Despite headlines, crypto will gain traction in the mainstream business community in 2023

By Justin Wilcox, CPA, Partner, Tax & Advisory Services
Jan 09, 2023

See this article as it originally appeared in the Hartford Business Journal.

There’s a saying in the cryptocurrency community: Build in the bear, get rewarded in the bull.

After market capitalization and the prices of major coins reached all-time highs in 2021, cryptocurrency had a bad year in 2022. Prices fell and fraud scandals dominated the headlines.

Whether or not the market rebounds in 2023, there are opportunities for businesses and entrepreneurs to grow and succeed in the crypto space this year. While less thrilling, a bear market provides a more level-headed environment in which to make strategic moves.

Cryptocurrency crises have precedent

In the first 11 months of 2022, Bitcoin lost about two-thirds of its value. Many stocks in the tech sector, such as Meta, fell at about the same rate. Crypto doesn’t have the market cornered on volatility — or scandal.

The collapse of FTX will likely be found to be a massive fraud that goes down in history. The fact that John Ray III, the executive who wound down Enron after its meltdown, was brought in to direct FTX’s dissolution underscores the fact that events like this have happened before.

It’s easy to mistake disasters like FTX and Terra Luna for some kind of referendum on the viability of cryptocurrency itself. But these are individual companies. Decentralized finance as a technology is much broader, and its adoption by the mainstream business community will continue.

In the long run, the FTX fiasco will have a positive effect on the trajectory of cryptocurrency business applications. Purists have long warned that crypto exchanges like FTX add a layer of unnecessary risk. This is now plain to see, so companies can take a more secure path.

The FTX collapse will likely push more organizations and investors to use self-custody solutions. While these aren’t without risk — keys or hardware where crypto is stored can be lost — the coins and the responsibility to protect them remain with their owner.

Business-use cases strong, getting stronger

As the Web3 landscape continues to evolve, an increasing number of traditional businesses are engaging with companies focused on cryptocurrency, NFTs and other blockchain applications.

Web3 organizations have the same needs for professional services as any other type of company, and many of them accept and issue payment in cryptocurrency, often at a more favorable rate than the U.S. dollar.

There are a number of reasons for this. They likely have other vendors and suppliers who transact in Bitcoin. They may also convert to another currency or invest the balance.

And while some companies and investors have remained on the sidelines of crypto because of environmental concerns about its energy consumption, a rare positive crypto story in 2022 shifted the equation.

The world’s second-biggest cryptocurrency, Ethereum, switched from a mining model to a proof-of-stake model, reducing its energy consumption by over 99%.

Great timing for bootstrapping

Many successful crypto projects and businesses were launched during previous downturns, and found themselves poised for success when the market heated up again.

These days investment dollars are, of course, fairly hard to come by in every industry. But if you can bootstrap your idea, 2023 is a great year to get started.

While still a specialized field, blockchain developers likely have more availability now than they did in the previous two years. It’s also easier to be more diligent about building and perfecting technology when there’s not a huge rush to launch.

Once they are up and running, crypto and NFT projects often require a great deal of marketing to be successful. While a full-fledged marketing push would likely be timed better later on, getting an early start on laying groundwork, such as building a social media following, can be advantageous.

And, of course, you don’t have to make a new coin or NFT to participate in the Web3 economy. Creating a product or service that caters to crypto organizations or investors can generate revenue regardless of where the price of Bitcoin heads this year.