TechDogs-" Top Trends 2023 - Cryptocurrency"


Top Trends 2023 - Cryptocurrency

By TechDogs

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At TechDogs, we believe in simplifying technology content so everyone can understand concepts, use cases and software. Usually, we start by explaining the technology behind it – but not today. That’s because we bet you already know what cryptocurrencies are! Yes, we’re that sure about the reach of this technology. (Don’t worry; we’ll link our article that explains everything about cryptocurrency below!) 

Cryptocurrency, better known as crypto, is among the hottest technologies in the world at the moment. It has revolutionized financial businesses, cross-border transactions and payment services across various industries. Yet, this trillion-dollar industry has more value to offer in the coming years. There will be innovations, trends and disruptions in the world of crypto that you need to know about. Interested?

Join us as we explore the 5 hottest Cryptocurrency Trends in 2023!
TechDogs-" Top Trends 2023 - Cryptocurrency"
Bitcoin, the first Cryptocurrency, was launched only in 2009. This technology has come a long way in 14 years, finding institutional and consumer adoption faster than any other technology in history. Consider this: it took Microsoft and Apple over four decades to reach $1 trillion in market capitalization. It took Google 21 years to do the same. Whereas Bitcoin, the most well-known cryptocurrency, managed to do the same in merely 12 years!

Hence, innovation and development in the industry are happening at break-neck speed. Last year, we covered trends such as the influence of 5G networks, Crypto ATMs and B2B payment integrations. After the volatile market movements of 2022, businesses and consumers have shown renewed interest in the crypto industry. So, here are the top 5 Cryptocurrency Trends expected to influence the world of crypto in 2023!

Trend 1: The Crypto Industry Will See Stricter Regulations

TechDogs-"Trend 1: The Crypto Industry Will See Stricter Regulations "A Meme Reflecting That The Crypto Industry Will See More Regulations
In 2022, we saw several important laws being passed to regulate cryptocurrency exchanges and businesses that used the asset. Governments are becoming more involved in the technology with nations such as El Salvador adopting them as legal national tender, while China notably outlawed all crypto-related operations. We expect to see more stringent regulations and laws being enacted in 2023 – and for good reason.

The crypto market experienced a massive crash in 2022, which made financial regulators take notice. To protect investors and businesses, regulators will start examining the cryptocurrency industry with a fine-tooth comb. The technology, poised to play a crucial role in the development of the financial sector, has operated without a well-defined regulatory framework till now. Given the volatile nature of cryptocurrencies, efforts will be made to prevent the industry from going mainstream without adequate protective measures in place. This will also significantly minimize the adverse effects of market losses on individual investors. #PlayingItSafe

However, since the cryptocurrency market is innovating quickly, crypto leaders believe that strict regulatory laws may impact the growth of the industry. Laws that need cryptocurrency exchanges to record the names and identities of users will go against its decentralized and anonymous nature. Hence, legislators are expected to work with key leaders and businesses to develop laws and regulations in 2023. 

TechDogs’ Opinion: Since the cryptocurrency industry is fairly new, it will be necessary to draw up better laws and regulations. Examples such as the Terra-Luna crash in May 2022 showed us that the industry cannot operate outside the bounds of legislation. We think that going ahead the primary focus of financial regulators and governments will be to promote continuous audits to help restrict the use of cryptocurrencies for unlawful activities. Moreover, if cryptocurrencies are backed by robust laws and regulations, consumers will perceive them as a secure asset which may enable higher adoption in financial services.

Trend 2: We Will Welcome The Next Generation Of Crypto

TechDogs-"Trend 2: We Will Welcome The Next Generation Of Crypto "The Epic Guy Checking Out Girl Meme Where The Girl Is "Next-Gen Of Cryptocurrency"
We know we've said it before but we will repeat it since it sounds almost unimaginable: Cryptocurrency technology is only a decade old! We have seen breakthroughs and innovations in the crypto space in quick succession. In 2023, we will welcome the next generations of cryptocurrencies, focused on their decentralized and security aspects.

