Technology

Cryptocurrencies: 6 trends of 2023

After a nightmare 2022, the crypto sector wants to get off to a good start in 2023. And the outlook is not as bleak as the economic news.

If there is anything unanimous, it is that 2022 was the worst year ever for the crypto ecosystem. Entangled in the economic downturn, like other markets, this sector has suffered two major crashes: Terra’s crash in May and especially FTX’s crash in November. It will also lose two of its three major lending platforms in the bankruptcy of Celsius and BlockFi.

Therefore, we can be almost sure of one thing: in 2023, we will not be able to do worse! What’s more, 2022 won’t be a black-only year. Innovation continues, decentralized finance protocols have proven to be quite resilient, and common regulation has emerged in the European Union with the adoption of the MiCA and TFR rules.

Additionally, 2023 could be a transitional year between the established bear market, economic uncertainty, and the next bitcoin halving in the spring of 2024.

Markets: An established bear market

Of course, past results are not indicative of future results. However, getting out of the economic downturn in 2023 seems difficult. As a result, the cryptocurrency market should not return to the top this year.

On the contrary, technical analysts are rather pessimistic. It’s better to look down. So we are closer to BTC at $10,000 than we are at $30,000. It will also be necessary to keep an eye on crypto projects in bad shape, such as Solana (SOL), which could play their long-term role in 2023.

Bitcoin: An Even Stronger King in 2023?

The Bitcoin protocol, in spite of itself, survived a list of disasters that affected the crypto ecosystem in 2022. However, as of this writing, it maintains an honorable price and has not fallen below $15,000 in 2022. Of course, it’s hard to predict. future course performance. But what is certain is that BTC will hold.

Market movements show that bitcoin has been less neglected than other cryptocurrencies. It remains the project that inspires the most confidence, and it is Bitcoin that is currently being turned to by long-term investors. Therefore, 2023 should be the year of Bitcoin strengthening in the crypto market.

Moreover, after El Salvador and the Central African Republic, could BTC become a currency in a new country? Perhaps and may be on the side of Latin America. This project is more or less seriously mentioned in Brazil, Argentina and Honduras.

Green mining: a real prospect in 2023

Once considered a pollution unworthy of its usefulness, bitcoin mining is slowly changing its image. More and more energy providers are realizing that mining can help monetize infrastructure with intermittent energy, in other words, renewable energy. In addition, the heat generated by servers can also have its merits.

The figures for the share of “green mining” (wind, solar, hydroelectric, geothermal, nuclear) vary from 20 to 60% depending on the source and especially the camp (for or against cryptography). However, the trend is real: virtuous mining is gaining momentum, and logic suggests that it will continue into 2023.

The first reason is the rise in energy prices. However, renewable energy is cheaper when miners use the excess energy they generate. The second reason is image. More and more miners understand that the extraction of coal or oil is condemned. Therefore, it is highly likely that fossil fuels will become a minority in the mining energy mix.

2023, a pivotal year for Ethereum (ETH)

Last September, the Ethereum The Merge upgrade went smoothly. Since then, Ethereum, like others, has been affected by the FTX earthquake. However, the fundamentals remain the same and 2023 is a very important year for Ethereum.

First of all, the Confluence was only the beginning of the updates. The next, Shanghai, should take place in March. Ethereum remains an ever-evolving protocol that is far from having implemented all of its features. Therefore, it is necessary that these updates go well in order for trust to be maintained.

Indeed, reinforced by The Merge and the failures of Solana, Ethereum is the reference protocol for new projects in the crypto sector. Its seniority and its resilience are two main advantages that can convince new players. Similarly, the transition to Proof-of-Stake, which consumes 100 times less power than Proof-of-Work, has removed a barrier for organizations looking to run prototypes on the public blockchain.

However, Ethereum will face the risk of network node centralization. Moreover, the presence, physical or virtual, of these nodes in the United States leads the US authorities to say that Ethereum is a network under their jurisdiction.

Polygon (MATIC), the star of alternative blockchains?

If there are many more or less declared competitors of Ethereum, no one has been able to resist its dominance. Even worse, Solana, the most dangerous of them all, is suffering furiously from the effects of FTX’s fall. But there is a protocol that has been talked about forever: Polygon.

Previously introduced as a secondary layer (layer 2) protocol for Ethereum, the Polygon solution has developed its own blockchain and now plays on both sides: with Ethereum and against Ethereum. Polygon’s success is due to its very fast network, which is inexpensive and uses the security of Ethereum.

As a result, big projects have been launched on Polygon, such as the decentralized social network Lens Protocol, NFT on Instagram, or even Disney projects, which at the moment are not cautious about their Web3 ambitions.

2023, the year of DeFi?

2022 will be the year of the downfall of the CeFi (centralized finance) players who replicate the trends and mistakes of traditional finance. However, in cryptography and Web3 in general, some people emphasize decentralization. It is therefore logical that DeFi protocols have benefited from the bankruptcy of some of the giants in the sector.

So 2023 could be the year of DeFi for at least three reasons. First, there is the extreme distrust of centralized players, including Binance, the ultra-dominant platform. Secondly, the technical reliability of protocols that work very well. Liquidity provision, pools and smart contracts are perfectly coordinated. The hacks we see are overwhelmingly caused by human error, fraud, and security flaws in certain pools, not protocols. Thirdly, it is the maturity achieved by the Aave and MakerDAO protocols, which have created real reliability and have been able to diversify.

If institutional players start using DeFi protocols rather than centralized platforms, its growth is sure to increase tenfold and become one of the main trends of 2023.

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