2021 was a huge year for cryptocurrencies, and the industry consensus at the conclusion of the year was that 2022 would be even bigger.
The previous 12 months did not go as planned. Clearly.
The collapse of the Terra ecosystem and the accompanying market-wide mayhem kicked off a challenging, if not disastrous, year for digital assets and their investors. Not to mention the failure of some of crypto's top lenders, as well as the bankruptcy of FTX and the arrest of Sam Bankman-Fried.
Even Nevertheless, this year saw a number of important events that promoted the benefits of blockchain technology. Here's how it happened, and here are seven reasons to be optimistic about the next 12 months.
The Merge, well, merged
The long-awaited Merge of Ethereum, which changed the blockchain's transaction validation mechanism from proof-of-work to proof-of-stake, was very probably the most significant year for the network since its inception over a decade ago.
As a result, Ethereum's native coin, ether (ETH), became almost 99% more energy-efficient. In the run-up, the price of ether exceeded that of bitcoin. This year has also seen a significant development of the blockchain ecosystem, as evidenced by increased layer-2 activity.
The Shanghai Fork, scheduled for the first half of 2023, is Ethereum's next big update. The fork's goal is to add features related to ETH staking systems.
Elon Musk planned to integrate crypto on Twitter
Since billionaire Elon Musk first tried to acquire Twitter, crypto enthusiasts have clamoured for digital asset payments and decentralized blockchains to be implemented on the social media network.
Musk floated the notion of adding digital payments during his first Twitter all-hands meeting in June. He also mentioned removing cryptocurrency-related scams. Twitter has become a haven for scammers aiming to prey on unskilled traders through malicious links and viruses.
“It would make sense to incorporate payments into Twitter so that it's easy to transmit money back and forth...currency as well as crypto,” Musk is believed to have stated during the discussion.
Those plans have yet to be fully realized.
Larry Fink stayed bullish on crypto tech
In 2022, the combined weight of adverse macro pressures and crypto's own tragedies inflicted a significant blow to investor confidence. Big-name investors, though, especially Blackrock's veteran CEO, Larry Fink, have not wavered in their crypto convictions.
Despite this, Fink believes the multiple blockchains that enable digital assets will be “extremely essential” in launching “the next generation of markets.”
Goldman Sachs eyed opportunity in distressed crypto companies
Private crypto company valuations, which were once skyrocketing, plummeted in 2022. However, the consequent bargain-basement valuations have proven more appealing to institutional investors, like Goldman Sachs.
According to Reuters, Goldman's asset management department increased its commitment to the business by undertaking due diligence on taking prospective equity shares in depressed crypto firms — or perhaps purchasing them outright.
Self-custody went mainstream — even for newbies
Following FTX's liquidity crisis and subsequent insolvency, crypto investors began transferring large amounts of their assets to self-custodial wallets.
The change, which has complexities, especially for newbies to the business, puts responsibility for cryptoasset storage away from an exchange and into the hands of an owner.
Withdrawals from exchanges to self-custody wallets increased dramatically in November, according to Glassnode, with bitcoin owners withdrawing their assets at a historically high rate of 106,000 bitcoin per month.
“As a result, favorable balance changes have occurred across all wallet cohorts, from shrimp to whales,” Glassnode added.
Venture dollars kept flowing in
Hundreds of venture capitalists appeared unfazed by the plummeting prices of spot cryptocurrencies, which are usually reasonably associated with venture values. According to Pitchbook, crypto startup investors put about $20 billion into the sector in the first three quarters, which is more than 40% more than in the same period in 2021.
According to Pitchbook's “Emerging Tech Indicator” for the third quarter, Web3 and DeFi projects accounted for the greatest industry slices, topping out fintech and biotech.
Industry muck bubbled to the surface
The year's succession of cryptocurrency bankruptcy left investors wondering when — or if — they'd ever be repaid.
The bright side？ Traders have become much more cautious about who they put their funds to. The idea extends to conducting increased due diligence on once-popular high-return gimmicks.
The shambles also opened the way for legislators in the United States and elsewhere to begin paying close attention to suitable restrictions. To be fair, whether or not that is a plus depends on who you ask.
As a reminder, WikiBit is ready to help you search the qualifications and reputation of projects in a bid to protect you from hidden dangers in this risky industry!