2025 crypto world trend prediction! A16z: 3 tracks will trigger industry changes, is popularization possible?

Editor's note: a16z has released its annual 'Big Ideas' compilation based on insights from its partners in artificial intelligence, U.S. trends, bio/health, encryption, enterprise technology, fintech, gaming, infrastructure, and other industries, for builders to explore in the coming year. Here are some expectations for the future development from our a16z encryption industry team. For information on policies, regulations, and more content in 2025, please refer to the relevant articles in November 2024.

Artificial intelligence needs to have its own Wallet to achieve autonomous behavior

As artificial intelligence transitions from 'non-player characters' (NPCs) to 'protagonists', they will begin to act as proxies. However, until recently, artificial intelligence has been unable to truly act autonomously. Currently, they are still unable to participate in market activities, such as exchanging value, revealing preferences, and coordinating resources, in a verifiably autonomous manner (i.e., not controlled by humans).

As we can see, AI agents (such as @truth_terminal) can trade using Cryptocurrency, bringing various opportunities for creative content. However, AI agents have even greater potential, not only to better serve human intentions but also to become independent network participants. When AI agents start managing their encryptionWallet, signing Secret Key, and encryption assets, we will see many interesting new applications emerge. These applications include AI operating or verifying Nodes in the Decentralization Physical Infrastructure Network (DePIN), such as playing a role in decentralized energy systems. Other possibilities include AI agents becoming true high-value game players, and even potentially giving rise to the first blockchain owned and operated by AI in the future.

Enter the 'Decentralization Autonomous Chatbot'

In addition to artificial intelligence having a Wallet, there is also an AI chatbot running in a Trusted Execution Environment (TEE). TEE provides an isolated environment in which applications can run, enabling a more secure design of decentralized systems. However, in this case, TEE is used to prove that the chatbot is autonomous, rather than controlled by human operators.

To further expand functionality, the next major innovation will be what we call Decentralization Autonomous Chatbot (DAC, not to be confused with Decentralization Autonomous Company (DAC)). Such a chatbot can attract fans by publishing attractive content (entertaining or informational) and will build fan communities on Decentralization social media; earn revenue from the audience in various ways; and manage its assets in Cryptocurrency. The related Secret Key will be managed in a TEE running the chatbot software simultaneously, meaning that no one can access these Secret Keys except for the software.

With the development of risks, regulatory framework may be needed. But the key point here is Decentralization: the chatbot runs on a permissionless Node cluster and is coordinated by Consensus protocol, which may even become the first truly autonomous billion-dollar entity.

As more people use artificial intelligence, we need unique 'proof of identity'.

In a world filled with online impersonation, fraud, multiple identities, Depth forgery, and other deceptive AI-generated content, we need 'identification' - a way to help us confirm that we are interacting with real people. However, the new problem here is not fake content; it is that now we can produce these contents at a lower cost. Artificial intelligence has significantly dropped the marginal cost of producing content that includes all the clues we use to determine whether something is 'real'.

Therefore, there is now more than ever a need for a way to privately associate content with individual digital identities. 'Identity verification' is a crucial cornerstone in establishing digital identities. However, here it becomes a mechanism that increases the marginal cost of attacking individuals or undermining network integrity: for humans, obtaining a unique ID is free, but for artificial intelligence, it is expensive and difficult.

This is why the 'uniqueness' attribute of privacy protection has become the next big innovation in building a trusted Internet. It is not just a matter of proving identity, but fundamentally changing the cost structure of malicious attacks. Therefore, the 'uniqueness attribute' - or 'Sybil resistance' - is an uncompromising feature of any identity verification system.

From prediction markets to better information aggregation mechanisms

The prediction market took the center stage in 2024 with the US election, but as an economist studying market design, I believe that it is not the prediction market itself that will undergo transformation in 2025. Instead, the prediction market paves the way for more decentralized, technology-based information aggregation mechanisms - these mechanisms can be applied to various industries, from community governance and sensor networks to finance.

