The key question facing the crypto industry is what the real utility of cryptocurrency is, according to Wall Street Journal columnist Jon Sindreu.
The reason for this new identity crisis in crypto, according to Sindreu, is that the sector has largely turned into a speculative bet on their own success, rather than delivering on being an alternative to traditional finance like it was meant to.
In the commentary piece, Sindreu said that many crypto developers are now focusing on Web3, or a vision of a new decentralized internet where big tech companies don’t control everything.
This new world would feature decentralized autonomous organizations (DAOs), non-fungible tokens (NFTs) and cryptocurrencies, and the goal is to create a native digital economy where crypto is “created and spent in a closed loop.”
Crypto should go beyond payments
Sindreu argued that the crypto industry needs to go beyond enabling digital payments because traditional banking already does this.
Instead, it should create an ecosystem that is digital, but still “real,” he said.
This ecosystem would likely depend on fiat-pegged stablecoins, and offer advantages through decentralized applications (dapps) and smart contracts.
Gaming is an opportunity for crypto
According to Sindreu, one potential area where crypto could gain more traction is in the gaming industry, a massive market where crypto could provide additional functionalities to players.
Despite this obvious opportunity, much of the focus from crypto companies has been on “GameFi” or play-to-earn models where the primary goal is to earn digital assets for real-world value, which can turn gameplay into a chore, the piece said.
While there are challenges and uncertainties in the crypto and Web3 space, some developers believe a “Trojan-horse approach” may be the key.
The approach involves seamlessly integrating crypto features into games that are genuinely fun to play, hoping that AAA studios will eventually return to the sector as the benefits of Web3 become more widely accepted.
What still remains unproven, however, is “whether crypto can enable such gains without creating yet more Ponzi schemes,” Sindreu concluded his piece by saying.
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