Crypto 2022 – A Year of Significant Wins and Losses
The year 2022 in the cryptocurrency market was marked by extreme volatility and financial turmoil, as central banks around the world implemented tightening monetary policies and asset values across various markets experienced sharp declines. In the digital asset industry, the year saw a significant decrease in realised volatility and futures volumes, as well as a contraction in open interest in futures markets following the collapse of FTX.
The Bitcoin supply structure saw a significant concentration of coins among a small number of large holders, with the top 1% of addresses holding over 70% of the total supply. The mining sector saw a cooling off, with the mining difficulty and hash rate both declining.
One major event was the launch of the Ethereum 2.0 upgrade, which aimed to improve the scalability, security, and energy efficiency of the Ethereum network. The upgrade involved the introduction of a new proof-of-stake (PoS) consensus mechanism, which allowed Ethereum users to earn rewards for validating transactions and securing the network. The launch of Ethereum 2.0 was highly anticipated by the crypto community and was seen as a significant milestone for the Ethereum project.
Another notable event was the continued expansion of the Lightning Network, a second-layer payment protocol that aims to increase the scalability and speed of Bitcoin transactions. The Lightning Network saw significant growth in 2022, with the number of nodes and channels reaching all-time highs. The expansion of the Lightning Network was seen as a key factor in the growing adoption of Bitcoin as a medium of exchange and a payment platform.
One of the major highlights of the year 2022 in the cryptocurrency market was the growth of decentralised finance (DeFi). DeFi refers to a set of financial applications and protocols that operate on blockchain technology and are decentralised, meaning they are not controlled by any single entity. In 2022, the total value locked in DeFi reached all-time highs, driven by the emergence of new protocols and platforms, as well as an increase in user adoption and transaction volume.
One trend that has emerged in the cryptocurrency market in recent years is the concept of proof of reserve, which refers to the ability of a cryptocurrency exchange or other entity to demonstrate that it holds the full amount of assets that it claims to hold. Proof of reserve is seen as a way to increase trust and transparency in the crypto industry, as it allows users to verify that their assets are being held safely and securely.
One key aspect of proof of reserve is the ability for users to independently audit the reserves of a cryptocurrency exchange or other entity. This can be done through the use of tools such as cryptographic proofs or third-party audits, which allow users to verify the holdings of an exchange without having to rely on the exchange's statements.
Our AUS & AGS have a publicly verifiable token supply, account balances, and on-chain procedures - giving us full Proof of Reserve, since 2019.
Non-fungible tokens (NFTs) gained widespread popularity in the cryptocurrency market in 2022. These unique digital assets represent ownership of items such as artwork, music, and collectibles. They can be bought, sold, and traded like other cryptocurrencies, but each NFT is distinct and cannot be exchanged for another NFT on a one-to-one basis. Our Gold Silver Pirates NFT was the first to offer gold and silver-backed NFTs, paving the way for the integration of real-world assets onto the blockchain.
In addition to these trends, the cryptocurrency market also saw several partnerships and collaborations with traditional financial institutions and tech companies. Major banks such as JP Morgan and Goldman Sachs announced plans to enter the crypto space, while tech giants like IBM and Microsoft formed partnerships with blockchain-based projects. These developments demonstrated the growing mainstream acceptance and adoption of cryptocurrencies and blockchain technology.
The cryptocurrency market in 2022 was marked by significant challenges and volatility, including a bear market. Amidst these challenges, a lot of users have lost trust in traditional exchanges. This is where Ainslie Wealth comes in. Ainslie Wealth allows people to trade cryptocurrency at low fees while not having counterparty risk, making it a reliable and secure option for users looking to buy and sell digital assets.
Despite the challenges of 2022, the industry remained hopeful for the future, with many experts remaining bullish on the long-term prospects for the sector.