The proliferation of scaling solutions and highly scalable new blockchain protocols have eliminated many of the bottlenecks, such as cost and speed, in cryptocurrency transactions. These factors pave the way for accelerated user growth. Sygnum Bank in its report “Digital Asset Outlook 2022” says this will eventually translate into a higher valuation for the market in 2022.
The report highlights that innovations in decentralization, scalability and security are the factors driving growth in applications as well as the mainstreaming of user adoption. This is also backed by a diverse range of use cases across multiple segments. 2021 saw major payment service providers, include Visa and MasterCard, embrace cryptocurrencies. 10% of financial institutions, as per a PYMNTS survey, support at least one cryptocurrency. With the demand for services growing, a MasterCard survey said 40% of consumers want to use their cryptocurrencies in the next 12-months.
In regards to the legitimization of cryptocurrencies as money, the report highlighted El Salvador as an example. This Central American country surprised the world by accepting bitcoin as legal tender and soon saw Panama following in its footsteps. Other countries – Ukraine, Cuba, and Paraguay are working on legalizing bitcoin payments. Argentina and Brazil may also set off on the El Salvador path. So, there has been positive adoption.
Moreover, since the advent of the COVID-19 pandemic, the popular cryptocurrency – BTC has outdone gold tenfold. Investors and institutional investors, alike, have turned to bitcoin as a store of value than gold. Popular cryptocurrencies – bitcoin and ether show strong store of value characteristics such as portability, authenticity, scarcity, storability, and divisibility.
Coming back to blockchain technology, cryptocurrencies have built on the blockchain’s protocol layers. The emergence and viability of DeFi have been astounding. This can be seen by the number of projects with real-world use cases, users and transaction volumes since 2020. It gave rise to other types of applications – with the core now being gaming and metaverse.