Take Note On These Coins: Here Are 23 Cryptocurrency Predictions for 2023! With bankruptcies, collapses and a long winter, 2022 has been one of the most turbulent years in crypto. According to Andrew Keys, venture capitalist and managing partner of DARMA Capital, we are probably experiencing the latest shocks to the emerging cryptocurrency ecosystem. We banish bad actors and bad practices from a dramatic but ultimately maturing process. Andrew Keys explains his cryptocurrency expectations and predictions for 2023.
- 1 Expert’s 2023 cryptocurrency expectations and predictions
- 1.1 1. Ethereum momentum
- 1.2 2. Ethereum staking
- 1.3 3. Fed view
- 1.4 4. Regulations in DC
- 1.5 5. Contract banks
- 1.6 6. More NFT uses
- 1.7 7. Investment DAOs
- 1.8 8. The future of Filecoin
- 1.9 9. Web3 reputation
- 1.10 10. ‘ZK everything’
- 1.11 11. Cosmic Cosmos
- 1.12 12. Leading crypto to be a tough year
- 1.13 13. Web3 games
- 1.14 14. Tier-2s
- 1.15 15. DeSci
- 1.16 16. Zombie Blockchains
- 1.17 17. Decentralized identity
- 1.18 18. The crypto epidemic is not over
- 1.19 19. Open source development
- 1.20 20. No more gods
- 1.21 21. Technical cryptocurrency
- 1.22 22. Institutional Ethereum
- 1.23 23. DEFI is different
Expert’s 2023 cryptocurrency expectations and predictions
1. Ethereum momentum
Looking back to 2022 10 years from now, we’ll see that the real news isn’t the stupidity of Sam Bankman-Fried and the Celsius Network. We will understand that Ethereum is a Proof-of-Stake (PoS) transition and remains the most common layer-1. Development at a number of protocol levels has created a vortex of innovation, development, users and capital. At Ethereum, we are witnessing the evolution of the bottom layer of humanity’s social, economic and political operating system.
Ethereum will remain the most widely adopted, widely developed and capital-laden layer 1 Blockchain in 2023. Merge was the biggest event in the hack since Satoshi’s Bitcoin Genesis Block in 2009. In 2023, more nuanced but equally valuable developments will begin in Ethereum. It will also provide more adoption and capital in a flywheel effect that will position Ethereum as chairman in the next bull run.
The next Ethereum upgrade from Merge is Shanghai, scheduled for the second quarter of 2023. Amid many upgrades, Shanghai will enable withdrawals of ETH stakes that have been locked in the deposit contract since staking was enabled in December 2020. Following the Shanghai upgrade, EIP-4844 is another Ethereum innovation that will further position Ethereum as the ubiquitous layer-1. EIP-4844 will enable proto-danksharding. While it is no longer included in the Shanghai update, I would argue that proto-danksharding will be adopted and implemented in 2023. This will lay the groundwork for rapid development towards full sharding and maximum Ethereum scalability.
2. Ethereum staking
Ethereum PoS, which you follow from . Following this, Ethereum’s utility as a staking innovation platform will continue to expand. It will also create a new composite crypto yield curve. Following Ethereum’s successful transition to PoS in September, ETH has now become the largest staked capital base of any blockchain, with over $20 billion stakes.
In 2023, capital will seek more faithful forms of returns. Also, future updates will allow stakes to be withdrawn. This is why we will see continued innovation in ETH staking. The increase in ETH staking in 2023 will result in more nuanced utility demand from validators, stakers and projects built on Ethereum. Using innovations like EigenLayer and others will continue to channel benefit and capital into the Ethereum core layer. It will also create an adoption and utility wheel that will continue to establish Ethereum as the global placement layer for Web3.
