financial utility, including yield-bearing NFTs, rights to take out a loan, and more. That’s before we even start on the broader use cases for NFTs in terms of identity and access to permissioned Web3 services.
4. Blockchain comes to HR
As the coronavirus pandemic sparked both increased interest in gig work and an uptick in crypto adoption, it was predictable that freelancing for crypto would become a theme for 2021. The Freelance Revolution is just getting started, driven not only by changing needs and circumstances, but by a growth in the number of freelancer portals, and the rise of blockchain-enabled sites.
Heading into 2022, we’re seeing a broader pattern of blockchain being integrated into HR processes to streamline and automate recruitment, employment terms and accounting, as well as actual crypto payments. Smart contract-powered platforms like CryptoTask and LaborX.com enable freelancers to connect directly with customers, cutting out middlemen and the inefficiency and costs they bring, while still protecting users. Meanwhile, crypto is being integrated with accounting systems via software like BitWage, deel and PaymentX, so that regular companies can pay permanent and contract workers in crypto, automating the invoicing and settlement process to save time and eliminate manual error.
5. Crypto flexes its green credentials
Bitcoin has come under fire for its power-hungry proof-of-work consensus, which prompted Tesla to suspend BTC payments in May 2021 until 50% of electricity used by miners was generated from clean sources (a threshold that may already have been reached). Tesla’s decision accelerated interest in clean crypto, and eco-friendly mining was given a boost when China kicked out its miners, a large proportion of which relied on coal-generated electricity. More recently, European regulators called for a ban on proof-of-work-mined cryptos, encouraging the industry to focus on proof-of-stake blockchains. With options like Cardano and Solana gaining traction over the past year, it’s fair to expect that trend to continue, and the blockchain industry to take a more active approach to corporate social responsibility – or its decentralised equivalent.