DeFi, NFT-art, Ethereum 2.0, metaverses, government digital currencies (CBDC) are all the main trends in the world of blockchain and cryptocurrencies in 2022. In this article, we will talk about the trends in the development of technologies that underlie the aforementioned phenomena.
New 3rd and 4th generation solutions
In 2022, we will see an increase in the popularity of many 3rd and 4th generation blockchain solutions designed to eliminate problems with the speed and scalability of networks without compromising their security and decentralization. These kinds of projects could go mainstream in 2022 just as DeFi exploded in 2020 and NFTs in 2021.
The first two generations played a decisive role in expanding the scope of the blockchain, however, penetration occurred only at the level of states and large corporations that could afford large-scale and expensive experiments. Unfortunately, at the local level (small businesses, small shops, restaurants, schools, etc.), this technology is still not very applicable due to its high complexity and cost.
The third and fourth generations of blockchains aim to bridge this gap and make the technology available to institutions and industries, governments and ordinary people. Although they achieve this goal in different ways: the third generation (Ethereum 2.0) – through solutions of the second level of the network, the fourth – through the creation of new consensus mechanisms (Solana, Insolar, Aergo).
Such networks do not have problems with scaling, they have high bandwidth and low fees. At the same time, they remain relatively safe and stable.In addition, 3G and especially 4G networks facilitate local blockchain integration with business-oriented interfaces that successfully hide the complexity of the underlying technology. It is assumed that after the launch of such solutions, we will stop talking about the blockchain and start using it in mass at all levels – from keeping a grade book in schools to verifying the authenticity of sneakers in a store. That is why new solutions can become a trend in the blockchain world in 2022.
Market impact
Some 3rd and 4th generation blockchains have already taken off in 2021: the price of their underlying assets has skyrocketed. For example, Polkadot (DOT) coin rose from $5.70 to $30 (+350%), while Solana (SOL) jumped from $1.60 to $182 (+5,600%). And this is evidence of the great interest of investors and developers in such projects. There is reason to believe that in 2022 their value will grow, especially in the case of the launch of new advertised solutions from well-known developers.
In this context, the following projects are of interest:
- Secretum (SER) is a social network based on Solana;
- MetaMUI (MMUI) is an identity transfer mechanism that complies with KYC / AML and FATF rules;
- Filecoin (FIL) is a decentralized storage system.
As well as the blockchains mentioned above: Solana, Polkadot, Cardano and Ethereum 2.0.
Technological institutionalization of blockchain
The next non-obvious trend of 2022 is the acceleration of the implementation of industry standards that will allow heterogeneous blockchains to interact and exchange data with each other. Moreover, standardization will take place both “from above” (at the level of laws and regulations) and “from below” (at the level of software solutions).
Now the blockchain technology sector is fragmented. Each chain is a separate ecosystem that hardly interacts with other similar networks. This approach severely limits the possibility of blockchain adoption by small and medium-sized enterprises. They simply do not know which blockchain and application to choose so that it is compatible with other networks and applications.
In the 1970s – 1980s personal computers similarly worked: each PC manufacturer had its own operating system (OS), for which it was necessary to create unique software solutions – from a calculator to a text editor. At the same time, a text file created in one OS could not be opened in another operating system. And so it was before the advent of industry standards on the market: they obliged all participants to create universal solutions that can work on all popular systems.
It is thanks to industry standards that we can now open the same text document or mp3 file on Microsoft Windows, macOS or Android. And everywhere everything will work correctly and be displayed (or sound) the same. This is the power of standards.
So, in 2022, we will witness how industry standards will begin to operate in the world of blockchain and cryptocurrencies. This will be facilitated by the imposition of such rules “from above”: regulators and international organizations will force businesses to work according to their standards, created specifically for cryptocurrencies and blockchain. An example is the IEEE (Institute of Electrical and Electronics Engineers) rules:
- IEEE P2140.1 – general requirements for the exchange of cryptocurrency;
- IEEE P2140.2 – security management for assets and clients on cryptocurrency exchanges;
- IEEE P2140.3 – customer identification and anti-money laundering on crypto exchanges;
- IEEE P2140.4 is a standard for asset exchange structures using DLT.
