In a crypto bear market, the fortunes favor the builders

The past few months have been a testing time for investors across the board, but especially tough for crypto investors.

After a brief correction in early 2021, crypto markets seemed ready for the moon. Bitcoin hit a new all-time high of over $68k in November 2021, while total crypto trading of $23 billion shattered all previous years’ records.

However, the sharp drop in crypto prices in January caused the market to fall below $2 trillion, and the continuation of this decline started for his companies with unsustainable business models. The first high-profile victim was Terra’s Luna stablecoin, the start of a domino-esque series of implosions.

With the market plummeting across the board, people are naturally wondering if crypto is finally undone.

A market opportunity that even the incumbents cannot 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 – powered in part by crypto – will 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 can exist in various forms. But it’s not just finance, NFTs will also play a key role as a form of sovereign ownership of digital goods.

In addition, Morgan Stanley believes that NFTs could represent as much as 10% of the luxury goods market over the same period.

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History has proven that 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 over 1 million active users.

The project was launched in 2017 during the time of pioneering NFT projects such as CryptoKitties and CryptoPunks. Almost immediately, it faced a debilitating two-year bear market that saw the price of Bitcoin collapse by more than 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: only 4k users were executing $1.1 million in monthly trades. But the rest, as they say, is history.

It is no coincidence that other market-defining companies (Coinbase: 2012), platforms (Uniswap: 2018) and protocols (Ethereum: 2015) were forged in the furnace of market pessimism. This is how good ideas are tested.

What’s different this time?

It is not yet widely recognized, but thanks to NFTs, we are now entering a period of non-linear expansion.

We know that crypto is moving forward 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 the consumer moment of crypto.

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That is, the rise of NFTs is the first time that blockchain technology (inaccessible to most) has touched the world of arts, culture and entertainment (accessible to all).

While the value of many speculative coins and DeFi tokens is at zero, many collectibles and digital goods with mainstream appeal have retained their value thanks to real demand.

Crucially, as this demand increasingly comes 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 up on web3. Not to mention the arrival of high-profile, non-crypto natives (Snoop Dogg, Jimmy Fallon, Post Malone, and countless athletes).

Largely untapped potential

The adoption of NFTs, despite the technical difficulty (and risk) associated with them, suggests huge potential as UX barriers and security vulnerabilities are resolved.

This potential can be seen from the growing number of use cases:

NFTs have unlocked a new creative canvas, enabling a new way to create and earn money. We are 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 – it is huge benefit.

What should entrepreneurs 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.

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Crypto’s next frontier will allow the masses to buy, own, and trade a digital good — one they actually 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 are likely to remain valuable to advanced crypto users, the biggest economic opportunity lies in the tools, wallets, and protocols that make blockchain interactions feel invisible on the front.

It will not be done by educating non-crypto natives. The opportunity is to build tools that are secure, intuitive, and trusted for the internet we’ve always known. And while that’s easier said than done, it’s an opportunity entrepreneurs only get once in a generation.

If Opensea could become a $13 billion corporate building with just 1.5 million active users during the last bear market, imagine the possibilities as that number grows.

As the 2020-2021 crypto paradigm has come and gone, a new, much larger vision wants to take its place. All it takes are people to build it, and the time to build is now.

The opinions expressed here by Inc.com columnists are their own, not Inc.com’s.

This post In a crypto bear market, the fortunes favor the builders

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