Crypto Investing Outlook in 2022 – My View on DAOs, Metaverse, Regulation, and Rival Chains

With many people still re-living cryptocurrency’s golden year (2021), what are the expectations/predictions for 2022?. This year is sure to overshadow and outclass the extraordinary performance of crypto in 2021. I foresee actual adoption figures in excess of one billion crypto users.

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Contributed by Nyce Ayuk

2021 was a record year for the cryptocurrency market. Towards the end of the year, precisely by November 2021, it surpassed $3 trillion in value with bitcoin remaining on top as the cryptocurrency with the largest market value. The second largest, ether, hit an all-time high while dogecoin similarly surged in popularity. 

Year 2021 will also be remembered as the year the first U.S. futures-based bitcoin ETF launched with the Pro-shares’ futures-based bitcoin making its debut on the New York Stock Exchange under the ticker ‘BITO.’

It was a year decentralized autonomous organisations, DAOs, became mainstream after ConstitutionDAO raised over $40 million to buy a rare copy of the US constitution at auction.

It was also the year that institutional adoption powered the bitcoin surge. El- Salvador became the first country to adopt Bitcoin as legal tender in September, 2021 and Morgan Stanley, the 6th largest bank in the United States became the first bank in the United States to offer its customers the option of investing a portion of their funds into bitcoin. 

Last year was a big year for non-fungible tokens (NFTs), the cryptocurrency tokens which represent ownership of a real-life object or a piece of digital art.  Celebrity endorsements was a major factor behind this huge success.

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SEE ALSO2022: The Year of GameFi?

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2022 Outlook

With many people still re-living cryptocurrency’s golden year (2021), what are the expectations/predictions for 2022?

This year is sure to overshadow and outclass the extraordinary performance of crypto in 2021. I foresee actual adoption figures in excess of one billion crypto users.

My prediction could not be more positive.

Bitcoin’s price rose to $68, 521 in early November 2021 before dropping off sharply to below $50,000 mark. From a high of $4, 865, Ethereum is now trading around $3,183.66. While volatility is obviously a feature within the crypto stratosphere, this should not deter a committed trader / investor.

I also see 2022 being an year of greater possibilities as the financial services’ tech revolution takes firm root.  I advise everyone to invest a portion of their funds in crypto – Start small with 1 – 5% and then increase your investment portfolio in crypto the same way you would with any asset. 

Many experts have continued to pose this question: Is this the year that Bitcoin value finally reaches above $100,000?

Wouldn’t be surprised! 

Before the end of this year, bitcoin will likely take a decisive step in reaching that threshold.  As digital natives take firm charge of the unfolding technological revolution, their market share of digital assets will take astronomical leaps. This year, the answer as to whether bitcoin will consolidate its 60% gain in 2021 with another blitzkrieg performance will be determined by a variety of factors, chief among those factors being to what extent the Fed in the United States tightens policy to stem inflation.

No matter how this puns out in the long term, bitcoin will maintain its bullish stature with a decisive breakout to new highs of about $100,000 before the end of the year.

The Impact of Central Banks and the Metaverse

Central bank policies will be the number one influencer of bitcoin and cryptocurrencies in 2022. The first point to be made is that cheap money is going nowhere and will surely continue to impact cryptocurrencies. The waves are sure to be rough but, by and large, crypto will ride those waves.

New tokens such as Avalanche and Solana, which were bullish in 2021 and recorded massive gains, will stabilize and face the same scaling challenges faced by Ethereum and other older protocols this year.

The metaverse has a lot of potential and will definitely be one of the superlative performers of this year. For sure, crypto will face a much more challenging environment in 2022 shaped, in part, by the commencement of interest rate normalization by the Federal Reserve of the United States and other major central banks in Europe, Asia, and the rest of the world.  

DAOs Set for Exponential Growth

A Decentralized Autonomous Organization (DAO) is a community-led entity with no central authority. Its importance hinges on it becoming the model that will enable businesses access finance without really relying on traditional financing governed by corporate rules.

This year, DAOs are on the cusp of something special.

I believe that DAOs and the metaverse will rise to prominence in 2022 and that tools for DAOs will be a major area of growth. The adoption of the metaverse will be on the rise powered by the demand from major corporations to join the virtual gold rush.

After PleasrDAO, ConstitutionDAO, BlockbursterDAO and FreeRossDAO, there will be more examples of people coming together to coordinate at scale through blockchain.  I think that DAOs will devote greater attention to important causes. For instance, political campaigns could be transformed by DAOs.

2022 will certainly unleash the full potential of DAOs as more individuals and businesses collaborate with such organizations.

