Where Is The Crypto Market Heading?

Over the last five years, the crypto market has been, more than any other industry, a complete roller coaster. People have marveled at the highs, and despaired during the crashes. Despite the volatility, the market has experienced tremendous growth and maturity in a short amount of time. So given this rapid movement and nearly violent swings, where is the crypto market heading? Let's take a look at the five key areas that best represent the market as a whole, highlighting key trends and examples of innovation in each category. The five areas we'll touch on are Protocols, Gaming, Exchanges, Security, and Regulation.

Protocols

Crypto protocols have exploded in terms of the various consensus methods, chains, and overall strategies used to increase capabilities, efficiency, and robustness. Where once there were two key consensus methods (Proof of Work and Proof of Stake), the number of unique methods have grown exponentially each year. While some could be accused of being more of a gimmick, most have a dedicated purpose that serves the needs of the protocol. Chains have taken every form too, from L1's L2's sidechains, and more. Bridges and other mechanisms have worked to expand and connect different ecosystems, and the uses of various tokens have also expanded. One area that has lagged is that of privacy on-chain. However, protocols like Namada, Anoma's first fractal instance, have focused on the issue and have made breakthroughs that enable interchain asset-agnostic privacy. Users can transfer ETH, DAI or any other fungible asset or NFT from Ethereum, or ATOM/OSMO from any IBC chain, and send them around privately with a few second transaction latency and near-zero fees.

Gaming

Web3 gaming continues to grow, moving past the early Play-to-Earn (P2E) gaming platforms (though these are not done evolving either and continue to find new use cases and markets). Gamification principles are strong and hold true across platforms, technologies, and specific capabilities. Making use of these psychological aspects gives gaming platforms plenty of room to develop new stories, more ways for players to earn rewards, and new twists to keep them interested. However, there are several new use cases that are giving Web3 gaming new life: Augmented Reality (AR), and Geo-fencing. The gaming platform Rebase is making use of both technologies to create a gaming experience with such scalability that the only limitation is the size of the globe. AR is great because users can interact with the world around them, providing different quests, artistic exercises, and ways to interact with the gaming community both virtually and physically. While Geo-fencing is certainly not new, the ability to merge it with AR and blockchain to create interactive, reward-building adventures is. The platform encourages users with unique location based NFTs that can only be earned by physically traveling to the locations and finding the right collection point. We can expect to see other platforms inspired by this model, creating new AR, Geo-fencing, blockchain opportunities for gamers to explore. With AR gaming projected to hit $275 Billion by 2027, this is an area to keep watching closely.

Exchanges

The crypto exchange industry has seen many changes across the globe over the five years, largely reacting to (or anticipating) specific countries and regions finalizing their positions on crypto. The result has been mixed, significantly affecting centralized exchanges the most. The SEC in the United States has not been kind to centralized exchanges overall, shutting down or restricting many of them. As a result, even US citizens living abroad are not able to join many of the most popular exchanges. This has caused a surge in DEXs to focus on a truly borderless economy, but hasn't stopped strong exchanges outside the US who are working in cooperation with regulators in the EU and areas of Asia to build a strong, fully compliant platform. A standout from this effort is Lama, which is working to become a seamless tool for crypto payments. The platform has multiple certifications in the EU and is an Outsourced Service Provider of a European e-Money firm. In addition to working with easy crypto payments, Lama is connecting with various financial providers including Visa, which will help crypto payments to become more normalized as they become as easy to use as a debit card.

Security

Crypto cannot function without strong security, and the protection arms race continues between scammers/hackers and the firms that protect blockchain users. To win this battle the crypto security platforms must use every arrow in their quiver to stay ahead of the ever increasing sophistication of hackers. Among other things, this will include utilizing machine learning (ML) and artificial intelligence (AI) techniques to scour data and detect issues that humans and even standard algorithms would overlook. This intersection of AI and blockchain has many powerful implications. One security firm that has distinguished itself is Blockfence, which has used its patent-pending ML/AI algorithms to detect over 31 thousand scams to date, evolving more robust techniques as it scales up capabilities to handle more and more clients. Strong security will mean talented teams who are passionate about finding protection methods even more creative and well built than what the hacking community can produce. We can expect to see an endless evolution of new security protocols in the future of crypto.

Regulation

As mentioned above, regulation has created major waves in the crypto industry. While looking globally there are certainly some countries that have taken a negative stance against crypto (the US being the most notable), other regions have proactively worked with crypto experts and platforms to co-develop regulations that make sense and live harmoniously with the current technological and financial industries. Other countries have taken this a step further and have begun pursuing their own central bank digital currencies (CBDCs), which may give these early adopting countries a significant advantage in 5-10 years as they move ahead of current world leaders (eg. US) with experience in how to build and fold in a CBDC into the economic ecosystem in a way that adds tremendous value to the country as a whole. General regulation in the crypto community, while avoided by the shadier platforms, has largely been desperately pursued by crypto platforms who have big plans for their communities, but want to see firm regulations in place so they can see the rules they must comply with before they begin building.

Looking Ahead

Though the past five years have been pretty wild for the crypto community and industry as a whole, the future seems very bright. The amount of use cases, valuable tools, creative platforms, and industry disrupting innovations has been nothing short of staggering. While there are certainly challenges ahead, the road looks bright for crypto and it will be rewarding to see what the next five years bring.