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As May comes to a close and June marks the halfway point for the year, this week’s newsletter looks back at the biggest stories of the year so far. 

All eyes on regulation.

If nothing else, 2023 will be looked back upon as the year Crypto and Web3 as a whole faced intense regulatory scrutiny as countries began to define their own legal standpoints on emergent technology. This pivotal year marked a turning point in the global conversation surrounding cryptocurrencies and decentralised technologies, as governments grappled with the implications and potential risks associated with these innovations.

The United States Government, in particular, emerged as one of the most vocal critics of the emergent digital markets. Throughout 2023, regulatory bodies and lawmakers in the US engaged in heated debates, deliberating on how to address the challenges and opportunities presented by cryptocurrencies. As President Joe Biden’s tenure approached its end, it became evident that the political treatment of Crypto within US borders would likely undergo a radical transformation in the coming year.

With the changing of the guard in the US presidency, a new administration had the potential to bring forth significant shifts in the regulatory landscape. President Biden’s successor would inherit the responsibility of shaping policies that would define the future of cryptocurrencies and their associated technologies. This transition of power sparked anticipation and speculation within the crypto community, as industry participants and enthusiasts awaited the unveiling of the new administration’s stance on digital assets.

Beyond the United States, countries around the world also recognized the need to establish their own legal frameworks for cryptocurrencies. As the potential of blockchain technology and Web3 platforms became increasingly evident, governments understood the necessity of striking a balance between fostering innovation and protecting their citizens from potential risks. Consequently, cryptocurrency and emergent technology policies became recurring topics within political campaigns and public rhetoric.

Governments sought to position themselves as major players in this new frontier by creating favourable regulatory environments that attracted crypto businesses, entrepreneurs, and investors. They understood that embracing these technologies could offer opportunities for economic growth, job creation, and technological advancement. Hence, nations raced to develop comprehensive regulatory frameworks that would foster innovation while safeguarding against illicit activities and consumer harm.

The year 2023 marked a critical juncture in the evolution of crypto and Web3, as countries around the world grappled with the complexities of regulating this disruptive industry. The intense regulatory scrutiny faced by cryptocurrencies and decentralised technologies during this period set the stage for future developments, shaping the trajectory of the entire ecosystem. Looking back, 2023 will be seen as a milestone year that propelled the global conversation on cryptocurrencies and laid the foundation for the regulatory frameworks that followed.

A year of upgrades and growth for Etherum. 

Etherum is often directly compared to Bitcoin whenever its performance is brought up in conversation, and this is not without merit. Etherum, being the second-largest cryptocurrency by market capitalization, has emerged as Bitcoin’s most capable rival in the blockchain technology space. The first half of 2023 has been particularly positive for the development and progress of the Ethereum ecosystem, further solidifying its position in the market.

One of the notable highlights of the first half of 2023 for Ethereum was the implementation of two major blockchain upgrades: the Shanghai and Capella updates. These upgrades were strategically designed to address key issues within the Ethereum network and enhance its overall functionality. A significant focus of these upgrades was to incentivize staking, a process where users lock up their Ether holdings to support the network’s security and consensus mechanism. By encouraging staking, Ethereum aimed to stabilise the value of its blockchain and increase investor confidence.

The Shanghai and Capella updates played a pivotal role in driving Ethereum to new levels of success throughout the year. These upgrades brought about improvements in scalability, security, and efficiency, making the Ethereum network more robust and capable of handling a larger volume of transactions. The introduction of staking mechanisms also contributed to a more sustainable and secure network, fostering a positive ecosystem for developers, investors, and users alike.

While Ethereum has experienced significant growth and positive developments, it still has a long way to go before it can rival Bitcoin’s monetary influence. Bitcoin, as the pioneer and most widely recognized cryptocurrency, has maintained its dominance in the market throughout the first half of 2023. Despite facing its own set of challenges and uncertainties, Bitcoin managed to hold a price level above $25,000, demonstrating resilience and maintaining investor confidence.

Bitcoin’s status as a store of value and its position as the most well-known cryptocurrency give it a unique and influential role in the digital asset space. Its scarcity, decentralised nature, and widespread adoption contribute to its perceived monetary value and make it a sought-after investment asset. While Ethereum continues to make strides in technological advancements and ecosystem development, it still has work to do to match Bitcoin’s level of recognition and widespread acceptance as a form of digital currency.

Nonetheless, the progress made by Ethereum in the first half of 2023 sets a strong foundation for its future growth and potential to challenge Bitcoin’s dominance. As the Ethereum ecosystem continues to evolve and address its scalability concerns through ongoing upgrades and innovations, it has the potential to attract a larger user base and gain more widespread adoption. The competition between Ethereum and Bitcoin will undoubtedly shape the future of the blockchain industry, as both platforms strive to offer unique value propositions and cater to different use cases within the digital economy.

2023 defined Web3’s early relationship with the financial world. 

Stepping out of the Web3 news bubble, late 2022 and early 2023 proved to be a challenging period for many individuals and economies around the world. One of the significant factors impacting the global landscape was the rising heating costs, which further burdened struggling European economies. As energy prices soared, households and businesses faced increased financial pressure, exacerbating the already precarious economic situation in many countries. The looming spectre of recession cast a shadow over these nations, raising concerns about their financial stability and future prospects.

Adding to the economic hardships, echoes of the banking crisis resurfaced as three separate banks collapsed in early 2023. These incidents served as stark reminders of the fragility of the traditional banking system and its susceptibility to financial shocks. The failures of these banks rattled the global financial markets, triggering anxiety and uncertainty among investors and the general public alike.

Amidst this backdrop of global financial turmoil, the resilience of Web3 and its digital currencies became apparent. While not immune to financial upsets, the decentralised nature of digital currencies enabled them to navigate the challenges more effectively than traditional systems. In March, during the height of the turmoil caused by the bank collapses, both Bitcoin and Ethereum demonstrated relative stability and even experienced modest growth. Investors sought refuge and security in these decentralised currencies, recognizing their potential to offer an alternative to the vulnerable traditional financial infrastructure.

The ability of Bitcoin and Ethereum to weather such significant financial events highlighted their potential as stores of value and alternative investment assets. Their decentralised nature, independent of central banks and traditional financial institutions, provided a sense of security to investors seeking stability during times of uncertainty. This resilience showcased the unique value proposition of Web3 and its digital currencies in a world grappling with economic volatility and financial instability.

However, it is important to note that while Bitcoin and Ethereum demonstrated strength during this period, they are not completely insulated from the effects of global financial events. The cryptocurrency market as a whole can still be influenced by external factors, market sentiment, and regulatory developments. The collapses of the three banks served as a reminder that the Web3 ecosystem, while robust, is still interconnected with the broader financial landscape.

The events of late 2022 and early 2023 underscored the potential of Web3 and digital currencies to offer a decentralised and more resilient alternative to traditional financial systems. The ability of Bitcoin and Ethereum to withstand and even thrive amidst financial turmoil emphasised the growing recognition and adoption of these digital assets as a means of financial security. As the world continues to navigate economic uncertainties, the role of Web3 and its digital currencies in shaping the future of finance is likely to become increasingly significant.