Study: Blockchain trend despite "crypto winter" not over

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Forex in this article

• Crypto market faces difficult phase in 2022
• Blockchain trend continues despite market difficulties
• Effective regulation of the crypto market is becoming increasingly important

crypto winter

The past year has not been easy for the crypto ecosystem. Skeptics have often warned of an impending crypto winter before, and in 2022 it actually swept over the industry. Above all, headlines about the bankruptcies of central institutions and criminal investigations against operators made the rounds again and again and caused the price of crypto assets to fall. The blockchain ecosystem now faces challenges that cannot be ignored, asset manager Invesco and the UK University of Cambridge explain in this year’s blockchain study.

Invesco and Cambridge: The blockchain trend is not over

But despite the difficulties in the crypto market, the first signs of a recovery can already be seen. “This second crypto winter should be an overall positive as the crypto ecosystem and traditional financial sector increasingly converge in the wake of the FTX bankruptcy,” Marion Laboure, an analyst at Deutsche Bank, told Invesco and Cambridge. According to the study, particularly high-performing blockchain companies led by experienced founding teams could have collected significant funds even in the crypto winter.

And despite the recent difficult phase, the blockchain trend is far from over. “Combined with the transformative power of asset tokenization, particularly evident in the emerging non-fungible token (NFT) market, blockchain developments are enabling a gradual transition from traditional, information-centric Web 2.0 to a forward-thinking, value-centric Web 3.0 – and with the addition of augmented/virtual reality (AR/VR) to the metaverse,” the study states. through the digitalization Asset classes, market infrastructure and money would become programmable, which could eventually create new markets and, as a result, new business opportunities.

The study highlights three investment opportunities in connection with the blockchain: “The tokenization of everything,” “Web3 and NFT” and the “Metaverse.” As the study explains, tokenization is no longer limited to cryptocurrencies. Real assets – such as real estate – can now be digitized much more by creating a digital image on the blockchain. The advantage of this is that said asset can be broken down into several shares (tokens) through digitization and these represent the proportionate ownership of the asset. As a result, tokenization increases proof of ownership and the liquidity of assets, giving a broader group of potential owners access to these assets. For example, if a bond only exists as a token on a blockchain, the token itself can of course also be an asset. “Potentially, tokenization should also make trading and settlement more efficient, as transactions can be settled immediately after execution at the same time (ie immediate delivery against payment with tokenized cash). This eliminates counterparty and settlement risk.”

Web3 is a further development of Web1 with only readable content and the transaction-oriented Web2. Mobile connectivity came into play with Web2, leading to the growth of large technology companies that provided Web2 features such as social media and video streaming. The Web3 aims to protect creators and users of direct content by leveraging blockchain, decentralization and tokenized governance models without rewarding a “middleman”. For example, selling NFT on the OpenSea platform charges a fee of just 2.5 percent, while other platforms such as YouTube or Apple’s AppStore charge between 30 and 45 percent. Overall, the NFT market could grow to $240 billion by 2030, according to the study. The Metaverse’s digital assets include NFTs, which embody artworks, music, online games, other virtual assets, and the digital twins of physical assets.

Finally, the Metaverse opens up vast virtual worlds immersively accessible via augmented reality (AR), virtual reality (VR) and digital assets. According to the study, it is assumed that the metaverse will reach a volume of around eight trillion US dollars by 2030. However, how the metaverse develops will depend to a large extent on whether it is set up as an open structure or as a closed system.

Regulation of the blockchain ecosystem

When it comes to topics related to the blockchain ecosystem, however, one point must not be forgotten: regulation. The most recent problems in the market in particular have revealed how important it is to find a stronger and more effective regulatory approach. “Some regulation is necessary, but must be done with a sense of proportion and appropriately,” the study quotes Changpeng Zhao, CEO of Binance. When it comes to regulation, one of three approaches is often chosen: the application of existing regulations as a basis, the revision of existing laws and regulations or new, tailor-made regulations.

Editorial office finanzen.net

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