New Delhi: The crypto market skyrocketed in 2021. The universe of digital tokens saw an investment of $30 billion and the total market capitalisation of this asset class, which is merely a decade old, hit $3 trillion during the year.

According to various reports, about 15 million Indian retail investors have placed bets on the digital tokens, with an investment of about $6.6 billion. About 90 per cent of domestic retail investors were added in the current calendar year.

Industry experts say India has a huge potential to become a global leader in this technology. The small cities and towns have led the way in adopting these digital assets.

"Despite the uncertainties around the regulatory framework of the sector in India, the adoption rate of digital assets is growing nearly twice as fast as that of the internet," said Vikas Ahuja, CEO of CrossTower India.
According to a Chainalysis report published in October 2021, India was ranked second in terms of digital adoption. The report pegged India at 11th out of 154 nations in crypto adoption.

Edul Patel, CEO & Co-founder of Mudrex, said it has truly been a roller-coaster ride for cryptocurrency investors this year. "Meme coins and metaverse were the top buzzwords for the year in the cryptocurrency market," he said.

How did Cryptos fare this year?
The largest cryptocurrency by market capitalisation, Bitcoin, remained range-bound for a good amount of time this year. The London Hard Fork upgrade to the Ethereum network made big news.
According to the data from Mudrex, Gala (GALA) topped the charts with a return of about 51,000 per cent. Axie Infinity (AXS) has rallied about 19,000 per cent, whereas The Sandbox (SAND) has gained 15,000 per cent. Polygon (MATIC), Terra (LUNA), Solana (SOL), Fantom (FTM), Kadena (KDA), Harmony (ONE) and Decentraland (MANA) rallied between 5,000 and 13,000 per cent in 2021, the exchange's data said.
"From our data, Terra (LUNA) was the best performer as it delivered about 15,000 per cent return to investors," said Ahuja. "Despite a 69 per cent rally in Bitcoin, the numero uno digital was featured among the laggards."

Other tokens that rewarded investors handsomely were Binance Coin (BNB), Solana (SOL) and Polygon (MATIC), fetching returns of 1,000-13,000 per cent on a year-to-date basis, he added.
The tokens with smaller market cap but superior fundamentals would be the best picks for the future, suggested Patel. Investors should keep an eye on Hedera (HBAR), Algorand (ALGO), Harmony (ONE), Fantom (FTM), Sandbox (SAND), Pancake Swap (CAKE), Render Token (RNDR), Polygon (MATIC) and Decentraland (MANA) in 2022, he added.
Reasons behind mass adoption
Experts said meme coins, central bank digital currency, and non-fungible tokens (NFTs) were the three major trends in 2021. The year also saw a slew of initial coin offerings or ICOs.

Multiple factors have led to the massive euphoria in cryptocurrencies. Central bank digital currencies and a crackdown in China led to fear, uncertainty and doubt among investors, said Patel.
"Avid crypto enthusiast and Tesla boss Elon Musk remained a top name in the crypto space, whereas Facebook renamed itself as Meta in order to create the metaverse. Celebrities joined the NFT bandwagon," he said.

Digital tokens have been indisputable and are already disrupting many traditional services and sectors globally. Emergence of niches such as NFTs, Web 3.0 and decentralised finance (DeFi) have played a pivotal role in their growth and adoption.
The Indian government is crafting a legal framework for the digital asset class, which will establish global standards and recognise the value of these assets, said Ahuja from CrossTowers India. "We believe this is a positive approach as the cryptocurrency is an emerging asset because of its intangibility and the fact that it uses highly sophisticated encryption to secure and verify transactions."
Cryptocurrencies come with a mix of excitement, innovation, growth, anxiety, curiosity as well as huge profits, but investors need to be cautious. One must learn the technologies the person is investing in and strongly back the underlying fundamentals, experts said.

The outlook for the future
Apart from India, several countries are attempting to bring in regulations and this could mature the cryptocurrency market in the coming years.
"With regulatory guidelines, investors would be more comfortable investing their money, and companies would be more comfortable starting businesses revolving around cryptos and blockchain," said Patel of Mudrex.

Everyone wants to ride the crypto wave but the fear of missing out the rally might be destructive for investors. Crypto is a new yet innovative technology but just a part of a bigger economic boost that blockchain offers for financial activities.
"We have successfully placed a footing in the Indian market, with growth of more than 3,000 per cent in the last one quarter," Ahuja added. "We are seeing increasing awareness and appetite for digital assets from both institutional and retail investors."