2023 Crypto Trends to Watch Out for, Zero Knowledge and Layer 2 ETH Technologies Continue to Improve

Photo: Doc. DOOR

JAKARTA - Investors are getting a breath of fresh air after the increase in crypto asset prices last week, such as Bitcoin (BTC) which rose by more than 20 percent and Ethereum (ETH) which also rose by more than 12 percent.

After the market's pressure last year, the first few weeks of 2023 saw the prices of crypto assets BTC, ETH, and other altcoins see significant increases. The increase came after the inflation rate was announced to decrease for the sixth month in a row in December as seen in the Consumer Price Index (CPI).

In addition, the market also agrees that The Federal Open Market Committee (FOMC) is likely to lower interest rates by 25 percentage points compared to last month (50 points).

The decline in the value of the United States (US) dollar has a good impact on increasing the price of Bitcoin. Where the US dollar used by trading partners of the United States during the last three months has fallen by 9 percent.

This has a positive effect on the majority of Bitcoin trading against the dollar. The increase in the price of crypto assets is expected to encourage market optimism to further analyze the crypto industry sector which has great potential in 2023.

Last year the crypto industry experienced very difficult times, yesterday's increase certainly answered that crypto assets continued to grow in terms of price, market capitalization value, adoption, to technological innovations such as DeFi (Decentralized Finance), stablecoins, NFT (Non-Fungible). Tokens), DAO (Decentralized Autonomous Organization). These innovations and developments continue to occur even though last year was still in a bear market cycle.

"Early in 2023, even though we are still in a condition of macroeconomic uncertainty, as investors, we still need to conduct research on various projects that have future potential, one of which is Zero Knowledge (zk), whose implementation is quite popular in 2022 and by In 2023, the potential and success are noteworthy," said PINTU Chief Marketing Officer Timothius Martin, in a statement, Thursday 19 January.

Quoted from Pintu Academy, Zero Knowledge (zk) is a technology that allows transactions in the blockchain to be processed by simply reading a proof without requiring complete data.

With this, the network does not need to spend large computing power to process transactions. zk technology is gaining attention because it can increase throughput (TPS) and reduce user transaction costs.

"Zk technology itself has actually been around since the 1990s. Several crypto asset projects are in the process of developing zk implementations, namely StarkEx, StarkNet, Loopring, zkSync, and also Polygon. As for the zk project, Ethereum's layer 2 project is also worth considering in 2023," Timo said.

According to Pintu Academy, a layer 2 blockchain is a blockchain created to solve problems that arise at layer 1. The layer 2 blockchain is built on top of the layer 1 network. The function of layer 2 is usually to address scalability issues. Layer 2 blockchain offers fast transaction processing and much cheaper transaction fees than layer 1.

Some layer 2s now bring a variety of new technological innovations and have unique value offerings regardless of the underlying blockchain network. One of the advantages of a layer 2 blockchain is that it still gets the security of layer 1 above it. Layer 2 combines faster transaction processing and lower transaction fees but inherits security from layer 1.

"It is undeniable, in the midst of bear market and bull market cycles, crypto assets and blockchain technology continue to mature and give birth to innovative innovations. Quoting Messari's annual report, there is one interesting section, namely "Crypto is (still) inevitable". This sentence is an emphasis that the innovation brought by crypto does not just disappear even though this industry is going through difficult times," concluded Timo.