Reflecting on the past year, Bitcoin’s value was approximately $50,000, crypto advertisements were ubiquitous in sports media, and it seemed like creating an NFT of one’s nostril could lead to significant wealth accumulation. However, who could have foreseen the downfall of Celsius Network and Voyager Digital, or that Matt Damon would become a source of humor in the cryptocurrency world? Additionally, the once-celebrated Sam Bankman-Fried transformed from a hero to a villain akin to Anakin Skywalker’s transformation into Darth Vader.
All of this is to say that predictions in the world of cryptocurrency can often be inaccurate, as trends and market conditions can shift rapidly. Nevertheless, after the recent challenging period in the industry, speculating about the future of crypto in 2023 may be a useful way to reset our perspectives. According to Jamie Burke, CEO and founder of Outlier Ventures, the trajectory of crypto funding during Q1 of 2023 will be pivotal in determining whether we continue in a prolonged bear market. While Burke acknowledges that the venture market remains robust, with substantial funding flowing into the industry and considerable capital still available for investment, he also notes that the landscape is evolving. In particular, he suggests that fund managers will be more risk-averse than during the bull run, and will focus on reinforcing existing investments in later-stage companies with established growth. As for the broader implications of this shift, and how else the crypto industry may evolve in 2023, we’ve gathered predictions from a range of experts in the field, with viewpoints that span from optimistic to skeptical.
1. Epic battles over-regulation.
While the precise outcome is uncertain, 2023 may mark the culmination of ongoing conflicts surrounding regulatory measures in the cryptocurrency space. According to Laura Shin, host of the “Unchained” podcast, we can expect the introduction of stringent regulations for crypto, which will likely spark a contentious struggle by the industry to resist those elements that imperil the principles of decentralization.
2. Web3 platforms continue to grow.
Alex Zhang, the de facto leader of Friends with Benefits DAO, suggests that larger macroeconomic downturns may compel crypto projects to shift away from speculative ventures and towards more practical applications, such as creating engaging and meaningful social experiences. Zhang anticipates an increased emphasis on developing more substantial Web3 social platforms and protocols, with a growing focus on features such as interoperable identity, on-chain social graphs, and crypto-abstracted social experiences.
3. More bleeding, more losses, more pain.
Cas Piancey, co-host of the “Crypto Critics’ Corner” podcast, offers a less optimistic view of the future, warning that the fallout from recent industry disruptions is far from over. Piancey contends that many companies, banks, and funds are hoping that the industry will quickly recover from the FTX and Alameda collapses, or that attention will shift away from their improprieties. However, Piancey argues that the widespread impact of the contagion is impossible to ignore and that we are likely to witness the closure of funds and the collapse of unexpected companies due to the scale and complexity of the problem. Specifically, Piancey predicts that the credit crunch and exposure to bad counterparties will take their toll on the industry and that the true extent of the damage will be difficult to quantify.
4. Truly global bitcoin adoption.
According to Alex Gladstein, chief strategy officer of the Human Rights Foundation, the proliferation of bitcoin entrepreneurs and leaders from diverse countries is staggering. Gladstein recently attended a bitcoin conference in Ghana and was amazed by the number of attendees from rural Cameroon, the Democratic Republic of the Congo, Somalia, and conflict zones, all building on bitcoin. He describes this as a legitimately amazing phenomenon and predicts that global adoption of bitcoin will likely be the top story of the coming year.
5. Maybe a focus on life outside of crypto/bitcoin/blockchain.
Peter McCormack, a prominent bitcoin bull and the host of the “What Bitcoin Did” podcast, responded to a request for his 2023 predictions with a lighthearted quip, stating that “Real Bedford will win the league.” While this is clearly a joke (McCormack purchased the team in 2021), it may reflect a broader sentiment within the crypto community. McCormack suggests that during periods of the market downturn, it can be beneficial – even therapeutic – to focus on other areas of interest.
6. Web3 gets fashionable.
According to Cathy Hackl, chief metaverse officer at Journey, the fashion industry will continue to be at the forefront of Web3 adoption. Hackl predicts that there will be more collaborations between Web3 personalities and consumer and luxury brands, which will explore new commerce models and customer touchpoints. In addition, she believes that the rise of generative AI could lead to blockchain playing a significant role in helping us differentiate between content created by AI and that created by humans.
7. Don’t count out NFTs.
It seems that according to Jamie Burke, CEO and founder of Outlier Ventures, the NFT sector will be one of the first to recover in 2023, as there has been a sustained high-risk appetite for NFT funding in 2022. He notes that major brands from Web2 and Web3 have already started investing in NFTs, and this trend is likely to continue in 2023.
8. Gaming and DAOs continue to grow.
According to Burke, the outlook for gaming in the Web3 space is positive, with several high-profile game titles such as Big Time, Star Atlas, and Ember Sword expected to be released in 2023. Additionally, Burke sees significant growth in decentralized autonomous organizations (DAOs), with a significant increase in new DAOs being formed in 2022 compared to the previous year. Despite the bear market causing some pause in the industry, Burke believes that the growth of new DAOs has continued to accelerate.
9. The big exchanges become “disaggregated.”
According to Haseeb Qureshi, managing partner at Dragonfly Capital, the exchange stack is being disaggregated, leading to the separation of custody, brokerage, and exchange/price discovery into different players, similar to how it works in traditional finance. This development will make it difficult for another FTX to emerge.
Qureshi also predicts that when trust in the market is low, established players such as Coinbase, Binance, and Uniswap will likely see an increase in market share as people are less likely to trust smaller and weaker competitors. In this scenario, network effects become stronger.
10. The space regroups.
Sandra Ro, the CEO of the Global Blockchain Business Council, advises the industry to take stock of the situation and evaluate the extent of the damage. She suggests that the industry should regroup with humility, rebuild with integrity, regain the trust of its stakeholders, and eventually recover from setbacks.
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