2023: What will Ethereum look like in a world with high interest rates?

I know I’m in the minority. I see Ethereum as a shared database where a currency emerges from the requirement to incentivise good sharing; most see it as a volatile asset class. What is the outlook for Ethereum in 2023? As is our norm, let’s start with the data.




For the first time, Ethereum faces US interest rates above 3.5% and for an extended time frame; higher interest rates are expected for most of 2023. What happens in the US is critical; just like the internet was in its early days, Ethereum is a broadly American network in its architectural values and approach as much as where the infrastructure and capital is. So for those who are financially minded, a higher cost of borrowing driven through central banks increasing rates across the world means there is no more “free money” or easy borrowing options. This combined with a US dollar having the strength of Wolverine provides interesting soil for Ethereum to grow in.  

‘Ethereum is a digital asset, and it doesn’t rely on traditional monetary policy to determine its value,’ I hear you say. True, but my minority position is that Ethereum and blockchains need to be connected to the real world to have value. This means it could easily see a decrease in demand when investors can get good returns in asset classes with a lower risk profile – and crypto, in general, still looks like a teenager on acid, rather than an inevitable bet on the future.

In 2023, blockchain has to start caring about software

The art of building good software, and having it used in production at scale – with all the associated patterns of what ‘good’ looks like – will matter in 2023. The enormity of action and purpose from those people building useful software that runs, and is extensible, will be deafening.  We will hear less from charlatans screaming about transaction speeds and proof of the past, future, and present. Forcing everyone in the space to do meaningful work. 

Twenty years ago, I would have asked someone to slap me in the face for feeling this and an extra slap for writing it down. Middle age and procreation mean I am now comfortable with this ‘no fun’ digital puritan mindset.

If in 2023 we can create multiple blockchains that care about software engineering as much as the price of coins, then we are in for a year of progress at a fundamental level.

A ‘Dot Com’ Year for Ethereum

A successful Merge in 2022, and the forthcoming Shanghai upgrade (planned for early Q2) will clearly show hyperscale software working and will drive Ethereum’s success and cement Ethereum and its Layer 2 solutions as the ‘Amazon’ of blockchains. For the industry, the next 12 months are a ‘2001: Dot Com’ moment. And it will also test Ethereum in a high interest rate environment, both for builders and investors in the ecosystem.

The importance of Ethereum as a shared database is not going away, despite the conflict and ongoing tragedy in Ukraine. The war and the effects of this conflict on energy prices will continue to ripple across the world economy throughout 2023, and the opening up of China after 3 years of lockdown will provide new space for the chaos monkey to play in 2023. On Sunday 22 January, the Chinese New Year begins; it is the Year of the Rabbit, a year of promise and progress. Which represents my aspirations for Ethereum and all those building in our space.


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