The past year has proven this concept, but it is important to note that the prediction market itself is not always the best way to aggregate information: even for global 'macroeconomic' events, they may not be reliable; for more 'micro' issues, the prediction pool may be too small to obtain meaningful signals. However, researchers and technologists have been designing frameworks for decades to incentivize people to (truthfully) share what they know in different information environments - from data pricing and purchasing mechanisms to 'Bayesian truth serum' used to guide subjective assessments, many of these methods have been applied in the encryption project.

Block chain has always been the natural choice for implementing these mechanisms - not only because they are Decentralization, but also because they help to create open and auditable incentive mechanisms. More importantly, block chain can make the results public, allowing everyone to interpret these results in real time.

More and more businesses will accept stablecoins as a payment method.

Stable coins have found a product-market fit in the past year - not surprising given that they are the cheapest way to send USD and enable fast global payments. Stable coins also provide a more accessible platform for entrepreneurs to build new payment products: no intermediaries, minimum balance requirements, or proprietary SDKs. However, large enterprises have yet to realize the significant cost savings and new profit opportunities that can be gained by switching to these payment systems.

Although we have seen some companies show interest in stablecoins (and early adoption in peer-to-peer payments), I anticipate a larger wave of experiments in 2025. Small and medium-sized enterprises with strong brands, fixed customer bases, and high payment costs - such as restaurants, cafes, and convenience stores - will be the first to abandon credit cards. They cannot enjoy credit card fraud protection (because it is a face-to-face transaction) and are also most affected by transaction fees (a 30 cent transaction fee per cup of coffee means huge profit losses!).

We should also expect large enterprises to start adopting stablecoins. If stablecoins really accelerate the development of the banking industry, then companies will attempt to intermediate payment providers—adding 2% of profit directly to their profit and loss statement. Companies will also begin to seek new solutions to address the service issues currently provided by credit card companies, such as fraud protection and identity authentication.

Countries are exploring the use of blockchain for government bonds.

Linking government bonds to the blockchain will create a digital asset supported by the government with Interest, without worrying about the surveillance issues brought by Central Bank Digital Currencies (CBDC). These products can unlock new sources of demand for borrowing and derivative financial products in CeFi (Decentralized Finance) protocols, adding more credibility and robustness to these ecosystems.

Therefore, as governments around the world that support innovation further explore the benefits and efficiency of public, permissionless, and irrevocable blockchain, some countries may attempt to issue government bonds on the blockchain this year. For example, the UK has already explored digital securities through its financial regulatory body, the Financial Conduct Authority (FCA), in its sandbox. The HM Treasury and the Exchequer have also expressed interest in the issuance of digital vouchers.

In the United States, given that the Securities and Exchange Commission (SEC) plans to require the cumbersome and costly infrastructure clearing of government bonds next year, there is expected to be more discussion on how blockchain can increase transparency, efficiency, and participation in bond trading.

We will see wider adoption of 'DUNA', which is a new American blockchain industry standard.

In 2024, Wyoming passed a new law recognizing Decentralized Autonomous Organization (DAO) as a legal entity. DUNA (Decentralization Unincorporated Nonprofit Association) is specifically designed to support the governance of the Block network with Decentralization, and is the only structure feasible for domestic projects in the United States. By incorporating DUNA into the legal entity structure of Decentralization, encryption projects and other Decentralization communities can provide legal legitimacy for their DAOs - not only promoting greater economic activity, but also protecting Tokenholders from liability, and helping manage tax and Compliance requirements.

DAO - a community that manages open blockchain network transactions - is a necessary tool to ensure that the network remains open, non-discriminatory, and does not unfairly extract value. DUNA can unleash the potential of DAO, and multiple projects have already implemented it. With the expected promotion and acceleration of its encryption ecosystem by the United States in 2025, I anticipate that DUNA will become the standard for US projects. We also expect other states to adopt similar structures (Wyoming is a pioneer; they were also the first state to adopt LLC, which is now widely used)... Especially with the emergence of other decentralization applications beyond encryption (such as physical infrastructure/energy grids).

Online Liquidity democratic towards the real world

With the increasing dissatisfaction with the current governance and voting system, there is now an opportunity to try new, technology-driven governance methods - not just online, but in the real world. I have written about how DAO and other decentralized communities allow us to study political systems, behavior, and rapidly evolving governance experiments on a large scale. But what would happen if we could apply these learnings to real-world governance through the blockchain?