IFRS (International Financial Reporting Standards), ISO (International Organization for Standardization) and many countries (starting with the US, EU and UK and ending with China, Russia and El Salvador) have created or will soon create their own standards for blockchain and cryptocurrency.
Market impact
In addition to being imposed from above, industry standards for blockchain and cryptocurrencies will crystallize around specific networks that offer the possibility of communication between heterogeneous blockchain chains. First of all, this will happen around Ethereum 2.0, because it has already become the industry standard for running smart contracts and decentralized applications (Dapps).
In addition, platforms such as Polkadot, Cosmos, Wanchain and ChainLink, designed to link all existing blockchains around themselves, can play an important role in this process.They should become for them a hub-intermediary for interaction – the exchange and transformation of data.
At the same time, Polkadot and Cosmos arouse maximum interest among investors and developers. The reason is obvious – in addition to cross-chain capabilities, they allow you to create and deploy smart contracts and Dapps in a scalable, high-performance, cost-effective and secure ecosystem.
Development of Blockchain as a Service (BaaS) services
Another trend that we will see in 2022 is the entry into the market of companies and platforms capable of offering BaaS solutions (“blockchain as a service”) to customers. Such a service will allow the business to focus only on the core work and functions of the blockchain without technological complexities and the need to invest in expensive infrastructure and additional technical solutions.
Blockchain as a Service (BaaS) is a unique product that allows customers to use cloud solutions to create, use and host their blockchain products as easily as launching websites. BaaS is based on software as a service (SaaS) and works in a similar way: it is a service offering from a third party that handles the overall maintenance of the infrastructure (installation, configuration, monitoring, and operational tools).
Simply put, using the BaaS model, the client gets the opportunity to focus on the main task – the proper functioning of the product or service. He doesn’t have to worry about infrastructure and performance improvements.All technological and software complexities associated with the blockchain are outsourced to the BaaS provider.
The benefits of using BaaS for business are obvious:
- reducing the complexity and cost of using the blockchain;
- the ability to take advantage of the blockchain without having to code your own network
- solutions: blockchain chains, smart contracts and Dapps;
- improving the security and transparency of business processes.
Market impact
Giants like IBM, R3, Amazon and Microsoft have been offering customers enterprise BaaS solutions based on Ethereum, Hyperledger and Corda networks for several years. But they mostly work with large companies and states. At the same time, their BaaS products are still too complex for ordinary small and medium companies to use, which hinders the mass adoption of this service.
The market needs simpler solutions, even if they are not as functional and secure as the products of Amazon, Microsoft and Google (after all, not everyone uses their cloud services to host websites and applications). Many people want a simple, convenient and cheap BaaS solution – something like what Multiversum, SOOM, Aergo and Insolar offer. All of these are fourth-generation blockchain platforms with business-oriented interfaces. They will either offer BaaS products themselves or become the basis for launching custom BaaS platforms.
All of them – except Aergo – should start in 2022. With the right combination of circumstances, their native tokens can take off – just like Solana in 2021.
Blockchain integration with IoT, 5G and AI
As early as 2022, we will see an increase in the number of blockchain integrations with other technologies – Big Data, the Internet of Things (IoT), artificial intelligence (AI), and fifth generation (5G) networks – as blockchain remains the most appropriate and effective way to solve problems related to with safety and reliability.
The Internet of Things (IoT) is a collective term used to describe a rapidly growing network of electronic devices connected to the World Wide Web, interacting not so much with a person as with each other. These gadgets are constantly exchanging data to provide people with added convenience and control. In some cases, they even allow you to automate simple processes, such as ordering supplies for a printer or filling out invoices when going through customs.
