What the Market Is Really Telling Us: Web3 Isn't Ready for Mainstream Yet


By Alex Miller, CEO of Hiro

Optimism about “web3,” what proponents are calling the next phase of the internet built around crypto and decentralization, has collided with the harsh reality of a bear market. But don’t worry, we’ve been here before. No, not in 2013 or 2018, but during the market crash from the dotcom bubble in the late ‘90s.

With both downturns, the market had a clear message: despite investors and builders’ enthusiasm, the technology—the internet and crypto—was/is just not mature enough yet for the mainstream consumer. In the case of the dotcom bubble, once investors realized many companies had no viable path to profitability, the resulting market crash led to the loss of $1.755 trillion in value. This effectively led to the downfalls of recipients of highly speculative investments including Webvan.com, Flooz.com, and of course, Pets.com.

Looking at the current crypto crash through this lens, it becomes clear that the amount of money bet on web3 and crypto companies over the past five years has been a net negative for the industry. Investors poured a quarter high of $9.2 billion during Q1 2022 in an effort to massively accelerate the space, but some things just can’t be rushed. The crypto industry needs time to go through numerous cycles to effectively shake out the good projects from the bad.

Of course, a market crash doesn’t disprove an entire industry, it just shows that investors and speculators placed terrible bets. After all, the internet has now become ingrained in our lives (in the face of some truly cringeworthy predictions). And out of the wreckage of the dotcom bubble emerged some massive companies, most notably Amazon, eBay, and Booking Holdings (formerly Priceline). Years later, we saw new, successful incarnations of many of those early flameouts once the technology and mainstream consumer was ready. 

What all of this shows is that hype is not enough to sustain an industry. Successful companies need good business fundamentals and to offer a superior alternative to existing solutions. Back in the ‘90s, no internet company offered a good enough shopping experience to replace a trip to the store. We are at a similar place with web3 where we haven’t actually found what its key use cases will be (NFTs and DeFi are still largely crypto native experiences). Projects can’t just put things on a blockchain and believe they have a viable product. Hopefully, this current market crash will let some of the steam out of the industry and allow projects to find more focus, with the next generation of companies laying down the foundation for the future.

Amazon provides a good way of looking at this. The company didn’t invent ecommerce, but Jeff Bezos’s careful approach, starting out with books before expanding into other categories, slowly taught mainstream consumers that they could trust the process of buying goods online. We need to find the equivalent of that in web3.

Thankfully, much of the hard work has already been done—when groups of scientists, programmers, and hobbyists (funded by private and public interests) built the foundation of the internet, they couldn’t have known how much it would change the world. The infrastructure needed to build web3, meanwhile, has already been built: Bitcoin, the most stable, scalable, and secure blockchain that processes hundreds of thousands of transactions each day.

We can be sure that the builders of the next iteration of the internet are heads down in their work, despite the chaos of the market.

About the Author

Alex Miller is the CEO of Hiro Systems. Hiro builds developer tools for Stacks, the network that enables apps and smart contracts on Bitcoin. A longtime startup executive, Alex has spent his career running operations and strategy for early stage companies.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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