Builders, the bear market is almost over
We’ve spent all of 2023 doubling down on the real crypto projects of substance — but 2024 is when they will really take off
Midjourney modified by Blockworks
After 2022’s market crash and the implosion of several notable blockchain companies, this has been a year of doubling down on projects of substance. Web3 has taken 2023 as its year of reflection and constitution.
That said, I firmly believe that 2024 will see builders’ hard work and grit pay off — next year, the public will see the fruits of our bear market labor.
Stablecoin payments will take off
Due to their stability and ease of use, stablecoins are becoming increasingly popular for payments, remittances and investments in DeFi applications. Stablecoins had a relentless year in 2022, settling as much as $11 trillion on-chain, almost 10 times PayPal’s and equal to Visa’s volumes.
PayPal launched its own stablecoin in 2023, the first US financial institution to do so. Traditional payments processors like Visa and Mastercard are also recognizing the opportunity behind stablecoins by experimenting with USDC, the second-largest stablecoin in the market, to explore its use to make cross-border payments faster and cheaper.
As there is an increasing demand from retail to spend stablecoins through online transactions and peoples’ day-to-day lives, Visa and Mastercard will be capitalizing on the opportunity in 2024. However, with the aforementioned increases in stablecoin usage, I also expect 2024 stablecoin numbers to equal Visa and Mastercard’s total volumes.
A breakout Web3 game will see a nine-digit user base globally
Although the Web3 gaming industry is still in its early stages of development, it will allow players to own and trade their in-game assets as real property, offering the immersive experiences that players crave.
Several Web3 games have been around for several years and have built large and loyal fanbases, such as Axie Infinity and Splinterlands, while other newer games are quickly gaining popularity. At its prime in the summer of 2022, Axie Infinity saw 2.7 million active users on the platform. Eventually, play-to-earn dynamics lost popularity — but we’re now anticipating the next wave of games to launch with new features.
Read more from our opinion section: Play-to-earn as we know it is dead: Long live SocialFi
Web3 games must still have the AAA-quality graphics and gameplay that are table stakes for Web2 games. Progress on this front has been exponential, and major influencers are taking note. While a nine-figure fanbase for a new game within a year might seem like a tall order, because of the global nature of online gaming, when there is a hit, its growth is exponential.
Bitcoin’s market capitalization will grow 50 percent
Bitcoin is poised for a banner year in 2024. As of writing, more than half a dozen US financial institutions have applied for a spot bitcoin exchange traded fund (ETF). Bitcoin futures ETFs are already in operation, as are leveraged bitcoin ETFs, and Grayscale’s recent court victory with the goal to convert its bitcoin fund into an ETF is more reason for optimism. Spot bitcoin ETFs would make it easier for retail investors to gain exposure to bitcoin, make bitcoin more attractive for institutional investors and add legitimacy to bitcoin as an asset class.
What’s more, the next bitcoin halving is expected to occur in April 2024, when the block reward for mining bitcoin is reduced by half. Such events are designed to slow the inflation of bitcoin, and as a result, many analysts expect the halving to significantly grow market capitalization. In the previous cycle in 2020, we saw bitcoin (BTC) increase almost 100% in market cap just six months after halving.
NFTs will prove themselves to be than just collectibles
NFTs provide a way for artists to establish ownership of their digital creations, create new revenue streams and engage communities around artists’ work. That said, there are so many more uses for NFTs than art.
Read more from our opinion section: Don’t use your NFT for that
In 2023, the groundwork was laid for NFTs’ next major utility to become apparent: loyalty programs and customer engagement strategies. In Asia, which has become a leader in Web3 adoption, NFTs have been integrated into OK Cashbag’s loyalty program, an app used by roughly half of the South Korean population. And in Japan, similar efforts are underway to add millions of shoppers into Web3 loyalty programs. It is only a matter of time before enterprises around the world understand that the same community building and revenue streams created for artists through NFTs can be applied to the world of ecommerce.
DeFi exploits will become rare
In the first half of 2023, there were almost 400 major DeFi exploits, culminating in roughly half a billion dollars stolen. So, DeFi exploits becoming rare next year might seem like quite a tall order.
But the key difference between the first half of 2023 and the second was the spotlight shone on the incredible capabilities of AI, such as Large Language Models (LLMs). There is good reason to be incredibly enthusiastic about LLMs’ ability to allow developers to code smart contracts through human language. The human-made errors of past years won’t be able to hide in code anymore, and will be identified immediately.
Web3 has grown in waves, with periods of progress, and then needed retrenchment. 2024 looks poised to be yet another breakout year in leveraging blockchain’s unique attributes to make the online world more transparent, equitable and secure.
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
- Empire: Start your morning with the top news and analysis to inform your day in crypto.
- Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
- 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
- Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
- The Drop: For crypto collectors and traders, covering apps, games, memes and more.
- Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
