Oksana Vodonos
3x Capital
Published in
7 min readOct 23, 2022

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CRYPTO market overview: Opportunities and Challenges

The amount of cryptocurrency in the world is increasing every day: new coins are created, new blockchain projects are launched, and some countries have legalized cryptocurrency as a payment option. According to CoinMarketCap cryptocurrency market capitalization is almost $0.92T as of 19 October 2022 and is anticipated to register a CAGR of 45.20% based on primary research by 2030.

In this analytical report, we will present estimated crypto market size, opportunities, and drivers for market growth, challenges, and risk as well as expected crypto market revenue in 2030.

Agenda:

  1. Web3.0 Description
  2. Crypto Market Cap
  3. Market Dynamics: Drivers
  4. Opportunities
  5. Risks & Challenges
  6. Summary

1. Web3.0 Description

Web3.0 is an idea for a new iteration of the World Wide Web which incorporates concepts such as decentralization, blockchain technologies, and token-based economics. Web3.0 is still evolving and being defined, and as such, there isn’t a canonical, universally accepted definition. What is clear, though, is that Web3.0 will have a strong emphasis on decentralized applications and make extensive use of blockchain-based technologies. Web3.0 will also make use of machine learning and artificial intelligence (AI) to help empower more intelligent and adaptive applications.

There are several key Web3.0 features:

  • Decentralized. As opposed to the first two generations of the web, where governance and applications were largely centralized, Web 3.0 is decentralized. Applications and services are enabled in a distributed approach, where there isn’t a central authority.
  • Blockchain-based. Blockchain is the enabler for the creation of decentralized applications and services. With blockchain, the data and connection across services are distributed in an approach that is different from centralized database infrastructure. Blockchain can also enable an immutable ledger of transactions and activity, helping to provide verifiable authenticity in a decentralized world.
  • Cryptocurrency-enabled. Cryptocurrency usage is a key feature of Web3.0 services and largely replaces the use of fiat currency.
  • Autonomous and artificially intelligent. More automation overall is a critical feature of Web3.0, and that automation will largely be powered by AI.

With blockchain at the foundation, Web3.0 enables a growing number of niches at the crypto market:

  • NFT. Nonfungible tokens (NFTs) are tokens that are stored in a blockchain with a cryptographic hash, making the token unit unique.
  • DeFi. Decentralized finance (DeFi) is an emerging use case for Web3.0 where decentralized blockchain is used as the basis for enabling financial services, outside of the confines of traditional centralized banking infrastructure.
  • Cryptocurrency. Cryptocurrencies are Web3.0 applications that create a new world of currency that aims to be separate from the historical world of fiat currency.
  • dApp. Decentralized applications (dApps) are applications that are built on top of blockchain and make use of smart contracts to enable service delivery in a programmatic approach that is logged in an immutable ledger.
  • Cross-chain bridges. There are multiple blockchains in the Web3.0 world, and enabling a degree of interoperability across them is the domain of cross-chain bridges.
  • DAOs. DAOs are set to potentially become the organizing entities for Web3.0 services, providing some structure and governance in a decentralized approach.

A combination of increasing use, loose monetary conditions, and crypto finding real use cases for the first time have led to the increase in crypto prices — with Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Blockchain/crypto gaming all growing.

2. Crypto Market Cap

The Crypto market accounted for $1,2B in 2020 and is estimated to be $87,7B by 2030 and is anticipated to register a CAGR of 45.20%. In 2022 The global cryptocurrency market size reached $992.8B of market capitalization.

Source: Coinmarketcap

The key players operating in the Global Web3.0 market include Polkadot (Web3 Foundation), Helium Systems Inc., Ocean Protocol Foundation Ltd., Decentraland, Flux, Filecoin, Kadena, ZCash, etc. Various countries around the world are working to legalize the usage of cryptocurrencies in order to attract new participants and boost economic growth. For instance, in March 2022, Dubai announced the adoption of a new cryptocurrency law to control the activities of digital assets and cryptocurrencies as part of its efforts to become a Web3.0 hub. The UAE intends to establish a Dubai Virtual Assets Regulatory Authority under the new law, which will be in charge of regulating blockchain-based virtual assets.

