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The State of Consumer Crypto

What’s Consumer Crypto? Whats the current state? Whats to look forward to?

Imagine being early enough to have to explain to people that crypto has use cases outside of finance, that's essentially where we’re at.

NFT Technology and Smart Contracts have the potential to transform and improve every consumer industry including content, social media, and gaming platforms with TAMs of $2.6T, $200B, & $250B respectively.

The future of the internet will be constructed on permissionless infrastructure, using smart contracts that allow developers to build openly. It will also consist of owning digital objects, or NFTs, online that will establish digital relationships and build online identities, all under the user's control.

Almost all online elements will have extensible infrastructure and will be ownable. Owning digital objects will be the primary business model of any consumer facing application that is digitally native.

Consumer Crypto will likely be the primary category attracting users to crypto. Most applications will have their users engage in onchain actions and own NFTs, whether users are aware of it or not.

Why Consumer Needs Smart Contracts and NFT Technology.

NFTs represent a unit of ownership of a unique, or within a set of unique, digital objects. They enable wallets to possess and control a digital object.

For context, bitcoins are the first digital money enabled by the bitcoin blockchain that makes them scarce, or impossible to duplicate. NFTs just apply this to files. Referencing any file to an NFT makes it scarce and impossible to duplicate.

Any file format such as .jpegs, .pdfs, .wavs, .mp3s, .mp4s, etc. can now be scarce, valued, and owned. Referred to as Cryptomedia, or Content NFTs.

These file types form the foundation of our consumer content and media industries, such as Art, Music, Podcast, Film, and so on. Owning the underlying digital objects introduces a new capability for these industries, potentially transforming their existing business models.

Beyond NFTs, blockchains and smart contracts also facilitate applications that are permissionless with open designed economies. These can serve as platforms for developers or companies to build on the open infrastructure and integrate their economies, potentially transforming categories like Social and Gaming.

What Consumer Use Cases Are Exciting?

At the onset of new technology, people often look to replicate existing systems. However, what's more exciting is that technology enables new actions, applications, and business models that weren't previously possible or hadn't been imagined in that context.

What consumer activities were impossible before the advent of smart contracts and NFTs? Which industries could the ownership of digital objects potentially transform?

  • Digital art couldn’t be owned, bought, or sold before NFTs

  • Collecting content is a new business model for other types of media outside of art (music, videos, articles, podcasts, etc.)

  • A permissionless social media platform for social apps to build on top of and monetize via collecting content

  • A permissionless gaming platform for gaming apps to build on top and monetize via open economies of gaming item collectibles and open economies

There are also use cases that no one is thinking of yet. NFTs can be used for more than representing ownership, they can be dynamic and interactive themselves such as NFTs having their own wallets and interacting with applications directly via standards like ERC6551, or Tokenbound Accounts.

What Is The State Of The Consumer Crypto Space?

A few themes to focus on here are User Experience, Speculation, and Gamification.

The user experience of consumer crypto apps has significantly improved over the past few years. Previously, you had to buy crypto on an exchange, download a wallet, write down the seed phrase, spend $20 on transaction fees, and every NFT cost at least $200.

On top consumer crypto apps like Sound, a user can sign in using their email and acquire a song for less than $1 using Apple Face ID. The user may not even realize that they've set up a wallet, converted from cash to crypto, and purchased a Music NFT on a layer 2 blockchain.

The integration work necessary to build out the best available experience still takes a lot of work, taking application founders 3 to 6 months to add wallet providers, credit card onramps, and layer 2 integrations. Even with the full set of integrations of all the best available tools, there are still more user experience tools needed, especially around onboarding onto layer 2s from the developer and user standpoint.

Ultimately, there are applications ready for many more users than there are today, but there are still more infrastructure and user experience tools needed to be ready for mainstream adoption.

User experience stack for developers

Speculation is one of the core features of ownership online and having upside in a digital object. A lot of Consumer Crypto applications have started around representing a type of digital object onchain as NFTs whether it is digital art, music, podcasts, gaming items, social posts, etc. enabling users to become collectors.

Having a stake in things that online users believe in creates a market around their favorite interests. They can benefit from the things they choose to engage with and support. While it might be an unpopular opinion, speculation is a key aspect of NFTs as it introduces an open market to any online entity.

While speculation is a prominent aspect of owning digital objects, it's not the only feature provided to users, even in the simplest form of owning an onchain digital object as an NFT. Two other key value propositions for online collectors are forming relationships with the creator and the surrounding community, and enhancing their online identity by adding provenance data on the blockchain about their possessions.

