The potential for crypto in 2022 is higher than it’s ever been. All signs point towards continued adoption throughout the year. Russia passing crypto-friendly legislation will place pressure on other countries to do the same. Companies like Walmart and Tesla are going to continue adoption of digital assets into their business’. Bitcoin, for the foreseeable future, still reigns supreme with its $826 billion market cap and continued accumulation from large companies and countries.
Just because Bitcoin is still the most popular, doesn’t mean that there isn’t value investing in other assets. During 2022 we saw many tokens make parabolic leaps in price during the bull runs. Very few in crypto communities think that $69,000 will be the ATH for Bitcoin forever, there’s too much news around it for BTC to not eventually go up again. The market and Bitcoin tend to move in the same direction. Next time Bitcoin goes up, a lot of the market will as well. I’ve looked at two coins that I think could see gains during throughout the year of 2022.
Binance is the largest global cryptocurrency exchange by trading volume. BNB is the native token of Binance, and is used for a variety of transactions and exchanges on the Binance Smart Chain. Essentially, by owning the token on the Binance network, you have access to certain tokens and liquidity options you wouldn’t otherwise. The token has integration with all services that Binance offers including staking, making payments, and futures trading. There are a lot of meme tokens on the Binance network that require BNB to purchase.
Eventually half of the tokens in circulation will be burned, meaning out of circulation for good. Every quarter they burn a certain amount of tokens. BNB started with 200 million in circulating supply, and that number is now a little over 168 million. Based on the law of supply and demand, the price will continue to go up. It already saw huge gains during the bull run in 2021. With an actual use case, a high market cap, and quarterly burns, it seems that BNB is a token to keep an eye on.
MATIC, the local token of the Polygon network, saw huge gains in 2021. It started the year just over a cent, and hit a high of $2.92 in December. In some ways Polygon’s network is similar to Ethereum. You can buy/sell NFTs, transfer tokens through the network, or earn them in Play-to-earn games. The main difference is Ethereum is entirely it’s own network, and Polygon is a scaling solution built on Ethereum. What does that mean? Essentially, Ethereum is something we’d call a layer 1 blockchain. Polygon is layer 2, meaning it is built on top of the layer 1 network, another example of layer 1 is the Loopring network. While Ethereum is proof-of-work, Polygon is proof-of-stake, I’ll get to why that’s important.
A scaling solution makes blockchains faster by processing some of the transactions on another network. Two of the main complaints about the Ethereum network is the transactions take too long, and the gas fees are too high. Gas fees are the cost of making a transaction on the network. Polygon aims to fix both of those issues. The transactions on Polygon are faster and much cheaper than on Ethereum. Even though the network is built on top of the Ethereum blockchain, a lot of the transactions are essentially outsourced to other networks.
Polygon uses a proof-of-stake consensus method to verify transactions, unlike the proof-of-work on the Ethereum blockchain. When someone stakes their MATIC on the Polygon network they lock it into a smart contract, which lets them become a validator on the network. Validators are able to mint MATIC tokens, which is now the only way for new tokens to get added to the circulating supply. There are only 10 billion MATIC tokens that will ever exist.
The network locks a portion of each transaction on Polygon into a burn contract. Users on the network can decide when to initiate the contract. The contract occurs on both Polygon and Ethereum’s blockchain, effectively removing them from the chain. This removes them from the circulating supply for good. The final thing I have to say about the network is the dev team is currently working on creating interoperability with more blockchains than just Ethereum. This will provide even more usability for the network, and could lead to a higher volume in transactions and token holders.
So there is a lot of potential upside for MATIC. Stakers can make good money off minting new tokens. The burns on the network once again bring the law of supply and demand into play. The minting of tokens and burns together ensure a stable token price. It’s safe to say that MATIC isn’t going anywhere anytime soon, and it has a good potential for the coming year.
Disclaimer: Elijah does not own BNB or MATIC. It’s always important to do your own research.