App Store for Crypto

 Consumers love platforms.

Presently, there is no crypto platform that owns the customer relationships and aggregates suppliers. It is therefore understandable that the race is already on to be the app store for crypto. This year, many companies will compete to build this platform.

Already, Coinbase is in the lead as it integrates DeFi and NFTs into its ecoystem and having already started building out a crypto app store.

Crypto Regulation

Hanging over the cryptocurrency space is the threat of more regulation.

There will be more plans in the works from Washington D. C., Europe, and across the world around cryptocurrency regulation. Central banks will continue to tinker with existing laws and come up with new guidelines that will make cryptocurrencies safer for both traders and investors. These regulations are envisioned to make crypto less susceptible to attacks by cybercriminals. 

In 2021, Chinese authorities declared all cryptocurrency transactions in China as illegal. While the United States has no intention of banning cryptocurrencies, the authorities are more likely to put in place stricter regulations to insulate traders and investors from getting hurt. 

Biden’s $1.2 trillion infrastructure bill, signed in November 2021, includes crypto tax reporting provisions that will make it easier for the FIRS to track crypto activities among Americans. Stricter regulations means that investors / traders should learn to keep all records of capital gains and losses from their crypto assets.

The volatility of the crypto market is the reason why there is a convergence of opinion to the effect that you should keep crypto investments to less than 5% of your total portfolio.

In effect, never invest anything that will unsettle you should you incur a loss.

Regulatory announcements may inject further volatility and affect the price of cryptocurrencies. Everything taken into consideration, I believe that regulation is a good thing for the industry as it will give people more confidence in cryptocurrencies.

Institutional Crypto Adoption

In 2021, mainstream companies took greater interest in cryptocurrencies with some of them investing in it. Fintech companies such as PayPal and Square are already allowing users access crypto on their platforms. Tesla holds billions in crypto assets.

The truth is that crypto has witnessed a tremendous amount of interest and this interest will be sustained even more this year. As a matter of fact, it will be one of the major engines of growth for the industry in 2022. Bigger corporations with global stature will likely adopt bitcoin and possibly other crypto payments.

AMC has already made the big announcement that it will accept bitcoin payments by the end of this year. Global behemoths like Amazon and Walmart are already making moves that suggest that they are ready to get involved in a big way. This could be the game changer that would ultimately create a chain reaction that will be good for crypto, unleashing in the process, the greatest wealth transfer in history.

Ethereum ‘Killers’ (Rivals)

Last year, the market cap of Ethereum, the second largest cryptocurrency, stood at a staggering $445 billion after a year of monstrous performance.

However, this dominance is facing stiff competition from upcoming blockchains that made a strong showing last year. As these ‘Ethereum Killers,’ as they have come to be described by some experts, accelerate their unrelenting challenge, the battle for dominance will intensify in 2022.

One common feature among them is the claim that they have technical advantages over Ethereum.

Ethereum has established itself a reputation of being the powerful computing platform, but its downside is that its transactions are seen as slow and costly. Rival chains are challenging Ethereum’s market position and dominance by offering faster transactions with lower gas fees (transaction fees). The vision behind Ethereum is to provide immutable blockchain ledgers to a variety of decentralized applications (dApps) with low fees and faster transactions. 

The underlisted ‘Ethereum Killers’ are indeed offering lower gas fees and faster transactions. They are becoming increasingly more competitive and this year will remain a potent threat to Ethereum’s hitherto unchallenged dominance. 

Here is a look at some of these ‘Ethereum killer’ chains:

  1. Avalanche ($AVAX)

Arguably one of the fastest smart contracts platform for decentralized apps in the open source blockchain industry, Avalanche can handle 4,500 transactions per second in contrast to Ethereum which handles only 30 within the same time span. 

Unlike the proof-of-work (PoW) blockchain architecture used by ethereum and bitcoin, Avalanche uses a blockchain system known as proof-of-sake (PoS). Transactions here are settled by a consensus among verified holders of the cryptocurrency to be transacted resulting in lower energy consumption and a more scalable system.

The final cost per transaction is approximately one tenth of Ethereum’s fees for a similar transaction. As a result, it is low cost, super-fast, and enables smart contract-enabled dApps to outperform their competition. The $AVAX token is a hard-capped scarce asset and can provide a unit of account between the multiple subnets created on Avalanche.

  1. Cardano ($ADA)

In mid-January 2022, Cardano’s $ADA token surged 30%, based on CoinGecko data. At the same time, the prices of Ethereum and Bitcoin, XRP, and Solana advanced less than 5%. Within the same period, Cardano’s 24-hour transaction volumes stood at $5.31 billion and Ethereum $5.59 billion.

