Disclosure: The views and opinions expressed herein are solely those of the author and do not represent the views and opinions of the crypto.news editorial.
At first glance, things now look very different than a year ago, with bitcoin (btc) more than doubling from $16,000-17,000 and the total market capitalization of cryptocurrencies comfortably above $1 trillion.
While prices reflect some form of recovery driven in part by speculation over the approval of bitcoin ETFs, we have not made enough progress as an industry as most barriers to cryptocurrency adoption still remain unresolved.
It may have been a grueling crypto winter, and the resurgence of bullish posts on . We will be going through a repeat of the previous market cycle, although with some improvements or differences.
The industry is still nascent and just over a decade old, and as a result there is still a lack of strong use cases, but this youth won't last forever, and the status quo shouldn't last either.
The fast-paced nature of the industry can be stimulating and impressive at times, as many things can change in the span of a day or a week, like most technology-based industries. However, this can be a double-edged sword, as it inclines us to focus on the new rather than the old and get caught in a sort of echo chamber.
While it may seem counterintuitive, the industry needs to force itself to slow down instead of always seeking to go faster. It is also necessary to analyze what has been done outside of web3, what has already been tested and, most importantly, resilient and thriving.
Sure, Metaverse-focused utilities like NFTs, web3 games, and SocialFi can be refreshing ideas. Still, they are too foreign to mainstream users to be effective pull factors for widespread adoption. These utilities serve as excellent and unique niches for the industry, generating curiosity and interest, but should not be misinterpreted as drivers of widespread adoption, at least not in the near future.
The reality is that blockchain technology is already complex enough for new users to understand, and this hasn't changed much. Adding relatively foreign ideas to the mix as a focal point only exacerbates this further.
This is where more tangible and battle-tested utilities, such as established payment systems and real-world assets (RWAs), come into play as a more viable basis for adoption; Most mainstream users already understand how most of these work and the grounded nature of them. Utilities are much more attractive and suitable for institutional and mass adoption compared to newer and riskier verticals. Unsurprisingly, the data and metrics support this as well; The total value locked (TVL) for RWAs is currently session to $5.7 billion in TVL, with projections for growth of up to 10 trillion dollars.
<img decoding="async" width="863" height="656" src="https://crypto.news/app/uploads/2023/12/image-36-edited.png” alt=”Web3 needs to go backwards before we can progress in 2024 | Opinion – 1″/>
Estimated tokenization market size | Fountain: 21.co
In terms of payment systems, we are also seeing established traditional players such as Visa and Mastercard taking steps to support the use of cryptocurrencies in 2023, and this trend will continue to gain momentum over the next year.
Accessibility has always been an issue hindering the adoption of web3 and cryptocurrencies, so there will certainly be a need to have more convenient on- and off-ramps to cryptocurrencies for user acquisition and retention. Along with regulatory compliance, these utilities will be the true backbone and foundation for adoption as they are stable and reliable enough to stand the test of time.
While it is undeniable that speculation fuels the web3 space, this creates a level of volatility and instability that intimidates and deters new entrants; the web3 industry cannot rely on this if it wants to scale beyond being treated simply as a decentralized casino.
Features like memecoin trading also don't add much legitimacy to the industry for mainstream users to take web3 seriously, and this all needs to change.
As the industry matures, token economics, buzz narratives and buzzwords will take a backseat to sustainable business models in 2024, as increasingly demanding users continue to eliminate non-value-creating projects. real or income generation. We have already received important lessons from FTX, Luna, USTC and, most recently, SafeMoon about the importance of decentralization, self-custody and due diligence.
The crypto space tends to have a goldfish memory, and most users are happy as long as they make money and forget about existing worries, but this approach needs to change as ponzinomic projects do not bring any significant benefit to the industry and do not last. forever.
Scams like FTX may have grown to colossal size and lasted for a long time based on empty promises and lies, but they eventually collapsed and greatly damaged the credibility of the industry.
By contrast, projects like Pudgy Penguins and its decision to introduce a collection of real-world toys, in addition to typical nft utilities, have performed relatively well in the bear market, unlike most nft projects. . This is not a mere coincidence and highlights the importance of having sustainable business models.
In 2024, we will see more and more positive examples as projects deliver on their product roadmap and drive real utilities to triumph over competitors with empty promises and hype-based marketing. Both builders and users need to be practical and patient rather than seeking achievements or simply looking to make quick money to build and support projects with adequate income streams.
Apart from projects that require sustainable business models, another central problem is that the web3 infrastructure currently cannot maximize the full potential of the industry due to its nascent nature. For example, decentralized exchanges (DEXs) provide an essential foundation for decentralized finance, which is a core vertical of web3, but the trading volume and liquidity of major DEXs are still surpassed by major centralized exchanges due to familiarity. of the user experience. , better slippage, liquidity depth and more.
While decentralization maximalists may not like the idea, many mainstream users are too comfortable with escrow services to jump straight to self-custody, resulting in many centralized services acting as a sort of bridge to web3.
We already see this trend slowly growing: Coinbase provides a gateway for its users to the ethereum ecosystem with its L2 foundation, Binance provides its users an entry point to defi with its recently launched web3 wallet, and even a custody wallet focused on Telegram. TON Space.
More and more web2.5 products and services, which are based on a hybrid combination of web3 decentralization and web2 battle-tested efficiency, will drive critical use cases and larger scale adoption for the crypto industry.
There is also a need to improve the security aspect of the infrastructure, as the web3 industry is still plagued by scams and exploits: in November alone, $290 million was lost in just five hacks and traditional wallet providers like Ledger fell victim to an exploit. which endangered many at-risk users in December.
It is still too early for decentralization alone to be the means to an end, as the web3 industry still needs more time to mature. User education also plays a key role, along with improvements to the product's UI and UX. As things stand, decentralization and its autonomy should be an end state that the web3 industry strives to make accessible, secure and easy to use even for mainstream users.
While this has yet to be achieved, web3's “progression through regression” in 2024 should be celebrated as it will undoubtedly bring the industry closer to making significant advancements and widespread adoption possible.
