Nevertheless, it is not accurate to say that the industry only experienced declines throughout the year. Globally, we could see a more mainstream adoption of crypto and had a bigger presence in famous sporting events such as the Super Bowl and the FIFA World Cup Qatar 2022. Along with that, there have been more discussions and conversations about blockchain technology across the world. From lavish crypto events held in the various regions to conferences between industry leaders and regulators, the importance of crypto in the financial sector has gradually expanded in 2022.
What can we expect for 2023
The blockchain and crypto industry is still in its infancy with still untapped potential waiting to be explored. Despite the multiple upheavals in the industry over the past year, it is important to distinguish between human errors and technological failures. The failures seen in 2022 are not due to failures in blockchain technology but are rather the result of faulty judgment and poor decision-making. As we enter 2023, here are some key trends we can expect to see this year.
Political consensus for a better regulatory environment
In 2023, we can expect further refinement of global crypto regulations and compliance. Since the events of 2022, it is certain that greater regulation within the industry is inevitable, with “smart regulation” being essential for safer custody of cryptocurrency.
Previously, at the 2022 World Economic Forum Annual Davos Conference, Prime Minister Narendra Modi called for global cooperation to address the challenges facing the crypto industry. From December 1, 2022 to November 30, 2023, India will assume the presidency of the G-20, the intergovernmental forum which involves some of the world’s largest economies, and one of the main priorities of the presidency is to build consensus for a political approach to crypto assets. This opportunity sets the stage for India to play a prominent role in shaping the political consensus on crypto assets. We can also expect to see more studies underway to better inform policy consensus.
Through political consensus, clearer frameworks can be established to establish better global regulation, including the implications of crypto assets on the economy and the interaction between banking sectors and the blockchain industry. A clear and stable regulatory environment can support innovation and is essential to restore confidence in the industry and foster long-term growth. Wider adoption and increased demand for Web3 talent
As regulatory frameworks become more transparent and institutional adoption of crypto becomes more widespread, mainstream blockchain adoption will begin to gain momentum. This happens for a simple reason – establishing clear regulations in the industry has a positive correlation with building investor confidence and certainty in asset allocation.
According to a research report conducted by Bank of America (BAC), there has been an acceleration in the adoption of blockchain technology with real-world applications. The decentralized nature of blockchain technology allows for a transparent and secure data storage system while removing the need for third-party dependencies. More and more companies and organizations from different sectors are interested in technology and the potential it offers. In particular, there is a high demand for blockchain solutions in the banking, financial services and insurance (BSFI), e-commerce and retail, healthcare and pharmaceutical sectors. In the traditional financial space, 2022 has seen the likes of JP Morgan execute the first-ever cross-border fixed income transaction on a public blockchain, while Goldman Sachs has announced it is doing due diligence on numerous crypto projects in difficulty. The increase in the number of institutional investors in crypto may lead to more use cases for the asset and bring a positive change to the current landscape.
At the same time, wider adoption of crypto and blockchain will also lead to an increase in demand for Web3 talent in 2023, which will open up more relevant job opportunities. Companies will begin to review their talent pool and consider hiring more talent with blockchain and crypto expertise. India, which is the second most populous country in the world and home to more than 450 Web3 start-ups, accounts for 11% of global Web3 and crypto talent. This growth of Web3 is driven by the huge pool of Gen Z and Millennial professionals in the country, which accounts for 77% of the population. With the current rate of widespread adoption and demand for Web3 talent, this may help further normalize the crypto landscape and lead to greater mainstream acceptance.
Accelerate innovation and education
When it comes to the outlook for the crypto market, most would agree that Bitcoin is a good indicator – given its position as the largest cryptocurrency by market capitalization. As the market enters the “crypto winter” phase in 2022, we have seen the decline of Bitcoin and the value of the crypto market as a whole. As of today, it’s certainly down from its 2021 highs, but the total market capitalization of digital assets still stands at $880 billion, more than double its 2020 high. However, throughout in the history of bitcoin and crypto, we have witnessed cycles of ups and downs in the market many times. Industry experts know that the current period of calm and macroeconomic uncertainty will not last indefinitely. Companies that have enough war chest and resources to get through this phase will be able to prevail and set the narrative for its growth in 2023.
Despite the onslaught of negativity in the industry, technological developments and innovations have continued in the ecosystem. For one thing, Ethereum has finally completed its transition from Proof of Work to Proof of Stake amid the current turbulent times. The transition will result in a 99.9% reduction in Ethereum’s power consumption, laying the foundation for greater efficiency in terms of cost and processing speed. With the upcoming Shanghai upgrade, we expect withdrawals of staked tokens to become easier and more efficient, which in turn will attract more capital to the staking pools. As technology matures, more innovations will emerge to deliver unprecedented value to investors and society as a whole.
Closing the knowledge gap is critical when it comes to crypto and 2023 is a critical time to educate people and rebuild trust in the industry. We can expect more resources to be devoted to educating investors about responsible crypto investing and better understanding blockchain technology and decentralized finance.
Let’s move on to 2022
As the crypto industry moves away from the headwinds and uncertainties that characterized 2022, greater transparency will be essential for industry players and regulators. Along with establishing clearer global regulations and legal compliance, organizations and regulators play an important role in closing the knowledge gap for users and investors. Industry leaders and companies will also need to work to restore user trust in blockchain technology and in the industry.
Current signs point to a year of incremental growth and continued innovation in 2023. Effective communications about the value and innovation behind crypto will be critical to the industry’s sustenance. We have seen that bitcoin network hash rates have remained resilient for most of the last year and with the next bitcoin halving expected in 2024, the least industry players can do is s to better educate users on how blockchain and distributed ledger technology work. Although the crypto space has had a tough year in 2022, we can all be optimistic about the various industry breakthroughs and new use cases that will occur in 2023.