At the moment, there is a brewing economic crisis. The costs of food and fuel are quickly rising. The Federal reserve, seeing inflation in consumer goods, raises base interest rates and causes markets to tank. The crypto market has been tanking most of all, as people pull money out of coins and tokens they’ve been HODLing, to pay for necessities and credit card bills. Meme tokens and NFTs fetch much smaller prices, as “greater fools” wise up. For one reason or another, people are starting to wake up and realize that utility matters.
Web3 promised to give people sovereignty over their own assets, but became captured by “greater fool” speculative bubbles, from the ICO craze in 2017 to the NFT craze in 2021. While the asset types might have changed, the common factor is that early investors are paid off by later investors. Those who come in at the top are left holding the bag, hoping prices will recover. The prices might never recover as more and more projects vie for a piece of the crypto market.
Technology gets commoditized over time, becoming faster and cheaper. VOIP dropped per-minute global communication costs to practically zero. The Web has disrupted newspapers, magazines, TV and radio, and more. So even utility goes down in price. How much more so, for assets whose market value is 1% utility and 99% speculation. Eventually, when push comes to shove, the bubbles pop.
Vitalik and his dad have been saying this for quite a while about the Web3+crypto+NFT space:
This is what utility can look like, and we’ve built it over the last 4 years:
Web1, Web2 and Web3 have each empowered people and united online communities, disrupting previous gatekeepers and enabling new business models such as e-Commerce and Software as a Service.
The vast majority of projects had very little utility, and were merely curiosities. But some platforms, like WordPress, wound up powering 40% of all websites. Big Tech has produced Web2 platforms built on top of Web1, that we now use every day. WeChat has completely replaced cash in China. That’s the kind of mainstream adoption we should be aiming at with Web2 + Web3 = Web5: