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The World Of Blockchain And Cryptocurrencies: Trends-2022

DeFi, NFT-art, Ethereum 2.0, metaverses, government digital currencies (CBDC) are all the main trends in the world of blockchain and cryptocurrencies in 2022. Everyone writes and talks about them, because they are obvious, and their development is easy to predict. We will tell you about non-obvious trends – that it will not be so noticeable to have a significant impact on the cryptocurrency markets. We will share our opinion on how these non-obvious events and aspects may affect the value of virtual assets and shares in 2022 and in the long term.

For several years, countries have been developing, discussing and adopting laws that determine the status of cryptocurrencies and the rules for their taxation. In 2022, this activity will reach unprecedented proportions. Most likely, special attention will be paid to NFTs due to the incredible growth in the popularity of non-fungible assets. Perhaps this is exactly what the main trend of 2022 looks like in the world of blockchain and cryptocurrencies in the context of states.

However, this is not the only important “state” pattern that will affect the market. Along with increased regulation and standardization, we also have to see:

  • the birth of the first national cryptocurrencies (CBDC);
  • increase in the number of state blockchain projects;
  • growing popularity of anonymous tokens and services;
  • rise of interest in DAO solutions.

We can assume that the authorities of some countries will create fake blockchains in order to prove the “honesty” of various electoral events and the “justification” of budget spending with 

their help.

1. Blockchain will become the “invisible” norm

Trend. In 2022, states will increasingly use blockchain to improve the efficiency of financial, fiscal, electoral, logistical, legal and other processes. There will be so many such solutions that the use of blockchain will become the norm, and it will no longer arouse increased interest among people – it will become “invisible” to the media.

A law operates in the social space: the norm is “invisible”. What everyone recognizes as an everyday occurrence does not fall into our field of vision. Therefore, when some practice becomes habitual, society stops noticing it and talking about it.A simple example – think about it, when was the last time you read the news that government agencies use the Internet in their projects? Now this is the norm, and 20-30 years ago, each such message would have looked like stunning news.

Explanation. Commercial enterprises have been offering and implementing various blockchain solutions in various fields for a long time. And government agencies are often slow. But in 2022, we are likely to see a trend reversal – the number of state projects will grow rapidly. National and municipal governments will start using blockchain so much that in some cases it will become the industry norm (default technology) and we will all stop noticing it.

The introduction of blockchain in the public sector provides a number of benefits:

  • reduction of labor-intensive processes;
  • security of storage and use of data;
  • reduction of costs associated with document circulation;
  • increasing confidence in government systems;
  • reducing the risk of fraud.

Together, all this contributes to the development of the concept of a “smart state” that uses Data Science and information technology to manage social and business infrastructure, ensuring the optimal use of available resources. When combined with other technologies, governments can achieve synergies and ultimately provide citizens and businesses with innovative services and solutions.

Market impact. State blockchain projects can be divided into two groups. The first is focused on improving the transparency, security and economic efficiency of public services and processes. Such solutions include the digital government of Estonia, the electoral system of the state of Alaska, the systems of social and pension payments in the United States and the Netherlands, as well as other projects of liberal democracies that declare the protection of individual freedom and property based on the rule of law.

These projects will have a positive impact on the economies of the countries where they are launched, as such blockchain initiatives are focused on improving the quality of services for citizens and businesses, as well as reducing government costs. In addition, they will contribute to the growth of stock quotes / tokens of companies participating in such projects (usually these are solutions based on Ethereum and Hyperledger chains).

The second group is blockchain solutions aimed at improving the efficiency of management and control over cash flows and business processes in the country. Such projects are typical for states with a lower level of personal freedoms (China, Russia, Kazakhstan, Belarus). The impact of initiatives on the economy of countries is usually negative, as they reduce economic freedoms and increase the fiscal burden, as well as give more leverage to government officials. Some of them use these tools for personal enrichment by removing the “rent” from the business.

2. The first cryptocurrencies of central banks will appear

Trend. The next non-obvious trend that can have a significant impact on the cryptocurrency and blockchain sector in 2022 is the full deployment of central bank digital currencies (CBDC). Thanks to their characteristics and the support of states, they are able to radically change the structure of the distribution and use of money. Commercial banks will become useless, and national currencies with an unstable exchange rate will become unclaimed. This can happen very quickly – literally within five years.

Explanation. CBDCs are cryptocurrencies issued by central banks. They have an official status and are regulated by the monetary authority of the issuing country. It is assumed that after the introduction of CBDC, network participants – central banks, commercial banks, businesses and individuals – will settle with each other directly (as users of the Bitcoin network), which will reduce transaction processing time and reduce fees. At the same time, the central bank issuing CBDC money will see all transactions and their counterparties, which guarantees compliance with the principles of KYC/KYT/AML.

The first CBDCs appeared in 2019. True, these were not full-fledged products, but pilot projects launched to test the concept and practical “running in” the technology on real cases. Nigeria, the United Arab Emirates and the Bahamas, as well as the Eastern Caribbean Central Bank, have already issued their CBDCs. Another 14 CBDCs are in the pilot phase and 16 are under development.

