2021 Marked by some major breakthroughs in cryptocurrencies.
For one, new cryptographic applications like Non-substitutable token (NFT) has grown steadily with these sales Digital assets Set a new record at major auction houses.
Second, Bitcoin has moved towards mainstream acceptance, with major websites such as Expedia and Microsoft accepting coins as a means of exchange.
Third, in September El Salvador became the first country in the world to accept Bitcoin as fiat currency.
There are many more examples of how the cryptocurrency market expanded last year. What is the future of cryptocurrencies in 2022 with this increase in activity?
We believe there are three major areas where cryptocurrencies will gain momentum next year:
- Greater acceptance of Bitcoin as a means of payment
- Strengthening regulatory scrutiny
- And an increase in NFT activity.
1: Bitcoin hug
Understanding the motivations for individuals to adopt Bitcoin has been a challenge for researchers. Recent studies suggest that five major factors contribute to the potential for using Bitcoin:
- Trust in the system
- Online reviews
- Quality of web platform available for transactions
- Perceived risk of investment
- Expectations for Bitcoin performance
Other studies add nuance to this discussion by considering gender, age, and level of education as equally important factors.
Due to the cryptographic situation, it is more and more likely that Bitcoin will become mainstream in the near future.
First, with increasing activity in online communities such as Twitter and Reddit, even beginners of cryptocurrencies can exchange information with experienced investors and get word-of-mouth advice on price forecasts and trading strategies.
Second, there is the explosive growth of new crypto exchanges (or trading platforms that can exchange fiat currencies for cryptocurrencies) and the massive investment in the technical infrastructure of existing exchanges. These infrastructure investments have increased access to the crypto market and have appealed to institutional investors.
2: Institutional involvement, regulatory scrutiny
Last year, we saw institutional investors like the European Investment Bank (EIB), the lending arm of the European Union, taking a stance on cryptocurrencies.
In April, EIB issued € 100 million in digital bonds on the Ethereum blockchain. Goldman Sachs, Banco Santander and Societe Generale were also involved in this issue. Research points to institutional adoption as a turning point in widespread crypto adoption, and it looks like we’re heading there soon.
Overall, the increased availability of point-of-sale information management to accept Bitcoin as a means of exchange and institutional investment in space could expand the acceptance of Bitcoin as a payment method in 2022.
After cryptocurrencies, decentralized finance (DeFi) is widely regarded as FinTech’s next frontier. DeFi will create a decentralized system that relies on distributed ledger technology to promote peer-to-peer loans, create new financial securities such as Stablecoin, and even provide a new model of corporate governance. Provide an opportunity.
Regulators also seem to be getting more and more attention. In November, the European Council, the body that defines the political priorities of the European Union, announced its position in the Cryptocurrency Market (MiCA) framework. This increases the clarity of regulations on crypto assets and DeFi.
In the same month, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the United States issued a joint statement announcing the development of a series of policy directives on cryptography.
Researchers have pointed out the lack of regulation as a major barrier to the acceptance of mainstream cryptocurrencies. More regulatory activity could occur in 2022, coupled with increased government oversight and moves by countries to consider digital versions of their currencies.
3: Increase in NFT activity
2021 brought a new wave of NFT sales. NFTs can provide proof of ownership of digital art, for example, in the same way that physical canvas can provide proof of ownership of Vincent van Gogh’s paintings.
NFTs began as a way to formalize ownership of digital art, but have since expanded to include other types of digital assets, including digital real estate.
NFT sales set a new record. A recent NFT has raised $ 17.1 million in Sotheby’s. As a result, the auction house has launched Metaverse, an NFT-only marketplace, to promote the sale of digital works.
With the advent of new NFT applications, this space could continue to grow in 2022.
Cryptocurrency: Buyers should be careful
Despite these investment opportunities, we urge crypto investors to be skeptical of the claims they read in the online community. At the very least, crypto enthusiasts need to do due diligence before investing.
New scams and plans will definitely emerge in 2022. For example, let’s take a look at the Squid Game cipher, which was a scam, using the popular Netflix show. Or a fake Banksy NFT sold for £ 244,000 ($ 323,770).
A survey of individual investor behavior found that some were very sensitive to “fear of oversight.”
Therefore, it can be difficult to turn down tips from hair stylists and best friend cousins at the next hot cryptocurrency opportunity. However, crypto investors need to educate themselves on the basics of technology and financial markets if they want to be cautious.
After all, crypto remains speculative, not for everyone.
This article was originally published conversation Erica Pimentel, Bertrand Malsch, and Nathaniel Law At Queen’s University, Ontario.read Click here for the original article..