The year 2022 marked many highs and lows for the crypto and blockchain industry. Following the Bull Run in 2021, the crypto industry received a major drop in January 2022, with Bitcoin and Ethereum prices falling by 20% and 31%. What could be the possible predictions for crypto and blockchain in 2023? 

On top of it, the crypto market witnessed the downfall of many leading giants in the space, such as FTX. However, the scope of innovation with cryptocurrencies and blockchain presents a different perspective on their potential for the future. They are disruptive technologies and would have to go through a lot of speculation before achieving mainstream adoption. 

As of now, business leaders and startups taking initiatives in the field of cryptocurrencies and blockchain technology have to weigh the risks and opportunities carefully. Awareness of crypto predictions could help you stay updated with news about expected changes in the market or the introduction of new technologies. Let us take a look at what the crypto industry holds for you in 2023.

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Most Popular Predictions for Crypto in 2023

Cryptocurrencies spelled a new wave of change in the financial sector with the peer-to-peer financial transaction model. Expectations regarding crypto in 2023 have been downplayed on different platforms owing to the turbulent state of the crypto market in 2022. On the other hand, the cryptocurrency market also laid the foundations of many innovative advancements, such as the development of ZK solution ecosystem. 

Many of the top brands have been adopting blockchain technology, and large banks have shown their interest in cryptocurrencies. Furthermore, Ethereum transitioned to the Proof of Stake model, opening up new doors for the broader adoption of blockchain technology. Here are some of the notable expectations for the crypto industry in 2023. 

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1. Trust-based Cryptocurrencies

The crypto winter has affected one of the most important aspects of the financial system underlying cryptocurrencies i.e. trust. Most people wondering about “Which crypto will go up in 2023?” turn towards trust-based solutions. Cryptocurrencies will not reach their full potential if they do not offer the advantages of trustless transactions. On top of it, the collapse of major crypto institutions at an interval of every few years could demolish the foundations of trust in the crypto industry. 

Crypto companies are more likely to achieve success in the market by building trust in cryptocurrencies. One of the recommended initiatives for improving trust in cryptocurrencies points to offering convenient and secure self-custody facilities. Rather than entrusting the users with complete responsibility for securing their crypto assets, crypto companies should ensure that users have verified skills for the same. The future of cryptocurrency could also rely on high-quality and secure hosted custody solutions. At the same time, third-party verification of service providers, as well as Proof of Reserves disclosures, would serve as mandatory measures for re-establishing trust. 

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2. Continuous Growth of DeFi Owing to Struggles of CeFi

The setbacks for centralized finance or CeFi in 2022 have created the possibility for restricting the sector to highly regulated companies. On the other hand, DeFi did not have any problems in 2022 and continued its golden run with new milestones. The collapse of the centralized crypto exchange FTX fuelled a formidable growth in DeFi transactions. Most of the discussions around the future of cryptocurrency in 2023 would emphasize DeFi and its diverse benefits. DeFi transactions increased by almost 68% in the period from October to November 2022. 

In a way, the loss of centralized finance turned out to be the profit of DeFi. Decentralized finance offers a secure alternative for governing crypto assets through smart contracts. At the same time, DeFi also offers better control to users over their assets alongside a clear understanding of liquidity flows. In 2023, the DeFi ecosystem will welcome new and complex applications. For example, GMX is a DeFi project aimed at creating a perpetual decentralized exchange. Furthermore, the demand for DeFi would also improve traction for different use cases such as synthetic assets, prediction markets and self-custody wallets. 

