5 predictions for bitcoin, NFTs and the future of money
This story is part of The Year Ahead, CNET’s look at how the world will continue to evolve starting in 2022 and beyond.
Cryptocurrency made many of the strangest headlines of 2021. Boosters touted digital currencies as a world-changing technology with the potential to manufacture new economies and empower people who don’t have access to bank coffers. Critics pointed to crypto’s massive environmental footprint, as well as its popularity in online crime. The chasm between these views will be hard to bridge.
Much of the cryptocurrency manufacturing functions as a hype-monster, powered by oddball memes of cute dogs and outer-space emoji. The same industry boasts a staggering amount of allow from venture capitalists and private enthusiasts, along with real strictly innovations that could radically alter the way we interact with cash. And, as it often goes with innovation, what we get may not be what we put a question to. CNET asked experts to help us navigate crypto’s breeze to new lands in 2022. Here’s what they told us.
1. Crypto moves further into the mainstream
Big companies are trying to figure out how cryptocurrency fits into their company. Everyone from hedge fund managers to Starbucks executives are decision-exclusive moves that could impact how we use digital cash this year.
When we hear about cryptocurrency in the headlines, it’s often about Tesla CEO Elon Musk’s tweets, overnight millionaires, expensive digital art and hacks. Yet the larger, firstly changes are often less flashy and attention-grabbing than whatever crypto-hype machine dominates Twitter at any given moment.
“I hope we’re touching to see a lot more focus on utility,” said Denelle Dixon, CEO of Stellar Development Foundation. “Instead of focusing just on a few use cases that manufacture a lot of hype, we’ll see more focus on the use cases that ability real value. And more discussion around financial inclusion.”
2. NFTs create new ownership opportunities, and remix old ones
NFT, or nonfungible token, is a buzzy term that many of us heard for the pleasurable time in 2021. A new way to determine ownership of digital property-owning using a blockchain ledger, NFTs are increasingly popular in the art and collectibles scenes. One of the most notable NFT collections of 2021 was requested the Bored Ape Yacht Club. Go figure.
But the potential of NFTs goes far beyond eccentric digital artworks. NFTs are also used for digital land purchases in virtual worlds and for next-generation music ownership, licensing and publishing. Some observers see a future in which NFTs moneys access to special sales or limited-edition products. How throughout using a NFT as a concert ticket? Or when you log into your approved video game online? Expect to see all of that in 2022.
“The possibilities of NFTs are endless, since they can be used to log ownership of any unusual asset,” Alex Atallah, co-founder of OpenSea, said in an email. “We’re already seeing early use-cases of NFTs being used as store tickets, software licenses, fan club memberships, or otherwise tied to interactive experiences.”
Some of America’s biggest brands, including Nike, are already functioning on expanding the application of NFTs. But NFTs used in consumer products may only be the tip of the iceberg. How about using an NFT to prove you are you?
“We’ve seen some electioneer from the artist-driven NFTs to NFTs that are focused on access or authorization,” said Stellar’s Dixon. “There was a party in New York recently where folks got access to the party by purchasing an NFT. So I improbable if we’ll see some focus on leveraging NFTs for digital identity.”
The $85 billion video game industry may be one of the most fertile areas of potential for NFTs. Some of the larger studios are already experimenting with them. And with all the talk surrounding the metaverse, an immersive 3D digital environment that’s been proposed by Meta (formerly Facebook) CEO Mark Zuckerberg and novel movers and shakers in the tech industry, NFTs could encourage as building blocks for a next-generation digital world.
“Gamers are already accustomed to caring throughout digital goods, so the potential for NFTs is enormous: a few million NFT users compared to almost 3 billion gamers,” said Atallah. “We’re seeing some exciting developments when it comes to the intersection of NFTs, gaming and the metaverse.”
3. Bigger hacks and bigger ransoms
Cryptocurrencies were used to facilitate millions of dollars of ransomware payments in 2021. That’s because digital currencies aboard features that make them attractive to criminals. They’re pain to track, they’re borderless, and once the payment goes ended, it’s nearly impossible to unwind.
