- Advertisement -
Cryptocurrency prices took a big hit in 2022, but developer activity this year paints a more optimistic picture for investors. New data released on Tuesday by Electric Capital shows that Ethereum had the highest number of full-time developers in 2022, with 1,873 as of Dec. 15. fell 67%, according to Coin Metrics. Ethereum competitors such as polkadot and solana followed closely behind with 9% and 36% growth respectively. For Solana, this rise came despite the network facing a defining moment in the aftermath of the FTX scandal. Its price dropped by 50% last year, but the strength of the developer community has given investors hope that it will survive. Meanwhile, the number of Bitcoin developers decreased by 4%, although it still remains the fifth largest in the market with 300 full-time developers. “Cryptocurrency is so much more than bitcoin from a developer’s perspective,” said Avichal Garg, co-founder of Electric Capital, which invests in early-stage crypto and fintech companies. “Bitcoin is like a digital commodity; in fact, as a platform, it was not designed for simplicity, extensibility, and future development.” He added that while bitcoin may be the most decentralized network in cryptocurrency, 90% of developers use other blockchains. The stack ecosystem, designed to build the smart contract layer for DeFi, NFT, and other bitcoin decentralized applications, saw a 20% reduction in in-house developers. Why It Matters to Investors Developer activity is a measure of the usefulness and potential of the network for end users. The more developers – not only building the blockchain itself, but more importantly, custom applications on top of it – the more likely it is that the blockchain will grow and maintain a user base. Nick Hotz, vice president of research at Arca, said this is the reason developer activity is a leading price indicator. Garg compared this to the early days of Apple, Google and other mega-cap tech firms we know today. “They spent so much time wooing developers because they realized that if they could get all the developers, then they would have all the apps, and apps are really a moat around the phone and operating system,” Garg said. “It’s a time-tested thing for computing platforms – you need all the developers.” This is especially important as the industry is still shaking off the FTX crash and many are hoping for a new era of crypto innovation and investment based on utility and real use cases rather than price speculation. By comparison, Amazon had about 36,000 developers last year and Goldman Sachs had 9,000. Electric Capital did not include comparative data in this year’s report, and Garg noted that many large companies are cutting jobs, in some cases by the same amount by which some of these crypto networks are expanding their developer bases. Bitcoin in Perspective In 2022, the price of bitcoin has fallen by about 64%, and in recent years some investors have become critical of cryptocurrency as nothing more than an asset to be bought and monitored for its price fluctuations. It would be easy to conclude that these things pushed developers away from bitcoin. Both Garg and Hotz implied that the 4 percent drop in the number of developers over the past year could look like a resurgence in the near future. “Those are really strong numbers,” Hotz said. “Single-digit losses or single-digit gains compared to a large percentage drop in prices throughout the year shows that people are staying.” Garg also said of the developers’ rejection that after more than a year of the current bear market, the consistent performance figures are “pretty astounding.” He also expects to see growth turn “vertical” again in the next up cycle, marking a similar flat trend in the previous crypto winter of 2018. “These numbers are not as sensitive as the downside price. “A bunch of new developers are coming in,” and they’re often held back, he said. “Reversing a deal is easy… Reversing a career decision is very difficult.”
Credit: www.cnbc.com /
- Advertisement -