More businesses are exploring the potential of blockchain applications (the base technology behind cryptocurrencies) in cybersecurity, financial services, the internet of things (IoT), supply-chain management, etc. Experts believe that cryptocurrencies will also be a crucial part of this new ecosystem.

The next generation of cryptocurrency projects, called the third generation, will help develop and innovate solutions that operate on smart contracts to reduce transaction fees. Moreover, these solutions will enable increased transaction speeds and real-time payments. Yet, that's not all: the fourth generation of cryptocurrency will aim to facilitate trust using decentralized tokens. Projects such as Aergo are already working to simplify blockchain networks by providing open-source enterprise platforms and blockchain architectures. These solutions, for example, can transform ownership rights of physical and virtual assets into a digital form that can be bought, sold and traded using cryptocurrencies. 

TechDogs’ Opinion: Quick innovations in the crypto space are certainly not surprising news! Yet, we believe that the new generations of cryptocurrency will further boost business adoption as they address the rising demand for transparency. The third generation will focus on eliminating limitations to the speed and scalability of financial services. The fourth generation will offer the establishment, management and reconfiguration of decentralized enterprise networks that are based on blockchain. We feel businesses with a long-term vision towards security, transparency and decentralization should stay prepared to integrate these unique solutions.

Trend 3: Cryptocurrency Wallets Will Need To Offer Better Interoperability

TechDogs-"Trend 3: Cryptocurrency Wallets Will Need To Offer Better Interoperability"The Legendary Gru's Plan Meme Where Gru Wants To Wrap Bitcoin But The Exchange Doesn't Support The Swap
Did you know: At the moment, there are over 12,000 cryptocurrency projects? Mind-blowing, right? What's even more astonishing is the rate at which the industry has grown. The number of live cryptocurrency projects doubled from 2021 to 2022! Moving into 2023, as more projects go live, crypto developers and project leaders will focus on interoperability between cryptocurrencies.

Investors demand digital wallets that can hold and swap between multiple cryptocurrencies at the same time. This means if a portfolio owns Bitcoin, Ethereum, Litecoin, or any other token, the user should be able to transact and trade using all of them. Yet the transfer of crypto from one blockchain network to another requires expensive fees and sometimes high transaction times. For example, swapping Ethereum for USD Token takes under a minute, while an Ethereum-Bitcoin swap may take up to 20 minutes.

Hence, businesses and consumers will prefer to invest in wallets that offer quick interoperability between different cryptocurrency assets. Digital wallets such as MetaMask and ZenGo enable users to connect to several blockchain networks for the same online wallet. However, upcoming wallets will allow investors to monitor their portfolio from a single location, regardless of the blockchain (or its layer) where the asset is stored. Right now, most wallets only provide support for a few of the larger projects. As the cryptocurrency ecosystem grows, interoperability will be direly needed to allow users to buy, sell, trade, or swap tokens seamlessly. 

TechDogs’ Opinion: True interoperability is needed to sustain the crypto ecosystem. If investors cannot exchange or swap cryptocurrencies across the width and breadth of the ecosystem, it will be challenging for smaller projects to offer their services to users. Hence, the development of multi-chain environments will improve the user experience for investors holding multiple cryptocurrencies. However, we believe that leading cryptocurrency exchanges and digital wallet providers need to get the ball rolling. Large-scale initiatives that address the issue of interoperability, such as Polkadot’s Relay Chain infrastructure, will be crucial to the entire cryptocurrency industry.

Trend 4: Decentralized Finance Will Continue To Grow

TechDogs-"Trend 4: Decentralized Finance Will Continue To Grow "The Both Buttons Pressed Meme Saying That With DeFi There Are No Middlemen And You Earn Fixed Interest
The DeFi industry will be in the spotlight in 2023, as it is expected to grow at a compound annual growth rate of 42.5% from 2022 to 2030. Decentralized Finance has become the poster child for cryptocurrency applications and is expected to grow further this year.