3. Fed view
The Fed will dovish, paving the way for the next crypto bull market in the third quarter of 2023. I predict that the Fed will move away from its hawkish policy and stop raising interest rates until the second quarter of 2023. We see that credit card debt is considerably high and savings are at considerably low levels. Indicators point to an economy in need of a jump to convince the Fed to ease rate hikes. This will create a risky environment that encourages capital flows to more innovative segments such as crypto. So far, I also assume that enough regulatory progress will be made in the crypto industry. This means that clearer policies will accompany the risky environment. Altogether this will lead to the next bull run starting in Q3 of 2023.
4. Regulations in DC
Washington, DC will be a crypto hotspot in 2023 as regulatory innovation advances at unprecedented rates. The central financial disasters of 2022 were the result of poor risk management, inadequate governance, incomplete controls and potential fraud. All of this could have happened in a random episode. Consumer protection will be the top priority of policy makers in 2023. The majority of emerging politics will take place around centralized exchanges and stablecoins.
Exchanges like Coinbase may be forced to become G-SIFI regulated entities, which will increase regulatory compliance costs. Washington, DC will be the home of some of the most controversial and valuable conversations about crypto in 2023. During this surge in regulatory attention, the Securities and Exchange Board will continue to declare that all tokens that are not categorically correct are unregistered securities.
5. Contract banks
Federal Reserve-approved banks will provide crypto services. The Financial Stability Oversight Board aims to further improve regulations to protect consumers and enable more technology innovation in an effort to create more robust and reliable global platforms.
6. More NFT uses
As the collective ‘jpeg’ era passes, the use of NFT will become more sophisticated, personalized and commercial. At the same time, blue-chip “jpeg” NFTs will become a multi-billion dollar asset class. In 2023, the Web3 ecosystem will surpass the ‘jpeg’ era of NFTs, which has dominated the last two years, represented by 10,000 pfp projects and zero utility art. The term ‘NFT’ will emerge in a variety of use cases, all using NFTs as the underlying technology. Therefore, it will no longer automatically mean ‘digital art’.
2023 will also be the rise of ‘phygital’, where a teenager buying a physical pair of Nike shoes will have a digital receipt of those sneakers to be worn digitally on their avatar in the metaverse. This rapid evolution in the true utility of NFTs will force the crypto community to look critically at 2021 and 2022 projects. The vast majority of remaining NFT projects will not have developed the benefit if they have not already failed. That means NFT cemetery. What remains will be the blue-chip NFTs, the CryptoPunks of the world, which were accepted but largely overlooked last year.
7. Investment DAOs
Investment DAOs will stand out as decentralized, faithful and transparent alternatives to investing through GP/LP enterprise structures. These organizations will grow in number and importance as transparent, auditable and collaborative tools for deploying and allocating capital. Investment DAOs will force a shift in the financial decision-making mindset. These DAOs will work based on the consensus of their global membership through the ‘wisdom of the organized crowd’ rather than relying on the opinions of a few experts. Tribute Labs will spawn more DAOs in 2023. It will also continue to build best practices and increase the impact of investment DAOs.
8. The future of Filecoin
Filecoin will become a full-fledged layer-1 protocol in its own right. It will also pave the way for the world’s largest decentralized information economy. Filecoin’s vision has always been bigger than storage. FVM will increase the complexity of Filecoin’s storage services while unlocking an original cosmos of use cases for the Web3 domain. I’m waiting for the web3 space to eagerly predict the ‘coming of age’ of Filecoin. Also, I hope next year he will explore developing locally on the protocol.
9. Web3 reputation
Reputation will re-emerge as a core innovation in Web3 as multiple projects are launched. In 2023, years of progress on the decentralized identity and fame front will finally reach its climax. These systems will begin to be critical modules of the infrastructure that supports many of our interactions and processes, particularly on the Web3.
