Decrypt: Rise and fall of crypto biz

CHENNAI: It’s been a roller coaster ride in the cryptoverse. How the mighty have fallen! The collapse of Terra, the implosion of Celsius, Terra, the bankruptcy of 3 AC, culminating with the devastation of FTX, the cryptoverse is littered with horror stories!

This year has seen crypto and larger Web3 industries see ups and down of loss, growth, and innovation. Market capitalisation of all crypto assets decreased by almost $2.2 trillion! So, its time to take stock as we close 2022.

CEX activity, which has apparently been steadily declining over the past year. And I see the trend crawl into 2023 as well. The US emerged as the country that made the maximum impact.

With almost 10% of total CEX traffic, the US came out on top, followed by South Korea, Russia, Turkey and Japan. In terms of the maturity of the cryptocurrency market, the US also placed first.

The US also leads the world in terms of DeFi traffic share (31.8%) and has the highest overall crypto population (nearly 46 million users).

Another notable trend we saw was NFT becoming the most talked-about cryptocurrency phrase globally. Just google it and NFT searches are dominating globally.

Weaning away from digital art and airdrops, now NFTs are being put to solve real world problems. They are getting successfully incorporated into a variety of industries, including sports, arts, entertainment, and cultural productions, broadening the application possibilities.

A key observation was Asia is leading in terms of rapid interest in NFT. Asian nations, in fact held four of the top five positions. China came out on top for NFT interest, followed by Hong Kong, Singapore, Nigeria, and Taiwan.

NFTs have recently been deemed to be virtual property subject to legal protection by mainland Chinese courts. This is a significant move in light of the nation’s strict crypto crackdown, which started in 2021.

While investments remained pretty static overall, there was a major uptick in the GameFi and Metaverse space. These two industries have constantly attracted interest and investment, most experts feel that GameFi would serve as the metaverse’s entry point, making this space enticing for investors.

In fact, this year, GameFi and Metaverse as a whole outperformed investments in categories including tooling, trade, and lending for the second year in a row.

From $874 million in 2021 to $2.4 billion in 2022, capital investment has dramatically increased in these two areas. Animoca recently established a $1 billion fund for developers in the metaverse validating the trend. The value of the GameFi sector alone is predicted to reach $2.8 billion over the next six years.

A notable trend seen in the cryptocurrency space, was a focus on regulation. Since the beginning of this year, over 40 countries have issued 105 “regulatory measures and recommendations” for the cryptocurrency industry. United States, leads here even as India is in the midst of a regulatory wave.

Over 20 federal and state regulatory acts covering everything from crypto transactions and regulatory guidelines to court rulings and stablecoins, the US has grabbed the lead when it comes to crypto regulations even as global regulators have been pushing for more unified cryptocurrency laws in an effort to control the wild west of the industry and safeguard consumers since the disastrous collapse of FTX. More next week folks!

To be concluded​

(The writer is founder, India Blockchain Alliance)