Now more than ever, the blockchain space is showcasing its impressive resilience. Despite months in a bear market in which cryptocurrency prices crashed and many projects have gone under, technological innovation and adoption by brands and consumers have both steadily increased.
Bear markets are generally considered a time for blockchain companies to build out their products and focus on the execution of their development road map. This time is no different. The projects that have doubled down and focused on product development are those that will be positioned to weather the damage incurred by the weaker market cycle and come out stronger.
During a bull market, companies tend to look for ways to capitalize on hype and maximize short-term growth. This results in a large wave of projects that are conceptualized and brought to market very quickly—often before founders have conducted sufficient market research and analysis, which is imperative to adequately identifying and addressing market gaps. Or, projects are funded before putting together fundamental technology foundations and road maps, leading to development shortcuts and ongoing production delays.
While the sheer number of blockchain companies grows astronomically, bull markets result in a high saturation of noisy platforms that lack strategic product differentiation. Furthermore, as projects look to optimize for a short window granted in the current climate, launching products too quickly increases the risk of security vulnerabilities, poor user experience and product shortcomings.
In the past two years alone, we’ve seen a massive number of vulnerabilities exploited in the blockchain space, often due to inadequate technological standards at the infrastructure level. If those projects had taken the time to ensure their infrastructure and security protocols were properly developed and tested, they may not have faced such major setbacks.
Additionally, it’s common for blockchain projects to encounter a multitude of bugs during their beta testing phase. Depending on the number of issues that arises, some projects are forced to conduct several iterations of beta testing to address all of them, which can also delay the launch, subsequently impeding the entire company road map. Once again, if companies had spent more time developing their products and stress-testing as many potential bugs as possible, many of these issues wouldn’t arise and continued delays could be avoided.
In other words, while a bear market may not seem like a good time for launching a new business or acquiring new users, the fact that it pushes Web3 companies to focus on conducting thoughtful market research, identifying long-term user needs, refining business strategies and spending time on product development has positive long-term implications for product security, user satisfaction and hitting target milestones.
High-potential, technologically sound products that address a gap in the market also have the added benefit of attracting investors and partners. Whether catching the attention of the bear market’s smaller pool of patient investors and companies looking to enter the space during that time or solidifying their pitches for the inevitable return of the bull market, blockchain companies that take the time to develop their products adequately increase their chances of coming out on top.
Originally posted on Forbes.