It’s almost 2023! And we’ve been living an eventful year, to say the least. We have to admit that 2022 wasn’t the best time for most people and neither for the cryptocurrencyA digital currency running on a blockchain and built with cryptography. Contrary to central-bank issued currency, cryptocurrency issuance rules are... More market. Not everything was bad, though, and 2023 comes with new promises. But before that, let’s take a tour around Crypto in 2022.
On the markets
- BitcoinBitcoin is the first decentralized digital currency. It was created in 2009, by an anonymous founder or group of founders... More (BTCAn abbreviation for Bitcoin.) decreased by over 64% in 2022, and Ethereum (ETH) did it by 67%. They weren’t alone. Crypto winter was almost omniscient for most coins this year. The total cryptocurrency market cap decreased by over 63% [CMC]. That’s no wonder, considering all the bad news for crypto in 2022.
- As always, we had some crypto gainers too in 2022. According to CoinGecko, the biggest gainer of the year was Nest Protocol (NEST), a decentralized pricing oracle platform on Ethereum. It increased by over 243% throughout the year. It’s followed by Trust WalletA crypto wallet is a user-friendly software or hardware used to manage private keys. There are software wallets for desktop... More Token (TWT), the native coin of the homonymous web3 wallet, with over 129%. In third place was GMX, a decentralized exchange of perpetual futures, which raised by over 113%.
- Decentralized Finance (DeFi) Total Value Locked (TVL) decreased by over 77% since January [DeFi Llama]. Still, the top five DeFi platforms have over $3.3 billion TVL each, and the total reaches $39 billion so far. On the other hand, Non-Fungible Tokens (NFTs) daily sales have decreased by over 77% since the last year [NonFungible]. The largest sale was for the piece “Clock” by the artist Pak. It was bought for $53 million to support the legal defense of Julian Assange.
- Stablecoins didn’t have a great year. TerraUSD (UST), one of the most popular stablecoins since 2021, collapsed completely in May 2022. In the next months, the Polkadot stablecoin Acala Dollar (aUSD) and HUSD by the exchange Huobi collapsed as well. Tether (USDT), still the leader in this field, lost at least 15% in market cap during 2022. US authorities are still perusing their reserves.
- Inflation is rising globally. Numerous national currencies have been losing value quickly, including the Japanese Yen, Pound Sterling, Chinese Yuan, Swiss Franc, and the Euro — which lost parity with the USD.
Out of business in crypto during 2022
We can say this was the year for bankruptcies and big crashes in crypto. This gloomy list includes some infamous names now.
- Terra (LUNA) and its failed stablecoin UST were likely the biggest blow of the year. LUNA had over $34 billion in market cap by April, while UST had $17.6 billion. They lost 99% of their value in a few days, and now they don’t exist anymore. However, their parent company, Terraform Labs, it’s still operating. They launched a second version of the blockchainBlockchain is a type of database storing an immutable set of data, verifiable to anyone with access to it —through... (Terra Classic/LUNC), without the stablecoin.
- The billionaire crypto fund Three Arrows Capital (3AC) collapsed around July 2022. The company filed for bankruptcy, but its founders went on the run. They handled $10 billion in assets at one point, but they left owing about $3.5 billion to over 32 companies worldwide. Apparently, the founders are still not cooperating with authorities.
- Tornado Cash, a decentralized crypto mixer (to increase transactionA cryptocurrency transaction is an entry on the blockchain ledger, noting sender, receiver and number of coins transacted. More privacy), was harshly sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) in August. This implies that all the funds there are frozen, the website was deleted, and US citizens can’t transact there anymore. US authorities arrested Alexey Pertsev, one of the developers, and they still refuse to let him go.
- The custodial crypto exchange FTX provoked itself a severe liquidity crunch and filed for bankruptcy in November. Its founder, Sam-Bankman Fried, was arrested in December. Caroline Ellison, ex-CEO of Alameda Research (FTX trading arm), confessed to the misuse of customers’ funds. Once the third-largest crypto exchange by volume, FTX is now owing around $3 billion to its 50 largest creditors.
