10 Predictions for 2023 with Ryan & David

Welcome to another episode of State of the Nation. We've got our 10 predictions for 2023. David prepared this list. I'm just along for the ride. And um just to give you some insights into kind of the world of live streaming. We just barely got this live stream up, David, right? You had a software update and uh it kind of wrecked your live stream setup, but down to the wire, we made it here for you guys.

Yeah, just just a few minutes late, but yeah, made a made a software update to OBS, absolutely broke everything, uh, and then fixed it right at the last minute. Yet here we are. The stream must go on. And there's a lot of things to talk about for 2023, and that is what we are going to be covering today on the episode. We've got ten subjects, ten things we want to cover, the big categories that you all know and love: Bitcoin, Ethereum, alt layer ones, uh layer twos, uh, prices, NFTs, regulation. We got 10 categories, a couple ones I haven't mentioned yet, that we just want to give our predictions for what they look like moving forward into 2023. Um, some of them will have more clear predictions than others, but I think we can look forward at the year ahead, pull back some lessons that we that Ron and I experienced going through the 2018 to 2020 bear market, uh, and apply them to the current state of crypto as it stands today. So we're going to go and run through all of these major categories of crypto just to see what lies ahead for us in 2023.

This is gonna be raw thoughts, guys. It's gonna come at you quick, so I hope you're ready. Before we get in, gotta talk about our friends and sponsors over at

Ryan, we have so much to cover in this episode. We're going to start with Bitcoin. And I actually had to ask my Bitcoin friends about what is ahead in the world of Bitcoin because I don't necessarily feel like I am equipped to answer that question. And so I've pulled in some extra help to talk about Bitcoin, but then we're going to go into the broader subjects that the Bankless Nation knows and loves. Alt Layer Ones, Ethereum, Layer Twos, etc. So all of that and more is coming up right after we talk to some of these fantastic sponsors that make the show possible.

Uh David, we've got the 10 predictions for 2023. I'm going to read out all of the categories we're going to cover really quick and then we'll hit them one by one. Number one, we're going to talk Bitcoin. Number two, Ethereum, then prices. Number four, alt layer ones, layer twos, of course, then NFTs, Dows, C5, that is centralized exchanges. Number nine, the CFTC and the SEC standoff. And number 10, some of our thematic predictions for 2023. Editor's choice. Ryan's and David's thematic predictions. I'm gonna have to think of mine before we get to the end here, I think, David. Uh and we are along for the ride, sir. Why don't you kick us off with? We got to start with old granddaddy Bitcoin who started this whole crypto movement. Hats off to you, Bitcoin. Without you, we wouldn't be here. What are the predictions for Bitcoin in 2023? What's in store for us, David? And uh we're looking right now at a Bitcoin havening clock. I'm gonna read this out 441 days, 22 hours, 51 minutes, and 50 seconds till the next Bitcoin havening. What does this mean?

Well, okay, so uh people will notice that that is more than one year away, four hundred and forty-one days. But uh if we pay attention to the last time a a uh Bitcoin happening happened, uh there is this chant that gets chanted, and it starts to start slowly and then starts to bubble up, and then it just becomes dominant throughout like crypto Twitter, or at least Bitcoin Twitter at the time, which is the halvening is not priced in. And so my big prediction is in around Q3, Q4 of 2023 of this year, uh we are going to start to hear the havening is not priced in. The halvening is not priced in uh because the 2024 halvening date is scheduled around March. It's probably going to creep up uh earlier than March because that's kind of what happenings do, they tend to accelerate. Uh people think it's every four years, but it's actually quicker than four years because hash rate for Bitcoin is up only. Uh but I think that is something to expect towards the end of this year. Is you are start going to start to hear the words that haven't is not priced in. You remember this time in uh four years ago, Ryan, when that was just dominant.

I do, and I'm curious. Okay, so how many halvings uh have you been here for? You remember the 2020 one, and that was certainly dominant. That was the chat leading a chant leading up to this.

Mm-hmm.

Uh do you remember the 2016 one? That wasn't

Not here. I was not here for the twenty the twenty sixteen haven't.

I was partway here. I wasn't all the way here, but I was partway here. This was uh kind of early days of Ethereum. Um and then prior to that, David, it goes dark for me. Uh I guess the the one prior to that must have been in uh 2020 twelve uh or something at that point in time. Um but for folks that aren't familiar, this is when the supply issuance of Bitcoin gets cut in half.

Right.

Hence the happening. And traditionally, David, as you've been saying, that has been very bullish,

Right.

Bitcoin price, at least the narrative of Bitcoin price. Because what is Bitcoin celebrated for? What is it known for? What is the one use case and thing that it does? It has twenty one million Bitcoin. That's it.

Right. And that there will only ever be 21 million. And so that that is at least the promise of uh the Bitcoin network, and that's what's coded in the algorithm. Of course, that is all uh at the end of the day, bankless would say socially enforced at some level. Um, but we are approaching less and less issuance uh per year. It gets cut in half every four years. Now, in 2020, it felt like a lonely thing to say, but I know some of this were saying some of us were saying, okay.

