Cryptocurrencies’ popularity is at an all-time high, a situation that has made them acceptable everywhere. The digital economy is now in the trillions when considering the total valuation, with the potential to hit higher records, especially in the next five years.
While most crypto assets are in the hands of a few institutions, some 300 million people globally have used, or exchanged crypto in the last ten years, or learned how to stake Ethereum in platforms like PrimeXBT.
Different tech startups have focused on DeFi and other blockchain-related technologies, pointing out the many upcoming trends that will hit the overall crypto sector. Here are some trends that will shape the sector.
The DeFi Space Will Become More Common
Decentralized apps were initially too hot to handle by many financial institutions. However, the success of Bitcoin, which is decentralized, has proved the skeptics wrong for a while now.
The blockchain will be the top contender to power decentralized apps. The decentralized finance sector has seen commitments to the tune of $20 billion as of 2020.
The figures will probably grow in the next five years because as of 2021, the total value locked in decentralized protocols stood at $100 billion. The mouthwatering figures could move to other areas in the crypto space for it to grow even more.
One notable result of DeFi is yield farming, which is a crypto-based fixed account that provides returns in some specified period. Crypto has witnessed a significant hit from COVID-fuelled inflation. However, before the unprecedented situation, the yield-farming sector out-competed its equivalent in the currency markets.
Digitizing Art and Everything Else With NFTs
In the crypto domain, Smart contracts have been the soul to verify and approve transfers that go into platforms like PrimeXBT for daily trading. The contracts are also at the heart of the creation of Dapps.
However, the non-fungible assets, which are much newer, offer a new meaning to the value of art and everything else that has potential in the digital domain.
NFTs are unique; one can never be like the other. A point that makes them the most regarded for the transformation of assets into digital forms for safekeeping or exchange for money. Domain names, game add-ons, and land deeds can also take the form of NFTs because of the underlying technology that makes each asset unique.
Perhaps the most ordinary use of NFT is the sale of artworks in places like OpenSea. Different marketplaces, especially the ones powered by Ethereum, have seen considerable growth since 2020.
In January 2021 alone, the Ethereum-based NFTs grew by a whopping 1000 percent. The change was from values of about $3 million to $33 million.
The merge NFT broke the record for the most expensive NFT, inspiring other creators to establish their position in the NFT space, growing it further. The merge went for about $90 million, pushing up the probability that the total NFT market might hit $80 billion in value in 2025 as widely expected by players in the sector.
The Adoption of the Blockchain and Crypto by Big Financial Companies
At first, when crypto came out, big institutions were the most skeptical about the technology. The big banks could not even contemplate financing a startup leaning toward digital assets.
However, the crypto world, which has entirely regulated itself so far, has proved that technologies like blockchain can work as well as traditional centralized financial systems to store and manage wealth.
The crypto ecosystem has crossed the $2 trillion mark before and currently shows potential to hit higher figures if the environment becomes conducive.
Institutional-backed investments, which were crypto-dominated, reached a new milestone in December 2020. For the first time, they totaled $15 billion at the end of that year. Since then, the figures have grown.
Goldman Sachs, which is a major lender in the US, has a crypto-backed loan program running to cater to crypto enthusiasts. The move is a step for the bank to integrate some of its asset classes with the blockchain, which is safer and more verifiable.
While the move does not amount to much compared to other areas that have invested heavily in the Blockchain, it ushers in an area where banks and other financial institutions do not view crypto and its associated technologies negatively.
Cryptocurrencies and associated technologies will have a positive impact on different industries and societies. The metaverse is one of those areas where NFTs, and crypto, will play a significant role.
In addition, banks and governments will continue to soften their stance on crypto, allowing for widespread usage in many areas, including their role as tradable instruments in PrimeXBT.