- 2022 was a terrible year for cryptocurrencies, with the loss of $2 trillion in market value.
- We could now see the handover of crypto technology and blockchain infrastructure to more regulated and established institutions.
- Cryptography and blockchains will continue to be integral parts of the modern economic toolkit.
By any measure, 2022 was a terrible year for crypto. In all, more than $2 trillion in largely speculative market value evaporated. Millions of consumers and businesses lost money, and perhaps more damaging for a nascent industry and technology, the fundamental trust in the promise of crypto-finance, which was supposed to be a correction to many of the misdeeds that gave rise to the 2008 financial crisis, is waning.
To the diehard crypto utopians (and some crypto-anarchists), 2022 was not just another “crypto winter,” but more of an ice age. Along with a broad loss of confidence, economic value and a market littered with the tombstones of failed firms and projects, perhaps the era of crypto speculation will remain frozen in ice. Just as it took the dot-com bubble bursting in the early 2000s to hand over the future of the internet to more durable companies, business models and use cases, perhaps 2022 marks a handover of crypto technology and blockchain infrastructure to steadier hands.
While the underlying technology of cryptography and blockchain is generalizable to all industries and coordinating activities (collectively the building blocks of Web3), experimentation at the core of financial services, among other sectors, continues unabated. While the most famous volte-face on policy towards crypto and blockchain belongs to JPMorgan, they are no longer alone among major financial institutions in embracing Web3. Arguably, just as boards and executive teams reluctantly owned their cybersecurity and digital transformation mandates, the embrace of crypto technology is equally inevitable, even if the term feels like a bad word.
Modern Economic Toolkit
History is riddled with examples of otherwise good or neutral technologies being co-opted by bad actors and those ever-present human follies of greed, nescience, risks of opportunity or outright criminality. All of which are amplified in emerging, lightly regulated sectors and accelerated by technology. Indeed, no sector is risk-free, especially not one involving money. However, crypto punishes the errant at speed, giving bad actors few places to hide.
Remember how crypto was born from anonymous trading activities on the so-called dark web? Or how insidious global ransomware attacks like WannaCry in 2017 spread worldwide in days. Yet we didn’t ban the internet or email. The more enduring approach with all breakthrough technologies is to net out their harmful effects by placing technologies (like all tools) in the hands of responsible actors and encouraging their responsible use.
Herein lies the regulatory and policy conundrum with the epic crypto failures in 2022. The countries that enable responsible competition will shape the future. Cryptography and blockchains will continue to be integral parts of the modern economic toolkit.
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