10 Crypto Trends for 2024 and beyond - the ice is melting

14 years after the invention of Bitcoin & Blockchains, and 2 years after a healthy de-toxing and clean-up time for the Crypto industry (= aka Crypto Winter), 2024 brings further melting of snow and lot of flowers blooming. Here my personal top 10 trends and events for 2024 (plus one bonus). All 100% without price predictions and no financial advice. Mentioned projects are for example purpose only and shall not be seen as any form of recommendation.

1. The impact of Bitcoin ETFs

a) Wall Street will heavily promote Bitcoin

I do not stress here again how big it is when 13 - i stopped counting - of the largest asset managers in the world can soon (1. HJ of 2024) provide their institutional clients Bitcoin exposure on banking rails. But how do those ETFs differentiate themselves from each other? Not much. They are basically all the same. Rumours also say that Wall Street products are not bought but sold. So they have to push their products out and will not do this silently. We get a first glimpse of what will come by watching at the Bitwise Bitcoin ETF commercial or by the fact that Van Eck (60bn AUM) secured the meme ticker “HODL” for its Bitcoin ETF. Genius marketing move, chapeaux!

Will Wall Street make Michael Saylor appear pale in “shilling” Bitcoin in 2024?

b) Blackrock will change Bitcoins (wrong) ESG image

Bitcoin consumes a lot of energy, and it will consume more. The important question is what can be done with this. I wrote a post on this where i explained that Bitcoin can play a key role in accelerating the green energy revolution. But to get this message across as a still tiny crypto industry is hard. The “Bitcoin- destroys-the-planet-image" still prevails in media. Blackrock, as one of the ETF applicants, will do this job. Blackrock is the largest asset manger in the world and has been the main driver behind the ESG Investment movement. Blackrock will have to explain now to their clients why Bitcoin is compatible with ESG. Blackrock will be forced to promote the true (green) features of Bitcoin. "Bitcoin, the waste electricity dung beetle" (see my post here).

2. Bitcoin Halving will attract mainstream media attention

Real world inflation is likely to remain elevated in 2024. And there is this strange asset called Bitcoin which reduces its inflation by another -50% in its every four year recurring “halving”. That will likely get a lot of mainstream media attention. Easy to understand for non tech journalists. The halving, which reduces supply, will coincide with the ETF go-lives, which brings additional demand into the market.

3. The Web3 laboratory of the early years is opening up to the real world

The last years Crypto/Web3 was to a great extend building in a decentralised laboratory with few tochpoints to the “real world”. That was important because it enabled a very steep trial-and-error based learning curve without wasting time on how to fit into current legal and economic frameworks. Innovations like Uniswap Labs Automated Market Makers (AMM) would have never been possible in an over-regulated traditional finance market under real market conditions. Other important infrastructure has been built and battle tested in that huge "Web3 Lab" (L1 “operating systems”, various consensus and scaling solutions, Oracles, Zero Knowledge Proof stack, AAMs, decentralised order book based exchanges and many many more.

In 2024 and beyond, Web3 will further expand to the real world via ie. tokenisation of Real World Asset (RWA), Web2 <> Web3 Gaming, Decentralised Physical Infrastructure (DePin), Consumer & Web2 connecting to Web3 etc.. User experience and abstraction of the complicated underlying technology is key for mass user adoption in the real world. Users should not be confronted with intimidating private key management or confusing blockchain standards. NEAR Protocol approach with their account based model is interesting and that field.

4. L1s in search for PMF - shift from tech to business development.

Since 2018 a lot of alternative Layer1 (L1) Blockchains, so called general purpose blockchains, or also sometimes called "Ethereum killers" emerged. All L1 pitches sounded pretty much equal: fastest, cheapest, safest, most decentralised and carbon neutral blockchains. It felt as if many ecosystems where trying to compete only on complicated tech (Trilemma solving) and not so much focusing on outside (non crypto native) user adoption.

But when we purchase today a car or a computer software we are typically also not interested in how the performance and other features are technologically solved in the backend. Who really wants to understand rollups, sharding, ZK proof? Some of us crypto natives do, but most non-crypto natives likely wont.