We can finally use Blockchain for secure, private voting, starting with low-risk pilot projects to reduce concerns about network security and auditing. But more importantly, Blockchain will enable us to experiment with 'liquid democracy' at the local level—a way for people to vote directly on issues or delegate their votes to others. This idea was initially proposed by Lewis Carroll (author of 'Alice's Adventures in Wonderland' and a prolific researcher on voting systems); however, it was not practical at scale... until now. The latest developments in computation, connectivity, and Blockchain technology make this new form of representative democracy possible. The encryption project has already applied this concept and generated a wealth of data on how these systems work—please see our recent research findings—data that can serve as a reference for local governments and communities.

Builders will reuse infrastructure rather than reinvent it

In the past year, teams have continued to "reinvent the wheel" in the Block chain technology stack - another customized series of validators, Consensus protocol implementation, execution engine, programming languages, RPC API. While these results have improved in some specific features, they generally lack in more extensive or foundational features. For example, a programming language specifically for SNARKs (Succinct Non-interactive Argument of Knowledge): although an ideal implementation may enable developers to generate more efficient SNARKs, in practice, it may lag behind general-purpose languages in compiler optimization, developer tools, online learning materials, AI programming support, etc. (at least for now), and may even result in poorer performance of generated SNARKs.

Therefore, I expect more teams to leverage others' contributions in 2025, and to reuse existing Blockchain infrastructure components more, from consensus protocol, existing stake capital to proof systems. This approach can not only help builders save a lot of time and energy, but also allow them to focus on continuously improving the differentiated value of their products/services.

Now that the infrastructure is finally in place, it is possible to build Web3 products and services that are suitable for the mainstream. Like any other industry, these products and services will be built by teams that can successfully navigate complex supply chains, rather than teams that underestimate the importance of 'not inventing here'.

encryption company will start with the end user experience, rather than letting the infrastructure determine the user experience

Although the blockchain technology infrastructure is interesting and diverse, many encryption companies are not just choosing their infrastructure - to some extent, the infrastructure makes decisions about their foundations, thereby affecting the end user experience (UX). This is because specific technological choices at the infrastructure level are directly related to the user experience (UX) of blockchain products/services.

But I believe the industry will overcome this potential ideological barrier: that is, technology should determine the ultimate user experience, not the other way around. By 2025, more encryption product designers will start from the user experience they want and then choose the appropriate infrastructure from there. Encryption startups no longer need to excessively follow specific infrastructure decisions before finding product-market fit-they can focus on truly finding product-market fit.

We will no longer be entangled in specific EIPs (Ethereum Improvement Proposals), Wallet providers, architectural intentions, etc., but can abstract these choices into a holistic, full-stack, plug-and-play manner. The industry is ready for this: rich programmable Block space, mature development tools, and chain abstraction are beginning to enable more people to design encryption products. Most end users do not care what language a product is written in, they only care about how to use the product every day. In the encryption industry, this situation will also begin to occur.

The "hidden path" helps to lead the killer-level applications of Web3

The superpowers of blockchain technology make it unique, but these powers also hinder mainstream adoption to some extent. For creators and fans, blockchain unlocks possibilities of connectivity, ownership, and monetization... but industry jargon (such as 'Non-fungible Token' and 'zkRollups') and complex designs create barriers for those who could benefit the most from these technologies. I realized this deeply while discussing Web3 with senior executives from various media, music, and fashion industries.

The widespread adoption of many consumer technologies has followed a similar path: starting with the technology; certain iconic companies/designers abstracting away complexity; this process helps unlock breakthrough applications. Think about how email started - the SMTP protocol hidden behind the 'send' button; or credit cards, where most users today don't care about the payment channels. Similarly, Spotify completely revolutionized the music industry by delivering song playlists to our fingertips instead of showcasing file formats. As Nassim Taleb observed, 'overengineering leads to fragility. Simplicity enables scalability.'

