Themes to watch in 2023
2023 is poised to be one of crypto’s most consequential years ever. [Image via Moritz Knöringer]
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
The crypto storylines to follow in 2023. From market trends to the regulatory landscape, here’s what to look for this year.
Numbers to know. The massive amount of stablecoin usage in 2022, and other key stats to know this week.
The latest Coinbase updates. A closer look at the web3 social media landscape from Coinbase Ventures, and other company news.
NEW YEAR, WHO DIS
5 crypto storylines to watch in 2023
Crypto’s 2022 was tumultuous, to say the least. The year began with NFT sales volumes peaking in January, and ended with many assets down 90% or more as FTX’s demise dominated headlines (There were some positive developments, too). So, what can we expect to see in 2023? Here’s a look at some of the key themes and storylines that crypto experts believe could emerge this year.
Investors will continue to de-risk crypto portfolios
The 2021 bull market saw institutional and retail investors alike taking on outsized risks in crypto investments. Expect far less of that in 2023, says David Duong, Head of Institutional Research at Coinbase. Investors will likely focus on high quality assets like Bitcoin and Ethereum, which still have strong narratives, Duong says. Bitcoin is becoming less volatile, with 85% of holders keeping their investments for more than 155 days, and Ethereum’s recent and forthcoming upgrades are solidifying it as the predominant layer-1 blockchain.
Crypto technology will see some highly anticipated updates
After the long-awaited Merge upgrade in September, Ethereum’s network will see more updates in 2023. The Shanghai update, expected in March, will allow those who staked Ethereum to begin unlocking their rewards. The upgrade will also pave the way for “danksharding,” an innovation, Decrypt notes, that many see as key to Ethereum’s future as a secure and reliable network that’s also fast and cheap.
Zero-knowledge rollups (ZKR), a long-awaited scaling solution, are also expected to launch across several blockchains in 2023. A key issue plaguing current networks is a limited ability to process large numbers of transactions. ZKRs allow millions of transactions to be bundled into a single transaction, enabling them to be settled faster and more cheaply while also maintaining the privacy of each user. Polygon, zkSync, Scroll, StarkWare, Loopring are among the layer-2 blockchains that are planning to release ZKRs.
Stablecoin regulation could get passed in the U.S.
The incoming Chair of the House Financial Services Committee, Rep. Patrick McHenry (R-NC), has been working on a stablecoin regulation bill for years alongside Rep. Maxine Waters (D-CA). 2023 might be the year it happens, crypto policy experts say, especially after the collapse of the $40 billion UST stablecoin last spring. “If anything moves, stablecoin regulation seems to be the area where action is most likely to occur legislatively,” said Miller Whitehouse-Levine, policy director of crypto lobbying group DeFi Education Fund.
Africa will lead emerging markets in Bitcoin adoption
Alex Gladstein, chief strategy officer of Human Rights Foundation, told Coindesk he was “blown away” by the level of bitcoin adoption across Africa after attending a recent bitcoin conference in Ghana. Many countries, including Nigeria, Ghana, Cameroon, and Kenya deal with high currency inflation, making crypto a viable alternative. At 6%, Sub-Saharan Africa has the highest percentage of peer-to-peer crypto transfers of any region in the world, and crypto is used there to import goods and pay for groceries. The activity Gladstein saw across Africa is why he believes “global adoption is probably the number one story” for 2023.
More countries will test and implement CBDCs
China, Jamaica, and The Bahamas are among the 11 countries that have launched a central bank digital currency (CBDCs are a completely digital version of government-issued money). And countries comprising 95% of global GDP are looking into establishing their own digital currency. In Spain, a coalition of two dozen banks are testing the impacts of a digital euro this year. Turkey, which is establishing its own digital Lira, is also testing a CBDC this year and is launching a blockchain-based digital identity system in tandem. Among the most-watched CBDC projects will be India’s, as it boasts the largest democracy in the world and a massive crypto user base.
NUMBERS TO KNOW
$7.4 trillion
Total stablecoin transaction volume in 2022, marking an all-time high and an increase from $6 trillion the previous year. According to CoinMetrics, stablecoins eclipsed the amount of money processed by payment giants Mastercard ($2.2 trillion), American Express ($1 trillion), and Discover ($200 billion).
$3.5 billion
The value of FTX assets that the Bahamian government seized in early November, according to a new press release from the Securities Commission of The Bahamas. The commission said assets will remain stored on its wallets until the Bahamas Supreme Court directs them to distribute funds to creditors or provides further clarity about handling FTX’s insolvency.
98%
Percent decrease that former U.S. President Donald Trump’s NFT trading cards have seen in trading volume since their mid-December peak. Trump Digital Trading Cards, which are minted on Polygon, have seen total sales drop from $3.5 million on December 17 to $21,354 on January 3.
14
Years since the first-ever Bitcoin transaction was recorded on January 3. The message inscribed in the “Genesis Block'' referenced a newspaper headline about the Great Recession, a key factor in Bitcoin’s creation: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
AROUND COINBASE
Deep-dives into the web3 landscape, and a new way to watch the “COIN” documentary
Coinbase Ventures recently published a timely look at the web3 social media network landscape, and how emerging platforms in that space can “give users control over their data, identity, and relationships, and enable permissionless innovation.” If you’ve been wondering what could someday supplant Twitter, be sure to give this a read.
Speaking of web3, Coinbase is laser-focused on serving as the bridge to web3 by providing our customers seamless access to the entire crypto economy. Our product team talks here about what they’ve been building to supercharge web3’s development, from a self-custody wallet to key developer tools.
ICYMI: The documentary film “COIN,” which chronicles the behind-the-scenes true story of how Coinbase, in the words of Brian Armstrong, ”went from [a] prototype to a public company,” is now available to stream for free on Amazon Prime.
DISCLAIMER
This material is the property of Coinbase, Inc., its parent and affiliates (“Coinbase”). The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Coinbase or its employees and summarizes information and articles with respect to cryptocurrencies or related topics that the author believes may be of interest.
TOKEN TRIVIA
What is a DAO?
A
Decentralized autonomous organization
B
A smart-contract powered way to organize people
C
A versatile group structure that allows strangers to share ownership
D
All of the above
Find the answer below.
Trivia Answer
D
All of the above
