2022 has been the most dramatic year for crypto to date. 2021 ended with a frenzy of excitement, with BTC reaching its ATH only weeks before. 2022 was going to be about consolidating wins, furthering adoption, and cementing the industry’s place in the mainstream.
As we know now, things turned out a little differently. To get a temperate check on the industry, BeInCrypto spoke to nearly 50 industry members to get a glimpse of crypto in 2023.
As part of our research into the industry’s future, we spoke to many projects, both large and small, developers and executives. One of the key takeaways from our work was that decentralization had to be put front and center again.
One of the key points of weakness in the industry is a lack of transparency. FTX was able to misappropriate users’ funds, in large part because nobody could see behind the curtain. On December 19, Caroline Ellison, the former head of FTX’s trading affiliate Alameda Research pleaded guilty to seven criminal charges. She told a New York judge that the company had access to an unknown “unlimited line of credit on FTX.com.”
Stakeholders, Customers, and Creditors got ****ed. Plain and simple.
Learn the lessons. Move on.
Market conditions made it worse. Alternatives to FTX should have been assisted and taken seriously.
Creditors were never set to “win” but it could have been a lot better.
— DJ Crypto (@DJCryptoYT) December 23, 2022
Decentralize Now!
That opaqueness poisons the well for the entire industry and forms a roadblock to adoption. What bad actors like Sam Bankman-Fried have done is put a crypto spin on traditional scams, says Jonathan Zeppettini, Strategy Lead at Decred. “In many cases, using cryptocurrencies as intended would protect users from exposure to these negative outcomes,” he says. “Unfortunately, complacency and greed often get the best of people.”
But, the solutions are already there and ready to use, and that includes self-custody of funds. According to multiple respondents, they simply need promotion and adoption. “I’d like to see more of an emphasis on tooling that empowers users to disintermediate and obviate the need for various middlemen…Decentralized exchanges such as Uniswap and DCRDEX can mostly replace traditional centralized exchanges and prevent another FTX incident from even being possible.”
The risk of centralized exchanges was demonstrated over a decade ago with the Mt Gox hacks. By early 2014, the exchange was handling over 70% of all bitcoin transactions. However, the early giant of crypto imploded after a series of intrusions, losing hundreds of thousands of bitcoins, then worth hundreds of millions in USD. 2022 has forced us to learn the same lessons, says Justin Banon, CEO of Boson Protocol.
Crypto in 2023 will have to get used to making the case for itself again. “Decentralization can offer solutions to these issues and provide self-custody of assets alongside permissionless and trustless transactions. I predict that we will start to see non-custodial and decentralized solutions re-emerging as individuals begin to see the value in trustlessness and decentralization.”
Empowering Users Also Means Education
Multiple respondents were also frank about their views on the lack of education for non-crypto natives. Technical jargon and overwhelming and intricate UI create high barriers to entry, they said. Being “educated” did not necessarily mean having developer-level knowledge about various protocols. However, users ought to be better placed to understand the relative benefits between different projects.
Problem: Blockchain literacy is low.
Unless your target audience is developers, most people are intimidated & confused when you throw heavy crypto jargon at them.
Solution: Use human friendly labels, add descriptions and tool-tips to educate people on the go. pic.twitter.com/5wi4mj6ajQ
— Yash Bhardwaj (@ybhrdwj) May 21, 2022
“When a user then gets to the point of interacting with a new protocol, it is up to each project to simplify onboarding for its user,” says Eric Chen, CEO of Injective Labs. “For example, having easier points of access for users to on-ramp with fiat is crucial, as it is a familiar process for users across the board… In addition, simplifying the UI to allow users to access the actual product without having to interface with technical jargon is just as important to help with [the] adoption of mainstream users.”
BeInCrypto also heard how education needs to extend beyond how to interact with individual protocols. Incoming users, and potential converts, need to understand the value of the technology itself. “If we would focus on teaching people the principles and not just ‘cryptocurrency,’ people would grasp the concept way faster,” says Daniel Logvin, CEO of LedgerByte. “Currently, the general public thinks that web3 is only about cryptocurrencies, which it’s not. Now we have smart contracts; we can process almost any type of information in the blockchain. People learning more about the possibilities of web3 would be a game changer and would greatly contribute in terms of its adoption.
Crypto In 2023 Should Be Less Speculative
Many observers also see the industry as a newfangled vehicle for making money. However, in 2022, it has more often than not been a new way to lose money. But I digress. A 2020 survey by the UK’s Financial Conduct Authority found that most holders saw crypto as a speculative investment. A 2022 study by the Ontario Securities Commission found speculation was the second most popular reason for owning crypto. Multiple surveys have found similar results.
FTX did not fail because of a bank run. It failed because it fraudulently used customer deposits to fund market making activities. Crypto does not need a central bank as a result. Crypto needs more utility, less speculation and better lit markets which are agency only
— Asiff Hirji (@AsiffHirji) November 12, 2022
In our own survey, we heard that the industry should move away from this and focus on use cases instead. In a market with thousands of coins, tokens, and assets, speculation will always exist. But it should not be the focus or what the space is known for. “Crypto companies that have dominated the headlines of late have been highly speculative, at times to the detriment of their customers,” says Devraj Varadhan, Senior Vice President of Engineering at Ripple.
“We are going to see a shift in the type of companies taking center stage – the ones that are harnessing crypto and blockchain technology to solve real problems and unmet customer needs will be the ones that have lasting longevity in the marketplace.”
Bring Forth The Bankless Future
One of the dreams of early crypto was a trustless, bankless system. A common thread in BeInCrypto’s conversations was the need to return to this vision. Not because of its idealism but for purely practical reasons, says Navdeep Sharma, cofounder of Reelstar. “Safety and security are better found in decentralized Web3 platforms that have less human influence due to their implementation of transparent, audited code, such as smart contracts.”
BeInCrypto heard that the potential of this technology is still not fully appreciated. Not just outside of the community but within it too. Crypto in 2023 needs to fix that problem.
“As power is given back to the user, a number of protocols will continue to break boundaries within the industry,” continues Chen of Injective Labs. “I fundamentally believe that user attention will continue to move into DeFi as verticals such as exchanges, lending, prediction markets, and derivatives become truly decentralized. This, in turn, would bring us all one step closer to the vision of creating a bankless world controlled by the people.”
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