1 What next for blockchain, crypto and payments?
Global adoption of crypto in 2021 was explosive, with El Salvador accepting Bitcoin as legal tender. 2022 could see more Latin American countries like Panama, Cuba, and Paraguay embrace cryptocurrencies. 2021 saw the total crypto market cap breach the $2 trillion mark and VC funds poured some $30 billion into crypto. A cause for celebration and concern in equal measure? The growth of DeFi services, NFTs, Web 3.0, play-to-earn games and decentralised social media are some of the key reasons for the growing popularity of cryptocurrencies.
Concerns around energy-intensive cryptocurrencies like Bitcoin peaked in 2021 as environmentalists expressed displeasure. You may recall that Elon Musk suspended vehicle sales through Bitcoin. That led to recurring conversations in the community to make crypto more sustainable, and alternatives are evolving. Cardano, Cudos, Fantom, Polkadot are just a few businesses offering eco-friendly currencies. Blockchain-based carbon credits company ClimateTrade is also helping to offset the network’s carbon footprint.
Cryptocurrency adoption grew by 880% over the past year, according to Chainalysis’ Global Crypto Adoption Index. Key players such as PayPal, Mastercard, Starbucks, Amazon, Visa, and many others are piloting projects and managing crypto transactions on their own payment networks. At its core, the increasing adoption of crypto can be credited to its growing utility. For instance, Cudos announced a new partnership with Shopping.io, letting holders pay for their purchases on Amazon, eBay, Walmart, and Etsy across 11 international markets. What’s also fuelling crypto adoption is increased activity in online communities such as Twitter, Discord and Telegram. These communities have become hubs for novices to interact with crypo projects.
It will be important for both issuers and intermediaries of crypto, particularly those used for payments, to check the regulatory status of the crypto itself and whether any corresponding regulatory authorisations are needed. Even if the crypto is unregulated, activities in relation to the crypto may well need to comply with money laundering requirements. Advertising of crypto is not straightforward and needs to comply with rapidly-evolving and wide-ranging regulatory requirements.
2 Can NFTs win another crown?
Last year was a breakthrough year for Non-Fungible Tokens (NFTs) with the hype surrounding them leading to “NFT” winning the ‘Collins’ word of the year! NFTs expanded into many sectors, especially in the art and collectible world with 2021 bringing us Christie’s $69 million sale of a digital piece of art and Louis Vuitton’s NFT game “Louis the Game”. NFTs are not without controversy though, with some commentators dismissing them as a fad, criticising them for creating artificial digital scarcity and unnecessary environmental pollution. In games, for example, on the one hand, Ubisoft made a high profile announcement of NFTs in Ghost Recon, only to withdraw its YouTube launch video after a negative reaction from the community and S.T.A.L.K.E.R. 2: Heart of Chernobyl also recently cancelled its support of NFTs; yet on the other hand, Gala Games, a blockchain-gaming platform, and crypto investment firm C2 Ventures, relatively recently formed a $100 million fund to invest in the exciting “play-to-earn” business model for games.
So it seems 2022 is set to be a make-or-break year for NFTs: either living up to the hype and becoming more ‘mainstream’ in the worlds of art, sport and fashion or perhaps fading away in sectors where NFTs do not have a role to play. We expect to see a greater focus on dynamic NFTs over static NFTs, as the traits and data recorded in a dynamic NFT can be continually changed through external inputs, extending their utility beyond collectibles in the gaming industry.
NFT growth will be faced with more challenges globally as the legal and regulatory framework continues to evolve. We see these challenges already, not just with advertising laws, but with various high-profile artists complaining of copyright infringement as their works have been ‘minted’ into NFTs. NFT issuers also need to think carefully about the appropriate model for launch and whether their advertising is compliant.
