This article will analyze four parts: the current urgent problems of the blockchain, the macroeconomic environment in 2023, the trend of cutting-edge technology in the blockchain, and the potential opportunities in 2023.
4 Big Questions to Solve
Question 1. How to abstract blockchain technology
Today, blockchain is still complicated for the average user. If you’ve ever transferred bitcoins, you may experience a half-hour wait before seeing a confirmed transaction on your device. If you have used dapps, you may have seen high fees that sometimes exceed the transfer amount. The gas cost is super high because there are too many transactions waiting on the chain. As various forms of applications come online and new use cases emerge, there is a constant need to evolve blockchain to make it faster and more reliable. But that’s not all. Ideally, blockchain technology should be completely hidden from users, and it is still a long time before it is truly “unaware of users”.
Issue 2. Delivering value as an alternative financial system
Bitcoin was originally a settlement mechanism for alternative fiat currencies. The consensus mechanism is called “Proof-of-Work” and it is a potentially breakthrough technology that makes it impossible for any centralized party to control the ledger. Bitcoin succeeds because people trust it with their hard-earned cash. While it failed to be adopted as a payment mechanism, it did succeed as a store of wealth. Ethereum allows for the creation of more complex token models and coordination systems on the blockchain. Stablecoins are issued on-chain, eliminating volatility.
With the advent of decentralized finance (defi), it is possible to create yielding assets through lending. While the alternative financial system promises fairness and transparency, in reality it does not have any significant impact on the economy. It has nothing to do with real-world assets and is closely tied to the broader macro environment. Today, DeFi is a volatile investment at best, currently worth only 1-5% of the portfolios of wealth groups around the world.
Problem 3. Awkward user experience with encrypted apps
In the early days of Bitcoin, die-hard fans of decentralization advocated that users download nodes on their computers and store funds there. Opening an account on an exchange today is much easier than downloading and managing an account yourself. This allows more users to deposit and withdraw cryptocurrencies. If you want to increase adoption, you need to make your product simple. Unfortunately, we still face similar problems today. Take wallet plugins as an example. It is a required software to access any decentralized application (dapps). But many people will not download the wallet plugin at present. It is unfamiliar and requires user learning. Additionally, expecting users to securely store their mnemonic phrases and carefully evaluate them when approving actions on a dapp is very difficult. Too many people end up having their funds stolen as a result. And some others couldn’t even do it. Encryption applications must make the user experience simple.
Issue 4. Regaining Control of the Web
For most of its history, the Internet had no native currency — only gateways to national monetary systems. This changed with the advent of cryptocurrencies. Now, this currency needs to be integrated on the network. Not only that. Encryption brings with it an even more powerful toolkit – decentralized data storage and digital identity. On the other hand, the Internet has given us some of the richest social experiences unimaginable in the past. As this situation develops, cracks begin to show. The big question now is whether we can merge the internet and the blockchain. What exactly is web3.0?