Therefore, I believe that by 2025, our industry will adopt the concept of "hidden wires". The best Decentralization applications have already begun to focus on more intuitive interfaces designed to make usage as simple as tapping a screen or swiping a card. In 2025, we will see more companies designing simple, communicating clearly; successful products do not explain, they solve problems.

The encryption industry finally has its own application store and discovery channel

When encryption applications are blocked by centralized platforms like Apple App Store or Google Play, it restricts access for their end users. However, we are now seeing some new app stores and markets that offer this distribution and discovery channel without setting thresholds. For example, Worldcoin's World App Market—not only stores authentication information but also allows access to 'mini-apps'—attracted millions of users to multiple apps in just a few days. Another example is Solana's feeless dApp store for mobile users. These two examples also demonstrate that hardware devices, not just software—such as phones, spherical devices—may be key advantages for encryption app stores... similar to how Apple devices were once an advantage in early app ecosystems.

Meanwhile, other stores offer thousands of Decentralization applications and Web3 development tools, covering popular Block ecosystems (such as Alchemy); as well as Block chains themselves as publishers and distributors of games (such as Ronin). However, it is not always fun: it is very difficult to move a product that is already distributed on existing platforms, such as messaging applications, to on-chain (exception: Telegram/TON network). The same applies to applications with significant Web2 distribution channels. But we may see more of these migrations by 2025.

Cryptocurrencyholder has transformed into Cryptocurrency user

In 2024, Cryptocurrency made significant progress as a political movement, with key legislative bodies and politicians expressing positive views towards it. We also saw its development as a financial movement, expanding investment channels for investors through features like BTC and Ethereum ETP. By 2025, Cryptocurrency should further evolve into a computational movement. But where will these new users come from?

I believe that now is the time to re-engage current 'passive' holders of Cryptocurrency and transform them into more active users, as only 5%-10% of Cryptocurrency holders actively use Cryptocurrency.

We can bring the 617 million people who already own Cryptocurrency into the blockchain, especially as the blockchain infrastructure continues to improve, Money Laundering drop, the user experience will be enhanced. This means that new applications will begin to emerge, attracting existing and new users. At the same time, some early applications we have seen—covering Stable Coin, Decentralized Finance (DeFi), Non-fungible Token (NFT), games, social, Decentralized Physical Infrastructure Network (DePIN), Decentralized Autonomous Organization (DAO), and prediction markets—are also becoming more easily accepted by mainstream users, as the community is driving the popularity of these applications while focusing more on user experience and other improvements.

Various industries may start tokenizing 'unconventional' assets

With the maturity of the encryption industry infrastructure and the promotion of other emerging technologies, the practice of tokenization assets will be widely disseminated in various industries. This will make previously inaccessible assets - whether due to high costs or lack of recognized value factors - not only possible to achieve liquidity, but more importantly, to participate in the global economy. Artificial intelligence engines can also use this information as unique datasets.

Just as the shale gas revolution unlocked oil reserves that were once thought to be inaccessible, tokenization of unconventional assets has the potential to redefine revenue generation in the digital age. What seemed like a sci-fi scenario is becoming more possible: for example, individuals can tokenize their biometric data and lease this information to companies through smart contracts. We have already seen early examples, such as the use of blockchain technology by the Decentralized Science (DeSci) company, which has brought more ownership, transparency, and consent to medical data collection. These developments enable people to utilize previously untapped assets in a decentralized manner, rather than relying on government and centralized intermediaries to provide them with these resources.

Disclaimer: This article does not constitute investment advice. Users should consider whether any opinions, views, or conclusions in this article are applicable to their specific circumstances and comply with relevant laws and regulations in their country or region.

This article is authorized to be reproduced from: "MarsBit"

Original authors: Dan Boneh, Sam Broner, Andrew Hall, Mason Hall, Maggie Hsu, Miles Jennings, Scott Duke Kominers, Eddy Lazzarin, Chris Lyons, Daren Matsuoka, Joachim Neu, Daejun Park, Brian Quintenz, karma (Daniel Reynaud), Aaron Schnider, Carra Wu, a16z

The article '2025crypto world trend forecast! A16z: 3 tracks will trigger industry changes, is popularization likely?' was first published in 'encryption city'.