Top Developments in Blockchain in 2022
While the blockchain world saw a flurry of events in the past year, it was a mixed bag. On the one hand, crypto increasingly started to resemble an eyesore as the year went on. The finale culminated into an epic dumpster fire led by crypto celebrity and FTX founder and CEO, Sam Bankman-Fried who swindled USD 8 billion worth of funds. On the positive end, the regulatory landscape for crypto-assets looked brighter and the Merge reshaped Ethereum in what was its most significant software upgrade. Let’s take a quick look at everything that made the news in the sector. Source: Coindesk.com The Merge For crypto enthusiasts, the Ethereum Merge was one of the most hotly anticipated events of the year. On September 15, 2022, Ethereum, the world’s second most valuable cryptocurrency completed a revamp of the blockchain mechanism from proof-of-work (PoW) to proof-of-stake (PoS) within a span of 15 minutes. The transition caused a meltdown of sorts in the community. But why was the Merge deemed so revolutionary? To put it simply, blockchain transactions would now be more sustainable. The proof-of-work method that Bitcoin ran on was dependent on crypto mining, which meant an army of miners or validators would verify all transactions. The mechanism drained a lot of energy because it involved a network of computers trying to solve complicated puzzles encoded in the cryptography. (According to the Ethereum Energy Consumption Index on Digiconomist.net, the protocol consumed 113 terawatt-hours per year with each transaction burning enough to fuel a US household for almost nine days, before the Merge.) The shift promised to cut down Ethereum’s energy consumption by nearly 99.95 percent according to non-profit company Ethereum Foundation. Aside from the direct benefit of reducing carbon footprint, the Merge had other unapparent advantages like increasing scalability and decentralisation, and pulling in more investors thanks to its new-found sustainability. LUNA crypto crashed from $120 to $0.02, a 99.9% correction, within 48 hours on May 11th – 12th Luna’s downfall Warning bells for the crypto crash started in May with the collapse of terraUSD, a stablecoin that had been pegged against an external traditional currency like the US dollar. The failure dragged terraUSD’s sister token Luna and hit several cryptocurrency companies with the estimated value of the loss at USD 300 billion. The next casualty came with a major crypto hedge fund, Three Arrows Capital that filed for bankruptcy because of the terraUSD fallout. In June, American-Israeli business Celsius Network suspended withdrawals and transfers after firing a quarter of its workers. The company filed for bankruptcy in July. On the India front, Singapore-based crypto lending firm Vauld unceremoniously suspended operations stating unstable market conditions. The Crypto Winter Bitcoin, the world’s most popular cryptocurrency, had seen a massive ascent in the recent past with experts having predicted only a purple path in the future. But the optimistic predictions fell apart this year. Overall prices for the currency fell by over 60% in a drastic drop this year. Since touching an all-time high of nearly USD 61,000 in November last year, approximately USD 2 trillion had vanished from the crypto market. Currently, Bitcoin prices are meandering around USD 17,000. Aside from the huge failures that marked the crypto world this year, the rise in interest rates put pressure on an asset as volatile as crypto. Veteran investors like Mark Mobius, co-founder of Mobius Capital Partners are seeing worse days ahead. In a recent interview Mobius stated that bitcoin would fall by another 40% to USD 10,000. CBDC payments QR code, Source: India Today Introduction of CBDCs In September, the IMF released a report stating that ‘more than half of the world’s central banks are exploring or developing digital currencies’. While countries like China and the Marshall Islands already have plans to launch their own Central Bank Digital Currencies or CBDCs, others like South Korea and Canada are still figuring out how to go about it. Unlike crypto assets, CBDCs are much more secure, and intrinsically not volatile. In late November, India launched two pilots for its digital rupee – for the wholesale sector (e₹-W) and for the retail sector (e₹-R). The RBI began a trial run from early December in four major cities, including Mumbai, New Delhi, Bengaluru and Bhubaneswar partnering with eight banks, including State Bank of India, ICICI Bank, Yes Bank and IDFC Bank. The Union Minister of State for Finance Pankaj Chaudhary shared more details around CBDC, saying it will strengthen the interbank market infrastructure and reduce transaction costs by eliminating intermediary banks similar to UPI transactions. Founder and former CEO of FTX Sam Bankman-Fried, Source: BBC The FTX crash An exchange founded in 2019 by former Wall Street trader and 30-year-old crypto wunderkind, Sam Bankman-Fried and ex-Google employee Gary Wang, FTX’s rise had been synonymous with the rise of crypto. In July last year, the exchange was valued at USD 18 billion. But it all unravelled in August this year after a US bank regulator ordered an investigation. CoinDesk reported that a leaked balance sheet showed that Bankman-Fried’s crypto trading firm Alameda Research was heavily leaning on FTX’s main token, FTT. The chain of events that followed were in quick succession — Binance CEO Changpeng Zhao initially announced that he was planning to acquire FTX on November 8 and then backed out from the deal on November 9. FTX filed for bankruptcy on November 11 alongwith Alameda Research and around 130 of its affiliates. Bankman-Fried eventually admitted to transferring funds illegally from FTX to Alameda. The value of the fraud has been pegged at a massive USD 8 billion. SBF’s spectacular fall from grace has brought down his value from about USD 24 billion in the beginning of the year to almost nothing. Expert liquidator, John Ray, who helped navigate Enron through its corporate bankruptcy went on to call FTX’s poor management ‘unprecedented.’ “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” he stated. The whole fiasco triggered instability in other crypto exchanges like Bitfrost which shut shop in November.
In September, the IMF released a report stating that ‘more than half of the world’s central banks are exploring or developing digital currencies’
In September, the IMF released a report stating that ‘more than half of the world’s central banks are exploring or developing digital currencies’
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["Go", "API", "ELT", "AI", "Scala", "Git", "RAG", "Ray", "Rust", "R"]
["AI", "Ray", "RAG", "R", "Go", "Rust", "Scala", "Git", "API", "ELT"]
Poulomi is a Technology Journalist with Analytics India Magazine. Her fascination with tech and eagerness to dive into new areas led her to the dynamic world of AI and data analytics.