The early stage of 2022 hasn’t been ideal in the crypto world, but these assets will always see ups and downs. And really, it hasn’t just been cryptos taking hits, with even massive companies like Meta experiencing brutal turbulence of late.
This has caused investors to wonder what kind of luck this year could have in store. And with that in mind, we want to take a quick look at some key questions that the crypto world is facing this year, regardless of what happens in the immediate term.
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How will people react to a Bitcoin winter?
We have previously posed the question of whether a “Bitcoin Winter” was coming, and defined the concept essentially as a cold period for value and investment alike. In addition to the question of whether it’s coming though, it’s also important to think about how people will react.
While it’s expected that some people will try to wait and buy cryptos at the lowest prices possible, we don’t know how low those prices will go in the end. Furthermore, one aspect of a true Bitcoin Winter would likely be a lull in trading.
In the end, reactions may not be entirely predictable, though AskMoney did address the question in a piece late last year in an attempt to establish expectations. The article made suggestions to crypto holders in the event of a winter –– including buying Bitcoin at its lowest price and also investing in DeFi such as Ethereum. Whether or not people will heed suggestions like these is difficult to say.
Will we see more government acceptance?
Another major question crypto face in 2022 is that of whether there will be more government acceptance. In the U.S., cryptocurrency is already taxed as a capital gains tax, and according to TIME, some state governments are now exploring accepting it as legal tender. It’s only a matter of time before other states and countries consider doing the same, or accepting cryptocurrency in other ways.
On the other hand, some governments are also taking precautions against crypto expansion. In the United Kingdom, for instance, steps have been made to protect consumers from “misleading claims” meant to incentivise investment.
It’s a mixed picture though it’s fair to say that broadly we’re likely to see more government acceptance and more precautions simultaneously.
Will sustainability become a bigger issue?
At the moment, the most glaring negative impact of cryptocurrency is the energy required by the mining process. And as coins become more scarce, more energy is required to mine each coin.
Developers are looking at different ways to reduce the carbon footprints, including implementing proof-of-stake (PoS) systems that are already in use with some cryptos. Other systems include proof of history, proof of elapsed time, proof of burn, and proof of capacity, all of which should be able to replace the current proof-of-work systems that use the most energy through mining.
As more investors become aware of the disastrous carbon footprint of cryptocurrency, it’s fairly likely that we’ll see some of these “greener” methods becoming preferred. We know that cryptocurrency is here to stay, but that doesn’t mean the market couldn’t shift toward eco-friendly altcoins.
Will security become stricter?
Cryptocurrency has been a target of fraud since the very beginning. With wallets requiring crypto holders to remember passwords and keys without an option to recover them, it has become harder for wallets to be hacked. However, what happens if the password and key fall into the wrong hands? Is there any recourse to be pursued? And what happens when a holder passes away? Will their intangible assets simply be lost?
These are questions to be answered by each wallet platform. Some platforms do have password recovery systems, while others refuse. We can expect security to improve generally, but whether it simply becomes stricter or more strategic and flexible remains to be seen.
Part of the intrigue of crypto, in the end, is that it tends to surprise us every year, in one way or another. That its to say, we think it wise to anticipate the unexpected and invest , if you do at all, carefully. If we’re to make predictions though, the questions above speak to some of the major matters that will have to be settled in cryptocurrency this year.
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