Interestingly, while Cardano’s gas fees was around $75,400, Ethereum commanded a whopping $44 million cost over the same period.

Skeptics argue that it is only a matter of time before the low gas fees enjoyed so far by Cardano will rise astronomically, but this dire prediction is yet to come to pass. With an enthusiastic fan base, less than salutary comments by some experts, say that Cardano may not get the same traction with developers and its vision will remain a pipedream. 

In spite of its ups and downs last year which saw its market value plumet, Cardano’s reputation as Ethereum’s nemesis remains strong. This reputation is buoyed by an enthusiastic Cardano community and recent positive developments in decentralized finance (DeFi), non-fungible tokens (NFTs) markeplaces, and the metaverse.

The progress it has recorded on scaling has also helped to drive optimism around Cardano.

  1.  Solana ($SOL)

Bull’s hope Solana will be the Ethereum Killer.

This network relies on proof-of-sake in association with a unique layer called proof-of-history to function. Rather than constantly communicating with other validators, the Solana network records and settles transactions based on ultra-precise timestamps.

The pace of the performance is blistering. This network can process about 50,000 transactions per second with each of the transactions completed in real time. The fee per transaction is $0.00025 at present, which is incredibly low.

Ethereum should watch its back because Solana is coming.

Developed in 2017, Solana is now the fourth most popular cryptocurrency on Coinbase with a $54 billion market cap.

Solana matches up well with Ethereum in speed and low transaction costs.  It is gaining momentum and traction among developers with more than 400 projects already running. At the moment, this may not compare with where Ethereum is, but the thing to note is that Ethereum rose steadily over time but much of Solana’s surge happened in the last six months.

  1. Binance Smart Chain (BSC)

BSC is an alternative DeFi platform by Binance, the leading crypto exchange.

In 2021, this smart contracts platform grew in value 17 times and ranked third in terms of capitalization after only by bitcoin and Ether. This rally was predicated on the mass exodus of DeFi users from Ethereum.

Users demand for low-cost DeFi products like Uniswap, the Ethereum-based decentralized crypto exchange, was clearly evident. The cost of making a transfer on Uniswap has soared to double digits – a simple transfer from a single wallet costs a user $10 – $15.

BSC was the first alternative ecosystem to take market share from Ethereum. As the smart contract blockchain war heats up, Binance is aiming for total domination.

  1. Polkadot ($DOT)

As an alternative chain, Polkadot seeks to integrate different blockchains by creating a network that connects them all.

While it aims to solve some of Ethereum’s scalability and cost issues, Polkadot is strongest in its interoperability processes because it enables blockchains to communicate effectively. The chain is technologically ambitious and since its release in April 2020 by Parity Labs, it has quickly gained traction.

Like Ethereum, the chain supports dApps, NFTs and more. Some experts maintain that Polkadot is building what they have described as ‘an internet of blockchains.’ Compared to about 4, 000 active open-source developers on Ethereum, 1,500 work for polkadot, thus making it home to the second highest number of full-time developers working across all blockchains.

According to some experts, the potential for Polkadot to surpass Ethereum in total number of developers is real.

  1. Terra Luna ($LUNA)

Terra is made up of a variety of ‘stablecoins’ running on the Terra network. The Terra protocol is an open source blockchain that operates a proof-at-stake model on the stablecoins ecosystem.

These stablecoins (cryptocurrency where the price is pegged to another fiat pair) are backed by fiat, other cryptocurrencies, and metals (Gold, silver etc). The $LUNA token is the native governance token native the network itself.

The ambition of the Terra Luna protocol is to function as a central bank for cryptocurrencies by offering stability. 

Polkadot has built a hub where stablecoins, traditional currencies, and volatile tokens can function as one hybrid mechanism with the help of smart contracts and stablecoins algorithms. This year, its prospects are bright.

Last year, the total value locked (TVL) in DeFi was more than $100 billion with most of the value coming from Ethereum. The second highest TVL amount of over $20 billion was locked in the Terra Luna chain.

About Nyce Ayuk

Nyce Ayuk is a United Kingdom Trained Serial Entrepreneur, Blockchain and Cryptocurrency enthusiast, eCommerce expert, Author and Business Coach. He leverages his vast knowledge and wealth of experience to educate people across the globe on how to create financial confidence for themselves from the comfort of their homes.

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RECOMMENDED READING: 3 Structural Changes Coming to Ethereum in 2022

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