3 Cloud gaming to hit lofty heights?
As gamers will know, cloud gaming has had mixed success to date. With the new Xbox Series X, PlayStation 5 or Geforce RTX graphics card costing over £500 in the UK, even if you can get hold of one, the appeal to end users is clear. A couple of years ago, there was much talk of the new generation of consoles being the last, with everyone shifting to cloud gaming. That has not happened just yet. However, some cloud gaming businesses quietly gained traction in 2021, and 2022 may be the year that they become more mainstream. Nvidia’s PC cloud gaming platform, GeForce Now, has over 12 million members and has been gaining traction since it left beta in 2020. Microsoft has enjoyed some similar success with Xbox Cloud Gaming, which Microsoft combined to good effect with its increasingly popular Game Pass subscription service. These services and those of smaller players show that there is some appetite by players. As broadband speeds increase, including with the rollout of 5G, and the infrastructure improves, uptake is likely to be better. We don’t see 2022 being the year that cloud gaming finally takes off, but we do expect steady increases in uptake by both players and developers that will eventually lead to its success.
4 5G hype to meet more than virtual reality
The global 5G rollout is well underway, with experts predicting that by 2025, 5G networks will cover one third of the world’s population. This increased accessibility has birthed innovative applications of the technology, and in the coming year, we expect to see widespread deployment of 5G technology in the creative industries.
The entertainment industry is to provide 5G-powered, virtual, immersive collaboration platforms which will enable seamless production and performances from wherever artists are (thanks to high bandwidth and ultra-low latency) and enrich festival experiences for audiences both at home and in venues (take a look at the 5G Festival). These platforms are leveraging various XR technologies.
The arts sector is exploring how 5G can help to improve accessibility to the arts, optimise the financial performance of exhibitions and provide immersive experiences for visitors (take a look at The Met Unframed - an immersive visual art and gaming experience featuring digitally rendered galleries).
The main obstacle to the 5G rollout is chipset shortages. Savvy businesses hoping to use 5G chips will forge new partnerships with emerging OEMs and vendors to localise chipset production and mitigate against global supply chain issues.
5 An insatiable appetite for food home delivery!
Consumers increasingly rely on gig workers for their home-delivery necessities. We have seen many new food tech businesses raising equity and entering the market, offering high-quality groceries delivered straight to people’s doors in almost no time by using the ‘dark store’ model (consumers purchase from a bricks-and-mortar retail store without having to enter it). New entrants include UK-based Weezy and Zapp and international entrants Gorillas and Getir. In response, several of the UK’s largest supermarkets, including Sainsbury’s with its Chop Chop delivery service, are now starting to compete in the (increasingly competitive) grocery home delivery space.
We have seen consolidation in this market, such as with Doordash acquiring Wolt. A buyer’s strategy behind this M&A activity is no doubt to benefit from economies of scale and strategic synergies (acquiring tech, real estate and specialised staff). We expect more brands in the delivery economy to raise funds, consolidate and diversify their offerings.
Given that the European Commission, at the end of last year, released draft legislation to reform conditions for platform economy workers in the EU, it will be interesting to see how the market evolves. Since Brexit, the UK has (in theory at least) no obligation to follow EU laws so we don’t expect the UK to follow suit any time soon with changes to the working conditions of platform workers, but watch this space!
6 Tech to drive talent and efficiency in the workplace
Technology will continue to drive workplace change in 2022. A PwC survey showed that a staggering 53% of those surveyed believe technological breakthroughs will be the single biggest contributor to change in the workforce over the next 5-10 years. This, coupled with changing staff workplace expectations, especially of Generations Y & Z, means that HR professionals and management must be prepared to undertake (with their CTOs) a deep dive at tech solutions, both to achieve efficiency and to attract and retain talent.
Roles and opportunities are changing fast, and there is a clear bias towards those who are in tech or are tech savvy. The metaverse will provide more opportunities for workers, and is set to create new jobs. Meta (Facebook) alone plans to hire 10,000 staff in the EU to transform Facebook into a metaverse.
AI will continue its transformative impact. Workers are expected to adapt, and while no-code and low-code technologies will expand in 2022, businesses (and individual staff) who seek out and embrace change and learn new skills will thrive.
