2022 wasn’t all bad for crypto (for the most part)

Cryptocurrency had a terrible, terrible, bad, very bad year in 2022.

The coin started tanking at the start of the second quarter and never moved higher. Terra collapsed in his May, leading to the bankruptcy of Celsius, Voyager and Three Arrows Capital. The Fed approved Tornado Cash in August. FTX collapsed in November, leading to BlockFi’s bankruptcy and warning signs from Genesis and Digital Currency Group. The whole world is now turning to cryptocurrencies, and for the wrong reasons.

But that year was not all bad. The industry has seen glimmers of positive progress that can be excused for being overlooked or forgotten amidst the public frenzy over the Sam Bankman-Fried fraud allegations.

Ethereum merged

After years of waiting and multiple delays, the Ethereum merge event happened in September and went off without a hitch. We moved from an of-work mining mechanism (which has always been an environmentalist’s punching bag) to a proof-of-stake mechanism that uses 99% less power. .

It may take years for people to understand the implications of this transition, but Ethereum may come to have an edge that rivals Bitcoin. Just because ETH price didn’t waver from the event, and just because the mainstream reaction felt like whine rather than bang, doesn’t mean the merger shrugged. (But it also happened when inflation spiked and all invested asset classes fell sharply.)

Ethereum co-founder Joe Rubin, CEO of ConsenSys, told me in October, “It was a huge undertaking that the Ethereum developer community handled very well.” I think that was the last major question mark surrounding the question of whether Ethereum will be systemically important going forward…and my colleagues in other ecosystems are probably showing a little more respect to the Ethereum ecosystem. I think there are.” Even former “bitcoin maximalists” acknowledged the importance of the merger.

legislative momentum

In cryptocurrencies, everyone talks about regulation as the dreaded bogeyman: regulation = death. The inherent appeal of crypto for many is to eliminate middlemen, decentralize everything, and exist outside government regulation. As the years went by, it became clear that this was not a realistic vision for most projects. Take a look at this year’s Tornado Cash shocking sanctions. The future of cryptocurrencies will look more regulated than purists would have liked, but regulation does not necessarily mean interference.

SEC Chairman Gary Gensler’s statement was indeed quite chilling, but other key figures at DC were far more open-minded and committed to legislation to regulate the crypto market in a way that doesn’t cool innovation. In. Sen. Ramis and Sen. Gillibrand reached out across the aisle to partner on a bill (sorry, Gary) where the CFTC, not the SEC, is in charge of cryptocurrencies. Senators, Rep. Thompson and his one from Khanna) have similar aims.

Importantly, while everyone in the crypto industry is panicking about Gensler and the SEC, quiet regulatory action is being encouraged. Even President Biden’s March executive order on cryptocurrencies should be taken as a positive indicator. I didn’t say “shut everything down”. Meanwhile, abroad, the European Parliament passed a legislative package on cryptocurrencies in March, specifically to “ensure that the EU’s financial services regulatory framework is innovation-friendly and does not pose obstacles to the application of new technologies.” specifically referred to.

VC still believes

I wouldn’t call myself crazy or deluded, but VC firms continue to fund Web3 play. Andreessen Horowitz (a16z) is the elephant in the Web3 room and for yet another crypto-focused fund (4th round) he has raised $4.5 billion. Katie Haun, a16z alumnus of her Haun Ventures, has raised her $1.5 billion for cryptocurrency investments. Pantera has raised her $1.3 billion for blockchain funds. Fireblocks ($550M), ConsenSys ($450M), Secret Network ($400M), NEAR ($350M), Chainalysis ($170M) and many others and projects got funding even during a severe winter freeze for cryptocurrencies. , Keyrock ($72 million) and Ramp ($70 million).

Ah, there was a cryptocurrency derivatives exchange called FTX that raised $800 million in 2022 ($400 million on FTX and $400 million on “another” FTX US entity) at a valuation of $32 billion.

Oops. The last example is a reminder. It’s their job to put a lot of money into things and hope that the couple hits big. We want to give money to the founders of the currency.

Major Brands Move to NFTs

Yes, the speculative bubble that quickly flipped JPEG has burst. To deny it, you have to check your head. But it was mostly the PFP (profile picture) crowd, spending hundreds of thousands of dollars on cartoon apes. Publishing art that failed in the 1990s, or resulting in “wash trading”.

Mania has not been sustainable for the field, as multiple leaders in the NFT field have said since the bubble burst. Art Blocks founder Erick Calderon said on the GM podcast: says.

Then, when the confusion subsides, we are left with the actual use case. NFTs are just tokens (I expect the use of those acronyms and jargon will soon be discontinued). This works for anything from party passes to sports tickets to club memberships to real estate deeds that require instant provable ownership. These are justifiable possibilities to excite those who can get past the pointing out and laughing denials of those who seem to be triggered by the very term “NFT.”

Believers now include big brands such as Tiffany, Adidas, Starbucks, Bud Light, Instagram, and Reddit, all of whom have been embracing NFTs even after NFT trading volumes plummeted. Thanks to Polygon for being the blockchain partner for 3 of our brands.) Possible are they working on something?

Yosuke Matsuda, president of Final Fantasy game publisher Square Enix, is bullish on NFTs in his year-end letter. , correcting the value of each available content to its actual estimated value, hopefully making it as familiar as trading physical goods. ”

Crypto Media Continues to Starve

Closing on a more meta (non-company) note: Sam Bankman-Fried’s movie fall was a boom time for crypto media. It sparked mainstream appeal — bigger than Mt. Gox, bigger than Silk Road, bigger than the DAO hack, bigger than the Quadriga debacle, bigger than the sudden bull market of 2017.

I’ve been writing about Bitcoin since 2011 and have never had my phone or inbox crashed with so many inquiries from friends and family interested in cryptocurrencies. Mainstream print and broadcast outlets recognize the need to understand and report on cryptocurrency happenings. I’m proud of how our team of journalists covered his FTX story. coin desk, It gets a lot of attention on Alameda’s balance sheet scoop).

So, while it may sound contradictory to say when the crypto market is in the dead of winter and the biggest news is negative, it’s a thrilling time to cover cryptocurrencies. Like I said, it’s never boring.i hope you stick around Decryption In 2023, seek news, education, stories, and insights to break crypto.