Cryptocurrencies have been among the most talked-about technological trends in the last few years. As with most other vital trends before the advent of the Covid-19 pandemic, digital assets gained popularity as crypto experienced continued adoption throughout different sectors of the economy.
The economic lockdowns due to the pandemic accelerated the digital currency transformation that made 2021 a remarkable year for cryptocurrencies. 2022 is likely to continue witnessing significant achievements and breakthroughs that will see cryptocurrency redefine the future of finance as new developments emerge daily.
Will crypto rise again?
Cryptocurrencies have been the subject of hot debate in the world of finance since they were first introduced. The market’s potential has not gone unnoticed despite naysayers’ claims that it is unreliable and volatile. As cryptos have gained acceptance over the years, many larger financial institutions are becoming more interested in this sector. Despite some highs and lows since its inception, many experts anticipate a resurgence soon. While such an investment carries a certain level of risk, if handled with caution, it may just be on the verge of another notable rise.
1. Improving Usability of Cryptocurrencies
If you own any form of cryptocurrency, you want to become part of the emerging future and enjoy the first-mover advantage; you need to know the leading crypto trends to make more informed investment decisions. The following are top cryptocurrency trends you ought to follow:
Crypto backed loans
If you have a project you are pursuing or have an emergency, you can take a cryptocurrency-backed loan similar to any other secured loan. Instead of using your home or car as collateral, you can place your digital assets as security and borrow some cash.
Smartcredit.io peer-to-peer lending platform facilitates the provision of loans between users. Some advantages associated with taking cryptocurrency-backed loans include the lack of an international barrier. Unlike fiat currencies, cryptocurrencies operate globally, meaning a borrower can avail financial partnerships with crypto-backed lenders from just about anywhere in the world.
Earning interest on cryptocurrencies
There’s always the temptation to hold on and hope that prices will appreciate for most people who own some cryptocurrency. However, instead of just sitting on your crypto holdings, the better thing to do is to avoid simply banking on higher prices but rather act as a bank yourself.
You can earn a tremendous interest by lending your digital assets to interested borrowers who’ll return them with interest. Similar to what banks and brokerage firms do, lending crypto through collateralized loans backed by clients’ securities is an ingenious way to use your digital assets.
Crypto staking
Staking refers to a method where you earn rewards or interest when you lock down your crypto for a certain amount of time. If you own cryptocurrencies like Ethereum, and SMARTCREDIT you earn a passive income on your holdings by committing them to support a blockchain in addition to confirming transactions.
Staking usually happens through a staking pool comparable to an interest-bearing savings account. In most cases, you could earn anywhere between 5 and 20 percent annually on the crypto assets you have staked. You earn because the blockchain will put your crypto holdings to work using a consensus mechanism called proof-of-stake that ensures all transactions are secure and verified.
Yield Farming
Yield farming is yet another popular trend in cryptocurrency investment that involves lending out digital assets to decentralized exchanges, thus contributing to their liquidity pools and earning interest on it in return. This is a highly lucrative project that offers high-interest rates, which in some cases could reach an annual percentage yield (APY) of over 100%.
APY refers to the annual interest you can earn on a deposit, with records showing cases where people have made over 1000% returns. Since the interest in paid in crypto, the earnings will depend on the value of your cryptocurrency of choice.
Liquidity Mining
Liquidity farming or mining is a network participation strategy in Decentralized Finance (DeFi). Crypto holders get involved by providing capital or liquidity to decentralized exchanges and earning rewards. The rewards that participants earn are primarily acquired from the trading fees that accrue from traders who swap cryptocurrencies.
Depending on the liquidity farm you choose, you could get rewarded using the farm’s native token or a governance protocol that gives you voting and contributing rights toward the protocol’s future. The process creates a symbiotic relationship that enables the exchange to receive liquidity and fees while the participant trades in a decentralized market.
Automated Crypto Trading
Auto investment is an ingenious way of earning passive income using your cryptocurrency holdings by choosing the digital asset you want to trade. Auto crypto investments are accomplished using software that will automatically conduct cryptocurrency trading on your behalf. Automatic investments work best for investors who lack the time required to monitor the trading graphs or want to make a long-term investment. Trading is conducted by connecting a bot to your account, and you can specify if you wish to invest monthly, weekly, or daily.
2. Institutional Adoption of Crypto
In 2020, institutional assets under management allocated $15 billion to crypto assets. The increase is five times greater than previous year.
Here’re some articles about institutional cryptocurrency investments:
- 169-Year-Old MassMutual Invests $100 Million in Bitcoin
- Square, Inc. Invests $50 Million in Bitcoin
- MicroStrategy Adds to Bitcoin Trove With Another $10M Purchase
It is a well-known fact that cryptocurrency has caused a major shift in the global economy over the past years. The investment of institutional money into crypto is a much-discussed topic in some circles. While there are some institutions that are investing heavily, such as the venture arms of Fortune 500 companies and large banks, most institutions remain wary of getting involved in the market due to its volatility and nascent nature.
However, it’s clear that awareness and interest continue to rise with more scrutiny coming on regulatory frameworks. It’s only a matter of time before we will see traditional financial giants firmly invest in cryptocurrencies with deeper understanding and regulation of this new asset class.
3. A Growing Ecosystem of DeFi is Emerging
The popularity of DeFi has surged in recent years, warranting an assessment of its future. Recently, experts have forecasted the growth and adaptation of Decentralized Finance as more mainstream users join the ranks.
Despite early security and trust issues, DeFi projects are garnering more access with better infrastructure for safety and efficiency. It is likely that this surge will favor DeFi projects as mainstream users open up to the idea of non-traditional banking services like automated trading, asset borrowing and low-cost transactions. Consequently, this exponential growth could lead to a tipping point – the point where DeFi becomes the primary mode of finance for many people worldwide – thus cementing its place in our future financial landscape.
4. NFTs: Tokenizing everything
NFT, or non-fungible token, is a digital asset whose unique cryptographic code verifies its authenticity and makes each instance of the asset distinguishable from any other. The potential applications of NFTs have been described as limitless and range from traditional artworks to digital ownership in gaming and virtual worlds. As more industries embrace the technology, there is certainly a future for NFTs.
The availability of open source coding platforms, rapid innovation in blockchain security protocols and advancements in digital asset type functionality will present exciting opportunities for creators to benefit from their intellectual property rights without risking theft or infringement. As it stands, NFTs are an innovative solution that could lead to monumental changes in how we store and transfer value online.
5. Crypto Regulation is On the Way
Many people speculate about the future of cryptocurrencies. A greater focus has been placed on the potential for regulation in the crypto world in recent years. As governments become more aware of the power of digital assets, they are closely monitoring their use. Many industry participants believe that imposing certain rules and regulations could bring clarity to this increasingly promising sector, despite some uncertainty and trepidation. Thus, it seems likely that governments will make substantial efforts to regulate cryptocurrencies in the near future.
Final Thought
You can create a fortune using your current cryptocurrency holdings using one or more of the crypto investment trends mentioned in this article. Trust a platform like smartcredit.io to give you access to the features that matter most in your crypto investment journey.
