After a protracted crypto winter, cryptocurrency companies are anticipating calmer times ahead, with institutional demand and rising Bitcoin acceptance spurring innovation in the market. Industry insiders told Cointelegraph that scalability and compliance solutions are trends to watch this year.
The Ethereum and Bitcoin networks face problems related to transaction fees and performance. Not by accident, according to CEO of Axelar Sergey Gorbunov, rollup projects are predicted to be in high demand in 2024. He feels rollup development kits are “something to watch in 2024.”
Regarding the expanding selection of tools available to developers working on blockchain scaling solutions, Gorbunov stated, “We’re beginning to see abstraction for the Web3 developer that is similar to what consumer-facing developers in SaaS enjoy.”
A kind of layer-2 blockchain called a rollup is intended to increase scalability. They merge several transactions into one batch off-chain, or away from the main blockchain. This leads to speedier and less expensive transactions by drastically reducing the amount of data that needs to be processed and stored on the main chain (on-chain).
Projects that are “going to scale across this landscape include leading DEXs like dYdX, PancakeSwap, and Uniswap – and DeFi pioneers like Frax and Lido,” according to Gorbunov.
Over the coming months, decentralised infrastructure is another field that is anticipated to expand. “Decentralizing frontends and backends is a critical issue, including when it comes to decentralised web-hosting and cloud-storage systems,” said Frank Hu, chief operating officer of ByteTrade Lab.
The growing participation of traditional firms and institutional investors in the cryptocurrency industry is the driving force behind these trends. A Coinbase poll conducted in November found that 45% of investors without cryptocurrency allocations intended to start investing during the same time frame, while 64% of institutional investors currently in place anticipated increasing their allocations over the following three years.
Unstoppable Domains’ chief operating officer, Sandra Carter, believes that initiatives that provide Web2 and Web3 interoperability have room to grow. “So many individuals, companies, and brands in Web2 have not switched to Web3 or even know about it. Because they understand that Web2 has so much value pent up that Web3 may unleash, [crypto] enterprises will make it easier and more accessible for them to take those first steps, she said.
In 2024, the legalisation of spot Bitcoin exchange-traded funds (ETFs) will be a catalyst for corporate growth. Ledn’s lending protocol’s Mauricio di Bartolomeo predicts that over the next months, a plethora of Bitcoin ETF variants, including leveraged and short ETFs, will hit the market. Predictions state that the cryptocurrency’s popularity will increase its use as collateral for loans denominated in bitcoin.
Furthermore, social media platforms—one of the pillars of the cryptocurrency industry—are also being undermined. According to Juan Bruce, co-founder of DSCVR, “social media has always been the driving force behind cryptocurrency.” He thinks it’s just a matter of time until decentralised social media platforms find a way to outperform traditional ones in terms of product-market fit.
According to Bruce, teams like ours are creating social platforms that allow cryptocurrency transactions for users and projects in a social setting, in addition to being on chain. This was stated to Cointelegraph.
But growth prospects are not impervious to difficulties. Carter thinks that in 2024, the regulatory environment would still pose a serious risk to cryptocurrency enterprises.
“There are so many moving parts when it comes to laws, and although there are wins and glimmer of hope [like the legal victories of Ripple and Grayscale], there are certain people who are adamant about preventing cryptocurrency from becoming widely used. The United States desires to compete in the blockchain technology space, but regulators are making every effort to thwart or limit it as much as possible.