5 megatrends to watch for 2024

Guest post by Dusan Stojanovic. Our fund True Global Ventures did an analysis of technology megatrends in 2018, and invested where we believed the investment opportunities were. As a result of hitting one of the megatrends, the TGV 4 Plus Fund became one of the top performing Venture Capital funds globally in about 24 months.

Megatrends you should keep an eye out for in 2024

Like in 2018, on January 11th, 2023 we listened to what was going on in the 15 countries we are covering, across Asia, North America and Europe, to give sharp megatrends which stick out in 2023 and beyond!

We do our megatrends every five years. Our objective is not to get all of them right but to be bold and take some risks on the megatrends and we are confident we will get some of them right. Where do we stand now on the Megatrends announced on January 11th?

The first 4 of the 5 Megatrends are happening faster than expected. These are:

Trend #1 – Centralisation is Dead. Decentralisation is more than back!  And Trend #2 – Consumer demand will accelerate the need for Security, Privacy and Regulation 

 We had two megatrends covering Bitcoin. One which was about decentralization and one about regulation. Where do we stand today?

We are seeing institutional consumer demand for exposure to Bitcoin accelerating the need for regulation. The big news is specifically with regards to the recent ruling against the SEC linked to Bitcoin ETFs. That SEC is getting a slap on the wrist with the failed appeal against Grayscale’s Bitcoin ETF is a testimony to more clarity for certain alternative asset classes.

We did state that we believed that Bitcoin would be one of the absolute strongest use cases for Blockchain Technology since itis completely decentralized and there is nobody to make a legal claim against. In this respect with all other legal battles between regulators and the industry, Bitcoin is untouchable and will be untouchable so the limited downside risk is even clearer now than it was in the beginning of the year. At the same time traditional finance is taking over from pure players in terms of market share. The CME Group which recently took the top spot on the list of the  biggest bitcoin (BTC) futures exchanges of the world replaced Binance for the first time in two years.

In the next weeks and months it will be very interesting to see whether Bitcoin ETFs will get approval in the US. They already exist outside of the US but the US market is key. The 12 US spot-bitcoin ETF applications are from Grayscale, 21Shares & Ark, BlackRock, Bitwise, VanEck, Wisdomtree, Invesco & Galaxy, Fidelity, Valkyrie, Global X, Hashdex and Franklin.

Whether the effect of the expected spot-bitcoin ETF application approval is already priced in today or not is very hard to judge. One could argue that we will only know the real demand once the Bitcoin ETFs are set up but on the other hand the question is whether net new money will go into these Bitcoin ETFs or if it will be reallocated from direct investments into Bitcoin. Our view is that net new money will be attracted especially if traditional finance companies like Blackrock and Fidelity will be awarded the Bitcoin ETF licenses.

We believe that Bitcoin, as the oldest use case of Blockchain and decentralisation, will be one of the biggest winners during 2023 and beyond. As the demand for Bitcoin increases with spot Bitcoin ETFs expected to be approved early 2024 and the new supply of Bitcoin halves in April 2024 (Bitcoin halving occurs every four years and cuts the rate at which new Bitcoins are released in circulation by half), we are optimistic about Bitcoin price increases.

There are now also signals of Ethereum ETFs with both Blackrock and Fidelity filing applications and who knows maybe Ripple ETFs and others will follow. We still believe that the most decentralized and best use case from a decentralization point of view will be the biggest winner. There is a reason why Bitcoin was born in the aftermath of Lehman Brothers but with no regulation around. This is about to be solved, once regulation catches up it will be very difficult to resist this alternative asset class.

Trend #3 – Finally Decentralised AI in Web3 getting real user traction

The success of ChatGPT and similar services has driven enormous user adoption. ChatGPT now has 100 million weekly active users and nearly 1.5 billion visitors per month.

USA has the highest number — 14.82% — of ChatGPT users, followed by India (8.18%).

A quarter of companies, including Small-Medium Enterprises (SMEs) have saved roughly $50,000 to $70,000 using ChatGPT. The impact is huge not only on Web3 but also on Non-Tech industries.

We are targeting areas like Legal AI, Education AI, Revenue AI and Code-related AI, where we see that Generative AI has material impact on productivity but also on new revenue streams.

The recent turmoil within Open AI with Sam Altman fired/resigning and then maybe being reappointed shows how difficult it is to marry research with product development. The firing/resignation of Sam Altman looks like the strangest case since Steve Jobs was fired by the Apple board in 1985 after a power struggle with the board.

Open AI had already part of its research team leaving in 2021 and starting Anthropic where Google is heavily invested and its initial backer Elon Musk leaving in 2018, so this would be at least the 3rd power struggle within Open AI. The intention is to make sure humanity is not at risk at the expense of rapid AI development. Can that really work without a more decentralized and/or regulated AI industry?

Right now, there are only a few players developing and launching AI models for the masses, around 15 in the U.S., 11 in China, 1-2 in other developed nations, limiting access to the mainstream. Our view is that the industry needs to have a more open playfield, that regulation is needed as soon as possible and that it is way more critical than regulating the Blockchain Industry. AI will have a way more critical impact on our future then Blockchain will have.

The Internet was not owned by anyone when it was started. It should be the top priority today to regulate AI development for any country starting with the US which we estimate is 9 months ahead of China and even more ahead of the rest of the world.

Trend #4 – Open Metaverses cross the chasm to become Mainstream

We mentioned already on January 11^th that Governments will play a role to promote investments in metaverse ecosystems in order not to be left behind and gave the example on South Korea and Japan then.

One recent concrete example is in Saudi Arabia, where the Neom Investment Fund has created a strategic partnership and signed a termsheet investing US$50 million in one of our portfolio companies, Animoca Brands. Neom will apply both Metaverse and Blockchain technologies to their vision of a US$500 billion mega smart city.

We believe that like in the aftermaths of the dotcom boom, the real world and virtual world will be increasingly connected. In the dotcom boom days, many believed in the new economy and that all consumption would one day be digital. This did not happen, but the consumer experience became partly offline and partly online. The development of smart cities connecting the real world with the virtual world is only one example of this megatrend.

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