How crypto can make, break, or reshape global markets

Does crypto need to overcome its problems to realize its potential—or were any of its promises ever possible?

How crypto can make, break, or reshape global markets
An innovative technology is disruptive, but crypto has the potential to upgrade our finances without burning down the whole system

Crypto has already catalyzed global change. From Bitcoin to NFTs, the promise of crypto continues to be tested, with billions of investment betting on the technology’s potential.

But, in our experience building and using crypto, the technology has some serious challenges it needs to overcome before it can upgrade our future.

  1. Only selling ideas is selling the future short
  2. NFTs and managing expectations around “limitless potential”
  3. Modern markets are outdated and inequitable

As long as these problems exist, crypto’s potential to do public good is being stymied.

Problem: If we only sell ideas, we sell the future short

Selling a better future is easy. Delivering it is much, much harder.

As markets emerge and Bitcoin’s value rises and falls, new possibilities arise in the form of new products and protocols. Billions have been invested on the potential of all these new ideas.

Most of these ideas won’t make it past the prototyping stage. The majority (90-95%) of venture-funded startups are expected to fail—and that estimate is arguably low. A combination of hope, hype, and remarkable amounts of capital often raises user expectations to impossible points—and that’s assuming you ever actually build a working product that attracts a critical mass of users.

It’s easy to take money on the back of a future promise. It’s hard to build, it’s hard to find users, and it’s exponentially harder to do both with a relatively new and unfamiliar technology.

"When people ask for an example of a crypto project that's succeeding, I have to point out that SuperRare has conducted nearly 300-million artists sales with a average 5,000% collector return, no scams, and a perfect operating record since 2018."
— Kyle Olney, Chief Operating Officer at SuperRare Labs

The more stories about crypto-adjacent projects failing to meet expectations, the more difficult it becomes to change that narrative. Most folks won’t see the 5% of projects that can change the world until after the world has changed.

As this cycle repeats itself through bear and bull markets, projects that go down in flames suck the oxygen and airtime from long-term successes that prove the technology’s promise.

Problem: NFTs and the challenge of limitless potential

Public perception of the crypto is fraught with misunderstandings and misaligned expectations. A technology’s potential is balanced by its potential, and its ability to prove its potential.

Initially, crypto’s potential was the ability to transact fungible value, like a currency (e.g. Bitcoin, US Dollars, etc.). NFTs offer the ability to transact non-fungible value, and “non-fungible” means they can represent almost anything, like a cat picture, or the licensing rights for that picture. NFTs can be deeds, commercial rights, or corporate assets.

"The opportunity space for NFTs is huge. The world is overwhelmingly composed of non-tangible assets & intellectual property that can now be represented on-chain.  Soon, anything worth owning will either be an NFT itself, or have an accompanying NFT included."
— Kyle Olney, SuperRare

NFTs haven’t existed for a decade yet. Almost all valuation has a degree of speculation. Similar to how most promises don’t develop into a successful product, many NFTs won’t develop value beyond speculation.

But there are “blue chip” NFTs that are holding their value like fine art. (“Blue chip” denoting “of the highest quality,” or “considered to be a reliable investment”.)

There are NFTs with utility that provide real, tractable value.  Some NFTs are little more than JPEGs. Some are so much more.

The reason we consider the perception of crypto as one of its core “problems” isn't because these perceptions are going to kill the technology. Crypto and NFTs are probably here to stay. But how they shape tomorrow will be determined by:

  1. what they can do right now (“their value to the user”),
  2. what they may one day do (“their potential value to the public”), and
  3. the perception that they lived up to their potential (“personal and public expectations”)

The ability for digital objects to hold non-fungible value has the potential to upend global lending markets as we know them. Whether it’s a disruption, an upgrade, or more of the same is being determined by the people building, using, and most importantly, benefitting from crypto.

Problem: Markets are not equitable

For thousands of years, wealthy incumbents have dictated our financial systems. As new markets emerge, they build off of these outdated systems, ensuring the terms that benefit the rich and powerful continue to do so. But our markets don’t need to operate this way.

"The +$2T fine art market, with $65B turnover in 2021, represents a mere portion of the TAM for the non-fungible asset class. Throughout history, ultra-high-net-worth individuals have allocated a significant percentage of their portfolio to fine art because it is the largest, non-correlated store of value asset class in the world, and it tends to outperform other asset classes. This is just the tip of the iceberg."
— Kyle Olney, SuperRare

As our finance systems become more efficient, they become less rational and more reactive, increasing the complexity and risk for new investors. Inflation (and most other symptoms of a less-than-flourishing economy) disproportionately affect the working class—further reducing their access to markets and systems that grow wealth.

The markets that crypto empowers are here. How they’re shaped is up to us: the people building protocols, and the people using them.

The founder of Ethereum shares their thoughts on how to best tax NFTs potential value to the market.

We can create a more accessible system, one where incumbents cannot simply squat on their wealth, extracting more value than they contribute. We could end the practice of buying, owning, and selling a loan. There can be a market system where capital must compete and contribute to receive returns from a public good.

Opportunity: Protocols as a public good

A public good is a commodity or service provided to all members of a society, usually via the government or an individual's community, like a library or transit services. They can be profitable, but they’re often provided without the expectation of profit.

Protocols are rules that dictate how data is used. They’re open-source code deployed on a public, worldwide network that anyone can access and use, without barriers to inclusion and usage. In other words: they’re a public good on a global scale.

Using a protocol, you could turn loans into a public good. Values can be programmed into our systems, even segmenting revenue for further public goods projects. In theory, every transaction the global economy makes could be pointed at improving the world. Fighting climate change, for example.

GitCoin acts like (and funds) public goods

But, as noted, theories and ideas are relatively easy to come up with. Realizing them, and building the future you want to see, is much harder.

The future is bananas

Tomorrow is going to be different from today. How you make your bets—where you put your time, money, and effort—changes the future's trajectory.

"The rules that dictate markets are changing. People have a chance to prioritize the public good over wealthy incumbents."
— Kyle Olney, SuperRare

We can plant our seeds, tend to our garden, and grow a future we want to see. Or we can continue to salt the ground with unfulfilled promises and unrealized potential.

We bet on the future by building. If you feel the same way, we want to pay you to help realize crypto's potential.