The past few months have been a testing time for investors across the board, but particularly hard on crypto investors.
After a brief correction in early 2021, the crypto markets seemed poised for the moon. Bitcoin achieved a new all-time high of over $68k in November 2021, while overall crypto trading of $23 billion shattered all previous years’ records.
However, the sharp decline of crypto prices in January saw the market fall below $2 trillion, and the continuation of this decline began to his companies with unsustainable business models. The first high-profile casualty was Terra’s Luna stablecoin, beginning a domino-like series of implosions.
With the market falling heavily across the board, people are naturally asking if crypto has finally come undone.
A Market Opportunity Even the Incumbents Can’t Ignore
Is crypto dead? The short answer: Absolutely not.
In fact, there has never been a better time to shape the future of crypto. According to Citi, the metaverse economy–in part, powered by crypto– is set to reach $13 trillion, and an active user base of 5 billion, by 2030.
The report predicts a mix of traditional forms of money and crypto, noting that money in the metaverse could exist in different forms. But it’s not just finances, NFTs will also play a key role as a form of sovereign ownership of digital goods.
In addition, Morgan Stanley believes NFTs could represent a whopping 10% of the luxury goods market over the same time period.
History Has Proven Most Value is Built in Bear Markets
While the metaverse is new territory, building in bear markets is anything but a new phenomenon.
Take OpenSea as an example, currently valued at $13 billion with more than 1 million active users.
The project was launched in 2017 in the days of pioneering NFT projects such as CryptoKitties and CryptoPunks. Almost immediately, it had to face a grueling, two-year bear market that saw the price of Bitcoin collapse by over 80%.
While others prematurely mourned/celebrated the ‘death of crypto,’ the founders of OpenSea kept building. After two years of hard work, their KPIs were far from impressive: a mere 4k users conducting $1.1 million in monthly transactions. But the rest, as they say, is history.
It’s no coincidence that other market-defining companies (Coinbase: 2012), platforms (Uniswap: 2018) and protocols (Ethereum: 2015) were forged in the furnace of market pessimism. That’s how good ideas are tested.
What’s Different This Time?
It’s not widely recognized yet, but we are now entering a period of non-linear expansion thanks to NFTs.
We know that crypto advances in waves. So what made the NFT explosion of 2021 different from the DeFi Summer of 2020 or the ICO boom of 2017?
It’s simple: NFTs represent crypto’s consumer moment.
That is, the rise of NFTs is the first time blockchain technology (inaccessible to most) has made contact with the world of art, culture and entertainment (accessible to all).
While the value of many speculative coins and DeFi tokens are zeroing out, many collectibles and digital goods with mainstream appeal have maintained their value thanks to genuine demand.
Crucially, as this demand comes increasingly from mainstream consumers, it has the potential to decouple the web3 market from the problems of “old guard” crypto (speculation, ponzinomics, and “number-go-up” business models).
Gaming, digital goods, and the metaverse are the focus of Wall Street and mainstream brands piling into web3. Not to mention the arrival of high-profile, non-crypto-natives (Snoop Dogg, Jimmy Fallon, Post Malone, and numerous athletes).
Largely Untapped Potential
The adoption of NFTs in spite of the technical difficulty (and risk) involved is suggestive of enormous potential when UX barriers and security concerns are resolved.
This potential can be inferred from the growing number of use cases:
NFTs have unlocked a new creative canvas, enabling a new way to create and monetize. We’re about to enter a true renaissance period of art, technology and business, and if you can contribute in any way–as a founder, developer, designer, writer, artist, programmer, marketer or investor– the upside is tremendous.
What Entrepreneurs Should Focus on Now
Blockchain’s mainstream moment feels like it’s only a matter of time, but it won’t become a reality until we create user experiences that meet users where they are.
The next frontier of crypto is enabling the masses to buy, own and trade a digital good–one that they genuinely want and use–without ever knowing (or needing to know) it’s stored on a blockchain.
No more seed phrases, hardware wallets, or complicated gas interfaces. While these will likely remain valuable to sophisticated crypto users, the largest economic opportunity lies in the tools, wallets and protocols that make blockchain interactions feel invisible on the front-end.
It won’t happen by educating non-crypto natives. The opportunity is to build tools that are safe, intuitive and familiar to the internet we’ve always known. And although that’s easier said than done, it’s a once-in-a-generation opportunity for entrepreneurs.
If Opensea could become a $13 billion company building through the last bear market with a mere 1.5 million active users, imagine the possibilities when that number grows.
While the crypto paradigm of 2020-2021 has come and gone, a new, much bigger vision is aiming to take its place. All it needs is people to build it, and the time for building is now.