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3. Financial Asset Tokenization 

The next important trend expected in the cryptocurrency market would point to the tokenization of financial assets. Real-world assets such as property and fiat currency are financial primitives which offer a representation of the claim on underlying assets. In addition, the real-world assets also offer prospects for generating yield and predictions for the cryptocurrency future, suggesting the representation of more assets on blockchain networks. The most popular example of using cryptocurrencies for representing real-world assets is stablecoins

Interestingly, stablecoins are popular among cryptocurrencies in terms of market capitalization. For example, the DAI of Maker and USDC by Circle have maintained their positions alongside ensuring limited volatility in the bear market conditions. Crypto communities have also been seeking prospects for the future of cryptocurrency in tokenization of real-world assets. MakerDAO has announced plans to invest around $550 million in the form of DAI in the US Treasury and corporate bonds. Another crypto platform, Jia, helps business owners obtain blockchain-based loans alongside generating significant yields for liquidity providers

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4. Visibility of NFTs and Web3

The rampant hype and speculation around NFTs fuelled up the prices, and many NFT projects dived in to capitalize on the available opportunity. Experts have frequently pointed out how the majority of discussions around NFTs focus on their monetary value. However, the predictions for crypto in the year 2023 would focus on the utility of non-fungible tokens. Businesses would seek the use of NFTs for the secure representation of digital and physical assets with the assurance of business utility. Non-fungible tokens can offer significant improvements in driving revenue, business processes, and customer engagement. Therefore, NFTs are more likely to be included in business processes seamlessly. 

What would be the most important factor driving the adoption of non-fungible tokens? The expansion in demand for NFTs for business use cases would focus on the growth of web3, which establishes new precedents for control over ownership of data and assets. In addition, the cryptocurrency future predictions also reflect on the interoperability aspects in web3. The functionalities of web3 could introduce new approaches for compensation of individuals for offering their time, inputs, and data. At the same time, web3 also ensures bridging the gap between physical and virtual worlds. As the popularity of web3 grows, NFTs will become ubiquitous entities in the digital landscape.

5. Further Growth in Cryptocurrency Evangelism

The advancements in the next wave of crypto adoption would depend a lot on the firm believers in cryptocurrencies. People and businesses which hold their trust in cryptocurrencies, even in uncertain times, are responsible for strengthening the roots of the crypto industry. Merchants prepared to cut transaction costs or social media companies seeking new approaches for redefining user experiences, and digital identity representation is the popular examples of advocacy for cryptocurrencies. 

Apart from concerns such as “Which crypto will go up in 2023?” the predictions for cryptocurrencies suggest the rise of more crypto advocates. Social media platforms could play an active role in development as payment platforms for processing cryptocurrencies. As a result, social media platforms could improve the broader accessibility of cryptocurrencies. For example, social media platforms that can offer a secure identity token to their users could help in offering digital identity in the form of a decentralized asset. The participation of such organizations in the cryptocurrency ecosystem would drive the popularity of crypto further in 2023. 

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6. Centralized Finance Could Show Signs of Recovery

The failure of CeFi solutions resulted in a significant spurt of growth for DeFi solutions. On the other hand, crypto predictions for centralized finance suggest possibilities of improvement in traditional financial institutions. Startups and entrepreneurs have been hailed as the superstars of the crypto industry. However, long-sighted legacy financial institutions have also showcased the significant potential for excellence in the crypto space. The biggest advantages for the big companies in centralized finance refer to the existing base of client relationships, brand portfolio, and risk management capabilities. 

The good news for the future of cryptocurrency in 2023 is evident in the recognition of blockchain technology by traditional financial institutions. Financial institutions would recognize the potential of blockchain for improving the cost-efficiency and speed of financial services. As the crypto winter recedes, centralized finance organizations would prepare to capitalize on new blockchain and crypto technologies to make the most of their value advantages. However, traditional financial organizations must also emphasize a digital asset strategy with effective risk tolerance and target exposure. 

7. Expansion of Web3 Developer Tool Stack

The growth of crypto and blockchain in 2023 would also fuel demand for developer tooling. It is an important highlight in predictions regarding crypto in 2023 and serves a crucial role in the automation of different redundant aspects of web3 development. Some of the popular companies which have been leading the market in web3 developer tooling include Alchemy and Tenderly. Developers have continued experiments with on-chain applications, and the number of developers increased by almost 3 times in 2022 as compared to 2021. Subsequently, the volumes of monthly verified smart contracts increased by almost 2.6 times in 2022. 