10. ‘ZK everything’
Prepare for the rise of ‘ZK everything’ as privacy technology evolves from academic proofs of concept to usable, scalable technology. Zero-knowledge proofs came to the fore last year with a use case, ZK-Rollups. Additionally, Ethereum has gained visibility as the dominant tool for scaling. ZK-Rollups will begin to fill the gap between Web2 and Web3. Moreover, new identity use cases will enable social networking, voting, games and zkML. From 2022 onwards, such developments will mean that in 2023 ZK will move from the world of academia and test-nets to the daily Web3 life. The ZK market will be larger than Bitcoin’s Proof-of-Work (PoW) market by 2030.
11. Cosmic Cosmos
Cosmos takes a different turn as developers and users seek further individualization. Appchains will also be published on Ethereum. In 2023, the ‘Cosmos vision’ will finally be adopted by the masses. Cosmos is not a Blockchain, but a “galaxy” of interconnected Blockchains. Also, as blockchains mature in implementation, developers will be forced to welcome and own more blockchain stacks. We will see a number of customizations. App-specific-rollups (RollApps) will take the best of both worlds and will be a big trend in 2023. However, alongside the growth in Cosmos, we will see the rise of application-specific Blockchains pegged by Ethereum.
12. Leading crypto to be a tough year
Bitcoin will face opposite headwinds. Thus, it will continue to lose its market share. Also, it will not lead the next bull market. Bitcoin will continue to lag behind in the market as it succumbs to the prevailing adverse winds, especially the ‘pet rock’ syndrome, environmental fluctuations and failure as ‘digital gold’. As the rest of Web3 starts showing real-world use cases, Bitcoin’s lack of daily utility will start to work in its favour. With increasing commercial and institutional use, it will succumb to the ‘pet rock’ syndrome, where holding the asset will not seem attractive compared to directing capital into tokens and ecosystems.
Environmental, social and governance (ESG) concerns will only increase with macro-political and macro-environmental action. Businesses, individuals and governments will always be under pressure to reduce unnecessary power consumption. Also, crypto is actually under scrutiny. Bitcoin will not eventually switch to PoS. As a result, its benefits will remain limited. It will therefore be the primary object of environmental criticism. Together, these headwinds will push Bitcoin further back into this bear market. Therefore, it will prepare the ground for another tier 1 that will lead the next bull run.
13. Web3 games
Web3 gaming will outlive its flawed, early projects. Also, it will eventually start meeting players where they are. Web3 games have mostly lagged behind his vision so far. The most ‘successful’ Web3 games such as Axie Infinity and DeFi Kingdoms have been promoted as the future of gaming. However, it failed to make an impression in the midst of 3 billion players worldwide. In 2023, Web3 games will break out of the habits of these first projects. In this way, it will begin to publish projects that combine the usefulness of Web3 with the classic game aesthetics. The next wave of Web3 games will be nothing like the Axie shape games of the past two years. It will begin to resemble mainstream gaming aesthetics. Recognized attention will actually shift from token-first projects like Axie to studios, companies, and games built with a game-first approach: Horizon, Animoca, and more.
As layer-1 protocols continue to undergo fundamental improvements in scalability and closure, layer-2s will support the next wave of consumer-friendly applications. The Tier 2 ecosystem has been growing steadily over the past 18 months, with generalized networks such as Arbitrum and Optimism, and segment-specific networks including ImmutableX. The Tier 2 ecosystem has had several false starts. But in 2023, we will see layer-2s come to the fore in crypto adoption. In particular, non-financial applications such as social media, games, and metaverse will be quickly released in the market. These will also look to layer-2s as the most appropriate assay.
Decentralized science (DeSci), Web3, open source collaboration, and decentralized fundraising will take center stage as another valuable use case. DAOs will be at the forefront of the movement. In 2023, DeSci will transform scientific research into a Web3-native asset class through IP-NFTs (Intellectual Property NFTs). It will also usher in a new era of scientific discovery comparable to the tremendous breakthroughs witnessed in open source software development in the early 2000s. Fields such as biotechnology will shift from monopolistic innovation models to open-source, hyper-collaborative ecosystems where outcomes are more compatible with patients and researchers at the core.
