Blockchain and crypto have had a strong record and following for the past few years. Major cryptocurrencies prices have soared to record highs, resulting in considerable growth in the market cap. Layer 1 and 2 protocols have also come full cycle to claim their place and share in the blockchain spotlight. In addition, the non-fungible token (NFT) niche is also booming.
The growing demand for blockchain and crypto technology for enterprises and its general awareness are some of the reasons for its rising popularity. In investment, there is the increasing use of trading bots and increased methods of earning crypto passively, including yield farming or staking. But what changes will blockchain and crypto enthusiasts expect to see in 2022 and beyond?
Current Blockchain Status
The best way to predict the future of the crypto and blockchain technology industry is by looking at past trends and where the industry stands. Here are some of the facts:
· The NFT market is growing and attracting new products.
· The enterprise world is increasingly looking for use cases and blockchain applications across all sectors, including logistics, retail and eCommerce, healthcare, and identity management.
· There are almost 80 million blockchain wallets by the end of 2021, and numbers can lay a sound basis for future predictions.
Being among the most disruptive technologies of 2021, those interested in blockchain have many expectations. Here’s a rundown of the trends you’re likely to see going forward.
Ethereum Scaling and Layer 2 Protocols
In the past year, there were considerable strides made in efforts to scale Ethereum, with the utilization of roll-up technology, an up-and-coming Layer 2 crypto solution. Roll-ups work by moving transactions off-chain while still maintaining data storage on the Ethereum chain.
Since rollups move the transaction away from the chain while still submitting data to the Ethereum chain, they enhance high scalability without causing data availability. Similarly, Ethereum is taking on Polygon as a scaling solution to help eliminate or reduce the issues facing its ecosystem. The trend and efforts to scale Ethereum will continue throughout 2022 and beyond.
Maturation of NFT
NFT projects have shown massive potential as another blockchain technology solution for numerous industries. It’s anticipated that the NFT market will continue expanding as developers continue to advance this technology. And while much of the emphasis in the NFT market has been on art and sports, 2022 and beyond is likely to generate focus on utility as well.
The prediction on the potential growth in utility NFT is the introduction of technologies such as Metaverse. As a technology that promises to change how people enjoy and share virtual experiences, it also challenges the perception of ownership of digital assets. Metaverse will in the
future be able to hold a broad range of NFTs that could be anything from virtual property, cosmetic items, memes, and many other things.
In addition to utility NFTs, gaming may also see significant changes towards more than just collectibles.
DeFi Market Further Growth
The decentralized finance or DeFi space has been on a steady evolution and emerging as a fast, efficient, permissionless, and transparent way of direct interaction of users within a network. The value of DeFi assets reached a whopping $180 billion, and the figure is expected to continue rising.
Before the close of 2021, the industry saw the emergence of DeFi 2.0, which is driven by the growing popularity of new products, including Tokemak – used for creating sustainable decentralized finance liquidity and high capital-efficient markets. This trend indicates the direction the blockchain market is likely to take in the future in a bid to develop products with higher liquidity models.
In addition, there are chances of increased DeFi products that are not on the Ethereum network. The success of the Solana network, among others, is a tell-tale sign of the things to come. And while Ethereum is undisputedly the leader in this area, any blockchain advisory will tell you that it’s not the only option available.
A top criticism of blockchain technology is its negative environmental impact due to the most popular blockchain protocols’ high energy consumption. The Proof of Work (PoW) based consensus algorithms need a lot of computational effort from participants. High energy consumption has a high impact on the environment.
On the other hand, Proof of Stake (PoS) and other environmentally friendly algorithms have lower energy consumption and are likely to be implemented more widely in 2022 and in the future. For instance, the PoS commission on Ethereum is partly motivated by a desire to make the platform more eco-friendly.
Blockchain Going into 2022 and Beyond
Historical patterns always play a significant role in developing projections for the future. The blockchain and crypto sector might see these and other trends not discussed here. However, you should note that these are only predictions. Another thing historical patterns have taught is things don’t always go as predicted.