The cryptocurrency market faced numerous challenges this year. Both centralized and decentralized groups had a tough time surviving. However, recent indicators show that their fortunes are beginning to turn around.
Overcoming these challenges may seem dramatic, but it’s essential for the system to grow stronger. Despite current difficulties, Web3 technologies emerging from this period of turbulence in crypto will bring massive changes.
Web3 represents the next evolutionary leap in information sharing, much like how we transitioned from a mostly agrarian society to industrialized factories. Thanks to the revolutionary blockchain technology, which will transform internet usage and human interaction.
In 2023, the future seems to offer several exciting possibilities. There are 10 crypto predictions worth exploring.
1. Why Crypto Venture Capital Funding Is Expected To Decline In 2023
Venture capital funding in the sector will continue declining through the first half of 2023. Some people are surprised because a lot of people are usually super excited and talk a lot about the cryptocurrency space.
However, this decrease in investment does not imply a negative state of the sector. It is seen as a normalizing trend, bringing the investment levels in cryptocurrency back down to a more rational point. This shift represents a more realistic approach to cryptocurrency investment than the frenzied funding seen in previous years.
Investor Caution Amidst Economic Uncertainty
Investors, ever cautious of catching a falling knife, are taking a wait-and-see approach. They are watching for the market to bottom out, holding off on making any hasty decisions while they assess the landscape.
Their wariness is not without basis; they must weigh broader macroeconomic concerns and the risk of a global recession. Given the current external conditions, investors are advised to exercise caution and postpone significant investments until there is more clarity regarding both the cryptocurrency market and the broader global economy.
Funding New Protocols Amidst Market Changes
Despite the general decline in crypto venture capital funding, certain areas within the sector are expected to continue to attract investment. Specifically, new settlement protocols (layer 1s/2s), interoperability (layer 0/bridge), and lending and trading protocols are predicted to receive continued funding.
These particular areas have now become essential in view of the recent market changes. These changes include security breaches or hacks, treasury shortfalls, regulatory changes, and even the collapse of some cryptocurrency exchanges.
These new protocols are deemed crucial for the future health and growth of the cryptocurrency market. Consequently, they continue to capture investor interest.
2. How Web3 Projects Are Welcoming Big Brands And Their Capital In 2023
The year 2023 marks a significant shift in the ethos of Web3, particularly in its perception of major brands. Historically, the Web3 space was dominated by an anarchist mentality that rejected the involvement of big brands, emphasizing decentralized and community-driven systems.
This philosophy was rooted in the idea that Web3 should be devoid of corporate influence, with value derived primarily from user engagement and speculator interest. However, this perspective is gradually changing. Participants are beginning to realize the limitations of relying solely on token values fueled by user and speculator dollars.
A token’s value becomes increasingly unstable and potentially unsustainable without external funding from large brands. Thus, 2023 sees a strategic shift in the Web3 community’s mindset, leading to an openness toward the monetary support that large brands can bring.
Embracing Big Brands And Their Capital In Web3 Projects
As the realization of the critical role of big brands in Web3 sets in, projects are starting to embrace these entities and the capital they offer. This capital comes from advertising, marketing, and sponsorship dollars.
The injection of these resources into Web3 projects brings stability and allows for actualizing one of Web3’s core dreams – the token representing micro equity. This concept involves dividing substantial external capital among users, creating a more stable and equitable value system.
Traditional Web2 brands like Nike, Starbucks, and Meta are paving the way in this transition. They continue experimenting in the Web3 space, primarily through nonfungible tokens (NFTs), which have emerged as the preferred format for these brand interactions.
The focus of these brands in Web3 extends beyond mere monetization. They aim to leverage the unique capabilities of Web3 for customer acquisition and engagement, thereby fostering deeper connections with their customer base.
3. Web3 Communities: Beyond Speculation And Towards Product/Market Fit
People are beginning to question the existing conceptions of community in the Web3 space, as these notions are often misleading. The term “community” has been predominantly used to denote a group of investors on Discord platforms who share a mutual aspiration for swift wealth accumulation. However, they typically disengage from the project when the growth momentum ceases.
Exceptions And The Reality Of Web3 Communities
We will continue to observe exceptions to this pattern, such as deeply involved decentralized finance communities and decentralized autonomous organizations that bridge the gap between online and offline worlds, like LinksDAO.
However, the realization that is likely to dawn upon us in 2023 is that the commonly touted Web3 concept of project/community fit was, more often than not, merely a project/speculator fit.
4. How Web3 Will Change the Game for App Developers and Users in 2023
Consequently, we can’t overlook the essence of genuine product/market fit. The focus needs to shift towards this fundamental aspect, which is crucial for the viability and success of any project.
The New Era Of Quality And Discovery In Web3 Applications
With the lowering costs of Web3 application development and the increasing expenses of user acquisition, the focus will shift toward quality and discovery. This environment will herald moments similar to the emergence of the App Store and AdMob for Web3, enhancing the connection between developers and users.