Market impact. In 2022, we will likely see CBDC launches in China, Sweden, Ukraine, Thailand, Australia, Russia and a few other countries. In a year, the EU, the UK and the US can issue their CBDCs — the “whitepaper” of the cryptocurrency dollar was published by the United States on February 4, 2022. In the long term, CBDCs will have a huge impact not only on the world of cryptocurrencies and blockchain, but also on the global economy – especially the traditional financial sector. How exactly? It depends on the CBDC implementation option and the reaction of large countries and international organizations.

The most obvious scenario is that CBDCs become a complete digital analogue of fiat money, and everyone can use them. Such a model is likely to have the greatest impact on the economy, and the effect will be truly devastating.

Commercial banks will lose their former importance, since it will be possible to store and transfer funds without their participation/intermediation. As a result, these organizations will lose the bulk of their income and will either have to disappear or be transformed.

CBDC of some countries will penetrate the economy of others, replacing local national fiat currencies as the main means of payment. Indeed, why use the unstable Venezuelan bolivar or Turkish lira when there is a stable and reliable Chinese yuan or American digital dollar freely available?

The states issuing CBDC money will have full control over the chronology of payment transactions and financial data of businesses and citizens. That is, they will know who has how much money, as well as who, to whom, how much and when the CBDC transferred.The dream of any state tax or fiscal authority will come true.

3. Some governments will create fake blockchains

Trend. Another non-obvious trend in 2022 is the exploitation of the public perception of blockchain as a “transparent” and “honest” technology to hide corruption and falsify elections. There will be few such decisions, but they will have a significant impact on the markets and, possibly, even bring down the economy of those states where they will be used.

Explanation. Perhaps the biggest blockchain scam of 2022 may not be a scam that raised hundreds of millions of dollars or a powerful hack, but the use of blockchain to cover up election fraud or corruption. It is quite possible that the authorities of individual countries will create electoral, financial or fiscal platforms that outwardly resemble a transparent and open blockchain. In fact, in the code of these systems, “holes” will be initially laid to hide the facts of corruption, falsifications and other abuses.

Market impact. The main threat is that authoritarian regimes are learning from each other, adopting practices and technologies that allow them to maintain power and stability. And if one regime manages to successfully use a fake blockchain, other governments close to it in spirit can borrow this experience and put it into practice. This will preserve the stability of the system of government, but will have a bad effect on the economic prospects of the country. In addition, local residents may develop a negative image of the blockchain. It is highly likely that fake blockchains will be used by some politicians to hide corruption and/or simulate the fight against it.

4. The popularity of anonymous tokens will grow

Trend. For several years now, we have been watching how governments are trying to get all the levers of control over the activities of the financial industry. The response will be the growing popularity of anonymous cryptocurrencies and applications that allow you to hide the identity of the counterparties of cryptocurrency transactions.

Explanation. In 2018, regulators turned their attention to the cryptocurrency market, and since then we have seen a constant tightening of laws and requirements for the circulation of digital assets, up to their complete ban in some countries (for example, in China). On the one hand, the practice of investing in cryptocurrencies is becoming safer, and on the other hand, it stimulates interest in projects that make it possible to maintain anonymity.

Such projects include Monero, Dash, ZCash, Firo and other virtual currencies that allow you to hide the amount of the transfer and the address of the recipient, leaving only information about the transaction itself and its timestamps in public access.

Back in 2018, Bitfury claimed they could reveal the identities of 16% of all bitcoin address holders. And a study by a group of CryptoLux programmers proved that anyone, even without special skills, can deanonymize 60% of the addresses on the bitcoin network – even if their owners use the Tor network or other similar programs.

Market impact. Most of all, the most popular anonymous cryptocurrencies, such as Monero and Dash, will benefit from the desire of the inhabitants of the planet to hide their transactions from states. But other similar projects have a chance to take off against the background of the general trend.

5. The number of DAO solutions will grow

Trend. The next trend in the world of blockchain and cryptocurrencies that we will most likely see in 2022 is the increase in the number of decentralized autonomous organizations (DAOs) designed to solve the governance problems in DeFi organizations.

Explanation. Most DeFi solutions are positioned as organizations with decentralized management, where all the main issues are decided by voting of network participants (platform token holders), for example, the size and distribution of commissions, listing on exchanges, the list of products/services offered, the integration of new functions, and so on.

At the same time, the transition to such management usually occurs in stages:

at the start, the platform is managed by one person or a team of developers;

then some secondary issues are put to the vote;

when the voting technology is developed and thoroughly tested, there is a complete transition to decentralized governance.

In 2022, many existing DeFi solutions are expected to complete the transition from centralized structures to DAOs. At the same time, more and more projects will appear that from the very beginning will use the DAO mechanism to manage the network (this is another consequence of the increased regulation and centralization of the market by states).

Market impact. The DAO currently manages more than $10.7 billion in assets. The largest liquidity is in Uniswap, BitDAO, Lido, Compound, and Aave. Promising projects are FWB, PleasrDAO, KlimaDAO and ConstitutionDAO, the Syndicate platform (allowing you to quickly launch DAO), Forta (monitoring the security of Daaps at runtime) and Nexus Mutual (insurance against smart contract exploits).

Conclusion

2021 has been a year of unprecedented growth and unexpected developments in the world of blockchain and cryptocurrencies. 2022 is likely to be just as interesting and profitable for the market – provided that the world does not start another financial crisis or something similar. True, in this case, the popularity of some tokens may grow.