Interest in crypto has skyrocketed in recent years. With crypto seeing all-time highs and facing big drops, here are the trends to look out for in 2022.
1. Enhanced corporate features and more dynamic use cases
More and more organisations today are confidently adopting the use of cryptocurrencies. Big-name brands such as Google, Microsoft, Apple, Disney, and more have begun to explore the crypto space and even mark their entry into the metaverse. Moreover, there is a steady increase in the dynamic use cases of crypto assets, including non-fungible tokens (NFTs) and metaverse integrations.
In this context, for example, Microsoft is developing a ‘SharePoint’ based solution that will allow for more efficient interactions between employees regardless of physical location. In addition, it is worth noting that as interest grows among corporate ventures, crypto products and services will find more use cases over time.
2. Ethereum 2.0 reaches its full potential
Ethereum 2.0, also known as the Serenity update, was first introduced and launched back in December 2020 with an upgrade schedule set to be pushed out in chunks. The blockchain’s planned transition to Proof-of-Stake from Proof-of-Work ultimately highlights how the current update is yet to achieve its full potential. With this major change now set to finally happen in the next coming months, here are a few things to expect once it goes live:
- Lower energy consumption
By switching to Proof-of-Stake, Ethereum will largely reduce its energy consumption, and it could fully maximise its network nodes' computational resources.
To keep block sizes low, the hash power with randomness is set to be changed, enabling users to run a validating node efficiently even with just average hardware. Therefore, there will soon be an uptick in validators, leading to improved transaction speeds.
- Deflationary Ether
The latest update of blending Proof-of-Stake and EIP 1559 will drive down the circulating supply, leading to a potential scarcity that may, in turn, cause a spike in the crypto’s valuation.
3. Crypto ETF approval
In 2021, the notable breakthrough of the first ever Bitcoin-linked exchange traded fund (ETF) launched on the New York Stock Exchange. This development is among the latest and more conventional ways to invest in cryptocurrencies.
With the ProShares Bitcoin Strategy ETF (BITO), investors can directly purchase cryptocurrencies from conventional investment brokerages through accounts they already own, such as Vanguard or Fidelity. Despite this, some experts believe that BITO ETF may be insufficient as it does not hold crypto directly despite the fund being able to be linked to Bitcoin. And while the fund allows for Bitcoin futures contracts, experts claim that these may not track Bitcoin’s price directly even if they follow its general trends. As such, it may be best for investors to wait for an ETF that actually holds Bitcoin.
In this context, BITO was the first to gain support even though the Securities and Exchange Commission considered ETF approval before. All in all, it is still risky to invest in a cryptocurrency ETF such as BITO, just like any other cryptocurrency investment.
4. Cryptocurrency regulation
The crypto industry will see further developments in drafting precise regulations around cryptocurrency. Lawmakers worldwide are already working on setting guidelines and establishing laws to make it safer for investors to engage with cryptocurrency.
These strict regulations are necessary as a deterrent to increasing cybercrimes. Although these regulations offer better security, they may also come with unique hurdles as various authorities may or may not have sufficient jurisdiction to stay on top of everything. Nonetheless, many experts believe that introducing regulation benefits the industry and will be a game-changer for everyone.
5. Increase in cyber attacks
As the cryptocurrency market exploded in growth and popularity in the last few years, so has the threat of cyber attacks. Hackers continually target individuals on crypto exchanges to steal funds. Detecting these attacks often proves difficult and typically results in the loss of large amounts of money. As such, investors must learn about the risks and implement measures to secure their crypto.
Phishing ranks as the leading cyber attack used in the crypto space. Hackers defraud their victims using fake messages and emails that appear to be from legitimate sources, such as wallet providers or cryptocurrency exchanges in Singapore. These messages either contain an attachment with a malicious payload or a link that leads to a fake website. The former injects malware into the device and allows hackers to access the victim’s wallet or passwords, while the latter is purpose-built to steal their sensitive information, such as login credentials.
All in all, there is still plenty of speculation around cryptocurrency, as the reality remains that it is a relatively new investment. The crypto market has been virtually unpredictable over its lifetime, not just because of new applications like NFTs but also the general market volatility of Litecoin prices in Singapore and other altcoins. What is certain is that innovation will continue to intensify, hence the need to stay on top of cryptocurrency trends.
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