Fear and uncertainty have characterized the cryptocurrency sector for the better part of the year. The sector has come under immense pressure on most coins correcting by more than 50% from record highs recorded at the height of the crypto boom last year. The implosion has coincided with a sell-off in the stock markets, as investors remain wary of what the future holds amid recession fears and elevated inflation.
While the sell-off has left most people with a bad taste, there is no doubt that crypto and the technologies involved are here to stay. Moreover, astute investors are already looking into the future, as the industry will eventually bounce back once the headwinds dissipate.
While cryptocurrencies remain the go-to asset class in the nascent sector, investors have already set sights on other emerging innovations. Below are some of the next big things likely to shape the cryptocurrency industry.
The Rise of Stablecoins
The extreme volatility levels associated with cryptocurrencies are forcing investors to look elsewhere. In addition, the 50% correction from record highs has left most investors with significant losses. Nevertheless, stablecoins could provide a way out from the volatility and the big losses associated with cryptocurrencies.
Stablecoins are becoming increasingly popular, as they are more stable than typical digital currencies. In addition, they come backed with tangible world assets such as Gold and silver and currencies such as the dollar, adding credibility to their long-term prospects.
Additionally, they are proving to be attractive investment plays in the burgeoning sector as they are not subject to heightened volatility, as with cryptocurrencies. Therefore, they are ideal investments for people who wish to protect their money from inflation and economic downturn.
As governments worldwide look to venture into the digital currency sphere, with central bank digital currencies, stablecoins should be the center of attention. For example, China and the US are looking to establish central bank digital currencies as a way to mitigate against the risks posed by private stablecoins.
However, stablecoins backed by solid assets such as Gold or silver should continue flourishing. Additionally, most people or investors would be willing to invest in stablecoins that are not under the control of a central authority such as a government.
Increasing Blockchain Technology Use
Cryptocurrencies have primarily grown in popularity due to the speculation that takes place. While most people are usually looking to profit from price fluctuation, the focus is increasingly shifting toward the underlying technology that powers the asset class.
Blockchain technology is a digital ledger that records all transactions chronologically and publicly. In addition, the technology results in immutable ledgers to affirm the security and transparency associated with the technology.
Consequently, it does not surprise that most businesses and large corporations are increasingly exploring ways to leverage the underlying technology. Moreover, as fear continues to grip the cryptocurrency sector, the focus should shift toward the underlying technology and its capabilities in powering other real-world applications.
Contrary to perception, blockchain is not all about cryptocurrencies. Instead, the technology continues to find widespread applications, from powering payment systems to decentralized applications transforming various operations and processes.
Therefore, more people and businesses should adopt the underlying cryptocurrency technology, given its credentials in making operations more efficient and adaptive.
Non Fungible Tokens (NFTs) are the latest blockchain innovation sweeping the cryptocurrency sector. As investors explore ways to diversify and broaden their exposure in the cryptocurrency sector, most are turning to NFTs, whose popularity and use-case continue to balloon by the day.
NFTs stand out on their ability to enhance the tokenization of real-world objects and assets. For instance, people and artists are increasingly tokenizing their pieces of art, music, and other collectibles in NFTs, some of which are going out for millions of dollars.
The popularity of NFTs stems from their ability to make it easy for people to distribute and store real-world objects in digital form. Additionally, they have allowed people to represent their online personas on social media throughout the metaverse world.
Therefore, it does not surprise that successful projects such as Bored Ape Yacht Club have cropped up with NFTs valued at millions of dollars. While it is difficult to predict the next big thing in the NFT world, there is no doubt that they will send shockwaves in the years to come especially that they are now being utilized in the real estate sector as well as the financial sector to generate loans.
For the longest time, centralized exchanges have called the shorts in the cryptocurrency sector. However, the need to decentralize the industry and move away from systems controlled by centralized authorities has given rise to one of the fastest-growing sectors around decentralized Finance (DeFi).
Decentralize Finance is a niche market comprised of non-custodial platforms that do not require intermediaries to operate. Some of the biggest innovations around DeFi include decentralized exchanges and non-custodial lending platforms.
Decentralized exchanges are increasingly cropping up as the race to replace centralized exchanges heats up. Likewise, DeFi tokens are increasingly becoming popular and backed by an extensive decentralized exchange that commands vast volumes.
Decentralized exchanges should take over from centralized exchanges, as they are more resilient and immune to security breaches. In addition, a central authority that does not control them ensures they offer more security and privacy to people’s data and holdings.
Additionally, decentralized finance protocols are making it easy for people to generate some passive income on the side. First, there is the option of staking tokens in a DeFi protocol to help secure a network and bolster liquidity for a cut of the transaction fees generated. Some protocols support yield farming offering another pathway to create some income away from cryptocurrency speculation.
Metaverse and Crypto Games
Metaverse, a virtual world where people express their different persona, is also giving rise to one of the economies away from cryptos. As a result, several projects or games powered by blockchain technology are increasingly cropping up and growing in popularity.
The Metaverse world has also given rise to play-to-earn games fuelling a multi-billion sector. People no longer play games for fun but compete against one another in the virtual world for big rewards. Axie Infinity is one of the biggest inventions in the sector, adding to a growing list of Sandbox and Decentraland.
The future away from volatile and highly speculative cryptocurrencies is heating up. Instead, Stablecoins and increased focus on blockchain technology are increasingly shaping the industry. Likewise, people are taking note of NFTs, Decentralized Finance, and play-to-earn crypto games as alternatives to crypto investments.