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The US$3 trillion cryptocurrency economy is impossible to be overlooked. With native digital tokens like bitcoin and ethereum reaching new all-time highs this month, it is flashing a positive impact, which is anticipated to befall the crypto market in 2022. On the other hand, we have memecoins like dogecoin and the sudden star 'Shiba Inu' that are making headlines constantly. While the price rally is an expected scenario, bitcoin upgrade and other crypto corrections are the biggest breakthroughs that could stronghold the stance of virtual tokens in the coming year.
Cryptocurrency and blockchain is dominating the financial ecosystem since 2020. Both the disruptions are evolving to go beyond finance into other industry verticals as well. While digital tokens are adopted as the new investment model, blockchain is adored for its decentralized nature. It keeps everything secure through a combination of techniques from cryptography, game theory, and computer science. But the foremost cryptocurrency, bitcoin, and many other digital tokens that were incepted five years before are following the native mechanism they were built up with. However, the growing environmental and social concerns like climate change and security are pushing the cryptocurrency platforms to enable innovative methods to combat the issue. As a result, the bitcoin upgrade is predicted to address some of the issues. Besides, other cryptos like ethereum and Ripple are also gearing up their game to enter 2022.
Bitcoin's recent upgrade comes after four years since it last changed anything in the decentralized medium. The 'Taproot' upgrade is aimed at providing greater transaction privacy and efficiency to the digital token. Besides, it would also open the door for bitcoin to enter the trending smart contract market.
Bitcoin upgrade is anticipated to encourage institutional investments as it has the potential to expand the digital token's utility. Unlike its 2017 upgrade that had divided audiences, Taproot is gaining universal support. The biggest disruption this upgrade is bringing is the change in the way digital contracts are carried out. Currently, bitcoin is using a method called 'Elliptic Curve Digital Signature Algorithm' to maintain the security of bitcoin wallets. Taproot will bring in Schnorr signatures, which makes multi-signature transactions unreadable.
These futuristic signature upgrades are also a game-changer for smart contracts. Taproot paves the way for bitcoin smart contracts to be cheaper and efficient, in terms of the space it occupies. Although bitcoin is seen as the first cryptocurrency investment choice, people choose Ethereum for smart contracts. But the changes are expected to help investors go for bitcoin smart contracts in 2022.
Ethereum, the world's second-largest and much-adored cryptocurrency, has recently got a big upgrade. Ethereum 2.0 was launched with the aim to provide a faster, cheaper, and more environmentally friendly outlook to the digital token. The upgrade was focused on moving the network from proof of work to proof of stake model. It also addresses the energy consumption concerns as ethereum doesn't need to be mined anymore. Instead of solving puzzles, long-term ether holders will get a chance to become validators. Anyone with 32 ETH can offer to stake. Staking is a process that locks up money for 1-1.5 years.
Ethereum 2.0 has also geared up its transactions speed at a lower cost. Besides, the upgrade is also burning off tokens whenever a new ETH is added to circulation. This combats the long stood inflammation issue of Ethereum.
Cardon's recent upgrade 'Alonzo Hard Fork' allows smart contracts to be created and deployed on the Cardano mainnet. Initially kept at the Cardano testnet, Alonzo is finally hitting the mainstream platform. The Alonzo upgrade is aimed at enhancing the smart contract capabilities in the platform. It will help Cardano deploy DeFi apps for widening its ecosystem. Besides, the changes will help the cryptocurrency position itself as a direct competitor to ethereum and Solana smart contracts.
The Ripple platform is coming up with a Liquidity Hub that is expected to help users get access to a variety of global venues starting from market makers to exchanges, OTC desks, and decentralized models. The new add-on is anticipated to support turn-key integration and smart order routing to source digital assets at optimized prices, giving customers easy buy, sell, and hold crypto assets options. The upgrade is all set to be launched in 2022. Ripple will unleash the application for everybody including financial institutions, banks, fintech, and corporates to help them support the upcoming crypto-asset revolution.
Although bitcoin and ethereum are hovering at a moderate value, experts predict that the trend is like a calm before the storm. Yes, with bitcoin upgrade and other crypto changes on track, 2022 is expected to start with flashing colors for investors. Every time a change or an improvement is made in the digital token's working model, it directly reflects on the price and sometimes drives it to record-high. Similarly, these lined-up breakthroughs are anticipated to enhance the capabilities and adoption of virtual tokens in the coming year.
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Disclaimer: Analytics Insight does not provide financial advice or guidance. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments. Read more here.
