Crypto is down but not out. The industry that took a beating last year is set to make its first major public showing of 2023 at Consensus, CoinDesk’s annual conference. Many of the biggest names in crypto, government, Web3 and more will be in Austin, Texas, this week to discuss the current state of the industry, the devastating year it just had and what the future may hold.
On that score, things are looking up. If the first four months of the year are any indication of where the industry is heading, the rebuilding has begun.
Get your tickets for Consensus 2023 in Austin, Texas here.
Still, there’s much more building, policymaking, educating and, yes, investing to be done. While recent markets have given some reason for optimism, fraud and contagion have absolutely smashed consumer confidence in the industry. Regaining that trust will be difficult, but that is the opportunity at the feet of today’s builders, regulators and decision makers – many of whom will share their views at Consensus.
Here’s what to expect this week in Austin.
Consensus 2023 Basics
If you’re unfamiliar, Consensus is a three-day conference in Austin. It’s run by CoinDesk, and it brings together major figures in crypto, finance, Web3, regulation, entertainment and more for three days. This year, it will take place April 26-28. Short of going to Austin or attending with a virtual ticket, the best way to keep up with what’s happening at the conference is to follow CoinDesk. For regular daily updates on the show, you can subscribe to the official newsletter, The Node.
The TradFi perspective
One of the biggest topics at Consensus will be how the traditional-finance world should now regard its relationship with crypto.
This past year kicked off with a series of bank runs, failures and buyouts that seem to echo the economic conditions that birthed Bitcoin. The London Times didn’t exactly rerun the same infamous headline Satoshi inserted in to Bitcoin genesis block, “Chancellor on brink of second bailout…,” but the finance world was more than made aware of the concept of “moral hazard” when U.S. regulators stepped in to rescue three banks (and letting one fail).
The failures, coupled with stubborn inflation, didn’t hurt the price of bitcoin, which soared in the wake of those events. That helped reignite the narrative that bitcoin could one day become a legitimate hedge asset. While few corporations are buying bitcoin like they did in 2021 as a way to diversify balance sheets, institutions are still building and adopting blockchain, or distributed ledger technology. Societe General, the august French institution, recently issued a euro-denominated stablecoin, while asset manager BlackRock is backing a major bitcoin mining concern.
With Ethereum’s recent Shanghai upgrade, which finally enables anyone to stake and unstake ether (ETH) at a whim, there’s a growing acknowledgement that the second-largest cryptocurrency by market capitalization could become crypto’s analog to the finance world’s “risk-free” rate of return. That reality is likely a ways off, but it is notable that ETH prices started to climb after the Shanghai hard fork, bucking analysts’ predictions of a mass sell-off.
Clearly, the opportunities exist for TradFi institutions to enter and make money in crypto – in the short and long term. Dawn Harflinger, president and CEO of the Liliʻuokalani Trust, will speak about the $1.2 billion fund’s long-term position on crypto at the Consensus conference. Meanwhile, CoinDesk senior reporter Ian Allison is scheduled to speak with Jose Fernandez da Ponte, who runs the crypto and digital currencies business unit at PayPal (PYPL), arguably the fintech company that has taken the largest position on crypto developing as a tool for everyday financial use.
What the BUIDLers are building
In the first three months of 2023, venture-capital investments in crypto slowed to a trickle – just $900 million compared with the many billions that flowed into crypto last year. Many crypto-native funds, however, are restocked with capital, either raised or earned from the last bull market, and are waiting for the right projects to invest in.
After the collapse of FTX, a centralized exchange, VCs have recommitted themselves to the tenets of decentralization. In particular, a number of funds are allocating dollars into “crypto infrastructure” – the distributed (and tamperproof) base upon which the wider crypto economy sits. This is by definition a broad category, including everything from layer 1 blockchains to scalable systems like crypto exchange Coinbase’s (COIN) recently launched Base network.
Likewise, projects with their own token treasuries are beginning to deploy millions of dollars in funding to pay for open-source development of their ecosystems. For example, Solana, which was hit especially hard by the downfall of Sam Bankman-Fried’s FTX empire, is showing the “stickiness” of crypto projects with committed developer communities and the funding necessary to pay them.
There is plenty to build. Udi Wertheimer, a prominent bitcoiner, and Muneeb Ali, the creator of the Stacks blockchain, will both speak about the wildfire of development activity spreading across Bitcoin, sparked by the quiet launch of Bitcoin Ordinals (aka Bitcoin NFTs). Separately Sunny Aggarwal, the founder of Cosmos’ largest decentralized exchange, will discuss the inter-chain plumbing that needs to be built for all blockchains to be able to interact seamlessly, and competing visions for the most active multi-chain network yet, Cosmos.
“NFT” is a clunky initialization of an even clunkier phrase, non-fungible token. That’s probably a big reason why over the past year major brands such as Reddit and Starbucks (SBUX) that are looking to experiment with “digital collectibles” did so without calling them NFTs. Those who saw this as an indictment of crypto missed the counterpoint: Crypto prices were in the doldrums, and so simply slapping “Web3” or “NFT” on a project wasn’t going to help, but those brands still had enough confidence in the concept to launch them in the first place.
Crypto is likely to continue growing this way – in the background. Case in point: Solana is gearing up to launch the Solana Phone, targeting not the mass market but committed crypto users who want to keep their funds safe but still accessible. Futurist Cathy Hackl is giving a presentation at Consensus about our “post-smartphone” future, when augmented reality and artificial intelligence are ubiquitous.
The market for crypto phones and wearables might still be small, but it's all a part of the wider “ownership economy” that is rocketing to life. There are competing visions for what exactly this will look like, and how far crypto or the metaverse will penetrate everyday life, but one thing is for sure, e-sports as one of the fastest growing entertainment segments will increasingly adopt new ownership models, GameSquare’s (GAME) Jason Lake will argue at Consensus.
Chainlink co-founder Sergey Nazarov, likewise, will discuss the role blockchain oracles and data providers will play in an increasingly digitized world.
Rules, regulations and crackdowns
The whole industry is feeling the pressure from regulators, and those regulators aren’t sitting idly by. Last week, the European Union took a leap forward by becoming the first major economic region to vote in a comprehensive regulatory framework for crypto. In the U.S., it’s clear the government wants to rein in the industry, though the exact form that takes is still to be determined.
Policy issues will take center stage at Consensus 2023. Jeremy Allaire, chief executive and co-founder of stablecoin issuer Circle, is due to speak on-stage with CoinDesk Chief Content Officer Michael Casey about the future of the stablecoin industry, which bridges the traditional and emerging financial sectors.
See also: The Big Issues of Stablecoin Issuance | Opinion
On Friday, Consensus hosts the Policy Summit, a track of sessions that includes a chance to hear from Dr. Marwan Al Zarouni, a strategic adviser to Digital Dubai and the United Arab Emirates government, about the emergence of multipolar crypto hubs as well as a policy discussion featuring Kristin Smith, CEO of the Blockchain Association, who is perhaps the most active crypto lobbyist in Washington.
Coming to consensus
The name Consensus is perhaps more apt this year than any other. While universal agreement is an unattainable, if not antithetical idea in crypto, you can’t move without direction. And by bringing together many of the biggest names and most influential people in crypto and finance, Consensus 2023 represents perhaps the greatest opportunity for clear direction for an industry that is crying out for it.
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.