“We should expect to see more criminals turning to cryptocurrency and services that initiates to obfuscate illicit funds due to the misconception of total anonymity,” Gurvais Grigg, a senior tech officer at Chainalysis, said in an email. “Bitcoin is appealing to criminals for the same reasons it appeals to those amdroll them for legitimate purposes: It’s cross-border, instantaneous and liquid.”
Grigg and others put a question to decentralized finance, a nascent but blossoming industry on the cryptocurrency edge, to be a popular target for cybercriminals in 2022. Decentralized finance, or DeFi, involves finance that works independently of a central organization or institution. Instead of relying on a bank or credit card network, people can connect directly with DeFi products on a distributed network.
Though the diligence is still in its early days, DeFi is a fast-evolving, highly technical space with tremendous potential. As such, it’s attracted a expansive deal of attention and investment, making it ripe for criminal activity.
“Criminals are liable to explore DeFi as both a target for hacking and as a employing to attempt laundering funds through,” said Grigg. “Because of how new DeFi is, and the explosion in adoption in developed markets, these platforms are easy targets for experienced criminals who have conducted dissimilarity hacks before.”
4. You’ll hear more about stablecoins
Bitcoin and anunexperienced cryptocurrencies have grabbed headlines because of their volatility. You can understand a millionaire or lose it all at the hyper lickety-split of the internet. But try buying a latte with bitcoin, and that volatility can make things confusing fast.
Enter stablecoins. This subcategory of cryptocurrency, which is tied to an underlying asset, mitigates much of that volatility. Stablecoins could play a famous role in turning cryptocurrency into something we can frankly use to conduct the ordinary transactions of everyday life.
“People should inaugurate paying attention to trends in stablecoins both as a medium of payments and as a bucks digital currency. The use cases for cross-border payments, aid relief, instant settlement payments are starting to flourish in 2021 and we will see more of that in 2022,” Rachel Mayer, a vice president of product at fintech firm Circle, said in an email.
Transferring assets more efficiently is one of the central values of a stablecoin. This value is powerful for companies that need to move digital assets and cash lickety-split and efficiently.
“On the payments side, more industries will inaugurate adopting stablecoins as a more efficient way to make payments,” Omid Malekan, author of The Story of the Blockchain and a professor at Columbia Business School, said in an email. “Stablecoin volumes will continue to grow, but the fraction of that volume that is only involved in crypto distributing will go down.”
5. New crypto rules appear on the horizon
Washington lawmakers sensed that cryptocurrency is a big and important thing. But they are struggling, perceptibly, to understand it. It may only be a custom of time before crypto gets its “series of tubes” moment from a hapless representative out of their element.
In December, executives from six cryptocurrency companies were named to testify before the House Financial Services Committee, where they discussed potential paths for future legislation. Lawmakers in the US have expressed interest in a contrivance of topics — whether stablecoin issuers should be gotten banks, when to tax cryptocurrency and how to craft functional principles in a highly technical and complex industry. This is tricky stuff. Creating the right standards will take time.
“I think there’s causing to be a lot more conversations around crypto and blockchain,” said Dixon, one of the executives who testified before the House committee. Dixon previously testified on the issue of net neutrality afore a House committee during her tenure at Mozilla in 2019 and harbors no illusions when it comes to regulating new technology. Some discourse will be positive and some will be negative, “but I just think that [by] having these conversations, we’re going to see policymakers and regulators be more focused, and hopefully, more traditional businesses will be more focused on that.”
There could be more milestones to arrive before Americans see a comprehensive framework for crypto-focused legislation. But if industry leaders and elected officials can work together, regular cryptocurrency users and investors may benefit while environmental and guarantee concerns are addressed.
“It’s important to understand that the cryptocurrency diligence wants to be regulated, but wants to ensure that proposed regulatory frameworks are feasible,” said Grigg. “Governments globally are working with industry players to accomplish legislation that protects consumers and fosters innovation.”