In 2020−2021 The Internet of Things market has grown dramatically from $219 billion to $418 billion due to various restrictions caused by the COVID-19 pandemic. It is expected that in 2022 and in the long term, the IoT market will continue to grow at an accelerated pace, and by 2025 it will reach $1.6 trillion. Including thanks to the integration of IoT and blockchain.
Blockchain technology is essential for IoT to solve security, scalability and data transfer speed issues between electronic devices.At the same time, blockchain-based IoT platforms will also use other technologies to increase the efficiency of their work and the quality of user experience.
5G networks
Mobile networks of the fifth generation will allow to transfer huge amounts of information at an acceptable speed of 10 GB / s (against 100 MB / s for 4G). It will be possible to implement VR and AR solutions for the metaverses and other projects that require a very fast, reliable and secure Internet connection.
Artificial intelligence (AI)
It is necessary to improve the efficiency of managing, configuring, analyzing, testing and automating IoT and blockchain networks. Including when processing Big Data, which are the main “product” of such systems. In addition, AI is required to create “nomadic programs” – these are autonomous participants in the metaverse with the same “rights” as a human user. These nomad programs will study, describe, test and improve the existing spaces of virtual worlds.
Distributed Computing
To create truly large-scale and interesting projects in the field of IoT, blockchain and metaverses, huge computing power will be required, and they must function without interruptions and failures. The easiest way is to “collect” such potential by distributing it among many nodes through the blockchain.
In the cryptocurrency and blockchain sector, there are already projects focused on IoT – EOS, IOTA, Quras, IoTeX, etc. In 2022, these projects will significantly benefit from the growth of the IoT market.In addition, blockchain platforms with built-in AI can rise on this wave – for example:
- SingularityNET – decentralized artificial intelligence market;
- DeepBrain Chain – neural network for data analysis and transmission;
- Matrix – smart contracts and machine learning services.
Strengthening the security of DeFi solutions
In 2022, security will be one of the priority trends for DeFi protocols. Projects focusing on security and preventing hacker attacks will help secure decentralized applications, which will contribute to the growth of their number of users, as well as increase confidence and trust in DeFi as a financial ecosystem.
In 2021, the volume of losses of the global economy from cybercrime will exceed $6 trillion. Especially, a lot of hacks and thefts are observed in the cryptocurrency and DeFi market, where hackers use errors in the code of crypto exchanges, wallets and smart contracts. For example, in the first three quarters of 2021, more than $610 million was stolen using similar exploits in DeFi ecosystems (compared to $77 million in 2020). Another $704 million is stolen but then returned by ethical (or white hat) hackers.
The deplorable state of affairs with security creates serious obstacles for the further development of the DeFi sector – users are afraid to invest big money in projects whose security is in question, especially if they are created by anonymous developers. Therefore, in 2022, we can expect an increase in interest in projects that guarantee maximum security to their users.
For example, these can be blockchain-based insurance platforms or services that insure cryptocurrency savings. An increase in interest in blockchain chains is also expected, the creators of which promise maximum data and money protection.
Market impact
The top cryptocurrencies to keep an eye on in the DeFi space are ETH, Solana (SOL), Cardano (ADA), and Polkadot (DOT). These third and fourth generation chains offer maximum protection while maintaining high scalability and decent throughput. In addition, projects such as Forta (allowing centralized applications to track the security of execution) and Nexus Mutual (insurance of users of decentralized applications from smart contract exploits) are of interest.
Summing up
2022 can bring a lot of interesting events, decisions and trends to the cryptocurrency and blockchain market. We will see the transition from Ethereum 1.0 to Ethereum 2.0, the launch of many third and fourth generation chains, increased security of DeFi, and the growth of blockchain integrations with IoT, 5G and AI. And all of these are great investment opportunities that anyone can take advantage of. The main thing is not to rush and choose the right moment to enter the market.