Blockchain Capital: Envisioning the "Consumer Era" of Cryptocurrencies

Author: KINJAL SHAH, Blockchain Capital; Compiler: Yvonne, MarsBit

**what happened? **

About two years ago, NFT began to enter the public eye. All of a sudden, we had a wave of consumer use cases launched by hundreds of influencers, millions of dollars in venture capital, and tons of builders.

! [NFT] (https://img.gateio.im/social/moments-40baef27dd-cbcc018e0c-dd1a6f-62a40f)

It was a period of growth. The world has witnessed a renaissance of cryptocurrencies - characterized by returning ownership to users and providing new revenue streams for creatives. We're seeing digital and generative art receive praise and attention never before seen in mainstream media. The discussion turned to the more human side of what is possible with this technology.

However, as has always been the case with previous big gains, the trend quickly turned. Security and user experience prove it's not for the masses. Soon, the chains became crowded, raising the barrier to entry, especially on the Ethereum chain. We have seen traders bemoaning network congestion, which is short-lived and sometimes comical. Principles and ideas exist, but implementation is lacking.

Looking back on these two years, we have observed and learned some lessons through investing, reading and working with builders. We’ll share some lessons learned, what failed, what succeeded, and what we’re excited about.

failure aspects

Speculative Community

The survival and development of PFP or "Avatar NFT" cannot be separated from its community. What started out as a means of bringing people together on the internet quickly turned into an inflammatory, pump-and-dump community. The market does not consider long-term sustainability and value consistency, but jumps from one new NFT to another, chasing the next hot spot. Going forward, we're excited to see the community create meaningful value by orienting themselves around a specific set of beliefs, not dissimilar to the most passionate fans we see on existing social media.

GM, WAGMI and UpOnly

We want a positive community movement. Unfortunately, this turned into a slogan, which in turn devolved into a false belief that Web3 can solve all problems. The industry has always been fun and dynamic. This is one of the most unique aspects of building in the crypto space. But this also brings up a problem, that is, we should not blindly pursue loud slogans and mainstream narratives, but should be brave enough to ask sharp questions.

DAO in its current form

People have described the potential of DAOs in a hundred different ways. DAOs are the new frontier for the community — and soon, everything will be a "DAO". Frankly, the experiment was benign and exciting. However, it is clear that not every organization is a good fit for a decentralized autonomous structure. Governance (a long-standing contentious topic in the crypto space) has not been resolved by the rapid experimentation of consumer DAOs. We believe the human element of DAOs is harder to define and will really affect how the narrative develops.

Aspects of success

NFT will continue to exist

NFTs are not going away. We saw PFP NFTs become a major use case when NFTs were just entering the public eye. However, millions of people in the world now know what NFT is. They understand that NFTs can be the carrier of almost anything - game assets, financial contracts, data containers. NFT has infinite possibilities, and it will not disappear.

Mainstream brands enter the NFT market

NFT creators have earned over $1.9 billion in royalties. The biggest brands in the world are launching NFT products, such as Starbucks, Reddit, Nike, Adidas, Gucci, Louis Vuitton, Tiffany, etc. In a bear market, companies such as Amazon, Google, and eBay continue to delve into NFTs, and imagine what the consumer world will look like five years from now. In particular, marketing and consumer acquisition in the digital world are changing—especially with the demise of . NFTs may play a role in market trends in the years to come.

Technical Innovation

We see new technological creations and innovations emerging in the market. New NFT design mechanisms, such as dynamic NFTs, convertible NFTs, and digital concepts, are exploring the development direction of e-commerce. We experimented with creator royalties — largely a social contract enforced by the market. Over time, I expect creator royalties (in some form) and secondary market sales to become the lifeblood of a healthy NFT market. After this time, we have ideas that need to be tested, validated and implemented.

**Why are we excited? **

Over the past five years, transaction speed, cost, and ease of use have been the top concerns of end users. With improvements in L2, zk technology, and security, we have made significant progress in infrastructure. Block space and throughput will soon allow high-volume use cases like gaming and social media. Now is the time to start experimenting with new spending behaviors uniquely powered by cryptocurrencies. Online time is the most limited resource for any user. The wallet will become a portal, not only linked to financial assets, but also linked to purchase behavior and user preferences. In the Web2 era, the rise of the Internet has led to every action of the user being tracked. With the disappearance, activities on the chain may become a new field of advertising and marketing. The internet will be formed in a way that doesn't violate users' privacy and individual sovereignty - and we need people like you to build it.

Created based on NFT

Generating content on the internet has never been easier. Every day, millions of creators release new music, art and performances to the web. NFT as a data container provides a new mechanism for creating immutable digital content. Properly structured, NFTs can help monetize intellectual property, provide incentives for co-creation (e.g. through tokens), and allow creators to create direct connections with fans. The IP (intellectual property) market has historically been an opaque one, with large holders selectively holding and distributing rights. Digitally grown intellectual property, such as the Nouns project, enables collaborations to move toward more decentralized, community-owned efforts. There are also many ideas for membership, reputation, and more to explore in NFT-enabled use cases.

chain game

Nearly half of the world's adults play games in some way. Blockchain provides an open global database upon which games can be built and distributed. Blockchain games allow users to own in-game assets with a universal source of truth (i.e. blockchain) and limited platform risk. These games may benefit from these inherent characteristics, creating a richer player experience where ownership is at the heart of the game. We saw record growth in the gaming space - accounting for nearly 50% of all on-chain dapp activity.

Social-first wallet

We live in a world of targeted advertising, compromised identities on hundreds of accounts, and unprotected privacy. Social networks are moving from releasing updates to the masses to gamifying experiences and connecting with smaller groups. By using cryptocurrencies as a catalyst, we could see social marketing strategies as a way to bring billions of people to crypto. Wallets serve as a new online profile that will allow users to influence the way they interact with the internet through the interoperability of data and preferences. Whether it's through games or fun new apps, your digital identity can be found in these wallets and experiences.

Too often, the cryptocurrency world feels more focused on short-term gains than long-term growth. In fact, builders have been working hard to ensure that the upcoming infrastructure can support consumer demand and consumption use cases at scale. There is still great uncertainty in the future. But looking ahead, we are optimistic that cryptographic building blocks will enable better digital identities, privacy protections, and fundamentally help build a more open and coordinated consumer web.