Predictions for NFTs and cryptocurrency dominated many of 2022’s wildest headlines. Digital currencies have been hailed as a game-changing technology with the ability to establish new economies and empower those who do not have access to bank accounts. Crypto’s large environmental imprint, as well as its appeal in online crime, have been cited as criticisms. The divide between these points of view will be difficult to cross.
Much of the Bitcoin sector is a hype monster, propelled by bizarre memes of beautiful dogs and outer-space emojis. The same business has a stunning amount of cash from venture capitalists and individual enthusiasts, as well as genuine technological advancements that have the potential to drastically change the way we interact with money.
We are on the verge of a new type of finance that will leverage a variety of technology to revolutionize the way we use and handle one of our most basic tools: money. The days of withdrawing cash at an ATM, applying for a mortgage at a bank branch, or shopping in a department store are long gone. Many people now do all financial transactions online, a trend that has been accelerated in the last two years by the COVID-19 epidemic. The future of money is increasingly being defined by Ether, which can be accessed via phones and PCs.
But there is a brighter future for money, and it is already in its early phases. Cryptocurrencies and quicker, more powerful financial technology is altering our understanding of money and putting financial institutions to the test. The year 2021 was a watershed moment in finance, and the year 2022 is shaping up to be even more so. ZDNet examines two areas that are shaping the future of money: blockchain and fintech technologies.
And, as is frequently the case with innovation, we may not receive what we expect. CNET asked experts to assist us in navigating cryptocurrency’s voyage to uncharted places in 2022. Here’s what they said.
Cryptocurrency Is Making Inroads Into The Mainstream
Large corporations are attempting to determine how bitcoin fits into their operations. This year, everyone from hedge fund managers to Starbucks executives is making decisions that will have an influence on how we utilize digital money.
When we hear about cryptocurrency in the news, it’s usually about Tesla CEO Elon Musk’s rants, overnight billionaires, high-priced digital art, and hacking. However, the broader, fundamental shifts are frequently less showy and attention-grabbing than whatever crypto-hype machine is dominating Twitter at the time.
According to a poll performed by London-based crypto hedge fund Nickel Digital Asset Management, the majority of experienced investors believe that digital assets will become mainstream. More than eight out of ten respondents in a survey of 200 institutional allocators and asset managers indicated they see broader applications for cryptocurrencies, namely for portfolio diversity. The key role that professional investors expect digital assets to play in the future is portfolio diversification, according to half of those polled.
Tokenization of traditional assets — converting real, regulated assets into digital assets on blockchain — providing access to decentralized finance platforms, and the ability for crypto to provide a new value transfer mechanism, such as a bank transfer or a wire transfer — were other common broader-use cases money managers reported seeing for crypto. “I hope to see a lot more emphasis on usefulness,” said Denelle Dixon, CEO of Stellar Development Foundation. “Rather than focusing just on a few use cases that generate a lot of attention.
More emphasis will be placed on use cases that provide genuine value. And there will be the greater talk on financial inclusion.
NFT Predictions Create New Ownership Opportunities While Remixing Old Ones
NFT, or nonfungible token is a buzzword that many of us first heard in 2022. NFTs are becoming increasingly popular in the art and collectibles markets as a novel means to identify ownership of digital goods utilizing a blockchain ledger. The Bored Ape Yacht Club was one of the most prominent NFT collections of 2021. That’s not surprising.
However, the promise of NFTs extends well beyond odd digital artworks. NFTs are also used to acquire digital land in virtual worlds, as well as next-generation music ownership, licensing, and publication. Some experts predict that in the future, NFTs may provide access to special deals or limited-edition items. Consider using an NFT as a concert ticket. Or when you go online to play your favorite video game? Expect
“The potential of NFTs is unlimited since they can be used to track ownership of any unique item,” stated OpenSea co-founder Alex Atallah in an email. “We’re already seeing early use-cases of NFTs like event tickets, software licenses, fan club memberships, and other interactive experiences.” Some of America’s most recognizable corporations, like Nike, are already pushing to extend the use of NFTs. However, NFTs utilized in consumer items might be only the tip of the iceberg. How about utilizing an NFT to show you’re who you say you are?
“We’ve seen some trend away from artist-driven NFTs and toward NFTs centered on access or authorization,” Stellar’s Dixon said. “Recently, there was a party in New York where attendees gained entry by purchasing an NFT. So I’m curious whether there will be any emphasis on exploiting NFTs for digital identification.” One of the most fruitful areas of promise for NFTs may be the $85 billion video gaming industry. Some of the bigger studios have already begun to experiment with them. With all of the buzz about the metaverse, an immersive 3D digital environment suggested by Meta (formerly Facebook) CEO Mark Zuckerberg and other tech industry movers and shakers, NFTs might serve as building blocks for a next-generation digital world.
“Because gamers are already accustomed to caring about digital things, the potential for NFTs is enormous: a few million NFT users against over 3 billion players,” said Atallah. “There are some fascinating advances at the interface of NFTs, gaming, and the metaverse.”
