As an investor, one aspect of success has always been indisputably clear to myself and my colleagues.
This has been and will continue to be to follow the narratives.
What is the importance of following a narrative?
Let us firstly define a narrative as a trending idea. Something which will take precedence in the coming future. Narratives in the crypto space often subjectively correlate to “undervaluedness”.
As an investor, we strive to find undervalued projects. However in order to do so, it is often more difficult than perceived. This is due to vast amounts of funding occurring in Web3 that is only being accelerated as projects compete for market share.
Hopefully reader, we have reached a mutual agreement that narratives are indeed important.
So what are the narratives I propose as a “Crypto Native” for this upcoming year?
Institutions do not make decisions then back away from them. This proves too costly. To do this, they would need to have an aggregate reason that outweighs their initial investment cost (think SEC harshest rulings for instance).
In 2021, we saw the greater involvement of largely recognised firms such as Visa, Adidas, Nike and many more traditional finance firms in this space. We have also seen greater integration into marketing efforts from the likes of FTX and Crypto.com. Perhaps a defining event was Facebook changing their name to “Meta”.
The technology is there.
As a reader of my articles, you should and will be well aware of the best upcoming technology and how it will undermine the likes of Bitcoin and Ethereum. Thus, institutions simply have to find the project that suits them. Options. Vaults. Insurance. There are plenty of specific areas that would benefit with adoption.
Ultimately, the incentive to adopt “crypto” has been brought about arguably because of the fear of not wanting to miss out. Allowing their competitors in TradFi markets to better position themselves through the use of blockchain technology is an incentive I believe will further adoption.
Movement of developers from Web2 to Web3
As what can be termed an “influencer”, I first-hand am privy to the amount of developers leaving their jobs in Web2 for Web3.
Developers follow the money.
They also follow the law.
As the industry has become more legitimised we will see increased activity and development with Solidity, Rust and other lucrative languages to name but a few.
There will be a greater inflow of money from institutions that will again incentivise developers to move into the space.
As new technology develops, new problems emerge, which in turn require new solutions. The Metaverse for instance will be a hot point for developers to turn to as it gains traction.
Layer 1 Blockchain competition
As technology advances, those unable to keep up will be left behind (ADA, Tron amongst others…).
For example, zero knowledge cryptography which solves the issue of privacy will place pressure on chains like Ftm, Solana and Avax.
Without diving too much into the underlying technology in this article, we may find in 2022 the optimal amount of security, privacy and scalability in a Layer 1 such as Ethereum. The pressure will thus amount on growing Layer 1 chains who have been gnawing away at a market share.
The most innovative technology is here to stay. A rollup centric future is very possible. Data availability solutions are also needed. If you haven’t yet reader, make sure you are following me on Medium, as to not miss out on hidden gems.
Final Thoughts
Only time can tell what will survive. It is likely that in 4 years from now, the majority of projects in this space will have been outcompeted.
Yes my dear reader.
Their value may drop so drastically from being unable to adapt that it can severely impact a “long term investment”. An investment which you left and were planning to check back in 4 years time.
This is why narratives and trends are important. I will continually discuss this further in the upcoming months as to what will survive and provide data as to why.
This was it for my thoughts on the 2022 narratives and trends that will occur in the cryptocurrency space.
To my reader on Medium, I hope you enjoyed this article.
I hope I was able to provide a greater understanding of narratives to yourself.
If this was useful then please do me a favour!
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Wishing you a happy new year,
Crypto 8 FI