Crypto in 2022 Will Bring New and Older Emergent Trends to the Fore
- The marginality of decentralized insurance might rapidly change in 2022.
- Social tokens and self-sovereign identity is estimated to grow in importance this year.
- Bitcoin ATMs might also become more prevalent in 2022.
- NFTs -- along with the metaverse, gaming, and Web 3.0 -- could be 2022’s biggest emergent trend.
- Layer 2 protocols and chains might emerge as significant components of the crypto ecosystem this year.
- More projects in 2022 to offer universal infrastructures for blockchain interoperability.
Crypto is an emergent phenomenon. Put simply, this means it has properties that we can’t extrapolate from the properties of its parts, or to put it even more simply, no one knows exactly what crypto will do in the future.
Still, this doesn’t stop analysts and other observers from hazarding predictions, given how much money could be at stake. And given that 2021 threw up so many new, emergent trends in crypto and related sectors, from non-fungible tokens (NFTs) to the metaverse and Web 3.0, so it stands to reason that 2022 will do something similar.
But while industry players speaking with Cryptonews.com agree that the New Year will produce trends that have remained marginal up until now, they also expect many of last year’s emergent trends to mature and gain even more steam. And this will help attract new money and interest to the sector, a change which in turn will set off new emergent trends of its own.
New emergent trends in crypto
When it comes to newer emergent trends, opinion differs quite widely on what sub-sectors will become more prominent in 2022. This isn’t perhaps surprising, seeing as how we’re dealing with the inherently unpredictable (and seeing as how different industry figures have different interests).
“What is striking is that insurance, as one of the major sectors or traditional finance, has not yet received much attention in terms of affording retail investors equivalent protection mechanisms within the DeFi space. The products currently found in the decentralized insurance (DeIns) space are predominantly crypto native products,” said Jan Stockhausen, Chief Legal Architect at Etherisc, a decentralized insurance solutions developer.
Stockhausen expects the marginality of DeIns to rapidly change in 2022 and beyond, once digital policies that mitigate real risks in the physical world are encoded in insurance-type smart contracts and covered by risk capital from the decentralized finance (DeFi) space.
“As more tangible proof points proliferate, DeIns will become attractive to investors. The robust risk appetite of the DeFi investors might even drive the creation of innovative insurance products for risks previously deemed uninsurable, like climate risks or even eco-friendly irrigation techniques,” he told Cryptonews.com.
Social tokens, self-sovereign identity, and decentralized identity
Moving in a completely different direction, other figures suggest that social tokens and self-sovereign identity (SSI) will grow in importance this year.
“Social tokens, a type of cryptocurrency based around a brand, community, or influencer, have endless applications but care is required in this space or we risk over-indexing on negative social behavior,” predicted Don Norbury, Head of Studio at blockchain-powered first-person shooter game Shrapnel.
In particular, Norbury explains that, up until now, social tokens -- which can be used to measure experience, reputation, and achievements in games and on social networks -- have generally been non-transferable, thereby tying them to particular platforms or wallets. However, self-sovereign identity (SSI) can help make social tokens transferable by creating a proof of identity unbound to any one platform.
“SSI can provide a more powerful form of identity control, untethering on-chain identity from specific wallets and giving users full ownership and control,” he told Cryptonews.com.
Other figures agree that blockchain-based identities will become more important in 2022, particularly in view of the emergence of the metaverse (see below), which will require identities to be moved from one area of the metaverse to another.
“As adoption increases, understanding and willingness to embrace new technologies also rises, paving the way for invaluable technologies like decentralized identity (DID) solutions to make inroads. In 2022, Web 3.0 must transition to a system of DID and data management so that people can take back control of their data and be confident that it is secure from the breaches and hacks that have defined the current era of the web,” said Ontology (ONT) founder Li Jun.
Bitcoin and crypto ATMs
Following a year in which El Salvador made bitcoin legal tender, and in which a handful of other nations looked ready to move in a similar direction, it may come as no surprise to hear that some people at least think Bitcoin ATMs will become more prevalent in 2022.
“We have witnessed huge growth within the BTM [Bitcoin ATM] industry in 2021, with global installations up by 70%. We do not see this slowing down any time soon,” said Sebastian Markowsky, Chief Strategy Officer at Coinsource, one of the biggest Bitcoin ATM providers in the United States.
Markovsky estimates that this year’s growth in crypto ATMs will only accelerate in 2022, and he suggests that BTM installations hitting 100,000 by 2025 is a “conservative estimate.”