DeFi uses blockchain technology to execute conventional financial transactions through smart contracts. These are transaction protocols that reside on the blockchain network allowing businesses to create online financial systems to replace traditional intermediaries and trust mechanisms. However, unlike conventional payment services or transactions, there is no need for financial intermediaries or third-party entities. Additionally, as the transaction data resides on blockchains, it cannot be tampered with or deleted.

We will see newer DeFi applications, varying from money lending to the creation of smart business contracts to the development of new financial instruments. According to DeFi Pulse, the Total Value Locked (TVL), a measure of the total value of cryptocurrencies assigned to DeFi contracts, increased from $2 billion in 2018 to a staggering $15 billion in 2020! The cryptocurrency industry will see higher adoption thanks to DeFi services and its growing influence. Moreover, the DeFi market value is expected to more than double in value to USD 231.19 billion in 2030, from 100 billion in 2022. #UpUpAndAway

TechDogs’ Opinion: We believe that DeFi is among the few technologies that can bring in new investors despite the volatile and unregulated nature of cryptocurrencies. The adoption of DeFi will grow in financial sectors as businesses are starting to explore it as a viable (and more effective) alternative to traditional financial systems. Additionally, we expect services such as yield farming, which enables investors to lease their owned cryptocurrency to other platforms or users to earn fixed interest rates, will be a major driving force. We’re sure DeFi will generate significant interest (pun intended!).

Trend 5: Environmental Impact Will Remain A Concern

TechDogs-"Trend 5: Environmental Impact Will Remain A Concern"The Popular Arnold Nature Meme On Eco-Friendly Cryptocurrency
Although cryptocurrency offers many advantages, there are some skeptics. One of their primary points of contention is the environmental impact of cryptocurrencies. As energy prices rise, cryptocurrency projects will need to figure out new ways to power servers and mining rigs. Hence, there will be a major emphasis on reducing energy consumption in 2023.

It is believed that a single Bitcoin transaction needs 1,449 kWh to complete or the equivalent of approximately 50 days of power for the average US household! Most digital currencies that operate on a Proof-of-Work consensus mechanism, similar to Bitcoin, consume more power. They need high-powered computers to solve complicated mathematical problems to create new tokens on the blockchain, contributing to a higher carbon footprint. Since consumers are more aware now and prefer to invest in businesses with green initiatives, using renewable power to operate mining hardware will be explored this year.

Some cryptocurrency leaders (such as Ethereum) are already transitioning their projects to a Proof-of-Stake consensus mechanism, which expends much less energy. Yet, Bitcoin mining is currently estimated to account for 0.5% of worldwide electricity usage. Thus, cryptocurrency stakeholders will need to explore Green-Proof-of-Work mechanisms, energy-efficient consensus algorithms that can reduce electricity consumption by up to 50%. 

TechDogs’ Opinion: The largest cryptocurrency, Bitcoin, currently consumes more electricity annually than the entire country of Sweden! Naturally, this will not be sustainable or scalable in the future. Consumers will switch to emerging projects that operate on “green” blockchains that only need a fraction of the energy consumed by traditional ones. We believe that cryptocurrency users, both institutional and individuals, will demand more focus on the environmental impact this year.

Hence, a major disruption in the crypto industry will come in the form of established projects transitioning to more eco-friendly methods this year.

Summing It Up

TechDogs-"Summing It Up "The Popular Woman Yelling At Cat Meme.
Even though the cryptocurrency market experienced a downturn in value in 2022 due to several factors, development and innovation are still in full swing. This suggests that it has the potential to expand quickly and meet the needs of the financial sector in the future. As a result, staying current on Cryptocurrency Trends will benefit both businesses and individual investors in 2023.

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