I think the next years will show an increasing shift towards external business development in order to find a real world product-market-fit (find the right industry and use cases that best fit to the technology). We can already see some signs in that direction ie. Avalanche with Financial RWA tokenisation and Gaming, Near Protocol with AI and consumer/Web2 focus, Solana Labs on payments, DePin and NFTs, just to name a few…

I also believe this is also a unique opportunity for classical business/tech/strategy consultants. They could be an important distribution partner for L1s and bridge between Web3 builders and corporates who want to incorporate blockchains for efficiency improvements and/or new business opportunities. But the consultants need people who really understand crypto (and not just blockchains).

5. Real World Asset (RWA) Tokenisation - a potential next hype

Real World Asset (RWA) tokenisation has the potential to be quite a hyped topic. RWA tokenisation means taking an existing asset (ie. stocks, bonds, real estates) and make a digital twin (= token) out of it which can then move on new blockchain rails. Why would they do this? Efficiency increase & cost savings through faster execution and settlement. There are assets worth trillions of dollars waiting to be tokenised.

One can increasingly read that "RWA as the huge investment opportunity”. RWA is however in a first stage predominantly a use case for L1 blockchain adoption. When a bank tokenises a corporate bond on Avalanche for instance then it becomes essentially a customer of the public Avalanche blockchain ecosystem. But there are also DeFi-like protocols that enable you to put RWA to work (ie. lending). I see potential that investors will mix-up and confuse RWA as investment narrative. And RWA will likely become, similar to AI, an overinflated buzzword which will be used by too many just to ride the wave. Watch out!

But most importantly RWA will help to make the public understand why we need public blockchains powered by crypto assets. And i hope it will also help to dispel the still-prevailing notion that "blockchain technology is great, but crypto is bad".

But i also believe many will be disappointed with RWA as well, because the market will realise that infrastructure and especially regulations are not ready for prime-time. These things take time and most people in Crypto (especially the “i-wanna-get-rich-quick-investors") have zero patience.

Rome wasn't build in a day. Be patient.

6. Decentralised Physical Infrastructure (DePin) - an entire Internet infrastructure will be decentralised

DePin has huge potential. It enables owners of non utilised hardware resources ie. storage space, CPU/GPU to sell this capacities to a decentralised network and make it accessible to everybody. The idea behind is probably 30 years old but it failed so far because a key puzzle piece was missing: the Incentive! why should people do this? And here crypto comes into play. Providers of this resources will be paid in the native token of the underlying protocol. Many protocols have been built in the last three years and they show promising developments and traction, like in storage Filecoin Foundation , Arweave or in rendering and cloud computing (Render Network, Akash)

On the other hand there are also projects that enable other decentralised infrastructure. ie. decentralised 5g telecom networks like Helium or decentralised google maps (Hifemapper). But there are many more.

All those solutions are also often cheaper than their centralised competitors. Despite the strong developments and promising traction, it is still a young segment. As above: it takes time to build this stuff.

7. DeFi: DEXs will outgrow CEXs

Decentralised Exchanges (DEX) have evolved strongly over the last two years. With the emergence of order book based exchanges and derivate exchanges like GMX, dYdX, Synthetix or Injective the user experience comes already very close to Centralised Exchanges (CEX) like Binance or Coinbase. The FTX collapse and the intransparent nature of Binance pushed more than ever users to DEXes. Increasing asset pair offerings and increasing liquidity through market growth and increasing cross-chain liquidity will push the shift from CEX to DEX further.

8. Gaming - Web 3 Gaming 2.0

Play-TO-earn was the much hyped narrative in the last bull market. You play a game in order to earn money, like many Filipinos did during Covid with the Web3 game Axie Infinity. That turned out to be not sustainable since the industry realised that games need to make primarily fun. Money shall not be the dominant driver. The industry learned from its mistakes and developed strongly over the last two years.

The corrected narrative is “Play-AND-earn”. The game needs to make primarily fun but when a game platform can share ie. the financial success with the most active, and successfully gamers, it provides still interesting new opportunities. Many games are currently being build and expected to be released in 2024. The unique possibilities of digital ownership (in-game skins, avatars, other gadgets) in game economic systems (in-game currencies) and market places (exchanges where you can sell your items) provide lot of creative opportunities.

