#238—Four predictions for 2023

From Hard Yaka partner Greg Kidd

Jan 09, 2023

Welcome to Yaka Stuff, our weekly newsletter that covers news, industry perspectives, and updates from the Hard Yaka ecosystem. Check out last week’s report here.

This week:

Four predictions for 2023 from Greg Kidd
The rise of Matrix
The decline of Google and Meta
This week in digital wallets
This week in crypto
This week in regulations
This week in identity
Ecosystem updates

1. Four predictions for 2023 from Greg Kidd

It’s been a whirlwind year, but central theses around new technologies, blockchains, and frameworks around value, payments, and identity haven’t changed. The more that gets revealed from the FTX debacle, the more it’s clear that it was mostly a case of old fashioned fraud. Meanwhile, extravagant experiments like Terra/LUNA could only exist in such periods of irrational exuberance.

Coming into 2023, the industry is licking its wounds but the silver lining is that a lot of the distractions are gone. (Although eyes are still peeled on the DCG/Genesis saga.) And so people are getting back to old fashioned work: building technologies and products that will improve people’s lives and change the way we work and play—grounded by business models that make money. We’re back to simpler times.

Revelations from this last cycle like DeFi and NFTs aren’t going away. The former still requires plenty of structural development while the latter seeks utility beyond collectibles. And of course, we’re all waiting for a bit of regulatory clarity, a potential benefit from all the focus on SBF. A summary judgment around the SEC case against Ripple is expected in the first half of the year. With regulations, there is also some consensus that it’s high time to figure out digital identity.

Hard Yaka partner Greg Kidd shared his thoughts on what he expects from 2023. (The predictions are his. The context is mine.)

I. Digital wallets will be cross platform rather than platform specific.

In 2023, expect wallet browsers to be able to access balances from multiple chains and sources—including, say, traditional bank accounts. The blockchain space continues to have a UX problem, and people expect to access all of their finances in one place.

II. Technologies like Matrix will break down barriers between messaging platforms. The bottom line is that we’ll start to see “front-to-back” integrations of credential, financial, and messaging platforms so that the user sits on top of the stack rather than sitting at the bottom of the silo.

A cross platform digital wallet tied to an identity—all of which you own and control. We now find ourselves at a confluence of technological developments that make this reality possible.

III. The decline of social media and the rise of instrumental media: interoperable messaging platforms will subsume some of the features previously associated with social media.

Elon’s Twitter side quest has only helped further illustrate the limitations of legacy social media platforms: the trust deficit, the lack of individual ownership, and the opaque accountability. People are already experimenting with federated alternatives like Mastodon. You’ve also got Jack Dorsey hyping up a relay-based analogue in Nostr.

The lack of trust also means that social media accounts are weak on the identity front. In that sense, they’re less than instrumental. Interoperability will also force platforms to cater to user and community needs rather than focusing on filling their moats. The web was built on open, interoperable protocols. It’s perhaps inevitable that social media (and instrumental media) follows suit.

IV. The rise of subscription services and pay-per-view eclipsing the ad-based model.

NFTs demonstrated that power is shifting to creators. Floor prices are down like everything else, but new projects are still finding buyers. Meanwhile, ad-based giants like Google and Facebook are seeing growth slow and market dominance recede. Platforms like YouTube and Twitch are going out of their way to cater to their golden geese with generous profit sharing agreements: the ones actually making content. Even so, those same creators are gravitating toward platforms like Patreon and Nebula that give them a more direct financial relationship with their fans and consumers as well as a sense of sovereignty and freedom.

There was a time when only established artists such as Radiohead and Louis CK could dabble with the direct-to-consumer PPV model. But in an age when distribution is open and anyone with a sense of purpose and hustle is able to build their own community, that opportunity is opening up to more and more creators.

Relevant:

Vitalik Buterin Reveals 3 ‘Huge’ Opportunities for Crypto in 2023
Via Sam Ostler—Watch: Vitalik Buterin On What’s Next for Ethereum (Part 1 / Part 2)
Via Sam—Coinbase report: 2023 crypto market outlook
Via Sam—Messari report: Crypto theses for 2023
The year that crypto shattered

2. The rise of Matrix

Here’s TechCrunch (via Vadim):

Interoperability and decentralization have been major themes in tech this year, driven in large part by mounting regulation, societal and industrial pressure and the hype trains that are crypto and web3. That rising tide is lifting other boats, such as an open standards-based communication protocol called Matrix — which is playing a part in bringing interoperability to another proprietary part of our digital lives: messaging.
The number of people on the Matrix network doubled in size this year, according to Matthew Hodgson, one of Matrix’s co-creators — a notable, if modest, boost to 80.3 million users (that number may be higher; not all Matrix deployments “phone home” stats to Matrix.org).
While the bulk of all this activity has been in enterprise communications, it looks like mainstream consumer platforms might now also be taking notice.
Some sleuthing from engineer and app researcher Jane Manchun Wong unearthed evidence that Reddit is experimenting with Matrix for its chat feature — a move more or less confirmed to TechCrunch by Reddit. A spokesperson said that it’s “looking at a number ways to improve conversations on Reddit” and was “testing a number of options,” though they stopped short of name-checking Matrix specifically.
Given the bigger swing in support of interoperability — it’s happening also in digital wallets and maps — a closer look at Matrix gives some insight into how we got here.

Relevant:

3. The decline of Google and Facebook

Here’s Axios:

Google and Meta, known together in the ad industry as the "duopoly," are expected to bring in less than half of all U.S. digital advertising this year for the first time since 2014.
Why it matters: The duo's ad dominance has for years made both companies the target of antitrust investigations and lawsuits. While they still tower over digital rivals, their momentum is starting to slow as competition moves in.
By the numbers: Google and Meta will together capture 48.4% of all U.S. digital ad revenue this year (28.8% for Google and 19.6% for Meta), down from 54.7% at their peak in 2017 (34.7% for Google and 20.0% for Meta), per data from Insider Intelligence.
…
Be smart: The ubiquity of screens in the home, workplace and on-the-go has made it so that virtually any company can target customers with digital ads, expanding the set of competitors for Google and Meta from other publishers and social media firms to streamers, e-commerce companies and beyond.

Relevant:

4. This week in digital wallets

5. This week in crypto

6. This week in regulations

7. This week in identity

8. Ecosystem updates

Decaf’s year in review:

The Decaf team has had an incredible year. In just nine short months, we have developed and launched two products that are already making a significant impact in the world of crypto and blockchain technology.
We began developing the Decaf Wallet and Decaf Point of Sales in March. Our goal was to create products that would make it easy for everyday people to access and use crypto for real-world payments, and sending money abroad.
Fast forward to the end of 2022, and we are proud to say that our products are live and being used by thousands of people around the world.

Relevant:

Decaf — Web3 payments year in review

Yaka Stuff

#238—Four predictions for 2023

From Hard Yaka partner Greg Kidd

1. Four predictions for 2023 from Greg Kidd

I. Digital wallets will be cross platform rather than platform specific.

II. Technologies like Matrix will break down barriers between messaging platforms. The bottom line is that we’ll start to see “front-to-back” integrations of credential, financial, and messaging platforms so that the user sits on top of the stack rather than sitting at the bottom of the silo.

III. The decline of social media and the rise of instrumental media: interoperable messaging platforms will subsume some of the features previously associated with social media.

IV. The rise of subscription services and pay-per-view eclipsing the ad-based model.

2. The rise of Matrix

3. The decline of Google and Facebook

4. This week in digital wallets

5. This week in crypto

6. This week in regulations

7. This week in identity

8. Ecosystem updates

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