The FTX collapse spread a lot of FUD around Web3, which has tainted people’s perceptions about cryptocurrency and blockchain technology. But, the truth is that Web3’s innovations won’t disappear anytime soon. Well, they’re only going to become better.
Here are five promising developments in Web3 for this year.
1. The NFT utility will grow
With Beeple’s ground-breaking $69M sale of his NFT artwork Everyday: The First 5000 Days in March 2021, non-fungible tokens (NFTs) first made a splash on the world stage. Yet, NFT artwork only makes up a minor portion of NFTs. Expect an expansion of the NFT utility in 2023 to include new features like entry passes to events and club memberships.
Also, more companies may begin issuing NFTs as a component of loyalty programs as they begin to see the potential of NFTs to increase engagement. There are already major brands on board, including Nike, Starbucks, Dolce & Gabbana, Tiffany & Co., the NBA, NFL, Time Inc., and others; it’s just a matter of time before all the well-known companies see the benefits and start their own NFT efforts. Several of these companies are using NFTs in quite creative ways. For instance, Nike’s digital fashion brand, RTFKT, enables holders to “mint” tangible things based on digital NFT holdings, while Adidas released a line of personalized clothes with a cryptocurrency theme for NFT holders.
2. Clearer regulations and enforcement
Intense regulatory monitoring of the cryptocurrency business has resulted from the collapse of FTX and the failure of DeFi lending platforms in late 2022. It’s important to note, though, that merely clarifying the rules would not have stopped brazen fraud.
The next step should be to impose strict rules on any organization handling user payments. The primary objective need to be the separation of custody and trading. That catastrophe may have been avoidable if FTX and Alameda’s funds weren’t mixed together. More transparency about proof-of-reserves is required as part of this “division of powers,” and independent accounting firms should audit these reserves.
Finally, in order to prevent money laundering and the financing of terrorism, countries around the world must come to an agreement on regulatory standards. This could prevent businesses from shifting their headquarters to a nation with lax regulatory enforcement in an effort to engage in regulatory arbitrage.
3. TradFi participation will increase
The year 2022 was marked by moves to offer custody services for digital assets by major organizations from traditional finance, including NASDAQ, BNY Mellon, and others. In addition, exchanges backed by Charles Schwab Corp., BlackRock Inc., EDX Markets, Fidelity Digital Assets, and Citadel Securities all introduced crypto trading for specific tokens.
Despite the bad market, institutional finance’s interest in cryptocurrencies has not decreased, indicating that this is a trend that will only grow in 2023. Institutional actors are less inclined to trust crypto-native enterprises after FTX, therefore custody in particular is likely to facilitate adoption.
4. DeFi will bloom
DeFi participation may increase at the same time as institutional interest in providing digital asset services rises.
The FTX disaster served as a reminder to the sector of the fundamental principle of decentralization: being able to govern your own value without having to rely on a third party that may or may not be operating in your best interests. Although FTX’s immediate effects resulted in exchanges losing liquidity, decentralized exchanges and other self-managed financial services may emerge in 2023.
5. Increased acceptance of crypto payments
Cryptocurrency payments have been adopted more slowly than other uses of the technology due to their volatility. Yet, changes in the payments sector in 2022 might cause a significant increase in the adoption of crypto payments in 2023.
For instance, a study indicated that 40% of consumers between the ages of 18 and 35 desire to utilize cryptocurrency in the upcoming year. More merchants are enabling crypto payments in response to the growing consumer demand.
All three major credit cards—Visa, Mastercard, and PayPal—now accept cryptocurrency payments. Notably, Visa noted $2.5 billion in cryptocurrency transactions in the first quarter of 2022. Just last month, Visa highlighted the potential for “account abstraction,” or automatic payments from self-custodial wallets, as yet another significant advancement for cryptocurrency payments. This would be a significant step in the competition between legacy payment networks and cryptocurrency payments.
There are many reasons for cryptocurrency enthusiasts to be excited about the remaining months of 2023.
Source link
