Taking into account the turbulence of 2022, the experts expect a gradual revival of digital assets in 2023. The industry will continue to grow, and the use of cryptocurrency will become more widely accepted as a form of payment by individuals and businesses alike. New coins are coming up, and the older ones will no doubt improve to meet the ever-evolving needs of the market. The fact of the matter is that it’s crucial to maintain a long-term perspective to take advantage of the potential benefits of the cryptocurrency space. With that in mind, let’s discuss the top predictions for the crypto industry in 2023.
#1 A Regulatory Framework Will Come
Cryptocurrency regulation is likely to be a vital issue in 2023. A regulatory framework is necessary to protect investors and preserve financial stability. Recently, the European Union has brought digital assets and associated issuers and services under a set of rules for the very first time. The Council and the Parliament have agreed on the Markets in Crypto-Assets (MiCA), which applies to cryptocurrency issuers and the systems operated by investment firms (and wallets where digital assets are held). Europe is one of the most significant crypto markets in the world, with investment in DeFi, representing 25% of the global cryptocurrency activity.
The Biden administration wants to implement a policy for digital assets to preserve the government’s ability to control the overall money supply and promote economic growth. As the second quarter (Q2) begins, it will most likely be a good time for cryptocurrency. We believe that making speculations would be too far-reaching. Monitor the Bitcoin price USD, for instance, even if casually, to react as quickly as possible to the positive and negative fluctuations in the market. You can make better investment decisions and meet your financial goals. Getting back on topic, very few countries have excelled at writing and enforcing clear regulations governing cryptocurrency.
#2 Financial Institutions Will Tokenize More Asserts
Financial service organizations resort to tokenization to create smooth experiences and ensure customers are satisfied. A token is a sort of symbol that represents confidential information; it’s undecipherable and unreliable. Sensitive data is swapped for non-sensitive data and can be used in a database or internal system without bringing it into scope. It’s expected that financial institutions will leverage blockchain technology to streamline custody and settlement while reducing costs for customers. It’s necessary to protect the private keys and develop security mechanisms to support transactions in and out, besides managing security risks. From art to buildings, the way people invest might fundamentally change.
#3 Ethereum Will Delay the Introduction of Sharding
Since the concept of peer-to-peer electronic cash payments emerged, blockchain technology and its basic structure have been applied in various areas, including but not limited to transactions in financial assets, smart contracts, storage, data management, and communication. Sharding is a technique used to split up large data collections across multiple servers. The Merge opens up Ethereum to sharding, which can enhance network latency. Sharding works with layer 2 rollups by dividing the burden of handling large data sets needed over the entire network. If successfully implemented, sharding will make Ethereum akin to the fastest payment protocols in the world.
Sharding is the next phase in ETH’s development cycle, and this feature will extend to the network load across the blockchain, building scalability, reducing latency, and speeding up transaction volume. There’s reason to believe that sharding will be delayed. If you check out Ethereum’s website, you’ll see that data shards could be implemented some time in 2023, with emphasis on the word “could”. According to the experts at JP Morgan, Ethereum’s dominance of DeFi is at risk because due to sharding delays. More exactly, by the time ETH implements sharding, other networks will have caught up, and it’s unlikely that activity will return to the Ethereum network.
#4 A Lot More Investors Will Adopt Bitcoin
Blockchain wallets, which enable the purchase of Bitcoin, reached 81 million users in 2022, as reported by Statista. The exact figures for BTC users aren’t available, but it’s estimated the user base of cryptocurrency increased by 190% between 2018 and 2020. An improved understanding of digital assets and a detailed regulatory framework will help drive greater adoption. Bitcoin, commonly referred to as digital gold, can increase portfolio diversification, enabling investors to minimize the overall volatility of their holdings. The decision to invest in BTC comes down to each person’s appetite for risk and their perspective on the future. Investors looking into Bitcoin ETFs are located mainly in Europe as opposed to the United States or China.
#5 Brazil Will Emerge as One of The Most Crypto-Friendly Countries
Cryptocurrency has been around for so long, prompting governments to explore ways to regulate it. Activities that are subject to taxation include but aren’t limited to selling cryptocurrency for fiat money, trading a digital asset for another digital asset, spending cryptocurrency on goods and services, and income resulting from mining and staking. It’s forecasted that Brazil will lead the way to more countries in South America allowing crypto payments within their boundaries. Latin America still has an unbanked and underbaked population, so blockchain companies can find success by adapting to people’s needs. Financial inclusion and remittances can be embraced in various ways.
This year, Brazil approved a bill that legalizes the use of digital assets as a payment method throughout the country. Attention must be paid to the fact that the law doesn’t make cryptocurrency a legal tender but includes them in the definition of payment methods. Itau Unibanco, which offers retail, corporate, and private baking services, tokenized its first digital asset on July 4th. Moreover, the bank intends to tokenize other real-world assets and offer custody services for clients. The adoption of digital assets is on the rise in Brazil, meaning that it’s one of the countries with the most significant number of investors and cryptocurrency users.
To sum up, we don’t know what the future holds. Our forecasts deserve to be taken seriously, but they don’t promise to be accurate.
