Toby Rush highlights challenges faced by web3 and blockchain, and the troubling state of crypto and NFTs, identifying the need for improved UIs
What will 2023 be known for, if 2021 was the year that prices hit all-time highs and 2022 was the year that crypto prices crashed? One reason could be that there are more rules, but another could be that the market is going down. The situation in the cryptocurrency and NFT market has gone from fear to greed and then back to neutral. The bitcoin market is very volatile and hard to predict. Last month, the cryptocurrency market showed some stability, but now it's going through a rough time again. This is because markets are very worried about how the price hikes in the U.S. will affect liquidity. Crypto experts say that the situation is hard to understand right now and that it will take a little more time to get back on track. Redeem co-founder, Toby Rush talks about the challenges faced by web3 and suggests that improved user interface and regulatory transparency can be a deciding factor.
Need for an Improved User Experience in Crypto Games
Bitcoin, Web3, and DeFi haven't been able to change the market as much as other indicators that have come out since last year's market crash. According to DefiLlama, the total value locked (TVL) for all DeFi protocols has not recovered from the sharp drop.
On November 11, when FTX filed for bankruptcy, TVL was 5.5% higher than it is now. The market for non-fungible tokens, or NFTs, has collapsed. Even though the markets for all cryptocurrencies have gotten better, it seems like fewer people are using Web3.
Rush thinks that this is because user experiences, especially front-end user interfaces, are not good enough. Rush said that even though Web3 is always getting better, most people still can't use it. He also stressed that it was annoying because tech companies have so much experience with getting new users started and promoting good things. Better onboarding can lead to good things for Rush.
Rush said, "For big brands, launching their own Web3 projects is only half the battle. They also need to make sure their customers can use these new services. To get around these problems, new onboarding frameworks need to be made and put into place. These frameworks will let users join Web3 with just a couple of clicks, without having to deal with non-custodial wallets, clunky crypto interfaces, gas fees, and other things that are too technical.
Account Abstraction is Coming into the Crypto
Account Abstraction, or ERC-4337, lets users use smart contract wallets with arbitrary verification logic as their main account instead of EOAs. ERC-4337 added this feature, which is a big improvement for users. Account abstraction was one of the most talked-about topics at the Ethereum Community Conference in Paris. The ERC-4337 upgrade enables account abstraction, which will eventually allow people to log into their crypto wallets and Web3 accounts just like they log into their email or favorite apps. Users may soon get seed phrases and private keys that are much easier to understand. It allows users to sign up in a secure manner, acquire digital assets, and effortlessly retrieve their funds while blockchain protection remains intact.
NFTs Made a Troubling Start
Rush argued that for businesses to succeed, they must adapt to consumers' preexisting mental models and ways of behaving. Companies and projects can help users more easily adopt decentralized products by expanding on existing use cases.
However, Web3's challenges extend far beyond user experience complexity. The term "expensive JPEGs" has come to be synonymous with the NFT asset class in front of public. That is if they are even aware of them. In reality, a dedicated fan base still uses NFTs. Initially, the traditional media showed limited interest in the new type of digital assets, focusing on their profit potential. Many of the same outlets eventually objected to a narrow focus on NFTs' financial viability.
Rush thinks that even while some applications of NFT are still somewhat obscure, they are growing in popularity. By issuing event tickets as NFTs, for instance, the traditional ticketing industry might profit from reduced fraud and the ability to customize and gain rewards. NFTs are being used by large companies to create individualized incentive and loyalty programs, such as Formula 1 and GQ.
The main regulatory worry is what we call "reactive enforcement." Also, the way that regulatory bodies take legal action against declared non-compliance without much communication beforehand.
Rush believes that blockchain-related assets exist in a legal "gray zone" in several nations, including the United States. The European Union's Markets in Crypto Assets (MiCA) initiative has not succeeded in providing regulatory clarity and transparency. The sector, especially in the United States, has been clamoring for more information about the rules and regulations that would affect it. On April 24, Coinbase went to court to sue the Securities and Exchange Commission (SEC) for not allowing it to operate freely.
In March, the SEC issued a Wells notice to the firm, a formal warning of impending enforcement action. Gary Gensler, the agency's head, was confident that crypto businesses had all the information they needed to remain in compliance. NFTs have the potential to revolutionize a wide variety of sectors, from video games and supply chains to tickets and loyalty programs, as has been clearly apparent as the industry has developed. Although we have understood that this perception will change rapidly as more and more well-known companies begin to implement Web3 capabilities into their products; however, the 'speculation stigma' still persists.
