Learn: Has 2022 Left Any Crypto Positives?
Although 2022 has been a brutal period for crypto, there are positive aspects to the year. Optimism can be found around the Ethereum Merge, DeFi, web3 brands, and resistance to censorship.
By all accounts, 2022 has been a brutal year in the crypto markets, finally dominated, as we approach year-end, by the arrest in the Bahamas of the Founder of FTX, Sam Bankman-Fried, leading to speculation about his prospects after he is extradited to the United States.
Prices are down heavily, and confidence is devastated, so you’d be forgiven for thinking that this is a year to forget and one that will go down in the crypto history books as having been relentlessly bleak.
However, if we imagine looking back from a few years down the line, might it be possible that not all of the recollections are negative, and could there be some specks of light that will also gain recognition?
When observers comment on crypto downturns, they sometimes tend to take events out of context, as though crypto were isolated from the wider world. In reality, though, when looking back at the stormy conditions of 2022, it should be evident that crypto was experiencing its implosions against a backdrop of widespread turmoil.
We have been collectively shaken by the after-effects of global covid responses: China is still not close to reasserting a semblance of normality; there is an ongoing war on the eastern edges of Europe; and intense political and cultural conflicts have become the domestic norm in many places.
In other words, crypto would stand out as unusual if it had not, throughout 2022, been navigating some extreme turbulence. Within this context, it becomes easier to identify relatively positive developments.
Perhaps the most celebrated crypto event of the year was the successful Ethereum merge, which transitioned the network from a proof-of-work to a proof-of-stake consensus mechanism.
This was a genuine landmark for Ethereum, from a technical point-of-view but also psychologically. The Merge had been postponed multiple times, and there were commentators who wondered if it would ever be realized.
Achieving completion of the switch to proof-of-stake meant that attention could then be refocused on scaling, Layer 2 solutions, and the ultimate point of the exercise, building, innovation and developer creativity.
There was a common characteristic shared by the companies that collapsed during the 2022 downturn: none of them operated in a decentralized manner.
From Celsius to Three Arrows Capital, to FTX, we saw failures not of cryptocurrencies themselves or of blockchain mechanics but, rather, of some horrendously mismanaged, opportunistic and entirely centralized structures.
This doesn’t make the collapses any less damaging for those caught up in the destruction. However, we also witnessed, besides the centralized malfunctions, decentralized finance protocols continuing to smoothly operate exactly as intended.
Those who watched it all unfold will, in future, remember the failed entities that came and went, but of greater importance is what remains: the DeFi platforms that work have now been battle-tested and come out the other side intact.
This year has seen the emergence of several nascent web3 brands, and if any of them go on to achieve mainstream recognition, then we’ll look back on 2022 as a year when foundations were established among the wreckage.
These new brands revolve around NFTs and reach out across art, fashion, gaming and other creative spheres. Names now familiar to NFT collectors, such as Yuga Labs, Moonbirds and Azuki, either launched in 2022 or, in the case of Yuga, have made significant expansionary moves.
They may or not survive and thrive long-term. That remains to be seen, but 2022 was the year when markers of intent were laid down, and web3 itself attracted interest as an increasingly prominent concept.
A point often made is that decentralized currencies and networks are inherently resistant to censorship, which is a major positive in favor of Bitcoin and cryptocurrencies.
It’s an argument that, up to now, has resonated with libertarians and perhaps with people living under authoritarian regimes, but it may not have gained traction across the board.
After all, most people living comfortably in democratic first-world economies haven’t usually had personal cause to worry about restrictions on their liberty.
However, 2022 has seen legitimate concerns voiced across the political aisle and from various ideological perspectives about censorship and financial freedom.
For example, we can look back at the Canadian government freezing the bank accounts of domestic protestors, donations being sent to Ukraine using cryptocurrency and NFTs, debates about the authoritarian dangers of CBDCs, disclosures about Twitter having suppressed political news, and multiple complaints about Twitter accounts being unfairly suspended.
Where you stand on those matters and other related reports may depend on your political leanings, but the point is not a partisan one. What’s apparent is that freedom of expression, the freedom to transact, and civil liberties more generally were at the forefront of discussion in ways not usually seen and that issues were raised from a range of political viewpoints.
And throughout all of this, there was ongoing background commentary from crypto advocates, arguing that fixes to civil liberties concerns are available.
Bitcoin is robust and proven. It was designed in ways that address potential restrictions on financial freedom, while proponents of web3 emphasize that a decentralized web can bypass both coordinated censorship and over-zealous online content moderation.
If censorship resistance, in general, becomes a higher public priority, then 2022 may go down as the year when the crypto solution made its case.