2021’s emergent trends getting bigger in 2022
Aside from the trends above, 2022 might also witness some of this year’s emergent trends becoming even more important to the crypto ecosystem.
Metaverse, Web 3.0, NFTs, and gaming
Commenters we spoke to for this article were nearly unanimous in suggesting that NFTs -- along with the metaverse, gaming, and Web 3.0 -- would be 2022’s biggest emergent trend (even if these all began emerging in 2020 or earlier).
“First, I expect Web 3.0 infrastructure protocols -- computation, storage, bandwidth, indexing, etc. -- to grow significantly over this year. The ethos of Web 3.0 is to build a censorship-resistant, permissionless internet and I believe we’ll start to see more dogfooding of these products within the Web 3.0 ecosystem (e.g. IBC blockchains utilizing Akash Network),” said Mason Nystrom, a research analyst at crypto intelligence firm Messari.
Nystrom also expects brands and larger companies to step up their experimentations with NFTs in 2022, largely as a way to increase engagement and connect with crypto-native audiences. Additionally, non-fungible tokens will require greater financial infrastructure, which he says will be developed in 2022 and beyond.
Other analysts highlight NFTs as crypto’s biggest emergent trend in 2022, with Arcane Research’s Jaran Mellerud suggesting that the NFT sector will continue to witness explosive growth, with “almost all the biggest gaming companies” moving into it in 2022.
“Gaming and the metaverse will overtake art's position as the biggest sub-sectors in NFT. Especially metaverse real estate will see extreme growth. Lending platforms will start to accept metaverse land as collateral for loans,” he told Cryptonews.com.
One of the reasons why NFTs, the metaverse, gaming, and Web 3.0 could be so big this year is that they all feed into each other, creating a kind of positive feedback loop in which the growth of one of these spurs the growth of the others.
“An enormous portion of our lives already takes place online, with global lockdowns necessitating remote work. Should this persist, interconnected living will gradually become integrated and mediated through the metaverse,” said Bryana Kortendick, the Vice President of communications of Enjin (ENJ).
Kortendick notes that NFTs are the primary building blocks of the metaverse, and that they facilitate much more beyond financial exchanges, “with additional use cases as cultural artifacts primed to flourish.”
One emergent trend Kortendick expects to see within the wider NFT trend is the growth of fractionalization for non-fungible tokens.
“[This is] a process with a lot of potential for streamlining group bidding to bring the cost of proprietorship down for expensive digital or physical assets represented on the blockchain. The same technological processes could be used for positive social impact too, like tokenizing and auctioning off sectors of the Amazon to preservation-focused organizations,” she told Cryptonews.com.
Lightning Network, Layer 2 growth
Layer 2 (L2) protocols and chains are now several years old, but more than few experts say they’ll emerge as significant components of the crypto ecosystem this year.
“While not new, we see support for Lightning [Network] will gain momentum and prominence this year. Lightning solves for lower fees which is an important factor for the next phase of growth in spending crypto,” said Bill Zielke, Chief Marketing Officer at BitPay, a crypto payments processing company.
Likewise, the Head of Research and Strategy at crypto exchange AAX, Ben Caselin, also predicts the growing importance of layer-two solutions, particularly as growing cryptocurrency use confronts the limitations of base layers.
“We can also expect more protocols that are similar to Stacks to look for ways to integrate with the Bitcoin network, either at the base layer or in second-layers such as the Lightning Network,” he told Cryptonews.com.
Much the same view is expressed by Mason Nystrom, who predicts that “we’ll see more applications move towards layer-2s and other blockchains which will help catalyze a new wave of retail users.”
One other emergent trend that has been brewing for some time, but that will become more significant in 2022, is interoperability. Its importance will be ramped up largely by moves towards building a metaverse, as well as by a growing need for liquidity.
“As we move forward into 2022, there are more blockchain networks than ever before. This year, it’s critical that these chains are developed to communicate with one another so that assets such as tokens, NFTs, and smart contracts information can be transferred between chains,” said Sergey Gorbunov, CEO and Co-founder at Axelar, a developer of cross-chain communication solutions.
Gorbunov explains that, in 2021, most developers sought to solve the challenge of interoperability by attempting to build once-off bridges between networks or interoperability add-ons. However, in his view, this has proven to be inefficient and insecure, so he expects more projects in 2022 to offer universal infrastructures for blockchain interoperability, something which will help the industry achieve wider adoption.
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Find more predictions for 2022 here.