Similar to the internet boom, the crypto market is entering its own Dotcom bubble. Investors had no interest in revenue models and companies were more focused on hosting lavish parties. We have replaced irrational exuberance with FOMO, Beanie Babies with NFT, IPO with SPAC, and Enron with FTX. Very few companies survived the crash, and the aftermath took decades to recover.

While the crypto market will likely undergo its own consolidation in the foreseeable future, intrinsic value will remain difficult to demonstrate to most people. The technology is too complex for most to utilize, low scalability to replace existing centralized solutions, and lack of regulation are just a few obstacles for mass adoption. Resulting in users having little incentive to interact with blockchain technology and those that do are only using blockchain to solve problems that exist within crypto, which is why most publicly traded blockchain companies are either trading or mining related. Cryptocurrency will remain as a speculative bubble, and nothing will change unless real blockchain applications are created.

Previous crypto cycles, while just as volatile, are arguably justified. The narrative for the 2013 cycle was cryptocurrency can be used for remittances, and the 2017 cycle was the rise of smart contracts and the compelling potential of decentralized applications. However, nothing can be said for the 2022 cycle and the likelihood of a wasted cycle is highly probable. Now might be a good time to reflect and reconsider existing proven applications to make them better and examine unexplored ideas to create new industries.

While the future of blockchain applications is uncertain, three examples come to mind when focusing on blockchain applications (payment) and adoption (gaming) for the purpose of building Web3 infrastructure (analytics).

Payment — Remittance has been one of the earliest purposes of cryptocurrency, while little innovation could be expected for payments, most of the world is still underbanked. Even though mobile payment such as Venmo and WeChat have bridged the gap for hundreds of millions of users, the rise of DeFi and its potential to unleash features such as fractional ownership and ability to earn additional income gives users an alternative that eliminates barriers and access to capital market all around the world, opening other endless possibilities. Instead of having payments processed through Visa, your financial transactions in the future can be fundamentally changed with applications powered by blockchain.

Gaming — While long lasting gaming IP are difficult to produce and expensive to maintain, the industry has lacked innovation for the better part of the decade with major hits such as GTA V and Diablo 3 being released in early 2010s. In-game economy can be replaced with tokens, game assets and license can be maintained through NFT, and communities such as guilds can be replaced with DAOs. While the technology for these applications are not complex, they reduce user friction and allow for greater user adoption while giving more ownerships to gamers and diminish the need for middlemen such as Steam and Epic.

Data Analytics — While currently most of the blockchain data is used for price or AML analysis, most of the data is unexplored and remains to be a goldmine. Additional data analytics tools driven by AI and machine learning will be specially created too as more proprietary and application specific data such as DNA are stored on the blockchain or supply chain data to be processed. As blockchains scale and decentralized protocols such as storage related increase in adoption, applications such as decentralized AWS will exist. As more demand is created through application and adoption, positive feedback loops and network effects can be built to create a truly valuable and sustainable ecosystem for the blockchain industry.

While it may be hard to have faith in the crypto market today as the fallout unfolds, the market will stabilize and blockchain will find its core value as long as people keep focusing more on building applications and accelerating adoption. Dominant giants such as Amazon and Google were created in the aftermath of the Dotcom bubble and there is no reason why blockchain-enabled companies will not come out stronger after this downturn. Many might be tempted to move on and try new things, but blockchain technology and its potential to transform industries is a generational opportunity that is here to stay. The need to build the backbone of Web3 is now more important than ever.