Atomic unit of a NFT

Gamification enhances user engagement with applications beyond ownership and speculation. The Consumer Crypto space has reached a maturity level where it has begun to focus on incorporating additional experiences around digital collectibles using gamification features. The key elements of gamification in consumer crypto include user experiences related to gameplay, social gratification, and a sense of community.

The space has seen many examples of gamification; gameplay in games like Axie Infinity, Dookey Dash, and The Worlds Largest; social gratification in media & entertainment apps like leaderboards on Sound, SuperRare, and 9dcc; sense of community across generative projects with a collection of unique NFTs like Punks, Squiggles, and Apes.

The gamification of applications can attract more users and maintain growth during bear markets, which typically slow down when relying solely on ownership. By prioritizing gamification and keeping speculation as a secondary feature, crypto based applications can appeal to users throughout all market cycles. When the market rises, speculation can then stimulate faster growth.

Key components of gamification

Looking Forward In Consumer Crypto.

Looking forward we’re most excited about the Cryptomedia and the Autonomous World categories all powered by NFT technology and Smart Contracts.


The Cryptomedia space encompasses infrastructure and applications that put or engage with content such as art, music, podcasts, articles, TV/film, and social posts on chain as NFTs. The first major phase of this space involves transforming the content monetization model. Instead of relying on consumption-based subscriptions or advertising models, it shifts towards a direct-to-consumer sale of digital objects, much like the models seen in existing web2 games.

Numerous early platforms have been established across a variety of content types. SuperRare and Foundation cater to Digital Art. Sound and Catalog are for Music. Paragraph and Mirror focus on Writing. Pods is for Podcasts. Hypeshot and Unlonely serve Livestreams. Zora supports any file type, among others. The majority of these leading products in each category already boast a sophisticated user experience, including features like email login, layer 2 support, credit card on-ramps, and cross-chain NFT buying.

Most of the activity around the ecosystem has formed around Ownership and collectibility, with end users that become collectors to build their onchain identity, establish relationships with creators, and speculate on the upside of the content and creator.

With many of these leading apps having hurdled the User Experience challenges, the next product releases are centered around building out the gamification experiences and better surfacing the immediate gratification from ownership. In the cryptomedia category, the gamification aspect has a strong focus on access and exclusivity. Early examples include gated chats and tiered access to exclusive content, along with in-real-life experiences. The social gratification component is evident in leaderboards for top collectors and viral artists, curator rewards, and social feeds. The community component is highlighted by generative collectibles or unique editions.

In addition to representing media onchain using NFT technology, applications are also developing key parts of their technology stack onchain. These are in the form of protocols that provide permissionless infrastructure for their own and other applications. These content protocols offer features such as minting, curation, and engagement. Examples include SuperRare’s curation protocol, the minting protocols of Sound, Zora, and Manifold, and Titles' republishing protocol. As more layers of the consumer media stack are built onchain, applications can better customize user experiences and monetize using these new business models.

Contrary to the popular belief that Cryptomedia and Content NFTs mainly benefit artists and collectors rather than users, this model actually promotes a free-to-consume and valuable-to-collect approach. This is akin to the free-to-play model in gaming. It provides an optimal experience for consumers as it eliminates ads and upfront subscription costs.

The combination of superior consumer experience, user base gamification, and ownership benefits could potentially revolutionize many media and content industries.

To better understand the early adopter users in the Cryptomedia space, let's explore a simple user journey.

  • Bob enjoys music for free. If he appreciates a song or artist, he can collect their music. His purchase directly funds the musician. The music he collects becomes a part of his online profile and contributes to his ranking on the leaderboard, which is based on the number of songs he's collected. This collection grants him access to an exclusive chat where musicians share updates and additional context. As Bob's collection grows, he gains access to an even more exclusive tier of content.

  • Musicians, in turn, grow their audience through these collectors. As an early collector, Bob can profit by selling the songs he collected early on to new collectors interested in earlier limited supply releases.Autonomous Worlds

Autonomous Worlds

Autonomous worlds (AWs) are fully onchain experiences powered by smart contracts. These contracts act as servers and enforce the logic of the experience, with early use cases focusing primarily on gaming and social. The core values of autonomous worlds are rooted in the permissionless and composable smart contract infrastructure that drives the experience, and in the ownership of entities within the onchain open economy of the experience.

A gaming AW is known as a Fully On-Chain Game (FOCG), where the game's rules and economies are completely governed by on-chain smart contracts. This structure allows developers to build additional gaming applications on top of the existing game without needing permission. They can expand current games, enrich the lore, and further cultivate the open economy. Users also get the benefit of ownership of digital objects within the onchain economy of the game, resulting in upside and onchain providence.

