In 2021, we saw cryptocurrencies achieve a new level of mainstream popularity, with entire countries, institutions and investors getting involved in the space.
While crypto and the blockchain technology that underpins it is undoubtedly one of the most exciting technological developments of our time, it is easy to overlook the nascency of the sector and its vast potential.
We have seen great developments in the sector in just the last few years, but crypto natives know that the best has yet to come. Whether it be regulators providing the appropriate framework for the industry to grow, or more investors coming on board, I believe that 2022 will see unprecedented growth for cryptocurrency — both in Australia and globally.
Here are some trends to keep an eye on in the coming year.
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Cryptocurrency will be regulated by 2022-23
The popularity of cryptocurrency will only continue to rise, and while robust regulation takes time to develop, by the end of 2022, I believe we can expect to see the foundations of a formal regulatory framework for the industry in Australia.
Last year, we saw recommendations from the senate committee inquiry demonstrating a growing commitment to regulating the local cryptocurrency space. If adopted, these recommendations will bring Australia in line with other crypto centers of gravity, such as New York and Singapore. I also expect the regulatory framework to increase tax transparency for retail investors by clarifying the different types of digital asset classes.
Institutional adoption of crypto will increase rapidly
In 2021, we began to see major institutions proactively seeking out business opportunities in the cryptocurrency space. This adoption has not been limited to only tech companies such as Tesla and other growth companies — which are making proprietary investments in the industry — but is also gaining momentum even among the more conservative traditional financial services industry, whose customers are demanding access.
This trend is only likely to accelerate in 2022, and there is no reason to believe that the cryptocurrency market will be saturated anytime soon. Blockchain technology, and the wide variety of ways in which both institutions and the retail public can participate in the market, is almost certainly still in its early stages. Just like with NFTs and the ‘metaverse’, it may well be that the most buzzworthy crypto investment cases this time next year have not even been thought of yet.
The crypto industry will take steps to address and mitigate its environmental impact
Public concern over the negative environmental impacts of cryptocurrency mining has been one of the biggest challenges faced by the industry over the past few years.
As the rest of the world moves toward creating a more sustainable future, there is an increased urgency for crypto to tackle its own carbon footprint. Decarbonisation of cryptocurrency mining will help increase investor confidence and encourage institutional investors to take up the digital assets that align with their own company’s sustainability goals.
Crypto miners will increasingly turn to renewable energy sources, and we are already seeing most major crypto projects turn toward proof-of-stake models, which use significantly less energy. I believe we can expect to see greater investments in ‘green’ projects that are fully carbon neutral, with a focus on leveraging blockchain technology for the environment.
The popularity of NFTs will continue to rise
One of the biggest crypto trends we have seen emerge over the past year has been the surging popularity of NFTs, particularly in the art and gaming space. However, the provably unique, immutable and indivisible nature of NFTs has far broader applications across areas such as digital identity and even real estate. I believe that NFTs have the potential to transform our relationship with the digital world.
This space is just in its initial adoption phase, and as it continues to develop, we can expect to see more use-cases of blockchain technology across multiple sectors.
As more governments and institutions become involved in the cryptocurrency space, we can expect to see the popularity of blockchain technology rise as well. We are at the cusp of a new reality for everyone around the world and I for one can not wait to see what the future holds.