Source: Cointelegraph Original: "{title}"
Views from: Ken Alabi
Every four years, a few months after Bitcoin's halving, the blockchain ecosystem experiences a period of heightened public attention. This cycle typically lasts over a year and is primarily driven by fundamental economic principles: when the supply of an asset decreases while demand remains stable or increases, its value usually rises. Historically, this supply shock has often triggered a market appreciation dominated by Bitcoin, sparking interest and participation from users, developers, investors, and policymakers.
During these post-halving cycles, the blockchain industry showcases its projects, technological innovations, and potential applications. Although previous cycles did not launch a blockchain application that significantly surpassed existing technologies in any specific field, the core advantages of blockchain—immutability, data transparency, and user asset sovereignty achieved through private key encryption—continue to attract innovators. These features have been creatively applied across various domains, including borderless payment systems, decentralized finance (DeFi), NFTs, gaming systems that record in-game assets, fan and loyalty tokens, transparent funding and charity distribution systems, agricultural subsidies, and loan tracking.
While past cycles highlighted the potential of blockchain, the next cycle is expected to showcase new application scenarios, specifically as follows:
Lessons Learned from Past Halving Cycles
The post-halving cycle of 2012 highlighted the potential of intermediary-free, borderless payment systems. Before Bitcoin, intermediary payments and slow cross-border transactions were the norm—international transfers took days, and check clearing was similarly slow. Bitcoin hinted at a future of seamless payments, and early adopters began tracking the number of merchants accepting Bitcoin. However, scalability issues and rising transaction fees limited this utility. Ironically, many blockchain networks restricted their success through fee structures, hindering growth. This cycle ultimately ended with security vulnerabilities, particularly the Mt. Gox hack that occurred 20 months after the halving.
In 2016, the explosive growth of ICOs (Initial Coin Offerings) democratized access to venture capital. Ordinary people could now invest in early projects—an opportunity that had previously belonged only to large financial institutions. However, the market was flooded with tokens supported only by white papers. The lack of investor protection and accountability led to the rapid collapse of many ICOs. Most projects from that era are now outdated, and even the largest ICOs no longer rank among the top 100 blockchain projects.
In 2020, three major trends dominated the market: decentralized finance (DeFi) projects, NFTs, and play-to-earn (P2E) games. DeFi projects promised unsustainable yields—sometimes exceeding 100%—by minting more tokens to provide these returns, but lacked actual economic activity to support them. Similarly, NFT valuations skyrocketed, with some being mere pixel art with no holdable value. The hype around the metaverse also gradually faded, as the anticipated mass adoption of virtual worlds failed to materialize. P2E games relied on inflationary token economic models, which collapsed when growth stagnated, exposing the fragility of these models.
The post-halving cycle of 2024 is set to begin steadily, based on the approval of Bitcoin ETFs in the U.S., marking the formal entry of cryptocurrencies into traditional financial markets. This initiative, combined with the increasing influence of the blockchain community on democratic processes, signifies an important shift.
Cryptocurrencies Entering the Financial System
This marks the first time that crypto assets are entering the financial system rather than being external to it, which could lead to more balanced regulation rather than outright hostility towards the technology. People have begun to internally recognize its utility and advocate for it. The U.S. is expected to play a leading role in adopting blockchain technology, especially considering its historical role in other technological innovations and advancements. The next question is: how far will this integration go? Will we see more countries incorporating crypto assets into their national reserves? In addition to regulatory progress, several blockchain applications are also expected to be tested in this cycle.
Decentralized Real-World Assets (RWAs)
The trend of tokenizing real-world assets and decentralizing their financing is on the rise. Real-world assets (RWAs) enable asset owners to directly benefit from blockchain-based financing. Key areas include real estate and housing financing, stocks, bonds, treasury bills, agricultural funding, DePIN, and DePUT.
Synergy Between Blockchain and Artificial Intelligence
The combination of blockchain and artificial intelligence is becoming a powerful force. Decentralized management of AI models and secure data processing provide new solutions to privacy issues. AI has the potential to surpass solutions like ZK-SNARKs by managing encrypted data and revealing it according to user instructions or only disclosing it to authorized law enforcement agencies, provided it adheres to blockchain protocols.
Micropayments
Traditional financial systems cannot support micropayments due to high operational costs. Blockchain, with its low-cost transaction model, is well-suited for micropayments, especially in content consumption. This has the potential to disrupt outdated media bundling practices and usher in a new era of seamless payments.
Memecoins and Celebrity Tokens
Memecoins are rampant, with nearly 10 meme coins currently in the top 100 by market cap, and they have almost no actual utility. Low-cost blockchains and user-friendly token creation tools have driven this trend. Meme tokens launched by popular public figures are also becoming increasingly popular, but most similarly lack practical uses.
Stablecoins
Stablecoins continue to bridge the gap between traditional finance and blockchain. As faster and cheaper blockchain technologies dominate this cycle, the use of stablecoins in payments is becoming more widespread, challenging traditional systems like slow check clearing and expensive cross-border transfers. If regulatory policies are clear, stablecoins are expected to achieve mainstream adoption.
Preliminary Data Revealed
Toronet Research tracked token performance from January to May 2024 and predicted trends for December 2024. The findings show:
Memecoins, AI-related tokens, and real-world asset tokens are the early leaders in growth.
Trading volumes across all categories have increased, which is a typical phenomenon of heightened interest and participation in blockchain projects every four years.
DePIN projects may not see much growth initially, although one or more innovative projects may achieve breakthroughs.
Layer-2 projects are growing faster than Layer-1 projects or absorbing the growth that the latter should have achieved.
According to another observation from the Toronet Research report, as with past cycles, projects in application areas with lower value that led to the previous cycle's boom (such as 2017's ICOs and 2021's NFTs) often face denial in the next cycle.
Can the Cycle Be Broken?
The current cycle presents the blockchain industry with its most significant opportunity. With increased institutional integration, more cautious regulatory commitments, and a shift towards real-world applications, the blockchain industry is poised for genuine growth. This cycle could be more successful than any previous one, especially as blockchain solutions are gradually accepted and integrated into the broader economic system.
Views from: Ken Alabi
Related: Africa is Key to Mass Adoption of Cryptocurrency
This article is for general informational purposes only and does not constitute legal or investment advice. The views, thoughts, and opinions expressed in this article are solely those of the author and do not represent the views of Cointelegraph.
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