This category pushes the boundaries of existing games and the business model of the web2 gaming industry. Until now, most games in the crypto space have followed a web2.5 approach, featuring in-game items as NFTs. However, prior to FOCGs, the business model was very similar to existing web2 games. While the web2.5 approach anticipates that in-game items will be interoperable with other games or social ecosystems, this is less likely when the games have isolated infrastructures and communities.

FOCGs represent a new paradigm shift, allowing games to be built on top of other games as shared infrastructure. Games can benefit from incorporating popular existing games with established user bases, and aim to enhance the gameplay experience by including the underlying game experience and economy. End users can also generate UGC to personalize their gameplay, lore, or create additional experiences for themselves or the rest of the ecosystem.

One of the most exciting use cases within AWs is that non-player characters (NPCs) within the games can become NFTs. By utilizing the ERC6551 standard, these characters can have their own wallets, enabling NPCs to be owned by real users who can then deploy them to act on their behalf.

The AW space is still small but growing rapidly across several ecosystems including the Ethereum VM (EVM), Cairo VM (Starknet), Solana VM (SVM), and others. Each ecosystem has open source frameworks such as MUD built by Lattice for EVM, DoJo built by Cartridge and Realms for Starknet, Bolt built by Magicblock for the SVM, and others. Each ecosystem has numerous games built on top such as Primodium and Skystrife on MUD/EVM, Realms and Dope Wars on DoJo/Starknet, SolCIV and Sage on Bolt/SVM, etc. Even within specific games, there are multiple derivative games. For example, the Realms ecosystem has dozens of games built on top of it.

Autonomous Worlds landscape

An intriguing example of the permissionless expansion of games within an ecosystem is the multiple games across ecosystems originating from the same lore around Loot. Loot is a collection of 8,000 NFTs, represented as white-text images on a black background. Each NFT symbolizes a "bag" of Loot reminiscent of fantasy-adventure games. Since its release in August 2021, Realms, Dope Wars, Treasure, and more across various frameworks and gaming engines have innovatively expanded on the original collection, each establishing their own game ecosystems.

The AW space is still in its early stages, with much more to develop. These developments include gaming engines and service providers, as well as various layers of gaming protocols, such as physics, hidden secrets, quests, world building, and so on. The ecosystem requires significant UX improvements, including enhancements to wallet infrastructure, account abstraction, gas fees, and higher throughput transactions.

Let's examine a user journey example of an early adopter onchain gamer, assuming further use cases are developed:

  • Alice begins a game by creating a character and defeating enemies using earned weapons. She realizes that she owns her character, weapons, and beasts as NFTs in her wallet. She discovers another enjoyable game that extends the gameplay from the previous one. In this new game, her character and weapons, along with their experience, are fully functional.

  • Being a developer and a sophisticated AI user, Alice decides to customize the gameplay further. She wants to gain an advantage and achieve a higher score on the leaderboard. Considering sharing her innovation with the ecosystem, she creates a tool. This tool expands NPCs into AI-powered characters that Alice can control. Now, she can play the game with a fleet of characters, without her active participation.

Crypto needs Consumer Crypto.

While markets are inherently speculative, they become less so when supported by real user data and metrics to justify valuations. For crypto markets to maintain growth beyond the speculation of financial products, technical upgrades, and market narratives, the key lies in increasing the number of users and usage of applications that have strong use cases.

There are, of course, users in DeFi and there’s no doubt about the need and potential for the DeFi industry, but in reality, the average user is going to come through consumer products. They’re going to take consumer actions in media, entertainment, and gaming, and that's where most of the usage of crypto applications will come from.

That is what institutional and retail investors are looking for when making their decisions on whether to invest a new inflow of capital into cryptocurrencies. To some, this category may seem like a nice to have or an industry with potential that might work out, but in reality, we need it, and there is no doubt that the killer use cases for adoption are here in the Consumer Crypto category.

(listening to Music NFTs I’ve collected while writing this. Article minted as Writing NFT)

Thanks to Derek Edws, Nick Tomaino, Ash Egan, Jess Sloss, Jesse Walden, David Greenstein, Chris Dixon, Fred Wilson, Loaf, Benny Giang, Tarrence V, Tom Ibold, Cooper Turley, Jon Gall and many others for inspiring my thinking for this piece.

Disclosure: PTC Crypto is an investor in projects mentioned above, including SuperRare, 9dcc, Sound, Titles, Pods, Decent, Delegate, Reservoir, Moonpay, and The Worlds Largest. At the time of this publication, PTC Crypto or its members may have exposure to the assets described in this article. The above material and content is educational in nature and should not be considered to be a recommendation to invest in a digital asset.

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