Is crypto in a deep funk? Think again

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

However, 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 has to be accessible to non-technical users. For instance, the Windows operating system made it easy for anyone to use a computer without more intimate knowledge of the operating system that MS-DOS required. Internet browsers enable anyone to surf the web without knowing what terms like TCP/IP mean. Technology needs to be delivered in a way that makes it accessible to everyone.

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

However, this inflection point comes as cryptocurrency has entered a deep bearish market. One notable trend we’re seeing is that in certain verticals like gaming, music, and even health and fitness, adoption indicators are bucking the broader market trends. What all of these breakthroughs have in common are tangible use cases of Web3 that can attract and retain non-crypto native consumers, making them highly resilient to market conditions.

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Blockchain technology is fading into the background

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

One example is “move-to-earn” apps that gamify physical exercise and incentivizes movement with tokens. STEPN, a Web3 app aimed at the global running community, allows users to purchase a pair of digital sneakers in the app, which then tracks their miles using GPS when they go running. 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 liken purchasing the NFT to paying for a gym membership with the potential to earn the fee (and more) back.

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

The allure of GameFi 

Gaming is another segment of the blockchain sector where the technology has begun to fade into the background, and the adoption metrics are diverging from market conditions. Blockchain gaming, or GameFi, has made huge strides over recent years thanks to games like Axie Infinity. The game’s “play-to-earn” model proved massively popular in several Asian countries during the pandemic as people used it to top up lost income when they couldn’t work. 

As the first mover, it’s fair to say that Axie Infinity has taken its share of teething problems, suffering a high-profile hack and justified criticism over the sustainability of its economic model. However, the GameFi app ecosystem has also grown rapidly over recent years, and Axie Infinity now has plenty of competition from other games that incorporate 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 gaming decreased by only 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 high. According to a recent report from NewZoo and Crypto.com, around 40% of gamers who haven’t yet engaged with blockchain games are either moderately or very interested in doing so. 

Turning up the volume on music NFTs

The music industry is a prime example of one where blockchain can 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’s analogous to the shift from vinyl to CDs or from MP3 to streaming. Furthermore, merchandising has always been a huge part of the music industry, with fans willing to invest in collectibles like shirts, autographs, or limited edition releases that also have value on secondary markets. 

With the transition to digital music now all but complete, there’s a vast 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. 

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

Entry points 

After many years where the crypto community was built for insiders, all the signs are there that the technology begins to fade into the background as more day-to-day use cases come to the fore. As such, the potential for mainstream adoption has never been greater.

To bridge the Web3 adoption gap, innovators need to create products that use blockchain to improve an existing industry, hobby or interest. We need to obsess about user experiences instead of token prices, and make blockchain slowly fade into the underlying stack of technologies together with electricity and TCP/IP. The next wave of consumers is not in it for the tech or the speculation, but seeking rewarding gameplay, to run faster, or just to enjoy music more equitably.