5 predictions for bitcoin, NFTs, and the future of money

This story is part of The year to come, CNET’s take on how the world will continue to evolve from 2022 and beyond.

Cryptocurrency grabbed the weirdest headlines of 2021. Boosters touted digital currencies as a technology that is changing the world with the potential to create new economies and empower unbanked populations around the world. Critics point fingers at cryptos massive environmental footprint, as well as its popularity in online crime. The gulf between these points of view will be difficult to bridge.

Much of the cryptocurrency industry operates like a freak of the hype, fueled by weird cute dog and space emoji memes. The same industry enjoys impressive funding from venture capitalists and private enthusiasts, as well as real technical innovations that could drastically change the way we interact with money. And, as it often goes with innovation, what we get may not be what we expect. CNET has asked experts to help us navigate the crypto journey to new lands in 2022. Here’s what they told us.

1. Crypto Moves Further Into The Mainstream

Big companies are trying to figure out how cryptocurrency fits into their business. Everyone from hedge fund managers to Starbucks executives are taking action that could impact how we use digital money this year.

When we hear about cryptocurrency in the headlines, it often comes down to Tesla and SpaceX CEO Elon Musk. tweetsovernight millionaires, expensive digital art and hacks. Yet larger fundamental changes are often less flashy and attracting attention than any crypto-hype machine that dominates Twitter at any given time.

“I hope we’ll focus more on utility,” said Denelle Dixon, CEO of Stellar Development Foundation. “Instead of just focusing on a few use cases that create a lot of hype, we’re going to focus more on use cases that generate real value. And more discussion of financial inclusion.”

2. NFTs create new ownership opportunities and remix old ones

NFT, or non-fungible token, is a buzzword many of us first heard in 2021. New way to determine ownership of digital property using blockchain ledger, NFTs are increasingly popular in the art and collectibles scenes. One of the most notable NFT collections of 2021 was called the Yacht Club Bored Ape. Go figure it out.

But the potential of NFTs goes far beyond quirky digital artwork. NFTs are also used for digital land purchases in virtual worlds and for new generation music ownership, licensing and publishing. Some observers see a future in which DTVs will offer access to special sales or limited edition products. How about using an NFT as a concert ticket? Or when you log into your favorite online video game? Expect to see all of this in 2022.

“The possibilities of NFTs are endless, as they can be used to register ownership of any single asset,” said Alex Atallah, co-founder of OpenSea, in an email. “We are already seeing the first use cases of NFT being used as event tickets, software licenses, fan club memberships, or otherwise tied to interactive experiences.”

Some of the biggest American brands, including Nike, are already working to expand the application of NFT. But NFTs used in consumer products may be just the tip of the iceberg. What if you used an NFT to prove you’re okay?

“We’ve seen a certain movement from artist-focused NFTs to access or authorization-based NFTs,” said Dixon of Stellar. “There was a party in New York recently where people got access to the party by purchasing an NFT. So I wonder if we’ll see some focus on using NFTs for digital identity.”

Perhaps one of the most fertile areas of potential for NFTs is the $ 85 billion video game industry. Some of the larger studios are already experiment with them. And with all the talk surrounding the metaverse, a immersive 3D digital environment which was proposed by Meta (Facebook) CEO Mark Zuckerberg and others in the tech industry, NFTs could serve as the building blocks for a next-generation digital world.

“Gamers are already used to worrying about digital goods, so the potential for NFTs is huge: a few million NFT users versus nearly 3 billion players,” Atallah said. “We are seeing some exciting developments when it comes to the intersection of NFT, Games, and Metaverse.”

3. Bigger hacks and bigger ransoms

Cryptocurrencies have been used to facilitate millions of dollars ransomware payments in 2021. This is because digital currencies include features that make them attractive to criminals. They are difficult to follow, they are borderless, and once the payment is made it is almost impossible to relax.

“We should expect to see more criminals turning to cryptocurrency and services that promise to hide illicit funds due to the misconception of total anonymity,” said Gurvais Grigg, technical manager at Chainalysis , in an email. “Bitcoin appeals to criminals for the same reasons it attracts those who use it for legitimate purposes: it’s cross-border, instant and liquid.”

Grigg and others expect decentralized finance, an emerging but flourishing industry on the cryptocurrency frontier, to be a popular target for cybercriminals in 2022. Decentralized finance, or DeFi, involves finance that operates independently of a central authority or institution. Instead of relying on a banking or credit card network, users can connect directly to DeFi products over a distributed network.

Although the industry is still in its infancy, DeFi is a rapidly evolving, highly technical space with enormous potential. As such, it has garnered a lot of attention and investment, which makes it ripe for criminal activity.

“Criminals are likely to explore DeFi both as a target for hacking and as a means of attempting to launder money,” Grigg said. “Due to the novelty of DeFi and the explosion of adoption in developed markets, these platforms are easy targets for experienced criminals who have already carried out similar hacks.”

4. You will learn more about stablecoins

Bitcoin and other cryptocurrencies have grabbed the headlines due to their volatility. You can become a millionaire or lose it all at the blazing speed of the Internet. But try to buy a latte with bitcoin, and this volatility can quickly confuse things.

Enter stable coins. This sub-category of cryptocurrency, which is tied to an underlying asset, mitigates much of this volatility. Stable coins could play a vital role in transforming cryptocurrency into something we can easily use to conduct ordinary day to day transactions.

“People should start paying attention to the trends in stablecoins both as a means of payment and as a digital dollar currency. Use cases for cross-border payments, aid, instant settlement payments are starting to bloom in 2021 and we’ll see more of that in 2022, ”said Rachel Mayer, vice president of products at Circle, in an email.

One of the core values ​​of a stablecoin is to transfer assets more efficiently. This value is powerful for businesses that need to move digital assets and money quickly and efficiently.

“On the payments side, more and more industries will start to adopt stablecoins as a more efficient way to make payments,” said Omid Malekan, author of The Story of the Blockchain and professor at Columbia Business School, in an email. “Stablecoin volumes will continue to grow, but the portion of that volume that is only involved in cryptocurrency trading will decrease.”

5. New crypto rules appear on the horizon

Washington lawmakers feel cryptocurrency to be big and important. But they are struggling, perceptibly, to understand it. It may only be a matter of time before the crypto gets its “tube series“moment of an unhappy representative out of his element.

In December, executives from six cryptocurrency companies were called to testify before the House Financial Services Committee, where they discussed potential avenues for future legislation. U.S. lawmakers have expressed interest in a range of topics – whether stablecoin issuers are to be considered banks, when to tax cryptocurrency, and how to make working rules in a highly technical and complex industry. It’s a tricky thing. Creating the right standards will take time.

“I think there are going to be a lot more conversations around crypto and blockchain,” said Dixon, one of the executives who testified before the House committee. Dixon previously testified on the issue of net neutrality before a House committee during his tenure at Mozilla in 2019 and has no illusions when it comes to regulating new technologies. Some talk will be positive and some will be negative, “but I just think [by] by having these conversations, we’re going to see policymakers and regulators be more focused, and hopefully more traditional businesses will be more focused on that. ”

There might be more steps to take before Americans see a full framework for crypto-focused legislation. But if industry leaders and elected officials can work together, regular cryptocurrency users and investors can benefit while environmental and security concerns are resolved.

“It’s important to understand that the cryptocurrency industry wants to be regulated, but wants to make sure that the proposed regulatory frameworks are workable,” Grigg said. “Governments around the world are working with industry players to create legislation that protects consumers and fosters innovation. “

As the cryptocurrency industry grows, it will continue to evolve in ways that we cannot yet imagine. But one thing is clear: crypto will be part of our future.

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