Silver linings in the crypto cloud
Confidence took a big hit in 2022, but the industry continues to develop high-potential products and services, according to Binance
It was a tough year for crypto and blockchain. We experienced severe breaches of trust, resulting in an adverse hit to the public and regulators’ perception of the industry.
It is already clear that recent events have rattled investor confidence and left long-term impacts that will require the industry to take significant steps and efforts to mend.
However, there are also silver linings for the crypto industry in the past year. Beyond the market fluctuations, we look deeper into what the crypto space has achieved in terms of building products and services, expanding their accessibility, introducing new solutions to old problems, and learning important lessons.
Better scalability a prelude to mass adoption: For years, the industry has been trying to find solutions to address blockchain scalability for higher speeds of transaction processing. Within what is described as the Blockchain Trilemma, scalability is one of a blockchain’s three desirable properties, the others being security and decentralisation.
In preparation for mass adoption, Ethereum made the transition from a proof-of-work consensus algorithm to one that uses proof-of-stake on Sept 15, 2022. This scaling solution, known as The Merge, is arguably the biggest scalability upgrade in the industry since Bitcoin’s Taproot. Thanks to The Merge, Ethereum’s energy consumption dropped by an estimated 99.95%.
Increased accessibility of crypto services and resources:
Lack of access to crypto is a barrier to adoption that the industry has been working hard to clear: without wide access, there can be no adoption.
Efforts by Binance to increase access included expanding the languages supported on the world’s largest cryptocurrency infrastructure
provider to 40, issuing 1.7 million Binance Cards, and supporting more than 100 fiat currencies with Binance P2P. The platform currently welcomes more than 600,000 Binance NFT users
weekly and processes an average of $2 billion worth of crypto daily.
Security and compliance: It became glaringly obvious last year that in order to push the industry forward, digital asset service providers must massively improve compliance and security measures to better protect users from bad actors in the crypto space.
By the end of 2022, Binance had bumped up the number of registrations, licences and authorisations it secured to 14, which includes major economic hubs like Dubai and France. In order to strengthen compliance operations, Binance also expanded its compliance team to more than 750 experts, an increase of more than 500% compared with 2021.
We also worked tirelessly on sharpening our security and identity verification protocols. Today, only users who have verified their identity via government-issued documents can transact in digital assets on the Binance platform — a strict yet necessary approach to make everyone in our ecosystem safer.
GLOBAL ADOPTION
Despite the challenging market conditions and setbacks in sentiment and trust, global adoption marches on — both for retail users and institutions adding blockchain-based tools and services to their arsenal.
Recent numbers from Statista suggest steady growth in crypto ownership and use in the majority of the 56 countries surveyed compared with last year. Thailand had a 44% rate of crypto ownership and use, the second-highest figure worldwide after Nigeria. The growth rate is almost double compared with 2019.
A study by Binance Research found many traditional institutions were getting on the crypto bandwagon or continuing to use crypto and blockchain technology. These included the likes of JPMorgan, Rakuten, Tencent, Tesla, Instagram, PayPal, American Express, Nasdaq, McDonald’s, Google Cloud, Mastercard, Sony, Nike and many more.
A glance at the plethora of sectors that continue to adopt blockchain technology is illuminating. The list of use cases and ultimately intrinsic value of crypto continues to grow.
KEY LESSONS
The industry needs to remain agile and responsive to disruptive events. Much of the focus has been on driving adoption and improving technology. This approach could lead many companies to overlook the possibility of disruptive events on an industry-wide scale catching some people flat-footed.
Given the crises in 2022, it’s clear crypto platforms have to put in even more effort to mitigate critical risks from events and refine processes by being more transparent, optimising risk management protocols and enhancing user trust.
Recently Binance joined the Association of Certified Sanctions Specialists (ACSS), the world’s only organisation bringing together professionals who specialise in sanctions compliance. By joining the association, Binance will be taking advantage of training materials, comprehensive databases and deep networks within ACSS to further enhance the skills and expertise of its compliance team, as well as continue setting the industry standard for security and compliance.