Uh Bitcoin community, the havening is coming up. We're excited about that. Algorithmic uh supply issuance. Yay, not central bank back. That's great. Take the humans out of the money. That's wonderful.

But also keep in mind, Bitcoin community, that when you have in your issuance, you also have in your security budget.

And the security budget happens to be a very important thing for your blockchain because that is how a blockchain actually defends itself and provides settlement assurances. Security budget comes from primarily issuance in Bitcoin. It's like 95% to 99% issuance, and a small fraction is transaction fees. That is how you pay the military to provide the defense service around Bitcoin. The military for Bitcoin, the analogy being miners, proof of work miners. So while you're excited about getting closer to 21 million and cutting off your issuance and less supply available in the market, now I start to wonder if the 2024 happening, uh, the community starts to wake up and realize, ooh, um.

Our

security budget is going down a lot, and can we really afford this? Do you think that'll be a new conversation and a new dynamic that we didn't see la in the last decade?

Yeah, it's going to be interesting because that is where you mean the last havening, that is where we saw some of these hardcore Bitcoiners uh start to consider that angle. Uh Hazu being one of the one of the big ones that was previously a very hardcore Bitcoiner that started to come around to the idea of a security budget happening. I do not think that this happening is the last hap is the happening that triggers a weakness in Bitcoin security. I think we have a

See, FOMO,

I still agree to this. Yeah, yeah. I I still think like there's Bitcoin's lack of security is a number of havenings away. And so I think that I mean, just to play it forward how it happened last time, Bitcoiners start chanting that happenings not priced in. Ethereum people are like your guys' security budget's cut in half. I think it's fundamentally bullish either way. For the same reason that we are bullish on the supply of Ether and ultrasound money, it's the same reason to be bullish about Bitcoin. But I don't want to hang on the halvening too much because again, like this is actually in 2024. Uh and so not happening this year. It's just like you're gonna start to see this rumbling. Uh and so I asked my uh my Bitcoiner friend CK, uh my my po podcast co host before you, Ryan, uh, what to watch out for in the world of

your ex.

My ex podcast co-host, yeah. And what to watch out for for in Bitcoin in twenty twenty three. And his answers were Bitcoin mining and this thing called No Stir.

We'll take those one by one. But I think the things to watch out for Bitcoin on when it uh comes to Bitcoin mining is the consolidation of Bitcoin miners into uh in into either more central, uh, central uh large entities or into newer entities that are also energy production, energy energy producers. And so if you look around, actually, I was doing a little bit of research before the show, if you look around, uh, a lot of energy producers across various countries are also becoming Bitcoin miners. And now that could actually, if you believe the uh the Bitcoin proof of work thesis, lead to integration of Bitcoin into the real world power supply, the and the decentralized power grid, and actually lead to the decentralization of Bitcoin mining, uh, if if that is the trend. Uh the other trend it could be is that a lot of these weaknesses in the current mining ecosystem, a lot of bankruptcies for the Bitcoin, uh the big, big Bitcoin miners lead to further consolidation, centralization. That is something to watch out for. That is a theme to watch out for. The other thing to watch out for is Noster, which uh is something that that Eric Wall is predicting uh just does not gain any traction. But this is the social media for the Bitcoin world, for Bitcoiners, uh social media by Bitcoiners for Bitcoiners. Uh this is something I'm not very familiar with, but this is gaining a ton of attention in the Bitcoin world. And it is basically an implementation of sort of decentralized social media, but using Bitcoin as the settlement layer for data. Uh, and so this is something that is gaining steam in the Bitcoin world.

Really? I wonder how this works. So they're actually

uh is it how are they doing that without Bitcoin being kind of an expressive base layer in the way that

I don't know. I don't know. I don't know. But this is the it've got a bunch of apps and uh this is something to probably to explore if you are l uh uh look, chess oh like s uh settlement assurances with chess as in like I make my peace and I'm I don't know why you want to put that data on the blockchain, but this is something that is pi being pioneered out of the Bitcoin world.

It's really interesting that mining is a thing that um hardcore Bitcoiners are really excited about. Um to me, that's just not an area of interest uh for me, like personally. And I just like what I see is a lot of uh, you know, the consolid d did you see um uh someone tweeted out, um, I think this was Zevin Van Ness, that um just just just uh before the end of the year last year, over 50% of for the for the last week of blocks or something of all Bitcoin blocks have been produced by one of two um centralized miners. Mining pools or mining pools.

Mining pools.

Yeah, mining pools. So this kind of centralization is um, I'm not, you know.

I don't know. I mean, I I guess there's this utopia where all of the major energy companies, right, um, around the world become producers of of uh Bitcoin miners. But um, we're not really seeing that. All we're seeing is kind of the the shake out of the bear market and just more consolidation in

I don't know. I don't know if I'm seeing that. Um I think and that is something, and and the kind of the why I'm putting that as a conversation in this agenda is to that is something to pay attention to in 2023 is where the diffusion of mining power lies. At the end of there's just some bankruptcies that needs to happen. ASICs are going to get distributed. Um but I will say that mining pools I would say are not a pretty weak form of centralization. Uh in the same way that like uh I can take my I can either run my Ethereum staking node through Rocket Pool if I choose to, or run it solo. Like mining pools don't have ownership over the ASIC units, and so that's actually a weaker form of centralization.