- More crypto firms went to bankruptcy in 2022. They include the crypto lenders Celsius and Babel Finance in June, Hodlnaut in August, and BlockFi in November; the crypto exchanges Zipmex and Voyager in July; and the Bitcoin mining firm Core Scientific in December. The latter is still operating, though.
Regulations on crypto in 2022
- The long-awaited Markets in Crypto-Assets (MiCA) law is almost there for all the EU states members. The European Parliament will vote on the bill by February 2023, and then it will go for approval by the European Council. If everything goes well, it’ll enter into force 20 days later. If the grace period of 18 months will be respected after events like the Terra and FTX crashes, is still to be seen.
- Crypto mining was banned or limited in several regions and countries in 2022. Alleging energy issues, Kosovo and Iran have banned this activity on their borders, until further notice. Kazakhstan and Argentina have been tightening their regulations for miners, including tax rises. New York (US) banned carbon-based mining operations, for environmental concerns.
- Bitcoin and crypto in general were legalized in several territories in 2022. In the wake of the Russian invasion, Ukraine not only legalized crypto but started to accept worldwide donations with it. The Central African Republic made Bitcoin legal tender, while Cuba and Brazil legalized crypto payments. Additionally, Mexico, Tonga, Arizona (US), and Saint Kitts and Nevis already have proposals to make crypto legal tender.
- More and more rules are coming for stablecoins worldwide. MiCA already has a section for them, but it’s not the only one. Japan, UK, US, Canada, South Korea, and Singapore are working on their own projects to addressAn address is a blockchain equivalent to a bank account number in the traditional financial system, or an email address.... More the issue. In general, they’re aiming to ban algorithmic stablecoins and establish safe reserves behind every coin.
Crypto hacks and scams in 2022
- According to DeFi Yield, around $50.9 billion have been lost to crypto hacks and exit scams in 2022. They count the Terra implosion with $40 billion lost, and also Celsius, Voyager, BlockFi, and FTX crashes (over $1 billion lost each). As for proper hacks, the dubious honor goes for Ronin, the Axie Infinity native blockchain. An unknown attacker stole over $625 million from this platform in March.
- In February, after five years, U.S. authorities captured the perpetrators of the billionaire Bitfinex hack. They seized $3.6 billion in BTC, but the victims are still fighting to recover those funds.
- Around 90% of companies were hit by ransomware in 2022. In this type of attack, hackers kidnap confidential data and ask for a ransom in cryptocurrency to give it back. Major cases of the year included the chip company Nvidia, the Costa Rica government, Toyota, the airline SpiceJet, and the health provider Keralty.
- Malware cryptojacking also increased in 2022. As discovered by cybersecurity firm Kaspersky Lab, the variants of this attack increased by over 230% compared to last year. By using the computer power unknowingly by the victim, hackers can earn even $40,500 per month with silent crypto mining. This malware is distributedA distributed system is made of components that are running on different networked computers, which communicate and coordinate their actions... More via cracked software.
Other news for crypto in 2022
- After years of waiting, Ethereum finally had The Merge in September. Therefore, crypto mining isn’t possible anymore on this chain. Instead, it has validators now, and it’s fully operating with the system Proof-of-Stake (PoS). Old Ethereum GPU miners migrated to coins like Ethereum Classic (ETC), Ravencoin (RVN), and Meowcoin (MEWC).
- Elon Musk bought Twitter in October, and the top dog-themed coins experienced a sharp (but short-lived) increase. The users of these memecoins are expecting Musk to include them as payment methods on this popular social platform. However, he’s considering resigning as the new Twitter CEO.
- Despite the huge drop in NFTs this year, big companies kept entering the ecosystem. Reddit, Disney, Mastercard, Lamborghini, PayPal, Samsung, Ulta Beauty, and Rolex are some on the list. Besides, according to the licensed trademark attorney Mike Kondoudis, NFT-related US trademarks applications increased by over 220% this year, compared with 2021.
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