The cryptocurrency industry has been facing many ups and downs throughout its development. The cryptocurrency markets are still highly volatile – crypto hypes are commonly replaced by crypto winters. Apart from that, the crypto world is periodically shaken by new scandals and reputation losses. Despite all of these misfortunes, the crypto market recovers and returns to its bull phase again, allowing many to boost their financial returns almost instantaneously.
But what to expect from crypto in 2023? Allied Market Research predicts that the global cryptocurrency market size, estimated at $1.49 bln in 2020, is projected to reach $4.94 bln by 2023, growing at a CAGR of 12.8% in the period of 2021 to 2030. Meanwhile, the cryptocurrency industry continues to develop, offering crypto users more investment and trading options as well as new opportunities for crypto startups.
In this article, we’ll have a look at the latest crypto innovations and the most promising crypto trends that will be popular in 2023.
Top Cryptocurrency Tendencies Overview
According to the Morgan Stanley Wealth Management Global Investment Office report, cryptocurrencies experience such peaks and troughs every four years. Forbes predicts that Bitcoin will start recovering in the second half of 2023. Meanwhile, MoffettNathanson analyst Lisa Ellis expects that the crypto winter will be over in 2024 and 2025 will be the peak of the present cryptocurrency cycle.
All this means that those who are thinking to invest in building their own crypto start-up or invest in crypto, have to play a long-term game and be ready when the time of high crypto rates comes. That’s why for the companies that consider turning to crypto and Blockchain application development services, it’s so important to follow various crypto trends and implement them in their crypto solutions as early as now to reap the most benefits from the crypto before the next recession starts.
Here are the most promising cryptocurrency trends to consider in 2023.
In 2021, NFTs hit the market and became an instant sensation among art creators, crypto investors, and the general public. The main idea of NFT (non-fungible tokens) is to ensure immutable proof of ownership for a particular piece of art, e.g. a digital image, a song, a video, etc. This way, the person who has bought an NFT acquires the rights to an art object which is documented in the blockchain. An NFT works as a copyrights protector and with the help of this technology, people can create, purchase, or trade their art online. That said, NFTs aren’t limited to only digital artworks. They have great potential for further development as NFTs can be used for proving the ownership of physical objects, e.g. buildings, cars, lands, and more.
Currently, the technology is in its initial stage of development, though it has already managed to generate much talk online. Everyone from unknown artists to world-popular stars started creating NFTs and trading them online, leading to the uncontrolled creation of NFT collections. Therefore, Binance is trying to regulate NFT trading on its platform, imposing restrictions on trading NFTs with a value of less than $1,000.
The NFT market quickly gained 2 mln of active users in 2021 and then lost 17% of trading activity by the end of 2022. This is explained by the hype created around the technology. Nevertheless, the industry proponents see “the sign of a resilient industry, despite the difficulties of 2022”. world-leading brands, including MasterCard, Starbucks, Disney, Nike, and many others have already created their NFTs. The technology is expected to head for gaining more stability over the next few years.
ETF stands for the exchange-traded fund and is a newly emerged stock exchange instrument on the crypto market that allows stock traders to operate several investment securities like a mutual fund. One fund can include shares or equities of various companies, different currency instruments, or commodities matched by certain characteristics. This allows investors to short markets, gain leverage, and exclude short-term capital gains taxes.
The ETFs are quickly gaining popularity in the crypto market as they are:
- Much more flexible – the number of shares in the ETF basket can change daily,
- Easy to trade – ETFs can be bought and sold at any time of the day whereas mutual funds can be traded only at the end of the day,
- Transparent – ETFs have to disclose their holdings daily,
- Tax efficient – in comparison to actively managed mutual funds, ETFs have a lower level of capital gain taxes which are paid only after the ETF sale.
- Lower costs – investors don’t have to buy all the stocks for their ETF portfolio. Instead, they can buy several stocks from various companies placed into one ETF. With an ETF, investors can also save up on broker commissions by performing fewer trades with one ETF. This way, the ETF operation, and management costs are much lower than with individual stocks.
One of the most popular decentralized blockchain platforms Ethereum started a major upgrade – shifting from Proof of Work (PoW) to Proof of Stake (PoS) in September 2022. This significant transition is expected to improve security, and scalability, and decrease energy consumption due to using fewer computational resources.
Thomas Perfumo, head of business operations and strategy at Kraken, believes that the upgraded Ethereum version will have a positive impact on its further development of the blockchain. He says, “I expect (this) will allow Ethereum to scale its transaction throughput, further reduce cost and enable new applications to drive greater utility on a chain.”
With so many beneficial changes starting in 2022, it’s expected that Ethereum usage will increase much in 2023 even despite the ongoing crypto winder.
