The growth of the crypto sector so far has been mainly driven by those who are familiar with the technology. Many liken it to a rabbit hole, where the typical user starts with some curiosity about Bitcoin, discovers Ethereum, and then hits any number of tangents with smart contracts, DeFi, NFTs, or any of the other sub-segments of the crypto industry.
However, the need for extensive knowledge of a technology in order to use it presents a high barrier to entry. For a new technology to achieve mass adoption, it must be accessible to non-technical users. For example, the Windows operating system made it easy for anyone to use a computer without the in-depth knowledge of the operating system that MS-DOS required. Internet browsers allow anyone to surf the Internet without knowing what terms like TCP/IP mean. Technology must be made available in a way that is accessible to all.
Blockchain technology is currently at an inflection point as the Web 3.0 era dawns and moves beyond DeFi (decentralized finance). The next wave of adoption will come from consumers who are not interested in crypto as a speculative asset or technology for its own sake.
However, this tipping point comes as the 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 countering broader market trends. What all these breakthroughs have in common are concrete use cases of Web3 that can attract and retain native non-crypto consumers, making them highly resilient to market conditions.
Blockchain technology takes a back seat
There are now a growing number of use cases for crypto that are less ecosystem-centric and less dependent on the user actively and knowingly engaging with a blockchain. They allow users to own tokens or NFTs and only perceive them in the context of their utility or value.
One example is move-to-earn apps that gamify physical activity and use tokens to incentivize exercise. STEPN, a Web3 app aimed at the global running community, allows users to purchase a pair of digital sneakers within the app, which then track their mileage while running using GPS. Users receive 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 compare buying the NFT to paying for a gym membership with a chance to get the fee (and more) back.
Recent conditions in the cryptocurrency markets have not been conducive to the value of the STEPN token. However, when measuring adoption, the prospects are significantly better. At the time of writing, STEPN runners have logged over 100 billion miles — a number that doubled in three months between June and August while crypto markets were firmly in bearish territory.
The allure of GameFi
Gaming is another segment of the blockchain sector where technology has started to take a back seat and adoption metrics are deviating from market conditions. Blockchain Gaming or GameFi has made great strides in recent years thanks to games like Axie Infinity. The game’s “play-to-earn” model proved extremely popular in several Asian countries during the pandemic, as people used it to make up for lost income when they were unable to work.
As a first mover, it’s fair to say that Axie Infinity has taken its share of teething troubles, suffered a high-profile hack, and has drawn fair criticism for the sustainability of its economic model. However, the GameFi app ecosystem has also grown rapidly in recent years, and Axie Infinity now faces a lot of competition from other games that include 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 games fell by just 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 daily active users.
The gaming community is also very interested in the industry. According to a recent report by NewZoo and Crypto.com, around 40% of gamers who are new to blockchain gaming are either moderately or very interested.
Increase the volume of music NFTs
The music industry is a prime example of 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 the format. As one commenter notes, it’s analogous to switching from vinyl to CDs or from MP3 to streaming. Additionally, merchandising has always been a big part of the music industry, with fans willing to invest in collectibles such as t-shirts, autographs or limited edition releases that also have value in secondary markets.
With the transition to digital music now all but complete, there is a huge opportunity for digital music collectibles here. So it’s hardly surprising that musicians largely ignore the market conditions and seize the opportunity of NFTs as a new format.
Interestingly, this could be even more valuable now. English rockers Muse recently announced they would be releasing the world’s first chart-topping NFT, meaning sales will count directly towards the album’s position on the UK and Australian music charts. This greatly increases the NFT’s appeal, usefulness, and value to fans, and moves further away from the underlying technology.
entry points
After many years of building the crypto community for insiders, all signs are that the technology is starting to take a back seat as more everyday use cases come to the fore. As such, the potential for mainstream adoption has never been greater.
To bridge the gap in Web3 adoption, innovators need to create products that use blockchain to enhance an existing industry, hobby, or interest. We must obsess over user experiences rather than token prices and ensure that blockchain slowly transitions into the underlying stack of technologies along with power and TCP/IP. The next wave of consumers aren’t in it for the tech or the speculation, but in search of rewarding gameplay, to run faster, or just to enjoy fairer music.
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