Optimism in Web3

There are reasons to be optimistic as many of the largest web2 companies and mainstream brands enter web3 in 2023

2022 was a dark year for the crypto industry, as bad actors were purged from the ecosystem and the markets crashed 90%. You already know this.

You don’t need another article to paint a negative picture of the “casino aspects” of crypto. It’s 2023 and there is a common understanding that the era of free money (airdrops, token issuances, play to earn, etc.) was never sustainable and needed to end.

That is mostly crypto, not web3. I could write an article explaining the nuances, but the concept has already been described pretty damn well by investors like Fred Wilson and Katie Haun (read Taking A Long Term View of Web3):

The most important software innovation of the last decade, which started with the Bitcoin white paper fourteen years ago, is the emergence of open-source software and decentralized protocols that are the foundation of web3. 

These protocols have survived recent market volatility. It is the promise of software that is not controlled by a company, but instead by an open-source community with built-in safeguards and increased transparency relative to today’s tech and financial systems, that gives us so much confidence in the future of web3.

One of the most common tropes that you hear if you hang out with web3 people is that we just need better onramps to onboard the next billion people.

Onboard the next billion users. People in our industry are obsessed with that phrase.

The conversation usually goes something like “the products just aren’t intuitive enough!” and “mainstream consumers will never download a Chrome extension and put money a wallet!” — basically blaming UX/UI for the current limitations of web3 adoption.

Globally, there are 320 million crypto users which isn’t exactly web3, but that’s 4.2% of the global population, so we have ways to go. (1)

A largest number of the most influential web2 companies and brands recently released or will soon launch web3 initiatives and already have distribution.

The products are easy to use and the web3 features are abstracted to feel like web2 product experiences. The UX/UI is simple and performant enough, so we no longer have that excuse.

In 2023, we have the opportunity to onboard the next billion users to web3 and that alone should make us optimistic. Building real utility is what matters most now.

There are enough smart engineers, designers, and product missionaries still building in this bear market, and market expectations are remarkably low - which is always the best time to experiment.

And when I mention smart people, I am largely referring to web2 builders.

We created a false narrative the web2 and web3 are isolated parts of the internet competing against each other, but the reality is that right now web3 needs web2, more than web2 needs web3.

Luckily for the new internet, we will see a convergence of web2 and web3 that I described in Nikhil Basu Trivdei’s “The Next Big Thing in 2023” annual letter:

In 2023, there will be a true convergence of web2 and web3 as many of the largest companies like Nike, Starbucks, Instagram and Visa integrate exciting blockchain features.

The main use cases will be loyalty programs, cross-border payments, and the expanded product market fit of stablecoins.

We often hear web3 companies say they “want to onboard the next billion users” — but through these releases billions of users already have crypto and blockchain capabilities embedded within the products they use everyday.

If you pay attention to what is actually happening and take a break from deathly crypto headlines, the innovation and experimentation we’re seeing in web3 entering 2023 is somewhere near an all-time high.

People keep asking about the "next big unlock for web3”, and yes, when will we onboard the next billion users?

If you ever look at the ocean, you may notice that a wave set is typically three to ten large waves that appear out of nowhere, and not one rogue wave.

Similarly, Web3 adoption in 2023 will be a swell of onboarding waves by the largest brands and internet companies, rather than a tsunami like DeFi summer or the NFT hysteria we saw in 2021.

A few projects that launched in H2 2022 and are expanding soon:

Starbucks: launched Starbucks Odyssey customer loyalty program in December 2022. Overall its loyalty program is driving 53% of total revenue or $4.35B in Q3 2022 and has 27.4M members.

Nike released its own virtual sneaker store and trading platform Swoosh.x. Nike has earned nearly $200m of direct revenue to date from NFT products and the marketplace has generated $1.2B+ in secondary volume as of August 2022. Launching web3 platform .Swoosh in Q1 2023, a digital community for virtual creations.

Instagram/Facebook released ability to connect digital wallets and share NFTs, along with an NFT marketplaces that lets creators sell NFTs on Instagram.

• Visa: released crypto products offerings suite in December 2022 and predictions entering 2023 that “soon governments, central banks, traditional financial institutions, and fintech will continue to focus on programmable currency and payments, whether CBDCs or stablecoins or other tokenized fiat currencies.” (2)
  

• Cloud Support (Google, Amazon, Microsoft): Google Cloud blockchain node engine, blockchain on AWS (enterprise blockchain), and Microsoft Entra (decentralized identity) are all now publicly available

Next week, Chapter One will release a report of Fortune 500 companies and mainstream brands releasing web3 products in 2023.

There is no guarantee that utility within these products will be strong enough to onboard and retain a billion users. But these releases mean that billions of users will have web3 functionality embedded within the products they use everyday.

And for that reason, we begin 2023 having optimism in web3.

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Sources:

1. Crypto Ownership Data (Triple A): https://triple-a.io/crypto-ownership-data

2. The Emergence of Crypto Visa in 2023 (Hacker Noon) https://hackernoon.com/the-emergence-of-crypto-visa-in-2023