All of this presents fresh challenges for employers and employees alike, and the already present issues of discrimination, and safeguarding data when using AI, should be firmly on the radar of HR professionals and in-house legal teams in 2022.
7 ESG moves up the Boardroom agenda
Environmental, Social, and Governance objectives are rapidly moving up the boardroom agenda. We’ve seen many of our clients make climate pledges, amend supply chain processes, reduce their carbon footprint, and invest greener.
Our software clients are building solutions to support their own clients in reaching ESG goals (e.g. tracking and showcasing carbon footprint and sustainability efforts). We expect to see more regulation and market forces encourage codes of conduct for constructing ESG ratings. Also, watch out for new appointments of ‘Chief ESG Officers’.
Carbon Capture Technology is set to take off. While the process can be questioned for its cost-effectiveness and viability (due to concerns of offsetting rather than reduction), as the tech improves, Carbon Capture (as well as tech used to help achieve ‘no-till’ farming) could assist businesses achieve 2050 net zero targets. Projects such as Exxon Mobil Corp's Carbon Capture and Storage (CCS) concept and the East Coast Cluster and HyNet project in the UK show the ambitions of leading governments.
Within circular supply chains, products that are returned to the supply chain are reused, recycled and resold. Yet, while much needed, this trend is still pretty new. That’s why 2022 won’t be the year for a big breakthrough but will see more foundations laid. There is a risk of greenwashing by some but tech advances will nonetheless help to progress the implementation of ESG agendas and make a better life for us and future mankind.
8 Creative AI, Democratisation of AI and Cyber AI
Creativity is often associated with humans, not machines. But 2022 may see AI becoming more creative, and with new models such as ‘GPT-4’ arriving in 2022 we expect to see more natural, and seemingly human creativity come from AI machines. The Court of Appeal recently declined to allow Dr Thaler’s AI machine (DABUS) to be listed as an inventor on a patent application, and the UK IPO recently commenced a consultation into the relationship between AI, patents and copyright, the outcome of which could result in legislative change. While we do not foresee the Government overhauling the patent system anytime soon, clarification on ‘inventorship’ seems likely.
We expect to see greater adoption of “low-code” and “no-code” technologies, perhaps now being used to develop complex AI systems. If businesses adopt these simple technologies, we may see a ‘democratisation’ of AI as it removes the barrier of requiring a highly skilled workforce, which to date has been a big obstacle to the widespread adoption of AI.
Cybercriminals will increasingly use AI to make their attacks more sophisticated. AI will also help to counteract cybercrime by identifying patterns of abnormal behaviour - this activity can be detected even when thousands of events are taking place every second. Identifying, or even predicting this behaviour, using AI and machine learning technology will save time in mitigating damage against cyber-attacks. It’s a constant but inevitable battle.
To find out more about the Government’s plan for AI in the next 10 years, read our article on the National AI Strategy.
9 Security, security, security!
New technology usually brings new headaches for CISOs. In the first half of 2021, there was a 100% increase from the previous year in cyber-attacks against IoT products. In 2022, expect to see new laws tackling these issues. The Product Security and Telecommunications Infrastructure Bill is designed to help ensure that consumer connectable products and IoT products are more secure against cyber-attacks. Manufacturers, importers and distributors will then have just 12 months from Royal Assent of the Bill to ensure that their products are secure.
10 Med Tech to administer First Aid!
The pandemic and growing pressure on the NHS will lead to another digital innovation push in healthcare. New technology is set to evolve in AI diagnostics, monitoring, and surgery and AI chat-bots are to provide mental health support. Regulation and budget increases may also drive innovation. The MHRA announced that it is looking to update regulations applying to software and AI as medical devices (take a look at our article for more on this), and in the last Budget an extra £2.1bn was promised for “innovative use of digital technology” in public sector healthcare.