Maybe we will see already in 2024 a Web2 blockbuster game go Web3. The game narrative of GTA, the 2nd most successful computer game of all time, would be predestined for Web3 in game economics. Will the highly anticipated GTA 6 release surprise us in that respect?.. there are at least rumours. If so, then i will buy a computer with a better GPU, so that i can play it with my son.

9. DeSo - Decentralised Social will become big. but not yet.

Today's Social Media was one of the biggest innovations of the current internet (Web2). We received free Apps that helped us to consume content, share our views with the world and connect to friends. We haven't understood for long time their underlying business model. Today we understand that if we don't pay for a product we are the product. Content creators on those big social media platforms built their economic foundation on platforms where they do not own their content nor can they take their followers with them if they want to leave. Creators are logged into the platforms. And since the underlying economic model of those companies is profit maximisation the platforms constantly increase advertising and squeeze content creators. Watching today's YouTube i have a déjà vu. In the late 90ies private television stations in Austria/Germany had one commercial break in the middle of a movie. Today there are more commercials than there is movie. YouTube feels today like if it is going into the same direction. Profit shortfalls at the Google headquarters? One second longer commercials. done!

How long is this still going to work?

Decentralised, alternatives are being built like Farcaster or Lens Protocol are two examples, both still in Beta. These are open platforms where the content creators own their content and can engage in new innovative ways with their followers. Although i believe this is still quite early, it has huge potential. However it will also depend on the speed of failure of the current social media platforms. Maybe Elon will help - or he will transform Twitter, sorry, X, in a decentralised platform as well.

In order for DeSo to reach a critical mass two things need to be given:

1) Very High Frustration with current social media

2) Attractive decentralised alternatives to be ready

Today both is not given yet. The pain of Web2 Social Media is not big enough and Web3 is not ready yet. But i believe it is just a question of time.

10. AI - Crypto can fix many of the problems of AI

Crypto can solve a lot of the problems which the current Generative AI developments causes. In fact one big weakness of the current AI like ChatGPT is its centralisation. Do we want to trust AI models that are owned by profit maximising companies located in certain states and where you don't know which data is powering it? There is already an increasing awareness forming that you need to be careful what you up-load to ChatGPT. You transfer the data to a US company.

Crypto’s decentralisation, will be able to provide an alternative. We will not need to trust a company located in a certain state but a decentralised, neutral and cryptographically secured network. Crypto’s incentive features combined with Zero Knowledge Proof and FHE (Fully Homomorphic Encryption) technology will enable also various industries to open up valuable data to train AI models without handing out the data or even revealing the data itself. Think about MedTech or healthcare.

But Crypto’s verifiability, immutability and transparency can also help to fix the increasing problem of fake news, which is further enforced by AI. Cryptographic “finger prints” of text, videos and pictures will enable to separate trustworthy quality content from AI driven bots.

The developments in this area are however very early. Digital Identity is for example a key puzzle piece that is still missing - a hard one. However the immense innovation power and speed of the open-source based Web3 industry will find solutions to these problems. Some interesting projects are already being built in that space.

As with RWA, AI and crypto will likely be (over)hyped and expectations will be too high and many will be disappointed. The classical Gartner hype cycle will play out ,yet again.

Bonus: Interoperability - will it be a crucial year for uniting crypto islands

Blockchains are still island states with their own infrastructure build on each island. Connections between those chains are still cumbersome and risky. So called bridges are connecting the chains with each other. But every time we cross such a bridge we are scared that it does not break down (=hacked). Although those bridges become ever more robust, this will unlikely be the future.

Chainlink Labs highly anticipated CCIP (Cross Chain Interoperability Protocol) launched in 2023 aims to be the TCP/IP of Blockchains. TCP/IP enabled information to flow freely across the internet and CCIP aims to enable that value can flow seamlessly between blockchains but also between blockchains and the real world (ie. the banking sector). Expectations are high, let's see if Chainlink can deliver, especially also cross EVM chains. I will keep a close eye on that front. If successful it could be a huge game changer for many business models and ecosystems.

Merry Christmas and a successful and healthy 2024!