Crypto had a bumpy ride but lean in
Five trends for something to smile about despite the gloomy look of crypto space
NEW DELHI: The crypto market is still in a state of upheaval. From the excesses and impulses of the past years, there are still buried bodies that need to be unearthed. Although many people and businesses have been able to hide their vulnerability, it is not sustainable. Even if this is ultimately beneficial for the ecosystem, more of consumer money will be wasted, people’s confidence will be broken, besides external criticism.
Five trends for something to smile about despite the gloomy look of crypto space:
■ Trend 1: Regulations are coming. There is little doubt that comprehensive laws are necessary for digital assets. Legislators need to strike the correct balance between rules and re-evaluate technological shortcomings. This year, rules will advance, particularly in areas like defining which digital assets are securities and which are commodities. The wheels are in motion! Expect a lot of movement here. In India too, the Blockchain Governance Council is doing good work in furthering the cause of transparency and trust in the regulatory ecosystem.
■ Trend 2: Blockchain Audits. Current accounting and auditing regulations are simply incapable of auditing or providing attestation services to businesses engaged in the cryptocurrency industry. This has been highlighted amply by the multiple scams and insolvencies that the industry has witnessed this year. Proof-of-Reserves, which crypto exchanges hastily adopted, was only recently proposed as a solution to those seeking more openness and comparability for crypto companies. That has also experienced repetitive damage as inquiries concerning the specifics of what these engagements comprise have started to be made. The mechanics of how these engagements will run are more crucial than the precise term or title for a crypto auditing or attestation procedure. This much is certain, accounting and auditing for cryptocurrencies are undoubtedly top priorities and will dominate 2023.
■ Trend 3: Green Blockchains. The high energy consumption needed by the most widely used protocols is one of the blockchain technology’s features that received the most criticism. POW is no longer relevant because newer protocols use Proof of Stake (PoS) and Proof of History (PoH) consensus to reduce power usage. Beyond 2023, this trend is probably going to become more pronounced. This will also increase the appeal of blockchain as a solution for many businesses.
■ Trend 4: ESG alignment. From an environmental standpoint, POS is the new benchmark in blockchain technology. A more sustainable blockchain for business will be crucial as new standards emerge and organizations prioritise ESG . Over 90% of S&P 500 businesses feel it’s important. The energy needed for proof of stake transactions is far lower than for transactions on other blockchains. In actuality, Ethereum reduced their carbon impact by 99% after converting to POS. This more effective strategy will be at the core of growing acceptance for companies wishing to function on blockchain at scale without compromising their commitment to ESG.
■ Trend 5: DeSci: Another important use case for Web3, open-source cooperation, and decentralised finance is decentralised science, or DeSci. The movement’s forerunners will be DAOs. DeSci will introduce IP-NFTs (Intellectual Property NFTs) in 2023 to transform scientific research into a Web3-native asset class, ushering in a new era of scientific discovery equivalent to the great advancements seen in open source software development.
Responsible blockchain will be the new mantra for 2023. Enjoy the ride and a happy New Year to all!
Crypto firm Bullish, Far Peak call off $9 bn SPAC deal
Cryptocurrency firm Bullish and Far Peak Acquisition Corp have called off their $9 billion merger, making it the latest blank-check deal to fall through as the industry comes under increasing regulatory scrutiny. The special purpose acquisition company (SPAC), which raised $550 million in its initial public offering and is led by former NYSE President Thomas Farley, will also wind down by March 7.
“Our quest to become a public company is taking longer than expected, but we respect the SEC’s ongoing work to lay new digital asset frameworks and clarify industry-specific disclosure and accounting complexities,” Bullish CEO Brendan Blumer said. One of the hallmarks of pandemic-era dealmaking, SPACs have since fallen out of favor amid a regulatory crackdown and a sudden rise in interest rates that has rattled the equities market. Backed by billionaire entrepreneur Peter Thiel, Bullish is a unit of the blockchain software company Block.one.