16. Zombie Blockchains
The remaining vaporware blockchains will eventually lose their position as the ‘best’ blockchains as even speculative money leaves their ecosystem. For years, vaporware blockchains like EOS and Cardano have been in the middle of the ‘best’ blockchains as measured by market cap. These projects have developed almost no ecosystems, despite the breakthrough innovations happening in the rest of Web3. That’s why they still avoid exaggeration from day one. In 2023, even the pre-launch cryptocurrency available to institutional investors and first-person investors will lose relevance. The bells of death will ring for these vaporware blockchains.
17. Decentralized identity
Identity projects, social networks and the growth in decentralized identity will bring AML/KYC solutions down to the wallet level. This focus on prestige and identity, along with increased regulation and consumer advocacy for DeFi use, will increase in 2023. Verifiable credentials will become the information standard for off-chain credentials and attestations, with a focus on free, inexpensive, and confidentiality-prioritizing options that can be selectively disclosed by users. Where will these analyzes lead? We will see the first iteration of scalable prestige systems built using tools like MetaMask Snaps, DIDs and VCs.
18. The crypto epidemic is not over
Prepare for more fallout. The chaos we’ve seen in crypto since May 2022 is not over. There are still buried corpses to be found from the excesses and impulses of past years. Many individuals and companies have managed to hide the information they have been exposed to. However, he will not be able to do this for much longer. Ultimately, that’s what’s good for the ecosystem. Unfortunately, more consumer money lost will mean more betrayal of trust and more outside criticism. Keep building for the future. However, prepare for more fallout in the near term.
19. Open source development
In 2023, prominent open source development projects will again be highlighted as a precaution against repeating past misconceptions in crypto. 2022 was a largely formative year for open-source, internet-based organizations. In 2023, we will see more projects come to the conclusion that we need to take our own rhetoric seriously and start taking meaningful steps towards building open source, community-related infrastructure. Two projects in particular will continue to define open source funding and development models: Gitcoin and Tea.xyz.
20. No more gods
The media will abandon the search for the deity and find sensible voices in crypto. While major central finance (CeFi) and DeFi projects collapsed last year, so did their founders and CEOs. These individuals have been greedily supported by the media. In addition, there has been unwarranted reliance on investors, companies and regulators. The media will need to confront their false obsession with crypto ‘gods’ and find restrained, rational voices in crypto. This will happen slowly but surely throughout 2023 as more and more ‘gods’ true natures emerge.
21. Technical cryptocurrency
The ‘tech coin’ will be useful, replacing ‘money crypto’ and laying the groundwork for the next bull market. The study of currency crypto will result in clarification of technology crypto as a related but distinct field. In 2023, tech cryptocurrency will become increasingly useful through two trends:
1) Accurate movement of capital from centralized to decentralized financial practices.
2) The rise of non-financial decentralized applications like DeSci, social media, consumer rewards, and more.
The result will be a growing base of Web3 (i.e. tech crypto) adoption over mere token (i.e. cryptocurrency) adoption. This will set the stage for the next bull market. Also, more capital is held in transparent financial practices than in shady centralized alternatives. So, it will help protect against volatile market cycles in the future.
22. Institutional Ethereum
The ‘Great Disintegration’ will gain momentum. Thus, it will pave the way for a stronger institutional adoption of Ethereum. In 2023, we will see the “major divergence” and consequent acceleration of Ethereum business adoption. The focus on Ethereum’s enterprise service will unlock more enterprise innovations pioneered by organizations like EY Building Privacy Technology on Ethereum.
23. DEFI is different
The world will understand the difference between CEFI and DEFI. The macro outcome of the 2022 disasters for 2023 will be a greater understanding by individuals, financial institutions, investors and regulators of the difference in the middle of CEFI and DEFI. The first is where processes are subjectively mediated by people who can improperly tamper with the database. The second is where processes take place faithfully and objectively by mathematics and computer science without manipulation.