It would be an understatement to say that cryptocurrency has been one of the most trending topics around the globe over the past year. While the jury is still out on how conversations around it would eventually pan out in the country, there is little denying that blockchain has the potential to disrupt several business practices. The year 2021 saw a rise of several trends in the crypto-ecosystem – From NFTs, DeFi to Metaverse.
Blockchain technology is one of the biggest innovations of the past decade. It’s a revolutionary technology, with applications that go far beyond cryptocurrency and bitcoin. It has the ability to create more transparency and fairness while also saving time and money. It wouldn’t be wrong to conclude that Blockchain technology is poised to transform the nature of transactions and trade across the world, and revolutionize different sectors from supply chain management to real estate.
A lot has changed in the last decade. Covid reshaped how we work and how we communicate. The increased adoption of digital technologies due to the pandemic has led to a sudden boost in the sector that is poised to accelerate its growth in the first two quarters of 2022. A few important technology trends that shaped the past year could help set the outlook for 2022.
Web 3.0
We are at a tipping point of a new phase in the Web’s evolution, where the Internet will transition from a centralized management style to a more democratic model. Web 3.0 represents the iteration of the Internet, where users, creators, and developers will have stake and vote on the platform. Services will run on blockchain and the Internet could process information with near human-like intelligence.
Web 3.0 is built upon the core concepts of decentralization, where information will be available and accessible to all and not depend on tech giants like Google, Facebook, and Twitter. The vision is to ensure that users can have access to information from anywhere in the world and to usher in a new digital era that can improve the lives of web users. What 2021 did was set the tone and urgent need for Web 3.0, with the recognition that NFTs and DeFi received. What Web 3.0 will evolve into is dependent on the conversations that occur around the philosophy behind it.
Metaverse
Facebook rebranding itself to Meta, triggered a new wave of interest in the metaverse. Metaverse is a virtual world that is an extension of the physical world, it is a digital reality that will combine social media, online gaming, augmented reality, virtual reality, and cryptocurrencies to allow virtual user interface. The metaverse will be immersive and ubiquitous, an interoperable network of real-time rendered 3D virtual worlds where users can work, play, entertain and interact with people from all over the world. It will create an entire ecosystem for developers, apps, ads, and new digital innovations which will facilitate the consumption of services.
In the future, metaverse will be accessible through phones, computers, wearable tech, and headsets, where people will be able to create personas and work on their virtual identities. And although the metaverse is controversial, with some critics calling it a techno-dystopian nightmare or a marketing strategy, it is something new and innovative that could potentially transform the way we live today.
Whether it’s a brief distraction or bubble or a trend, what is certain is that the collision of gaming, NFTs, and crypto with metaverse has a tremendous potential for growth and could dictate how the big companies will interact with the new generation.
Decentralised Finance (DeFi)
Decentralized finance or DeFi, is an umbrella term for financial applications that are made publically available on a decentralized blockchain network. This makes them open and available for use to anyone and does not rely or depend on central financial intermediaries, such as brokerages, exchanges, or banks to offer traditional financial services. It eliminates the need for a middleman and shifts responsibilities and power from governments and banks to the public. Decentralised Finance is, arguably, the most significant disruptor in a currently growing digital economy and has the ability to change the way money is exchanged.
Data from Defi pulse shows that the total value locked in USD stands at 101 Billion. Since May 2020, TVL into platforms such as Maker, Compound, Uniswap and Aave has grown from under $1 billion to $88 billion at its peak. Looking at how the crypto markets have fared, the obvious question about DeFi space is – where will it go from here? Analysing the quality and originality of many of the DeFi projects, one can remain optimistic about this sector’s performance in 2022.
Central Bank Digital currency (CBDCs)
Central Bank Digital Currency or CBDCs are a digital form of central bank money that is based on blockchain, it is basically a virtual form of a fiat currency. CBDCs are issued and regulated by the central bank or any nation’s monetary authority and are backed by the issuing government. Many CBDC pilot projects are currently ongoing and are in various stages of development across the globe. The Indian government has released its National Blockchain Strategy in Jan 2021 and is also likely to introduce a bill to launch its own digital currency.
China is the front-runner in the global race to launch central bank digital currencies (CBDC) and is testing its digital yuan, China’s state-sponsored digital currency across major cities including Shenzhen, Beijing and Shanghai. Though the timeline for its official rollout is still unclear, the fact that China is already in its testing phase is bound to catalyse other countries to take similar actions. What CBDCs can do is revolutionise the entire cross-border payment sector.
Since the pandemic, the world has undergone a rapid digital transformation and it is exciting to see the progress various technologies will make in 2022. It is an opportune time for startups, corporations and investors to capitalize in these emerging technologies and business trends.
Darshan Bathija, CEO and Co-Founder of Vauld