Crypto is stuck. The SEC is cracking down just as some people finished getting rich off of HarryPotterObamaSonic10Inu. NFT volume has significantly dwindled, startups are selling at deep discounts relative to their valuations, and popular tokens like BTC continue to retreat from their all-time highs. In a perfect sign of the times, the Staples Center may even come back.
Still, excitement persists around very familiar events in Web3. LVMH just announced they are going deeper down the rabbit hole by selling NFTs at 39,000 euros each, profiles with NFT PFPs are promoting new tickers daily, and some guy called ben.eth has all of the crypto Twitter riled up with his memecoin presales.
However, all of this isn’t progress — it’s nostalgia for a time not so long ago when money was cheap and abundant. Free money is no longer the reality, and the space needs to move past it to develop Web3 products that meet the needs of this new world.
Zero Interest Rate Policy (ZIRP) made capital cheap, and much of what happened in crypto and Web3 in recent years falls under this “easy” money umbrella. And with all the recent coverage of what’s happening in Web3, it’s easy to brand all of it a phenomenon on its last legs. Indeed, the over-financialization ensuing from Web3 advancements has drawn in more than a few unfavorable actors, particularly in an era of readily available capital and rampant speculation.
As interest rates rise, the Web3 space will naturally contract, eliminating unfavorable actors and speculative projects that relied on easy funding. Unfortunately, some legitimate projects will fall victim too. This transition presents an opportunity for the industry to demonstrate resilience, build sustainable solutions, and establish a foundation based on genuine value and user needs.
Consumer priorities are likely to shift toward products and services that offer security, stability, and practical utility, and away from volatile, high-risk investments and luxury indulgences with limited functional value. This shift in the economic landscape necessitates a reevaluation of priorities within Web3.
In a post-ZIRP world, Web3 needs to highlight new forms of engagement and interaction online that weren’t previously possible and position the technology as a new programming primitive for the internet. We already see Web3 being applied in novel ways in spaces like conceptual art, media distribution, gaming, and AI.
Overall, the community must hold itself accountable, stay honest, and pay close attention to what people truly need to navigate this uncertain new world. Blockchain enthusiasts and believers should consider showcasing the benefits and practical use-cases of cryptocurrencies, rather than bolstering short-lived, speculative hype.
This shift away from an era of cheap capital and volatility could provide the impetus for blockchain technology and its applications to mature and gain acceptance by an even broader audience. The combination of resilience and innovation will be key for moving the industry forward in these changing times.
Source: Blockworks