DApps aka decentralized applications is one of the promising directions in Blockchain development that creates the basis for Web 3.0 technology. These applications can run on a Blockchain or P2P networks and can be built for various purposes from FinTech apps to social media, to gaming, and others. There are many dApps examples that run on the Ethereum blockchain with the help of Smart Contracts, some of them are Binance Smart Chain, CryptoKitties, Uniswap, and many others.
- DApps provide much transparency while preserving user privacy,
- They can be stored on decentralized clouds,
- DApps provide more opportunities for generating revenues,
- They will run on Web 3.0.
Blockchain technology penetrates every aspect of people’s lives and changes the way we work, live, and do business.
One of the Blockchain structures that are popularized by cryptocurrency enthusiasts and is applied in various organizations today is DAO – a decentralized autonomous organization.
DAO is an organizational model in which an entity starts operating just like a Blockchain. It is governed by a community, instead of a central authority. The members establish certain community goals and act to meet these goals in the most efficient way for the company.
DAO approach can be implemented for various entities be it an online community or a single institution, e.g. a government, a charity organization, or a central bank. By applying DAO, companies can ensure decentralized and fair decision-making within the company, participation of each individual in issue-solving, and public transparency of the results and actions taken.
Stablecoins started as an attempt to make cryptocurrencies less risk-prone and more stable. For this, stablecoin inventors pegged their prices to fiat currencies or gold. This helped to significantly reduce the volatility of stablecoins in comparison to traditional cryptocurrencies.
Currently, there are several types of stablecoins: fiat-based stablecoins such as Tether (USDN), and TrueUSD (TUSD); pegged to other cryptocurrency stablecoins such as DAI stablecoin is pegged to the US dollars and is also backed by Ethereum (ETH); algorithmic stablecoins are the coins that rely on algorithm-generated Smart Contracts that automatically regulate the number of coins by selling or buying stablecoins when the price fluctuates.
Many traders prefer investing in stablecoins as they have fewer fluctuations and can be simply converted into fiat money once they’re fiat-based stablecoins.
Web 3.0 is the next Web generation that is slowly taking in power over the familiar Web 2.0. The Web 3.0 version will incorporate the latest technologies that drive digital development today, including Artificial Intelligence, Semantic Web, the Metaverse, and, the most basic and important one – Blockchain.
Based on the idea of decentralized ledgers, Web 3.0 will provide a more secure and personalized experience to netizens. Meanwhile, it’ll ensure a more stable work of various websites and applications as they will be many times copied and shared among the decentralized network.
Companies get prepared for the transition to Web 3.0 and build their applications based on the decentralized networks such as dApps that will smoothly run in the next generation web.
Crypto Payment Gateways
At its very inception, the cryptocurrency economy existed alongside the fiat economy. Today, these two economies become more interdependent, and the appearance of stablecoins along with the payment gateways are among the ones most fundamental indicators for that.
Payment gateways allow e-commerce businesses handling crypto transactions to facilitate the payment processes for their customers. There are many services that provide crypto payment gateways today, BitPay, PayPal, and Coinbase Commerce are among them. Apart from processing crypto payments, these gateways also make it easy to accept fiat money and provide receipts for the completed operations.
In 2023, we’ll witness a broader use of crypto payment gateways among online businesses.
The end of 2022 was the time when lawmakers around the world drew international attention to the issue of cryptocurrency regulation. Currently, most countries around the world are seeking ways to handle crypto and lawfully incorporate it into their economies as the power and influence of crypto are growing day by day.
World governments are setting laws and guidelines to make it safer for businesses and individuals to invest in cryptocurrency. For example, the US government released the Infrastructure and Investment Jobs Act. The act states that if any company or a person “transfers digital assets on behalf of another person”, will be considered a “broker”. This results in the necessity of trading platforms to perform the KYC (Know Your Customer) policy towards each transaction, identifying the customers and accounts that participate in the transaction.
It’s expected that in 2023, there will be more regulatory announcements that will affect how cryptocurrencies are handled and traded. And this is a good sign for the industry if the regulations will have a sensible approach toward decentralization and personal data privacy.
In 2023, the crypto market will be slowly entering the recovery phase. Nevertheless, there are one or two more years to wait till cryptocurrencies get into their full force and will be traded at their highest prices. Therefore, those investors who are waiting for crypto recovery should start preparing for it in advance and follow the latest cryptocurrency trends right now.
If you’re also considering building a cryptocurrency exchange platform, launching your own dApp, or thinking about how to upgrade the existing crypto solution, then we are ready to help you with that. Scand’s Blockchain development specialists have much experience in developing diverse Blockchain-based digital applications and over 20 years of work in the international software development market.