Crypto Market Key Stats Q2/2022 (Source: Cryptorank)

3. Drivers

  1. Increased Transparency to Drive the Market Growth

The decentralized web, also known as Web3.0, is the third generation of the internet that uses decentralized ledger technology (DLT), machine learning (ML), and Big Data. The Web3.0 Market provides a better surfing experience for users and more efficient data analysis. In comparison to previous versions, Web3.0 is more dynamic and user-friendly. Leading government agencies are initiating digitalization programs to create a regulatory environment that will let Web3.0 market gain traction. Rising data security concerns and rising firm investments to expand Web3.0 market applications are expected to drive the market forward. Consumers can employ new technologies and live a more fulfilling life due to rapid urbanization, globalization, and digitalization. Blockchain technology provides computers with human-like intelligence while also improving data exchange. As a result, businesses are using Web3.0 market to enhance data security and privacy, propelling the Global Web3.0 market forward.

2. Increasing preference and use of Non-Fungible Tokens (NFTs) as well as digital collectibles, digital currencies, and other blockchain entities are expected to continue to support revenue growth of the market going ahead

The Reddit community, for example, is using cryptocurrency tokens to enable users to control pieces of the community in which they participate. This will result in rewards to users in the form of community points, which they can earn by posting on a specific subreddit. These points can be used as voting shares, allowing users with significant contributions to have a greater say in community decisions. As these points are stored on the blockchain, they can’t be taken away easily, and their owners will have more control over them. However, a corporate version of a Web3.0 concept known as Decentralized Autonomous Organizations (DAOs), which uses tokens, enables more evenly distributed ownership and decision-making authority.

4. Opportunities

1. Rapid Innovation in Technology to Stimulate Market Growth

Future technological advancements are expected to drive the growth of the Web3.0 market. Blockchain in Web3.0 is a rapidly evolving technology. It offers significant advantages to the end-user, such as lower operational costs, increased speed, reduced cyber-attack risks, and personal data management. Blockchain and IoT integration and the use of blockchain technology in logistics and operations have witnessed significant advancements in recent years. Primary research and development are being done to improve the scalability of this technology. This is so that it can be used effectively in businesses, including currency exchange, social networking, chat platforms, data storage, and browsing. Recent years have also seen the emergence of NFT payment systems and digital collectibles thanks to Web3.0 technology. Other technology uses include spatial web design, 3D graphics, and more. Within the next few years, the continued rise of Web3.0 will generate enormous growth potential and impact numerous sectors.

2. Various countries worldwide are making efforts to legalize the use of Cryptocurrency to attract new players and improve their economic growth

Dubai passed a Cryptocurrency law in March 2022 aimed at becoming a Web3.0 hub for digital assets and cryptocurrencies. The UAE intends to establish a Dubai Virtual Assets Regulatory Authority under the new law, which will regulate blockchain-based virtual assets.
North America held the most significant shares in 2021. In North America, the US held the largest share of the Web3.0 market. This share is attributable to the region’s increasing investments in advanced technology.
For companies operating in the cryptocurrency market, emerging economies (such as India, China, and Brazil) and developed countries (such as the US, Germany, and Japan) are expected to offer significant growth opportunities.

Source: Statista

5. Risks & Challenges

1. Uncertain regulatory status

The cryptocurrency market is not yet regulated. Cryptocurrencies are currently restraining their adoption due to the lack of regulations and uncertainty regarding them. Financial regulatory bodies around the world are working to establish common standards for cryptocurrencies, but regulatory acceptance remains a challenge. As distributed ledger technology is still in the nascent stage, it raises a number of questions for regulators and policymakers at national and international levels.

2. Concerns regarding security, privacy, and control

In order to benefit from cryptocurrency, end users must overcome challenges related to security, privacy, and control. However, cryptocurrency has the potential to transform and revolutionize peer-to-peer and remittance transactions. As cryptocurrency transactions are recorded in the distributed public ledger known as the blockchain, hackers have a large attack surface to gain access to critical and sensitive information. If this public ledger is used to store confidential contract-related information or payment data, replicating the file could make it easier for hackers to access. A hub-and-spoke model and a distributed database can be accessed with a compromised key.

Summary

  • Based on primary research, the Web3.0 market is anticipated to register a CAGR of 45.20%.
  • As far as the region is concerned, Asia Pacific is projected to dominate the Global Web3.0 market.
  • Additional factors contributing to the market’s growth include government rules that prevent monopolies and privacy initiatives.
  • Secure networks, interoperability, and data ownership will also drive this market. Web3.0 refers to online internet services that have progressed to the third generation. Insurers increasingly rely on administrators’ knowledge to analyze data and drive the web using a machine-based understanding.

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Oksana Vodonos
3x Capital

Discover and Empower Startups | Entrepreneurship | Venture Capital