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Toby Rush Highlights Challenges Faced by Web3 and Blockchain, and the Troubling State of Crypto and NFTs, Identifying the Need for Improved UIs
1. What is the state of the cryptocurrency and NFT market in 2023? The cryptocurrency and NFT market in 2023 has seen a shift from fear to greed and back to neutrality. The bitcoin market remains highly volatile and unpredictable. Recent fluctuations in the market have been influenced by concerns about the impact of price hikes in the U.S. on liquidity. Experts suggest that the situation is complex and may take some time to stabilize.
2. What are some of the challenges faced by the Web3 and blockchain space? Toby Rush, co-founder of Redeem, highlights several challenges faced by Web3 and blockchain technologies. These challenges include inadequate user experiences, particularly front-end user interfaces, and regulatory ambiguity. Rush emphasizes that despite continuous improvement, most people still find it difficult to use Web3 effectively.
3. How has the market for NFTs evolved since the crash? The market for non-fungible tokens (NFTs) has experienced a collapse, even though the overall cryptocurrency markets have shown improvement. While cryptocurrencies have rebounded, there appears to be a decrease in the adoption of Web3 technologies. This could be attributed to suboptimal user experiences.
4. What does Toby Rush propose as a solution to the user experience issue? Toby Rush suggests that improving user experiences through better front-end user interfaces is crucial. Rush emphasizes the need for new onboarding frameworks that simplify the process for users to join Web3 without dealing with complex technical aspects like non-custodial wallets, crypto interfaces, and gas fees.
5. What is Account Abstraction, and how does it enhance the crypto experience? Account Abstraction, also known as ERC-4337, allows users to utilize smart contract wallets with customizable verification logic as their primary accounts. This is a significant improvement for users, making it easier for them to log into crypto wallets and Web3 accounts in a way similar to accessing email or apps. The ERC-4337 upgrade aims to simplify user interactions and enhance security.
6. How has the NFT asset class been received by the public? The NFT asset class faced initial skepticism, with the term "expensive JPEGs" becoming associated with it. However, dedicated fan bases continue to use NFTs for various purposes. Rush suggests that expanding on existing use cases can help users more easily adopt decentralized products and overcome the negative perceptions associated with NFTs.
7. What role does regulatory transparency play in the Web3 and crypto space? Regulatory transparency is a significant concern in the Web3 and crypto space. The lack of clear regulations has led to a legal "gray zone," particularly in nations like the United States. The absence of communication and clarity regarding regulatory enforcement has raised concerns within the industry.
8. What is the significance of the European Union's MiCA initiative? The European Union's Markets in Crypto Assets (MiCA) initiative was designed to provide regulatory clarity for the crypto sector. However, Rush suggests that it hasn't successfully addressed the regulatory concerns within the industry. The lack of clear rules and regulations has led to uncertainty, especially for companies operating in the United States.
9. How has the SEC's involvement impacted the crypto industry? The U.S. Securities and Exchange Commission (SEC) has been involved in regulatory actions against crypto companies. Toby Rush cites the example of Coinbase, which faced a Wells notice and legal action from the SEC. Despite the claims of regulatory clarity by the SEC, there remains a perception of uncertainty and lack of transparency.
10. How do well-known companies contribute to the perception of Web3 capabilities? Toby Rush suggests that as more well-known companies begin implementing Web3 capabilities into their products, the perception of the technology is expected to change rapidly. However, there is still a lingering "speculation stigma" associated with the industry, which could impact its adoption and reputation.
11. What is the potential of NFTs in various sectors? NFTs have the potential to revolutionize various sectors, including video games, supply chains, event tickets, and loyalty programs. They offer benefits like reduced fraud and enhanced customization. Large companies like Formula 1 and GQ have started using NFTs for individualized incentive and loyalty programs.
12. What does Toby Rush emphasize as a solution for the challenges faced by Web3? Toby Rush underscores the importance of improved user experiences, particularly through enhanced front-end user interfaces. He also stresses the need for regulatory transparency and better onboarding frameworks to simplify the adoption of Web3 technologies for users.
13. How does the current market state differ from previous years? While 2021 saw all-time highs in cryptocurrency prices and 2022 witnessed a market crash, 2023's market state is characterized by fluctuating sentiments, from fear to greed and back to neutrality. Volatility, regulatory concerns, and the need for improved user experiences are defining factors in the current market landscape.