The Bear Market is A Blessing For Web3’s Future. Here’s Why.

Cryptocurrency enthusiasts might think it’s blasphemy, but what’s currently happening in the industry is a reason to rejoice rather than despair.

Crypto is going through the necessary but painful process of separating the wheat from the chaff. And boy, is crypto full of chaff. From Do Kwon, who ran Terra into the ground, to Three Arrows Capital’s founders, who are literally on the run, crypto doesn’t lack bad projects that need to disappear.

The common denominator among such projects was espousing values such as decentralization and transparency, whose absence in traditional finance, crypto entrepreneurs claim, prevents financial empowerment. Those values largely didn’t translate into real-world business models, which is important since the industry lacks strong regulation and enforcement. Celsius’s founders raiding the company coffers before screwing the retail customers is a case in point. Access to funds and the power to move them willy-nilly remained only with the company’s creators.

Is it true that blatant misuse would have been prevented if Celsius was actually a decentralized finance (DeFi) company without a centralized business structure? Such platforms do exist, while not with the same name recognition among more traditional techies. Take EQIFi, which operates in the same space but is backed by a globally licensed digital bank and structures its platform decentrally. The idea is to offer investors an ecosystem in which they can stake their tokens in a truly decentralized way.

Related: Rebound And Reset: Making The Most Of The Current Crypto Bear Market

It’s hard to know whether platforms that adhere to DeFi purity will win out and fare better than the likes of Celsius in the long run, but it’s undoubtedly the case that they are doing things differently. By combining the best of both worlds, one might be able to deliver on the promises of an earlier generation of crypto leaders.

It’s not only big projects like Celsius and 3AC that were thriving in the bull market. The world right now is full of “zombie firms.” These companies could never survive in normal market conditions but managed to stay alive because of cheap access to capital. While a joke, the widely circulated quote during the bull run asking, “if I raise money faster than I am spending it, am I profitable?” speaks to a phenomenon that was endemic during the booming market.

Small crypto startups successfully chased huge valuations with very little but hype to underpin them. Now the industry is paying the price. According to classic Darwinian logic, the survivors of this downturn will be the companies that built products that can thrive even in this harsh environment. And that’s happening. Imagine leveraging blockchain to do something useful, like improve crowdfunding through real transparency. There’s a Web3 crowdfunding platform called SeedOn doing exactly that. Instead of scaling back in the downturn as companies collapse, they are taking on new vetted projects showing that innovation still brings value.

Related: How should investors weather this ‘crypto winter’

Instead of growing for increased valuation, Web3 can now focus on building. It can maximize users’ value and transform how companies do business. In the long run, it will be healthier for Web3 to have value as an underpinning instead of valuation bubbles.

Another valuation bubble that burst is — of course — bitcoin’s. From having peaked at almost $70,000, now the price is hovering at $19-$20,000. Surprisingly to many enthusiasts, this is also a good thing. Many speculators made money when the market pumped and Bitcoin went to the moon. It also served to promote virtual currency in the mainstream. However, the booming price creates problems that hinder the ecosystem’s growth — the main obstacle being that money needs price stability.

Bitcoin maxis might think a bitcoin price around $20,000 is way too low as they want to get rich on “HODLing.” But the fact is a stable bitcoin enhances its feature as a store of value. If I expect an asset I hold today will be worth twice as much next year, why would I ever spend it? Conversely, if I fear the currency to lose half its value by next year, why would I ever even hold it? If the price is stable, the currency’s usefulness is amplified manifold.

The crypto ecosystem might see a bright red line between Bitcoin and Web3, but there isn’t one. For example, Jack Dorsey, the legendary founder of Twitter, is building a decentralized version of the web that Bitcoin will entirely power.

That the first and most prominent cryptocurrency establishes itself as a helpful way of storing wealth is great. If I, as a consumer, can count on Bitcoin to keep its value, maybe I’ll save some in my wallet, even just out of FOMO, and perhaps use it for something in the future.

The road to mass adoption is full of surprising twists and turns. Instead of price pumping for the sake of speculators making money on the movement, Satoshi Nakamoto’s vision of a decentralized currency is a step closer to reality.

This bear market will end at one point, and we can’t know what tech or crypto will look like after the winter. But right now, there are many reasons to be optimistic that the growing pains we are experiencing will be worth it in the long run.