Larger Hacks & Larger Ransoms
In 2021, cryptocurrency was used to finance millions of dollars in ransomware payments.
This is due to the fact that digital currencies have qualities that make them appealing to thieves. They’re tough to trace, borderless, and virtually hard to unravel after the payment is made. “Because of the misperception of ultimate anonymity, we could expect to see more criminals flocking to bitcoin and businesses that claim to disguise illegal payments.”
Gervais Grigg, a senior tech officer at Chainalysis, said in an email. “Bitcoin is appealing to criminals for the same reasons it appeals to those using them for legitimate purposes: It’s cross-border, instantaneous, and liquid.” Grigg and others expect decentralized finance, a nascent but blossoming industry on the cryptocurrency frontier, to be a popular target for cybercriminals in 2022.
Chainalysis’ senior tech officer, Gervais Grigg, stated in an email. “Bitcoin appeals to criminals for the same reasons it appeals to normal users: it is cross-border, fast, and liquid.” Grigg and others predict that in 2022, decentralized finance, a small but burgeoning business on the cryptocurrency frontier, would be a hot target for hackers.
As a result, it’s drawn a lot of attention and investment, making it ideal for illicit activities. “Criminals are likely to investigate Defi as a target for hacking as well as a way of attempting to launder monies through,” Grigg warned. “Because of the newness of Defi and the boom in adoption in developed economies, these platforms are ideal targets for experienced criminals who have previously carried out similar breaches.”
You’ll Learn More About Stable Coins
Because of its volatility, Bitcoin and other cryptocurrencies have made headlines. At the pace of the internet, you might become a billionaire or lose it all. But try purchasing a coffee with bitcoin, and the volatility may quickly become perplexing. Then there are stablecoins. This cryptocurrency subcategory, which is linked to an underlying asset, reduces some of the volatility. Stablecoins might play a critical role in transforming bitcoin into something we can simply use to perform everyday transactions.
“People should start paying attention to movements in stablecoins, both as a payment channel and as a digital currency backed by the US dollar. Cross-border payments, assistance relief, and rapid settlement payments are beginning to thrive in 2021, and we will see even more of these in 2022 “Circle’s vice president of product, Rachel Mayer, stated in an email. One of the primary features of a stable coin is the ability to transfer assets more effectively. This benefit is significant for businesses that need to move digital assets and cash swiftly and effectively.
“On the payments side, more businesses will start utilizing stablecoins as a more efficient method to process payments,” Omid Malekan, author of The Story of the Blockchain and a Columbia Business School professor, wrote in an email. “Stablecoin volumes will continue to rise, but the proportion of that volume devoted only to crypto trading will fall.”
Stablecoins are a subset of the ever-expanding crypto ecosystem, largely utilized by crypto investors as a convenient and cost-effective means to deal in bitcoin. Uncle Sam, on the other hand, is a significant figure who is interested in stablecoins.
U.S. government officials are racing to regulate stablecoins, which are different from other more volatile types of crypto. Where Bitcoin and Ethereum rise and fall by the day and even hour, stablecoins promise to maintain their value because they’re pegged to less volatile assets, like the U.S. dollar or euro. Because of their potential use as actual currency, U.S. government officials fear the potential risks stablecoins pose for consumers and financial markets if they remain unregulated.
“A stablecoin is a coin that is tied to another asset and functions nearly as a reserve currency.” “It’s basically a common denominator for other cryptocurrencies,” Humphrey Yang, the personal financial guru at HumphreyTalks, explains.
New Crypto Rules Are On The Way
Legislators in Washington understand that cryptocurrency is a significant and important issue. However, they are clearly failing to grasp it. It’s just a matter of time until crypto has its “series of tubes” moment, courtesy of a hapless person out of their environment.
Six executives from cryptocurrency firms spoke before the House Financial Services Committee in December, where they explored potential avenues for future regulation. Lawmakers in the United States have expressed interest in a variety of issues, including whether stablecoin issuers should be deemed banks, whether cryptocurrencies should be taxed, and how to develop effective laws in a highly technical and sophisticated business.
This is hard business. It will take time to develop the appropriate standards. “I think there will be a lot more talks about crypto and blockchain,” Dixon, one of the CEOs who appeared before the House committee, said. Dixon previously testified before a House committee on the topic of net neutrality during her employment at Mozilla in 2019 and has no illusions about regulating new technologies.
“But I just feel that by having these talks, we’ll see lawmakers and regulators become more focused, and ideally, more conventional businesses become more focused,” she adds. Other benchmarks may need to be completed before Americans see a full framework for crypto-focused legislation. However, if corporate leaders and government leaders can work together, ordinary bitcoin users and investors may benefit while environmental and security concerns are addressed.
“It’s critical to recognize that the cryptocurrency business wants to be regulated, but only if suggested regulatory frameworks are realistic,” Grigg added. “Governments throughout the world are collaborating with industry players to develop legislation that protects consumers while also encouraging innovation.”
As the Bitcoin business matures, it will continue to evolve in ways we cannot yet predict. But one thing is certain: cryptocurrency will play a role in our future.
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