In 2021, the introduction of new Central Bank Digital Currency (CBDC) initiatives, the intensification of policy and legislative talks, and the increased adoption by established institutions all helped crypto and blockchains sustain a rise into traditional financial markets.
In particular, a constant stream of new entries into the space, with broader acceptance for crypto developments and enhanced usefulness, are expected in 2022, according to Ripple’s leadership.
Managing Director of APAC & MENA, Brooks Entwistle, cites recent CBDC initiatives linked to national real-time payment systems to enhance payment rails. He says the move has opened the door for additional crypto activities in 2022 to meet the rising demand, which could lead to more growth for RippleNet’s On-Demand Liquidity (ODL) solution.
“While remittances will continue to be a key use case, we can expect other applications to rise to the fore, such as trade flow or treasury management,” said Entwistle.
Notably, inefficiencies in the global domestic and cross-border financial systems continue to be highlighted by the pandemic as remittances to low- and medium-income countries surged in 2021, placing further strain on inadequate cross-border payment systems.
NFTs have come to the forefront
Besides that, the cryptocurrency space has been marked by ongoing development and maturity in the debate of new use cases for blockchain and cryptocurrency, as well as the rapid emergence of non-fungible tokens (NFTs) in 2021.
Generally, blockchain and crypto have been shown to have commercial utility for the first time thanks to the mainstream adoption of NFTs, and as a result of the widespread use, Ripple’s $250 million Creator Fund has been able to construct new features and communities on top of it.
There’s little question that NFT firms will prosper in this space, but the infrastructure needs to support consumer and creative demand if it is to do so. According to Chief Technology Officer David Schwartz, the catalyst to NFT’s long-term viability would be “creating a seamless user experience for mainstream consumers and retailers alike.”
Likewise, General Manager of RippleX, Monica Long, points out, technological advancements in other sectors, like decentralized finance (DeFi), can also assist in pushing the expansion of NFTs beyond mere collectibles she said:
“The ability to buy, sell, store or transfer an NFT from a wallet attached to that identity and then seamlessly access it on another means buyers and sellers can confidently verify creators and their creations.”
Interoperability will aid mainstream adoption
Moreover, interoperability with multi-chains is a recurring topic among the members of the Ripple leadership team for 2022, especially in terms of its capacity to aid in the realization of broader mainstream adoption and utility for cryptocurrency.
“Developers crave the ability to build bridges between networks to meet their specific use cases<..> Achieving this interoperability will be key to breaking down the barriers for broader crypto adoption.”
It appears for the foreseeable future, these technological obstacles will serve to emphasize the need for cross-chain interoperability in order to meet the rising demand from developers.
Regulators to play a greater role
As a result of the rapid rise in popularity of NFTs and CBDCs, as well as interest from traditional financial institutions in cryptocurrency, regulators are also anticipated to play an increasingly important role in 2022.
Regulatory oversight remained inconsistent among countries and regions despite an increase in activity over the last year.
On the whole, the strengthening of regulations is crucial in instilling trust in businesses to join the cryptocurrency market or cooperate with crypto providers.
It’s worth noting that Finbold recently reported US crypto lobbying spending had already doubled in 2021, fuelled by regulatory uncertainty, as $4.9 million was leveraged to attempt to influence legislators. If the present growth rate continues, the sum may double in lockstep by the end of this year.