The future of Web3 and Blockchain’s potential
Web3, blockchain, and crypto are touted as the future of the internet or known as the evolved version of Web2 with the potential to be a game-changer. But is it really going to change the world?
Web3 aims to promote the use of open, secured services or applications via decentralised protocols, aiming to disrupt the traditional finance industry such as banks, and ushering in a new digital economy age where the middleman no longer exists. For example, the Republic of Georgia has invested in a blockchain-based land title registry back in 2016. This technology is used to secure land property transfer, reduce or even eliminate the need to hire advisory agents, and save fees in the process. The technology can range from Non-fungible token (NFT) gaming to HealthCerts, an open-sourced digital standard used by the Singapore government to issue digital COVID-19 test result certificates. This is just one of the many features that blockchain can do!
Going deeper, we can see that NFTs (non-fungible tokens) and DAOs (decentralized autonomous organizations) are the hot sectors for the first quarter of 2022.
What is DAO?
DAOs are organisations that are automated and decentralized, governed by the community where the decisions made are executed by smart contracts on the blockchain. This removes the need for a centralised authority or control.
DAOs offer many benefits that would be unthinkable a few years ago. Decisions can be made in an instant once all participating members reach a consensus. Therefore, it allows fast and decisive decisions to be made based on majority votes since no hierarchal structures are present that would otherwise slow it down. For example, in the Cosmos network, one can vote to make a series of decisions, such as whether to ban a certain whale wallet or decrease the staking value.
In another example, DAOs allow charity organisations to quickly distribute funds to the appropriate channels using smart contracts, minimising human decision error and corruption. This results in a greater impact and an effective process overall.
DAOs can also be a great tool and platform for investments as DeFi (decentralized finance) picks up pace. It allows retail and Institutional investors to own cryptocurrencies, lend, or even stake them for better returns over time.
The future of web3
The famous phrase – Early bird catches the worm is a saying that can be applied to cryptocurrencies, especially DeFi and DAOs. The 5 stages of the adoption curve determine the current adoption stage of new technology or product. We can determine Cryptocurrency’s current stage by looking at the number of identity-verified crypto users- that is users who did KYC (identity verification check) on various crypto exchanges. In 2016, there were five million identity-verified crypto users worldwide, but by Q3 2020 this number increased to 101 million. That is a staggering 1,900% increase!
Even though that seems like a lot, it is only a fraction of the world’s population. There is a lot more room to grow as the world is starting to see the utility and functions that cryptocurrencies can offer. Hence, from these numbers, we can see that the crypto adoption rate is still low and belongs to the early adoption segments.
Bitcoin Vs Internet adoption rate
Let’s look at Bitcoin’s adoption rate, which is rather similar, if not more to the internet’s adoption rate from 1997 to 2025. The internet took seven and a half years to reach 1 billion and Bitcoin is estimated to take only 4 years to achieve the same number. Right now, it is at the 100-130 million mark, which is impressive. This data is based on the number of people who did KYC aka identity verification on crypto exchanges. But not all crypto users use an exchange, so the numbers, in reality, may be even larger than this.
Let’s look from a broader perspective. In this chart, we can see that Crypto adoption is growing massively at 165% a year versus 85% for the internet during the same period. This is the fastest adoption of any technology in the history of mankind. Still, think crypto is a Ponzi?
VC activity
A venture capitalist (VC) is essentially a private equity investor that provides capital to companies with high growth potential in exchange for an equity stake, providing startups with the means to expand.
The year 2021 was a bull market for crypto, with high expectations for it to reach $100k based on analyst predictions. This led to some big investments by VCs into crypto start-ups, around $30B+ was deployed globally.
However, a slowdown is expected this year and could be reduced by as much as 50% from its peak, this is a similar trend back to 2018/19 during the bear market. This is because investors are holding back from deploying more capital due to recession fears, elevated inflation estimates, and the ongoing Ukraine-Russia war.
Supply of BTC on exchanges
The market will likely see sideway actions for a while and will probably not reach its all-time high (ATH) any time soon. Why?
Many signs point to a lack of capital inflows in the crypto market. Without a constant capital inflow and demand, prices will not increase. On-chain activity dropped by 13% In July compared to November’s highs, and exchanges have seen a 20% drop in their balances since Jan 2020, according to glassnode. Low Activity is usually linked to a significantly reduced demand for cryptocurrencies because of declining interest from market tourists and is a sign of bear markets.
This shows that investors are shifting into HOLD mode during this crypto winter by withdrawing their coins offline from exchanges to crypto wallets.
What can you do?
While waiting for the bear to rear its ugly head, you may look up which DAOs or token looks promising using various research methods. You should never trust a single source alone, not even your favourite Youtuber, as he or she may have hidden agenda to boost their views. Worst, it may be a pump-and-dump scheme if you are not careful. Once you have identified a potential project, you should set up a watchlist to keep an eye on it. Do a Fundamenta, sentimental, and technical Analysis to identify the following:
- Roadmap – what are their plans for the next few months?
- Website – does it look credible or well-designed? Is the information complete?
- White Paper – what is the utility, can users stake or participate in governance?
- Partnerships – Do they have strong partners? Who are their partners?
- Community sentiments – Is their discord active? What is everyone on Reddit and Twitter talking about?
- Tokenomics – What is supply and demand? Is it sustainable?
These are your tools to provide an overall analysis of a project and will aid you to find out if they have a solid foundation and a long-term narrative. Some other online tools that will aid you are:
- Defillama – on-chain analytics platform (sort by changes in value to analyse trends and find out the next popular chain.
- TokenTerminal – Fees, earnings, and revenue database. Check out the price to fees indicator to evaluate if a token is currently trading at a good value.
- Debank – web 3 portfolio tracker. You can use it to track your wallet holdings or look up other wallets (alpha hint: look up the whale wallets from Etherscan and their wallet on Debank to see what they are holding!)
- Dune Analytics – Analytics platform to track volume, and adoption for different protocols, sort the dashboard by favourites to find trending protocols.
- CoinMarketCal– Crypto events calendar.
The next step is straightforward, to buy when the opportunity presents itself and make sure you use Dollar-Cost Averaging (DCA) to take advantage of those dips. You can also DCA out when you find that the project has reached your desired price or if you have better alternative investments. Do your research and stay safe!
