How cryptocurrencies will transform the world in 2022?
Software development, Banking, DeFi, NFTs & Sports
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The Global Cryptocurrency Market Cap is at $2.08 Trillion dollars as of 10th January 2022
💸Price Check - 7 days change
Bitcoin - $41800 (-11%)😔
Ethereum - $3166 (-18%)🥺
All financial markets are in a tumble right now, be it stocks, commodities, bonds, or cryptos. There are two major reasons why crypto has taken a bigger hit -
The effect is huge since China’s real estate market is in trillions and case easily shake the world’s economic cycle.
b) The Federal Reserve raised interest rates to tackle inflation.
Five Sectors disrupted by Cryptocurrencies
On one hand, blockchain tech is disrupting the world, it’s the pioneer of innovation! On the other hand, it’s termed an illegal phenomenon by governments. All of this is because, how “money” is coded into newer applications. Time has come - it’s software developers v/s governments
Software development (dev platforms, decentralized storage)
The developer ecosystem in crypto-space is immense and it’s growing at great speed! There are now more than 18k active developers in the Web 3.0 ecosystem. Ethereum, Cardano, Solana, Avalanche, Binance, Polkadot, Cosmos, and more —> All of these products are playgrounds for developers to build real-world applications.
Ethereum will be the app store of the decentralized internet community.
Imagine a world like that, all apps we use on our mobiles today will be replaced by a decentralized version of it. No more centralized powerful social media companies!
So yes, software development is changing at the base layer. We just have a handful of developers right now, what happens when silicon valley moves to Web3?
Banking - Payments/Lend/Borrow
Bitcoin was invented as a peer-2-peer blockchain-based currency to solve the ‘middle-man problem’. When we transfer cash from one to another, we rely on banks to do that. In total, 69% of the world is banked. The remaining 31% are unbanked or rely completely on cash. Nearly 84% of the world has mobile phones. Any person can transfer any digital coins to anyone without relying on the bank to do the transfer for them. This changes completely with cryptos.
Coinbase intends to become a crypto bank! We have DeFi products like Aave, Maker, or Compound, where you can earn interest on your stablecoins, which is way more than our regular bank.
I don’t realize how we still trust banks - they play will financial products to put an entire population through misery. So many banks run out of funds as a result of bad loans.
Global economy > Local economy.
Sorry, we don’t need banks anymore.
Decentralized Finance(DeFi) - Yield Farming/Stabelcoins
The DeFi landscape has brought newer products to rope in more customers for their platforms. We have stablecoins where customers can interested. Yield Farming is a method to accrue very high-interest rates for providing liquidity to a new platform. Not only can users earn interest on their fiat currencies but also for native crypto tokens.
Examples - Aave, Compound, Maker
Non Fungible Tokens(NFTs)
The NFT mania continues to surprise me but the demand is real. People love NFTs, they use them in their avatars. They speculate it’s going to be higher in price. From actors to rappers, a lot of people have become an advocate for NFTs. Eminem bought a bored ape NFT and used it as his Twitter pic. Pretty cool!
Let me share an NFT example - Imagine, we have 151 Pokemons from the first season - the likes of Bulbasaur, Charizard, and Mewto, etc. Now, I mint some graphic versions of all 151 Pokemons.
There are only 1 unique NFTs for each Pokemon. This creates demand from users who want to own these NFTS as a collection and/or trade them in the future with their friends. They can buy these NFTs using Ethereum. OpenSea is one of the places where a lot of NFTs are listed, bought, and sold.
NFT marketplace OpenSea valued at more than $13bn
Sports - Fan tokens, Gambling
Chillz is one of the interesting blockchain systems which deals with Sports. It has created an ecosystem of sports fans and brings them closer to their favorite franchises. Fan tokens are a new way of interaction between Teams & their Fans!
Fans could use these tokens to vote on specific topics or decisions, which can influence the decisions made by the team on the ground! The leadership team of any football club can formulate ways they want to use the fan tokens. They can vote on team formation, new jersey, and even players to some extent!
Another aspect of sports is betting - that’s changing as well! We have players like Polymarkets, Augur who are trying to solve the puzzle but the landscape is changing quickly. Prediction markets that are not centrally managed are taking shape. We will see the advent of Decentralized Prediction Markets soon.
All legacy players in the software world will have to adapt to Web 3.0 benefits - Decentralization at the core! Innovation is at a lightning speed and I am excited to see how technology is dominating the world in so many areas - AI, Blockchain, 5G, Internet of Things devices. I would like to emphasize the changes which will be brought to us by using Blockchain.
Blockchain & Cryptocurrencies are used synonymously! However, blockchain is the underlying tech behind cryptos. Cryptocurrencies have had a (mostly) negative reputation since their inception. It’s obvious because the incumbents control the world and they see cryptos as a threat to their financial wallets. Governments don’t like cryptos since they can’t control them. Banks will run out of business if crypto is successful in the long run, so they don’t like it. A regular person is least bothered about crypto, apart from investing a few hundred dollars in shitcoins like Dogecoin and Shiba Inu. We need to define cryptocurrencies better, so let’s do that!
A cryptocurrency, broadly defined, is virtual or digital money that takes the form of tokens or “coins.” ... The “crypto” in cryptocurrencies refers to complicated cryptography that allows for the creation and processing of digital currencies and their transactions across decentralized systems.
Cryptography is the science of protecting information by transforming it into a secure format —> Computer Programming + Information Security
Currencies are government forced paper money or digital money, which we use to transact. Basically, for CS students, its a database —> Database * Money
Cryptocurrencies = Cryptography * Currency
Cryptocurrencies= Programming * Security * Database * Money
Examples - Bitcoin, Ethereum
We have more than 10000 cryptocurrencies in circulation today. The real value of the crypto token is marked by its utility in the real world. What benefits does it provide? For example, Chainlink provides LINK tokens as rewards to data providers. The token has a utility in its blockchain, which makes it valuable. It takes time for a token to really show its utility, users. Investments in crypto are a challenge and it takes time to identify the real value projects! Don’t turn a blind eye to this asset class!
The beauty of cryptos is that anyone from anywhere can buy any digital currencies or tokens. Cryptocurrencies are a global economy. It’s insanely disruptive! 2022 has come too fast and it brought along a crazy tonne of innovative products for the consumers! Too many human minds are working on software development!
If you have any questions, leave a comment or you can reach out to my Twitter.
I wish everyone an awesome, productive, kick-ass 2022! Cheers, until the next one!
~
Abhishek
https://twitter.com/wildwayfarer10