Is crypto in a deep funk? Think again

The growth of the crypto sector to date has been mostly driven by those familiar with the technology. Many liken it to a rabbit hole, where the typical user starts with some curiosity about Bitcoin, discovers Ethereum, and then embarks on any number of tangents involving smart contracts, DeFi, NFTs, or any of the other sub-segments of the crypto. industry.

But requiring extensive knowledge of a technology to be able to use it creates a high barrier to entry. For a new technology to reach mass adoption, it must be accessible to non-technical users. For example, the Windows operating system made it easy for anyone to use a computer without the more in-depth knowledge of the operating system that MS-DOS required. Web browsers make it possible for anyone to surf the web without knowing what terms like TCP/IP mean. The technology must be delivered in a way that makes it accessible to everyone.

Blockchain technology is currently at an inflection point as the Web 3.0 era begins and reaches beyond DeFi (decentralized finance). The next wave of adoption will come from consumers who are not interested in crypto as a speculative asset or a technology for its own sake.

However, this turning point comes as cryptocurrency has entered a deeply bearish market. A notable trend we are seeing is that in certain verticals such as gaming, music and even health and fitness, adoption indicators are bucking the broader market trends. What all these breakthroughs have in common are specific Web3 use cases that can attract and retain non-encrypted consumers, making them highly resilient to market conditions.

The blockchain technology goes into the background

There are now more and more use cases for crypto that are less ecosystem-centric and less dependent on the user actively and consciously engaging in a blockchain. They allow users to own tokens or NFTs and only perceive them in the context of their utility or value.

One example is “move-to-earn” apps that gamify physical exercise and stimulate movement with tokens. STEPN, a Web3 app aimed at the global running community, allows users to purchase a pair of digital running shoes in the app, which then tracks their miles using GPS as they run. Users earn rewards that they can spend on other goodies in the STEPN app or sell for dollars.

Of course, the digital sneakers are an NFT and the rewards are tokens on the Ethereum blockchain. Many compare buying NFT to paying for a gym membership with the potential to earn back the fee (and more).

Recent conditions in the cryptocurrency markets have not been kind to the value of STEPN’s token. But when measuring adoption, the outlook is significantly brighter. At the time of writing, STEPN runners have clocked up 100 billion miles — a number that has doubled in three months between June and August while crypto markets have been in bearish territory.

The allure of GameFi

Gaming is another segment of the blockchain sector where the technology has begun to seep into the background, and adoption metrics diverge from market conditions. Blockchain gaming, or GameFi, has made great strides in recent years thanks to games like Axie Infinity. The game’s play-to-earn model proved hugely popular in several Asian countries during the pandemic, as people used it to supplement lost income when unable to work.

As the first mover, it’s fair to say that Axie Infinity has had its share of teething problems, suffering from a high-profile hack and justified criticism over the sustainability of its financial model. However, the GameFi app ecosystem has also grown rapidly in recent years, and Axie Infinity now has a lot of competition from other games that feature NFTs and tokens.

In June, Dapp Radar reported that blockchain gaming is “fiercely defying” the bear market based on user activity. The number of unique active wallets participating in games dropped by just 5% between May and June while the crypto market was in freefall. In July, blockchain gaming accounted for over 60% of all activity on the blockchain, making it the most dominant use case with over a million active daily users.

Interest in the sector among the gaming community is also great. According to a recent report by NewZoo and Crypto.com, around 40% of players who have yet to engage in blockchain gaming are either moderately or very interested in doing so.

Turn up the volume on NFT music

The music industry is a good example of one where blockchain could find broad appeal among new audiences of non-crypto natives. In many ways, NFTs are simply another step in the evolution of format. As one commentator points out, it is analogous to the shift from vinyl to CDs or from MP3 to streaming. Furthermore, merchandising has always been a big part of the music industry, with fans willing to invest in collectibles such as shirts, autographs or limited edition releases that also have value on secondary markets.

With the transition to digital music now almost complete, there is a huge opportunity here for digital music collectibles. So it’s hardly surprising that musicians are largely ignoring market conditions and seizing the opportunity of NFTs as a new format.

Excitingly, there may now be even more value in doing so. English rockers Muse recently announced that they would be releasing the world’s first chart-eligible NFT, meaning sales will count directly towards the album’s position in the UK and Australian music charts. This greatly increases the appeal, utility and value of NFT to fans, and further abstracts from the underlying technology.

Entry points

After many years of the crypto community being built for insiders, all signs are that the technology is starting to fade into the background as more everyday use cases emerge. As such, the potential for mainstream adoption has never been greater.

To bridge the Web3 adoption gap, innovators must create products that use blockchain to improve an existing industry, hobby, or interest. We need to obsess over user experiences instead of token prices, and make blockchain slowly disappear into the underlying stack of technologies along with electricity and TCP/IP. The next wave of consumers is not for the technology or the speculation, but seeks rewarding gaming, to run faster, or just to enjoy music more fairly.