The involvement of developers in the crypto and web3 ecosystem validate predictions for the future of cryptocurrency, calling for the need for advanced developer tooling. One of the prominent technologies required for web3 development refers to cross-chain tooling, as it involves composable software. Cross-chain tooling could enable the deployment of projects on different blockchain networks. The growth in cryptocurrency use cases would serve a vital role in driving the need for innovative developer tooling in 2023. 

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8. More Adoption of Zero-Knowledge Use Cases

Cryptocurrencies have been popular for ensuring privacy for users in financial transactions. Zero-knowledge technology has evolved as the most popular technology for safeguarding privacy in cryptocurrency applications. The estimates for the future of cryptocurrency in 2023 would reflect on possibilities for more adoption of zero-knowledge proofs. Zero-knowledge proofs utilize a structured approach with a prover, verifier, and mathematical algorithm for proving information without revealing the data associated with the proof. Zero-knowledge proofs are an exclusive instrument in the crypto landscape, considering the inherent transparency in blockchain networks. 

The most noticeable aspect underlying the possible predictions for the crypto industry in 2023 for the adoption of zero-knowledge proofs refers to the resourcefulness of ZKPs. Many new projects such as Espresso Systems, Succinct Labs, and Risczero have developed zero-knowledge proof use cases. ZKPs have a specific beneficial impact on identity verification in the crypto industry. Users could rely on ZKPs for on-chain identity verification without revealing their personal or sensitive data. Zero-knowledge proofs would also offer a substantial boost to the security of crypto bridges for increasing interoperability

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9. New Proceedings in Regulations

The concerns regarding regulations for cryptocurrencies are one of the prominent highlights in discussions around blockchain and cryptocurrencies. Blockchain and web3 applications imply that digital assets must be decentralized without any centralized control. Who will govern the transactions and exchanges in cryptocurrencies? Many countries have implemented their own regulations for governing the use of cryptocurrencies and digital assets. However, policymakers have to struggle with different choices regarding the effective application of existing rules. 

The list of predictions regarding cryptocurrency’s future in 2023 will focus on emerging regulations. Policymakers are more likely to seek solutions for establishing balanced regulations for crypto and blockchain solutions. Apart from understanding the discrepancies in the underlying technology, policymakers must identify the areas which must be regulated. The emphasis on crypto regulations in 2023 would continue with the objectives of presenting a clear definition of digital assets.

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10. Companies Would Use Blockchain Data

The striking characteristic of blockchain technology is the rich and open-source data collection. Therefore, it can support comprehensive analysis of on-chain activity, and leveraging the data efficiently with responsibility could drive the growth of blockchain applications and use cases. The notable crypto predictions for 2023 also draw attention to growing interest in the use of blockchain data. Blockchain data could offer significant information on user behavior, on-chain cash flow, and new trends. 

The development of blockchain analytics firms such as Nansen could serve as critical instruments for developing a comprehensive understanding of on-chain analytics by leveraging wallet activity. Companies such as nxyz have also been working on blockchain indexing projects through data APIs without any rate limits.

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Final Words

The top trends expected in the crypto industry for 2023 reveal many prolific insights for the sector. Cryptocurrencies had a rough year in 2022, also referred to as the crypto winter, with big names registering massive drops in pricing. At the same time, popular names in the crypto industry failed in 2022 alongside compromising user assets. 

Therefore, predictions for the crypto industry in 2023 focus on the positive possibilities with technological innovation and re-establishing trust. Many experts have commented that the downfall of cryptocurrency last year was primarily due to errors on behalf of users, such as a lack of due diligence. On the other hand, existing players and new ventures in the crypto space have to learn from the failures of previous projects. Learn more about crypto fundamentals and find out more about their advantages right now.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!