Andreessen Horowitz (a16z) predicts cryptocurrency trends for 2024 in ‘Big Idea’ report

Venture capital firm Andreessen Horowitz (a16z) has released its “Big Ideas” report outlining its predictions for the industry in the coming year. The report covers a variety of areas including American Dynamism, Bio&Healthcare, Consumer Technology, Cryptocurrency, Enterprise, Fintech, Gaming, Infrastructure and other areas, scrutinizing the most compelling trends.

In the cryptocurrency space, the company claimed notable developments, highlighting certain trends that are highly anticipated in 2024.

A new era of decentralization

Andreessen Horowitz analysts emphasized the mission of decentralization, which aims to democratize the system by promoting a trustworthy, neutral and composable Internet infrastructure, fostering competition, promoting ecosystem diversity and providing users with more choice and ownership. .

The efficiency and stability of centralized systems initially presented obstacles to decentralization.

However, recent years have seen a change in the landscape. New models for decentralization now accommodate applications with advanced capabilities, including innovative approaches such as Machiavellian DAOs that enhance leadership accountability.

“As these models evolve, we will soon see unprecedented levels of decentralized coordination, operational capabilities and innovation,” said Miles Jennings, general counsel and head of decentralization at Andreessen Horowitz.

Improved user experience

Experts have been criticizing the lack of user experience (UX) updates since 2016, but developers are actively working on solutions. Innovations include automatically generated cryptographic keys, smart accounts, embedded wallets, multi-party computation (MPC), and advanced RPC endpoints.

“The technologies listed will not only help web3 push further into the mainstream, but also improve its UX, making it better and more secure than web2,” explained Eddy Lazzarin, Chief Technology Officer at a16z crypto.

Advancement through modular technology stack

Analysts have advocated for open-source, modular technology stacks to foster limitless innovation. Unlike monolithic architectures, this architecture allows participants to specialize and encourages more competition.

Synergy between AI and blockchain

According to experts, decentralized blockchains are a counterweight to centralized artificial intelligence (AI). Currently, AI models can only be trained and operated by a limited number of large tech companies due to their significant computing power and data requirements.

With cryptocurrency, it is possible to create a multi-faceted, global, borderless marketplace where anyone can contribute and be rewarded for bringing computations or new data sets to the network for those who need them. As a result, such markets could make AI more accessible.

The underlying technology of cryptocurrencies can also be used to track the provenance of online content and create conditions for decentralized control of generative AI.

Play-to-Earn Evolution

Analysts emphasize the need for games that are enjoyable and provide value to players.

“As we see P2E evolve beyond its initial growing pains, the dynamics of how we manage gaming economies will continue to change as a result. But ultimately, this will be part of the game rather than a separate trend.”

Arianna Simpson, managing partner at Andreessen Horowitz, predicts:

Encryption Guarantee for AI Generated Games

Experts pointed out that AI agents in Web3 games must be based on a specific model and ensure that the latter runs without corruption. Otherwise the game will eventually lose its integrity.

“When lore, terrain, narrative and logic are all procedurally generated (when AI becomes the game creator), we will want to know that that world is built with guarantees… Cryptocurrencies provide such assurances, including the ability to understand and diagnose. , If a problem occurs with AI, you will be punished.”,

Carra Wu, investment partner at a16z crypto, explained:

Accessible formal verification

Experts emphasized the need for more accessible formal verification methods, especially in smart contract development. Modern technologies provide an improved developer experience, reducing vulnerabilities and costly hacks in smart contract protocols.

“As the adoption of tools inspired by formal methods increases among developers and security professionals, we can expect the next generation of smart contract protocols to become more robust and less vulnerable to costly hacks.”

predicted Daniel Reynaud, research engineering partner at a16z Crypto.

NFTs that complement your brand

Popular brands like Starbucks, Nike, and Reddit are introducing NFTs to consumers to strengthen customer identity and community. NFTs connect physical and digital goods, laying the foundation for new products and experiences.

The A16z cryptocurrency team noted the growing trend of using NFTs as consumer goods, managed through custodial wallets and layer 2 blockchains with low transaction costs.

SNARK’S INCREASING POPULARITY

Analysts highlighted that SNARKs allow an untrusted ‘prover’ to compute a ‘cryptographic receipt’ for some computing workload, making it impossible to forge. In the past, calculating these receipts would have resulted in 10^9 operations overhead compared to the original calculation. Recent developments have brought this number closer to 10^6.

SNARK use cases include upgrading Internet of Things (IoT) devices, media editing software for content authenticity, LLM inference to integrate authenticity information, and the promise of more consumer benefits in other areas.

Venture capital firm Andreessen Horowitz anticipates significant industry developments in its forecast for the coming year. In particular, the company is looking specifically at developments in artificial intelligence and decentralization.

Each trend listed reflects ongoing innovation and transformational potential within the technology and cryptocurrency landscape, with the promise of further developments in 2024.