Why 2023 Might Be The Year of the Crypto Underdog


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the 2023 Super Bowl It’s just under a month away, and if you remember anything about last year’s game, the sheer number of multi-million dollar crypto announcements indicated that the industry was on the verge of going mainstream. Suffice it to say that the rest of the year would not be so prosperous. Although it seems unlikely that we’ll see any more flashy, celebrity-studded ads for crypto platforms hitting our screens in February, that doesn’t mean crypto is a dead industry in the slightest.

Everyone likes to root for the underdog, but there are a few variables that investors, institutions, and entrepreneurs need to consider before going full speed ahead on a particular project. block chain niche. Blockchain is in a much different position than it was a year ago, with external factors such as incoming regulation and broader market trends playing a role in which projects will get or deserve substantial backing.

Related: 5 Things to Expect from Crypto in 2023

A child prodigy is not enough

This time last year, the cryptocurrency bull run was dominated by easily digestible projects for the public: think large exchanges, NFTs, Web3 and some DeFi. Typically, the higher-profile projects were headed by a wise-guy leader, a megacorporation with endless cash flow, or both.

While a cult of personality can certainly attract new audiences and sell them a product, increased attention becomes a double-edged sword once the going gets tough. Once the crypto winter went into full force, skeptics probably felt vindicated seeing the more founder-centric dramatic declines.

But any entrepreneur knows that projects that fail don’t necessarily dictate the future of an entire industry. Now is an opportune time to get creative and look for valuable crypto uses that have gone under the radar until now, perhaps for all the wrong reasons. So if everyone has apparently learned their lesson about investing in projects based on charisma (or the lack thereof) alone, should we look for projects that work in conjunction with new technological developments?

The recent general public fascination with AI fueled by OpenAI’s near miraculous generative AI model, ChatGPT, it could be a signal for the next steps of crypto. Some startups are already betting on its potential to transform entire industries thanks to its fluency and competent prose. But despite AI’s clear advances and ease of use, it may not be ready for significant mainstream implementation in cryptography.

Related: Microsoft invests billions in OpenAI, creator of ChatGPT

Most of the proposals to merge AI with cryptocurrency involve accessibility and fraud prevention. AI could help create a better user experience, while machine learning’s propensity for patterns can flag unusual or risky transactions before they become catastrophic.

So far, AI has not proven vital to industry-wide efforts to control and manage risk. Companies like Spool, for example, already create comprehensive DeFi tools for individual and institutional investors to build diversified and risk-assessed portfolios for DeFi come back easily.

Fusing new technologies with crypto platforms should be encouraged, but cannot be seen as a safety net or a substitute for due diligence on the part of the investor. And we certainly shouldn’t be adding AI to products for the sake of adding AI.

Playing by new rules

After a year or two of mostly cursory oversight, it looks like governments are stepping back to be the parent in the room with crypto legislation. The next 12 months are likely to unfold exponentially from 2022 regulatory developments of the European Union, Brazil and the United Kingdom, with the all the G20 committing to create a year of political consensus by the end of the year.

But the question of how to regulate cryptocurrency is not an easy one to navigate, and each country seems to have its interpretation of what it entails. Even the United States has its own competing priorities in the advancement of legislation. Debates over how to classify digital assets with the SEC, increased penalties thanks to continued cybercrime, and a push to create its own central bank digital currency have brought US crypto policy to a standstill.

However, there is a clear sign that stronger regulation will play a much bigger role than last year at this time. Cryptocurrency purists may scoff at regulators spoiling the fun and insist that cryptocurrencies can regulate themselves, but the myriad of scandals and sordid developments do not point in their favor.

If individual investors or smaller crypto VCs are scared off by having precise regulation and supervision after seeing the recklessness in the industry over the past two years, they should never have felt welcome in the first place. transparent and decentralized blockchain projects have forms of self-governance, just look at any effective DAO. But setting clear guidelines could potentially appeal to institutions and major venture capitalists that have slowed investment during the crypto winter.

Plenty of blockchain-focused VCs and crypto-natives have no problem staying close to the regulatory pulse and doing their due diligence to avoid the hype cycle. They are also unaffected by the turbulent cryptocurrency market. For example, Digital Finance Group (DFG) is moving ahead at full speed with its strong support for projects it considers to be Web3 pioneers. One of the prominent blockchains the company supports, Polkadot, performed comparatively well in 2022 despite market conditions, its Polkadot Annual Report. presented.

The influential people and trusted institutions imploring investors to do their own research may have been right. And with a new playbook for crypto on the horizon, it may be time to internalize that lesson and reassess what the blockchain industry should aspire to.

We probably won’t see crypto as a whole return to Super Bowl status anytime soon. But a change in what projects and aspects of this industry investors and developers champion could help rebuild its reputation and operations. Rather than stepping back into old territory, it may be time to look at crypto developments that have been left behind. While they may be less glamorous, they could be the key to ensuring a blockchain future.