In 2022 the cryptocurrency and blockchain industries saw many highs and lows. After crypto experienced a significant drop in January 2022, Ethereum and Bitcoin prices dropped by 31% and 20% respectively. However, despite the turbulence in the crypto market in 2022, there have been several significant advancements in the field, including the development of the ZK solution ecosystem.

The Rise of Trust-Based Cryptocurrencies

Building trust in cryptocurrencies will be key to the success of companies operating in this field. This is likely to be via initiatives that offer secure and convenient self-custody services and through the use of secure, high-quality hosted custody solutions. The verification of service providers via third parties, and the use of Proof of Reserves disclosures, could also play an important role in re-establishing trust.

The Impact of Web3

Trading and cryptography experts such as Domen Zavrl know that Web3 developer tooling is expected to underpin growth in the crypto and blockchain sectors. Cross-chain tooling, one of the key technologies needed for Web3 development, could potentially facilitate project deployment across various blockchain networks.

Emerging Regulations

Regulations are one of the key discussions around what will happen in the world of crypto in 2023. While many countries have now introduced their own regulations governing the use of digital assets and cryptocurrencies, there are still many questions concerning the governance of crypto transactions and exchanges. Emerging regulations are likely to focus on providing balanced solutions and a clear definition of what comprises a digital asset.

The Use of Blockchain Data

Blockchain technology has the potential to support in-depth analysis of on-chain activity, due to its inherent open-source nature and facility to collect data effectively. The growing interest in the use of blockchain data is likely to continue throughout 2023. This data could prove a rich source of information regarding, for example, on-chain cash flow, user behaviour and emerging trends. The emergence of blockchain analytics like Nansen could support the development of a new understanding of on-chain analytics via a leveraging of wallet activity. Blockchain indexing projects are already underway, with companies such as nxyz using data APIs without rate limits.

Zero-Knowledge Use Cases

The adoption of zero-knowledge proofs is expected to increase in 2023. These proofs deploy a structured approach that includes a verifier, prover, and mathematical algorithm to provide information without revealing any of the data associated with the proof. Several new projects, such as those by Succinct Labs, Risczero, and Espresso Systems, have resulted in the development of innovative zero-knowledge proof cases. Zero-knowledge proofs could also offer a significant boost to crypto bridge security and associated interoperability.

The Tokenization of Financial Assets

A key anticipated trend in the crypto field is the increasing tokenization of financial assets, and there is likely to be an increased representation of such assets on the blockchain network. Currently, stablecoins are the most popular example of a way in which cryptocurrencies can represent real-world assets. Stablecoins are also widely deployed, in the crypto field, around market capitalization. MakerDAO has recently unveiled plans to invest approximately $550 million (in the form of the DAO cryptocurrency) in corporate bonds from the US Treasury.

The Future of Crypto: Focusing on the Positives

Although the difficulties of 2022 for the sector led to the year being referred to as the ‘crypto winter’, 2023 is set to be more positive, with a focus on re-establishing trust within the industry and the potential inherent in new technological innovations.

For more information about the future of crypto in 2023 and beyond, take a look at the embedded PDF.