11 AdTech and grow your own ‘first party’ data
Last year, the AdTech sector faced challenges to the way in which it operates: the ICO rebooted its investigation into the industry, European data protection authorities scrutinised consent solutions proposed by industry bodies and pressure through privacy-focused initiatives from key players that make it more difficult to track users. We expect more of the same. We also expect the industry to respond by developing consent solutions that (try hard to) meet regulators’ expectations. Advertisers will become more privacy conscious, allocating media budgets to privacy-friendly solutions and many will look to get ahead of the curve by building their own first-party data assets.
12 There’s another world out there….
With companies like Snap, Nvidia, Meta, Microsoft backing the metaverse with their state-of-the-art products, the metaverse is set to take off in 2022. The metaverse is a set of virtual spaces where you can create and explore with other people who aren’t in the same physical space as you. Although pitched as the next version of the internet, at the moment the metaverse provides an upgrade rather than a replacement, as users can have different experiences than they would normally have on a 2D app or website.
The metaverse offers digital platforms, including marketplaces and retailers, that allow users to sell virtual goods in connection with outside exchange systems, real-time 3D computer graphics and personalised avatars and virtual social interaction. Metaverse attributes are constantly evolving. However, for an ‘always-on’ metaverse to become accessible, peripherals that enhance the metaverse experience need to be cheaper and more comfortable (including XR accessories).
Expect to see investors showering metaverse start-ups with funds in the coming year, and the video games industry could lead to the early sophistication of the metaverse. Games like Fortnite, Roblox or Minecraft are commonly being considered as existing metaverses and platforms more than games. These products offer sandbox environments in which to express one's creativity, opportunities to socialise, access concerts or interactions with user’s favourite brands (e.g. NBA). With the power of game engines improving (to the level where games can be used to make movies), this sector could heighten the importance of the metaverse.
13 EdTech sector passes with flying colours
EdTech start-ups earned their stars during the pandemic with IPOs, such as Duolingo and Coursera, substantial funding rounds (Openclassrooms raised $80 million) and some businesses gaining unicorn status (GoStudent was valued at €1.4 billion). With increasing disillusionment with traditional education institutions and increased demand for accessible online education, the strong performance of EdTech businesses that started in the pandemic will continue into the next year. Rather than just providing supplemental support to education, we expect to see digital transformation become part of the core provision of education. Given the gradual impact of modern deskilling on the workforce caused by automation and other technologies, we may see M&A activity in the EdTech market for upskilling and reskilling workers.
14 Supply chain and logistics embrace the tech fast lane
Public opinions on the subject of sustainability have shifted. Consumers love recyclable packaging and it’s increasingly something they look for when shopping online. Consumers are paying more attention to finding brands that are aligned with their values and 70% of consumers would pay more to support greener logistics operations. Since supply chains are, according to some, responsible for 90% of industry’s ecological footprint, this is the area that has the opportunity to make the most impact on this issue.
Logistics is ripe for further automation. We expect to see a surge in the value of the warehouse robotics market and the deployment of cloud based ERP systems. Advances in 3D printing have led to stunning results and warehouses might even soon (but not quite this year!) be full of 3D printers that create the stock that used to sit on shelves. Blockchain also has benefits that supply chain management can leverage, including improved inventory visibility, transparency, enhanced security and timely notifications.
15 An open door for open source?
We regularly work with vendors and customers alike of proprietary software. We also admire the world of open-source and the disruptive effect it has had on traditional enterprise software. One can’t beat the pace of innovation of millions of developers, and it's resulted in the success of many businesses such as RedHat, MongoDB, Confluent and DataBricks. Open-source venture funds and open-source start-ups have potential to disrupt the status quo. That said, and as you’d expect of any decent lawyer, the health warning is to pay close attention to a) the open source licence restrictions (the environment is complex and provides a trap for the unwary) and b) the internal governance process that controls when and how open source is used in your business.
And with that, we wish you each a healthy, happy and prosperous 2022 – may your tech fears be dispelled and all your tech dreams come true!