I get that distinction. Uh overall, what's your take on on Bitcoin? So there's some excitement for the happening. Uh are you uh you know bullish uh Bitcoin in tw in 2023

Well, I had to ask my friend about what the 2023 has in store for Bitcoin because it's like it's Bitcoin.

on your radar?

It's terrible. Well, it's not on my radar, but also it's like there's no roadmap. That's the point. And so there's designed to be not much on the on the roadmap for Bitcoin. That's part actually a feature that the Bitcoiners enjoy about Bitcoin.

I do think it's down too much and uh is due to go up uh maybe in twenty twenty three. So we'll talk about that a little bit. What what do we got next? We've got Ethereum, I think we're we're talking about. So uh what's what's the prediction for Ethereum?

Ethereum, yeah, and I got this fantastic uh thread out of ProtoLambda, and I've lost the particular tweet. But uh, it's about how many how hard forks will Ethereum see this year. And ProtoLambda uh says we may see three Ethereum hard forks this year. Uh I checked this uh take with Tim Bako and he was like, probably just two. Uh and so again, rough consensus out of the Ethereum land. Uh but the two

It's a lot.

Two is a lot. Two is a lot. And what are those two hard forks? Shanghai and Cancun are the next two hard forks. These are the execution layer hard forks. Shanghai, of course, might as well be called the Withdrawals Hard Fork. That is slated for probably March of this year, pessimistically April. And then Cancun would be EIP 4844 or Proto-Dank Sharding. Also partly named after Proto Lambda here, who's got this tweet. But that is what is in store with Ethereum hard forks this year. Probably probably almost certainly two hard forks. Shanghai to enable withdrawals in March, April of 2023, and then Cancun later in the year to enable 4844. And those are going to be the three, the two major Ethereum protocol upgrades for this year.

I heard people are talking about Cancun in Q3 as a possibility. And if EIP 4844 gets shipped in Q3, that would be hugely bullish.

Very accelerated, yeah.

Can you remind people what uh four eight four four is? Oh, so you said it's um you know proto-dank sharding. But what is the net effect of this for the uh Ethereum ecosystem for crypto?

Yeah, certainly. It gives roll-ups a first class status on Ethereum. So it really is changing the way Ethereum architecture is to really enable layer twos to take off the brakes and be unconstrained. And because uh what do rollups do? They post data down to the Ethereum layer one. 48404 gives a little uh sandbox of data on the beacon chain for rollups to post data to and to really allow uh roll ups to uh use the beacon chain for data availability, which allows them to like have orders of magnitude increase in speed and uh cheaper transaction.

Don't you think then Cancun is like the alt layer one killer?

Yeah,

Like that's always

in the case, yeah.

I guess what I'm just saying is right, like we expect another bull market to come and ETH mainnet gas fees to increase, but now instead of the transaction volume going to alternative layer ones, it is so cheap for that transaction volume. It's almost like close to zero cost uh for that transaction volume to go to uh layer twos, and they will be much more mature by the next bull cycle uh comes around. This is um if I was an alternative layer one, I'd be a little bit worried about 4844.

Yeah.

and uh Cancun and I'd be looking at my strategy and maybe thinking about how I might become a roll up and uh get my security from Ethereum 'cause it's way cheaper.

Certainly, certainly. Moving on in Proto's uh Proto's uh uh predictions, he of course predicts that 48404 proto tank sharding will ship on Ethereum main net. So we've covered this. Uh but he also says the line between chains will start to blur due to eigenlayer, suave, and large uh layer one stakers offering offering different sequencing as a surface solutions. Uh and so this is also this is a a pretty like 401 Ethereum level take. Uh, and but Eigenlayer is something that more and more people are clamoring about. Uh a really quick TLDR on what Eigenlayer is. It's generalized security for other computational resources uh using staked ether. So if you are staking your ether, you can sign up for additional slashing assumptions, slashing conditions to secure something else, such as an Oracle. And so you say you're a solo staker with 32 Ether, you've you're already signed up for the slashing conditions of uh validating incorrect blocks, uh, but you can sign up for an additional slashing uh assumption for something else, as in an Oracle layer or a data availability layer. And this is something Eigenlayer has uh captured a bunch of nerds' attentions, and people are talking about this more and more and more. So, one of my predictions for 2023 is Eigenlayer starts to be talked about even more, probably throughout all of the the entire year, as we kind of reason about what this thing can do.

Would do you know a date for Eigenlayer when that uh when that ships and

When that trip should mainnet? No, I do not. No, I do not. So this is not an an Ethereum protocol. This is not like part of the all-core devs call. This won't be an EIP. This is a startup that is

d working on this problem that is separate from any sort of core development from Ethereum.

Yeah, it's just leveraging the economic security of ETH the asset to economically secure more things. That's hugely bullish for ETH the asset, in my opinion. It's also just man, it adds another dimension to the whole game here and the economics behind it. And I'm both um excited and and simultaneously a little terrified

Yeah.