Figuring out the possibilities and pitfalls of the crypto development space has always been part science, part art, and part sheer dumb luck. However, despite the fact that it is hard gauging what is promising and what is empty talk on the side of the developer teams, it is still possible to determine where lie spaces that offer a potential for growth and development. The same applies to both technological advancement and market capabilities, or investment opportunities. Presently, a form of crypto winter is hammering on the markets, and the developers as well.
Ever since the middle of the year when the last big crypto crash took place, the upward potential of the bitcoin token price, but all other digital currencies has been minuscule. That period had its more glittering moments when a potential breakout was in the cards, but so far, it failed to manifest itself completely, or better said to a point where the bearish sentiment could be discarded at least for some time. But, Bernstein is a financial company that believes in several possible vectors of how the same situation could change for the better. Here is their pick of the most important ongoing or upcoming trends that could change the overall fortune of the crypto markets and maybe even signal an incoming crypto spring along the way.
Ethereum and the Merge
The biggest factor in the near future that could and will likely influence no matter what the markets are is the latest upgrade of the ethereum blockchain. That upgrade is called the Merge and it should switch the same blockchain from the proof-of-work system to one that is based on a proof-of-stake mechanism. It is only a few days away and could offer a monumental change in the processes of the second-biggest digital currency network in the world.
However, the sheer size of the same change is making some in the community, but also among the developers working with ethereum, worry about the prospects of an error or glitch. Others are pointing to the fact that it will be hard to see a strong and instant transition to the full proof-of-stake concept. Yet, despite all of the opinions around it, the Merge should happen no later than September 20 and move the markets either in a positive or negative direction.
Expansion of Cryptocurrency Users and Bigger Adoption Rates
For years, the thing that many in the crypto community dreamt of was a higher level of user adoption. That period never came in a dramatic fashion, but the growth did occur gradually and through a range of movements of both the technology and the markets. That is why things like on-chain liquidity have shot up and many dapps and decentralized systems began attracting new users. Here, once more, ethereum alone managed to do a lot, but other networks like solana or polygon did a huge amount of lifting as well in domains like NFTs or blockchain gaming, respectively.
Other such ventures and platforms are constantly appearing so the number of users will likely continue to rise. On the other hand, instances of weekend traders who take their money into the market only to lose it relatively quickly and never come back have been dwindling steadily as well. That is a direct reflection of the growing level of market maturity, which is no longer only crypto enthusiasts and esports players like it was a decade ago.
DeFi Killer Apps
Many still label the summer of 2020, which took place in the midst of the COVID-19 pandemic as the Summer of DeFi. The reason for that was a big explosion of DeFi platforms that quickly found their place in the financial sector. Now, after over two years of lukewarm activity, Layer 2 platforms are once more on the rise as the issue of scalability is not a pressing problem. Instead, growing and expanding are much more accessible.
That is why platforms like Uniswap exchange are managing to generate a lot of profits from fees alone. Others are bound to follow and this could result in the appearance of a DeFi killer app, or dapp, which would increase user adoption dramatically and almost overnight. Presently, it is hard to assess what would that dapp be and how would it function, so chances are solid that it will not appear anytime soon or even in 2023. But, the developers are certainly seeking out precisely that and with it, the ability to greatly expand beyond the present success levels of DeFi solutions.
NFTs and Crypto Gaming
Not long ago, many believed that the true killer app would emerge from the domain of gaming. Here, things like play-to-earn titles offered the clearest and most easily accessible routes to the wider population, especially younger gamers ready to turn their free time into crypto profits. However, while many titles, including Axie Infinite, managed to reach an impressive level of success, mainstream gaming companies continue to avoid the same field. In fact, even a short-lived excursion into the domains of NFTs proved to be a big failure where the established gaming public only got enraged because of the same initiatives.
Presently, it looks like the same field is very tame and slow-moving, but that could be deceiving. Here, the process of play-to-own gaming might provide the ideal merger of NFTs and blockchain gaming. The idea is that multiple interoperable cryptocurrency-based games possess their own avatars that are NFTs that the players strive to collect, hold, and trade. Some are even suggesting that in excess of a million NFTs are lying in wait already for such a cross-blockchain integration. Web3 gaming developments should help in making that possibility a reality as well, but they will need the active backing of mainstream gaming studios. For the first time in many months, it appears that there is traction there. But, many from the same industry will want to see official confirmation before they begin collecting their NFT avatars.