The Competition And Emergence Of New Players In Web3
Initially, L1s and wallets will battle for dominance in this arena. However, a fresh contender will likely rise to the forefront, reshaping the landscape.
The Evolution Of Breakout Web3 Applications In 2023
The standout Web3 applications of 2023 will resemble the most downloaded and highest-earning apps during the infancy of mobile technology. These applications will prioritize a simple user experience and aesthetics while integrating innovative methods for engagement and monetization. They will mimic the success of apps like Angry Birds in 2009, which combined simplicity with innovation.
5. The Future of Gaming: Balancing Stability and Speculation
The prevailing focus on “stability” and “sustainability” in the gaming industry, partly influenced by the experiences of Axie Infinity, will likely lead to the emergence of games designed with inherent stability. However, these games may not exhibit the volatile ups and downs typically associated with cryptocurrency speculation.
A Repetitive Player Experience
Such a trend could result in a consistent gaming experience, yet it lacks excitement, almost like a replica of traditional Web2 video games. This subdued experience could feel unoriginal and repetitive to players.
Revival Of Market Speculation In Gaming
Over time, game developers are anticipated to rediscover the thrill that market speculation brings to gaming. They may then attempt to integrate this element into their games in a manner that is both enjoyable and responsible.
6. How Web3 Apps Can Follow The Footsteps Of Internet And Mobile Giants
Web3 is poised to maintain its influence in specialized markets, presenting applications that are essentially replicas of existing business models with a fundamental blockchain element incorporated. These applications will attract a distinct segment of users who desire the familiar basic product but are inclined toward Web3.
Parallels With Early Internet And Mobile Companies
This trend mirrors the inception of several early internet companies like Amazon, which started as an online bookstore, or mobile entities such as Robinhood, which began as a mobile trading platform. The primary distinction among these Web3 apps will not be their core product offerings but their marketing strategies and user experience.
The Pursuit Of Groundbreaking Innovation
Many of these Web3 applications will take daring risks in pursuing transformative innovation, like Amazon’s revolutionary strides in the e-commerce industry.
7. Blockchain Trends And Challenges In 2023
Blockchain applications will increasingly turn to large-cap tokens to manage compliance costs and operational expenses. Despite an expected delay in its 2023 roadmap, Ethereum’s planned introduction of sharding to decrease gas fees will eventually occur. This is predicted to lead to a significant decrease in the popularity of alternative L1s.
8. How Stablecoins Are Transforming Crypto Capital Markets
Stablecoins are poised to break the barriers of crypto capital markets and expand their reach into more practical use cases. As they continue to prove their utility, the mainstream adoption of stablecoins – primarily among businesses – is expected to surge. This widespread usage will stimulate innovation within Web3 ecosystems.
The developments in private blockchain research and government initiatives will also continue, with some launching centralized public infrastructure such as central bank digital currencies or marketplace infrastructure announcements.
9. Cryptocurrency Challenges In 2023: Controversies, Volatility, and Regulations
As 2023 draws to a close, the clash over cryptocurrencies is predicted to intensify, especially as it becomes a key issue in the forthcoming U.S. elections.
Persistent Market Volatility
The potential of the cryptocurrency market is undeniable. However, it will remain unstable due to various factors. Accidental security breaches like Wormhole, excessive risk-taking as seen in Terra, and outright scams such as SafeMoon contribute to this instability.
Inconsistent Regulatory Actions
The U.S. government’s indecisiveness on cryptocurrency regulations will persist, adversely affecting the local industry. Any implemented regulatory measures will likely be fragmented and potentially ineffective in mitigating the risk of unsound projects.
10. The Future Of Crypto: Emerging Trends And Narratives
Despite the bear market, the crypto industry is dynamically evolving. Blockchain builders are determined to create and iterate, constantly pushing boundaries in this space.
In 2023, we expect a turning point where new growth areas will emerge, breaking away from the existing dominant narratives. These narratives include Non-Fungible Token (NFT) profile-picture projects, play-to-earn projects, and alternative Layer-1 (L1) blockchains.
The crypto world has been fueled by gripping tales until now. However, there is a recognition that this domain is open to fresh ideologies and platforms that have a chance to capture the limelight.
Driving Real Consumer Utility And Adoption
The anticipation is that these new narratives will not merely be the next wave of hype but will be instrumental in driving real consumer utility and adoption. The goal is not just to create new speculative assets but to foster innovations that provide tangible benefits to users and help integrate crypto into daily life.
If these new narratives succeed in their mission, they could catalyze a significant increase in crypto users and wallets. Blockchain technology could potentially experience a significant increase in participants with the integration of several hundred million individuals unsure about crypto. This would promote growth and innovation, rendering a new cycle of development to emerge.