Cryptocurrency
Latest posts by Meghmala Roy (see all)

2022 wasn’t necessarily negative for crypto

Right now, cryptocurrency is being watched by everyone—but for the wrong reasons. The year wasn’t perfect, though. You would be forgiven for missing or forgetting about the industry’s positive developments that occurred in the midst of the widespread outrage over Sam Bankman-alleged Fried’s fraud.Coins started to decline at the beginning of Q2 and never recovered. Terra collapsed in May, causing Celsius, Voyager, and Three Arrows Capital to go bankrupt. In August, the Fed approved Tornado Cash. In November, FTX collapsed, causing BlockFi to go bankrupt and warning signs from Genesis and Digital Currency Group.

The Ethereum merge event happened in September and went ahead without a hitch after years of anticipation and numerous delays. The second-most popular cryptocurrency, Ethereum, switched from the environmentally unfriendly proof-of-work mining method that Bitcoin employs to a proof-of-stake method that consumes 99% less energy. Although it might take years for people to fully comprehend the effects of this change, Ethereum may now be in a prime position to challenge Bitcoin in terms of adoption and perhaps even value in the future. The merge was not a shrug only because the price of ETH didn’t change after the event and because the mainstream response was more of a whimper than a bang. (It also happened at a time when the U.S. economy was in free fall, inflation was out of control, and every investment asset class was experiencing severe losses.)

Future cryptocurrency will likely seem more controlled than purists anticipated, but regulation does not always imply intervention. While everyone in the cryptocurrency industry is busy freaking out about Gensler and the SEC, encouraging regulatory actions are quietly taking place. Even President Biden’s crypto executive order from March can be viewed as a promising sign because it was only a (modest) request to various agencies to coordinate their efforts to regulate cryptocurrencies rather than a call to “put it all down.” While everything was going on, the European Parliament passed a crypto-related legislation package in March, making sure “that the EU financial services regulatory framework is innovation-friendly and does not pose hurdles to the implementation of new technology.”

VC firms continue to invest in Web 3 games. The Web3 elephant in the room, Andreessen Horowitz (a16z), raised $4.5 billion for its fourth cryptocurrency-focused fund. Pantera raised $1.3 billion for a blockchain fund, while Katie Haun’s Haun Ventures raised $1.5 billion for cryptocurrency investments. Even in the heart of a crypto winter, a number of cryptocurrency businesses and projects received funding, including Fireblocks ($550 million), ConsenSys ($450 million), Secret Network ($400 million), NEAR ($350 million), Chainalysis ($170 million), Keyrock ($72 million), and Ramp ($70 million), to name a FEW. In 2022, the FTX cryptocurrency derivatives exchange raised $800 million at a $32 price ($400 million for FTX and $400 million for the “independent” FTX US firm).

Real use cases are still present after the dust has settled. NFTs are merely tokens that may be used as anything that requires instantaneous proven ownership, such as a party pass, sports ticket, club membership, or real estate deed (I think we’ll eventually cease using all these acronyms and jargon). People who can see past the point-and-laugh dismissiveness of some who seem to be triggered by the very name “NFT” are excited by these real possibilities.