2021 was a huge year for cryptocurrency, the Bitcoin price in INR reached new highs. Ethereum became the second biggest cryptocurrency and reached its all-time high. Worldwide new regulations were put in place by administrators. Long-time investors were always bullish, but it became popular culture from Elon Musk to the just-passed-out college graduate. It was a breakthrough year not just for the digital currencies but also crypto assets as it went mainstream as a new age investment.
Cryptocurrency v/s Cryptoassets
Assets are stores of value. Crypto assets are digital assets that work without any intervention by middlemen. It uses public ledger, peer-to-peer networking, and most importantly cryptography to regulate, verify and secure transactions. Apart from it having the capacity to be converted into cash, there are various other benefits that can be derived by holding them.
A general question that pops out is; Is this not cryptocurrency? Yes, when Bitcoin was launched there was no distinction between cryptocurrency and crypto-assets. But as technology improved, a distinction between these two has happened with crypto assets becoming a blanket term that is no longer limited to cryptocurrencies. It is still a tokenized asset that is recorded in a public ledger but the value may/may not be derived from the blockchain. Additionally, its application is not limited to payments.
As the new year kicks in, here are some themes in crypto assets that will be of greater relevance this year:
NFT and Fan Tokens
NFTs or non-fungible tokens are digital assets that can be transacted using blockchain technology. Like their cryptocurrency counterparts, buying and selling happen on specialized platforms. But they are non-fungible which means they cannot be exchanged with an equivalent item. For example, Rs 100 in exchange for Rs 100. Companies can have numerous possibilities by using NFTs. For example: Let’s say a company releases 1000 NFTs of your favourite album and you happen to be one of the first to purchase. When they go mainstream, you may get passes for their tour or even get a cut of their royalties. NFTs with such possibilities are on the rise and are likely to increase in the next few months.
This is another emerging theme that is likely to get more traction this year. There is a rise in Play to Earn, P2E games with some gaming giants earning billions of dollars without them not even being available in app stores. Experts believe that gaming companies may enter the crypto space and launch tokenized NFTs on blockchains.
The rise of tokenized funds is another them to watch out for. This is the latest innovation on the traditional ETFs, Exchange Traded Funds. Blockchain technology can be used by fund managers to create tokenized funds. This can be used to track the performance of traditional markets using digital assets. It can also be created to have tokens set up to monitor themes theme-based.
This is another strong theme that experts predict will do well this year. This is because of noteworthy events like the name change from Facebook to Metaverse and the increase in the popularity of crypto gaming.
Tokens like Polkadot, Cardano, and Solan token have emerged as potential Ethereum killers. Though they are delivering good returns they are yet to get Ethereum out of the race with the ETH to INR still going steady. Time will tell whether these token can replace the second-largest cryptocurrency.
The other themes to watch out for are Decentralized Finance (Defi), Web 3, Learn to Earn, and asset trading applications. Happy trading!