a16z published their first ever crypto report almost two weeks ago. They plan on doing it annually, the report is about trends in the crypto industry.
In this post, I want to share with the community some key insights I took away from the report on why crypto's future looks bright.
The Crypto Market Cycle
The crypto industry started more than a decade ago with bitcoin been the forerunner. Since then ethereum and the rest followed, now there are thousand of cryptocurrencies. However, the market has not fully matured yet. The crypto market cycle is a feedback loop of four cycles:
Price -> Interest -> Idea -> Innovation
Prices drive interest and interest generates activity which leads to ideas. This ideas give birth to startups and/or projects. The successful startups pump the price which generates more interest on the cryptocurrency, more interest equals more ideas which creates more startups and projects. The cycle keeps repeating itself. Almost all Cryptocurrencies follow this cycle and Hive is no exception. I think it's the perfect example if you see the projects that are being built and the interest that's it's gaining.
I know, I know, the market only shows green and red, up trends and down trends. But that's how the market behaves, it's purely emotional based on fear and greed. Don't pay much attention to the fluctuations, just keep building. In the background, this is what is happening; the price-innovation feedback loop. This builds a consistent long term growth as every cycle refines itself from the previous one. Eventually the core foundations are put into place and their's some stability in the now volatile industry.
Web3 Values Creators Far More Than Web2.
Web3 platforms offer fairer economic terms than Web2. With a few exceptions, creators on Web2 hardly have a percent of the content they produce. On Web3 you have potential to earn rewards on every content you produce and the percentage you take is far higher than Web2.
Compare Opensea's NFT Marketplace take rate of around 2.5% and Meta's nearly 100% from Facebook and Instagram? Clearly the gap is quite huge!
A U.S congressman called Ritchie Torres summarized it quite well, in an open-ed he said: "You know something is profoundly wrong with the economy when Big Tech has a higher take rate that the mafia." Mafias don't take this much percent and they're still rich no wonder these Web2 companies are mega rich!
According to our analysis, web3 paid out on average $174,000 per creator, while Meta paid out $0.10 per user, Spotify paid out $636 per artist, and YouTube paid out $2.47 per channel.
This was a study between Opensea(Web3) and Meta, Spotify and Youtube(Web2s) on what the average pay out is for creators. The numbers are stagerring because Web2 has billion users while web3 has less than a million(Opensea). Yet it pays far more than the whole Web2 combined.
Crypto Is Having Real Impact In The Real World.
It's no news that more than a billion people are unbanked and underserved around the world. The news is cryptocurrency can solve this problem. For example here on Hive, every user has a bank account which is their wallet and you can make transfers to any other user instantly and free of charge. Did you know that joining Hive is way faster and simpler than opening a bank account? It's not a problem of not having the infrastructure, it's just a publication problem and a lack of awareness. No doubt the rich will be mega rich but now everyone has the potential to be rich because crypto provides financial inclusion for everyone regardless of their background.DeFi or decentralized finance has now made it possible for emerging markets to have access to capital that would otherwise have been unavailable. With NFTs, you're granted virtual property rights across different kinds of digital goods. Decentralized Autonomous Organization also known as DAOs allow people to pull their resources together and work on shared interest. There's no central entity and revenue is shared equally based on the resources you put it. Crypto is going after industry after industry and it has a solution for them. This a revolutionary wave of cosmic proportions.
We're Still Early On Crypto
According to the report, When we compare the industry with the early internet and it's commercialization, we're around 1995. The internet reached 1 billion users around 2005 which coincided more or less with the rise of Facebook and other Big Tech companies. It's predicted the crypto industry will reach a billion users by 2031. At the time of this writing, that's nine years from now.However, I think it will happen much sooner because despite the current market down turns people are still flocking into cryptocurrency as an alternative against the rising inflations. It's just lack of awareness and misconception about crypto but I guess that's how it was back in 1995 when the internet was called 'a fad'.
When do you think the crypto industry will reach a billion users? Let me know in the comments.
All Resources:
A16z Crypto Report