The Breakdown - What's the Future of Crypto Adoption?

Starting point is 00:00:04 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Sunday, October 20th, and that means it's time for Long Read Sunday. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, we have a video. kind of a quirky one today. We're actually going to read two different pieces, both exploring

Starting point is 00:00:43 the particular ways that people are getting onboarded to crypto this cycle. The first piece is by Ryan Gorman and is called Tap to Earn Games are realizing Satoshi's dream. Love or Hate games like Hamster Combat, they're onboarding millions of users. I'm going to turn it over to AI, me from 11 Labs, and then I will come back. If media reports and anecdotal information is to be believed, we are on the cusp of a massive wave of crypto adoption from a group of people who don't know they are even using the technology despite reaping the benefits. Tap to earn games are not a new idea, but when applied to Web 3, there's been a Cambrian explosion of engagement like nothing before seen for this industry, and hamster combat is only the beginning. In many cases,

Starting point is 00:01:26 the rewards are enabling a small amount of economic freedom that did not previously exist. Take, for example, the reports coming out of Iran, where the government has claimed that hamster combat is a soft tool in the West's war against their theocracy, distracting voters from casting ballots during a recent election. For their part, the founders have denied any ties to the West, but there's likely an even greater force at play here. Iran is currently among the world's worst-performing economies, and residents face very little prospect for employment with ever-rising prices due to draconian sanctions over the country's nuclear program. This has led the country to embrace crypto at much higher rates than most. Iranians consistently rank among the top users of

Starting point is 00:02:05 Tonkeeper and many other non-custodial wallets, as they try to find new and different ways to to use money and protect the value of their earnings. Even more surprisingly, though, is the rate at which the country has latched on to hamster combat. Take, for example, this AP description of a recent afternoon in Tehran, the Iranian capital. Quote, cab drivers and bikers tap away furiously on their mobile phones as they wait at red lights in the Iranian capital during an early June heat wave. Some pedestrians in Tehran are doing the same. They all believe they could get rich. For these people, wealth is relative to the West when you consider the currency has devalued from 32,000 reals to USD in 2015, down to 42,000 reals per dollar at the moment. Concurrently, the price

Starting point is 00:02:43 of meat has soared 70% in the last year, and the cost of a ride share taxi has doubled, according to the AP. It's no wonder Iranians will cling to any opportunity to earn they can find, but they aren't the only group that is latched onto mini-apps with the promise of big rewards. Section Kids and their games For as long as video games have existed, they have been played by children. I played them while growing up, and still do. So do many of my friends.

Starting point is 00:03:08 So did you, or if not you, many people you grew up with, and that's where this becomes more compelling. Many people I speak with, colleagues, partners, conference goers, have anecdotally mentioned to me how much their children love hamster combat. Some of these kids are as young as 11 and 12 years old, and they played nonstop. These kids, like many Iranians, ferociously tapping away using all kinds of methods, including, in some instances, a massage wand to optimize gameplay, likely do not know that crypto underpins the rewards and ultimately the airdrop. But they do know that the top players will

Starting point is 00:03:39 earn a windfall that would otherwise not have existed, whether they are in Iran, Iowa, or anywhere else in the world. Yes, the rewards on offer are likely what enticed the more than 300 million people that played hamster combat and continue to play the countless other tap-to-earn games coming online each week. But this isn't really the point. All one needs to do is look at how video games overtook board games during the 1980s to understand what is happening. For the first time in history, 300 million people are interacting with a Web 3 platform underpinned by crypto, and this spans all generations' backgrounds and locations. And with younger generations becoming increasingly crypto-native, it's only a matter of when, not if, these platforms begin to overtake the

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Starting point is 00:05:36 They've clearly found product market fit. Back when the slash R-slash Wall Street Betz saga kicked off the first meme coin mania in 2021, it was mostly dog coins that were super hot. Doge coin copycats like Shiba Inu, Baby Doge, and Flokey, the latter of which was named after Elon Musk's dog, a Shiba Inu. At the time, hardly any meme coins were at the top end of the market. There were, as always, silly projects with outrageous valuations that weren't explicitly meme coins, such as Safe Moon and Hecks. But out of the top 250 or so, pure play meme coins

Starting point is 00:06:06 were represented by that small handful of dog coins orbiting Musk's then newly found appreciation for Dogecoin. Today, over 10% of the top 250 are meme coins, and they're securing more billion-dollar market caps faster than ever. Out of the meme coins that have launched during this cycle, which, let's say, started in 2022, seven have reached the $1 billion dollar market. mark at some point. Bunk, Bome, Wiff, Brett, Popcat, Corgiye, and Pepe. On average, it took those seven meme coins about five months to reach three commas. Boam did it in four days, Pepe in 21, and Wiff in 84. A slew of smaller meme coins have also either recently hit all-time highs or are approaching new records as we speak, including MOG, Turbo, SPX, 6,900, narrow, gigacad, and

Starting point is 00:06:50 NPC. One theory goes that meme coins are capturing so much interest simply because the SEC has sued the market into submission. If a majority of the crypto market is considered investment contracts regulated in the same way as securities, then why not trade the most pointless tokens instead? Let's say that's true. Thanks a lot, Gensler. You've made crypto more fun than ever. All right, back to real non-AI-NLW here. One of the big things that people have been wondering is what would this cycle's new attractor to crypto be? In every previous bull market, we've had Bitcoin kick it off, but then eventually some new thing brings in some new group of people, NFTs, for example, during the last cycle. One of the things that has made this particular cycle weird

Starting point is 00:07:36 is the fact that there just hasn't seemed to be anything that is clearly bringing in totally different or new audiences, at least not when it comes to American consumers. If you zoom out and go globally, things start to look a little bit different. One of the things that we saw from the A16C crypto report this week is that a huge part of the growth that's happening right now is in places like Nigeria and Argentina. Stablecoins, boring as though they might seem, are a major, major force onboarding people into the crypto ecosystem. And that's not stable coins for trading, obviously. It's stable coins for life. The example that Ryan gives here of TAP to Earn Games in Iran is another example of where perhaps international patterns are diverging

Starting point is 00:08:18 a little bit from the U.S. Now, I think it's still an open question as to what, if anything, is going to get U.S. retail customers excited to get back in this space. I've seen some folks advance a theory that at this stage, there's basically not much left that crypto can do until regulatory clarity actually allows for some securities like properties. Ultimately, I think it's worth asking, would we view it as a failure if this cycle kind of ended up looking like it does now? An expansion of the audience for Bitcoin via ETFs, an expansion of stablecoin usage in the global South and meme coins for the crypto DGens. Is that a problem? Do we rely on fresh new blood in the form of retail traders? I think it's an interesting question to explore, certainly worthy of a Sunday think.

Starting point is 00:09:06 For now that that is going to do it for today's breakdown. Appreciate you guys listening as always, and until next time, be safe and take care of each other. Peace.

The Breakdown - What's the Future of Crypto Adoption?

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