How much do you think the challenges of the last two years – coin shortage, Suez Canal, ongoing pandemic’s economic impact, etc. – contributed to the growth in popularity for crypto and “new currencies” like NFTs?
Any sort of destabilization of the status quo or institutional things that have been in place for a long time, any factors that disrupt that create a ladder for replacements and new ideas to take over. In fact, volatility in any number of global factors creates doubt in people’s minds as to the future – what value do things hold? So people look for other options they can go to. You see the increase in information and the media around these ideas and it becomes a no brainer to see how other things are having an impact. Why wouldn’t I invest in cryptocurrency when it seems to have a lot of long-term upside value? It makes an easy decision that wouldn’t be the same if those disruptions warrant going on. It’s safe to say that the pandemic gave opportunities to learn and invest more.
It certainly accelerated price appreciation. It drove more people to look at this [NFTs]. I don’t think we’ve seen what inflation will do to the economy yet. What we saw early on was that people were forced to stay at home and had a lot of time on their hands. They were given “free” money by the government and were looking for places to park that money. A lot of people started learning about bitcoin and crypto assets for the first time and they tested it out with the $600 they received from the government and they saw the price appreciation. It’s not all about price, but price brings in new adopters because that’s what people are driven by. Once people get more educated on what’s driving these values, that’s what gets them to stay. Millions of people that were onboarded in the last two years are never going away. Everyone has to go through various different stages to understand what Bitcoin is.
I don’t think the Coin shortage contributed that much to the growth of NFTs as the supply chain shortage and the pandemic. NFTs are now a cultural phenomenon and can very well be utilized as status symbols akin to LVMH products, etc. In the advent of the Pandemic, crypto has emerged as an asset class that enabled global transactions. Why rely on a bank when you can send money directly to an individual on a P2P network? The supply chain issue forced companies to expand their product choice. It caused marketing departments to venture into this nascent market of NFTs and the emerging Metaverse. How can they sustain & maintain consumer engagement? NFTs offer that exclusivity factor to keep customer loyalty at bay.
There is a profound movement I can feel. Generally, there is a frustration with the way things are handled and distrust towards governments and institutions is at an all time high. People will not “Occupy Wall Street” but show their frustration in scenarios like Gamestop. This shows a clear path ahead for crypto along the topics of Store of Value, where Bitcoin is 50 times better in being gold than gold, the optionality of self-custody with Bitcoin and Crypto as well as censorship resistance. All these topics are mega trends that provide huge opportunity in itself but even more if they converge into the next generation of finance. Digital values of all kinds which will generate yield in this new world once the correction is over, which will certainly come and things are back to prepare for the next growth and adoption phase.
Which cryptos other than Bitcoin do you think will see the biggest growth going into 2022? What puts them above the rest in your opinion?
Simply put, we only want to support cryptos with strong blockchain analytics. In terms of consumer adoption, this perception varies. Bitcoin is on top while Ethereum is number 2. As you continue down the list, perspective begins to change on number 3 – some say Zcash, others Ripple or Litecoin. After Ethereum, people will usually end up with something entirely different based on the narrative around them. The questions to ask are: What kind of media or press can we get around these? What story can we get around this? What new tech does it bring? Who is talking about it?
Ethereum will continue to scale. There’s a lot of competing Layer-1 blockchains that are trying to beat Ethereum in a faster, more efficient way. However, in my opinion, the further you go down that road, the closer you get to the legacy system and the further away you get from decentralization. As things become more efficient like Layer-2s such as Lightning on Bitcoin or Polygon on Ethereum become easier to get into – better onramps for users – those will be wildly successful and it’ll pull people in from some of these more centralized smart contract platforms. An area that I think is low-hanging-fruit is the Play-To-Earn space. I see a lot of synergies to tie NFTs with these marketplaces in a decentralized way into the existing gaming system. To empower the players to be generating value instead of distributing these values to the game producers.
Ethereum has solidified itself as the premiere smart contract network. If you’re to assign an analogy to this Ethereum is Apple with Android characteristics. We will continue to see Ethereum’s network scale via L2 chains such as: Polygon, Optimism, Arbitrum, zkSync. Smart Contract competitors will begin to eat Ethereum’s market share. Tezos, Cosmos, Solana, Algorand all are key players in this sector. However, although market share will diminish, interoperability will increase significantly.
Next to Ethereum, Solana has huge additional potential. It has been the most active protocol. Polkadot may capture relevant share of the NFT boom but it will take through the next crypto winter to build its technological advancement into market leadership.
This concludes our look into crypto for 2022.
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