I’ve had the privilege of witnessing the inception of blockchain and crypto wallets, observing their early developments. When the buzz around crypto wallets first emerged, I found it challenging to comprehend. Digital wallets? The concept seemed puzzling, but my curiosity was piqued.
Having now grasped the concept, I’m eager to share some valuable insights about the adoption of crypto wallets, focusing on one particular wallet that has become synonymous with online money storage: MetaMask. Let’s start at the beginning.
Having now grasped the concept, I’m eager to share some valuable insights about the adoption of crypto wallets, focusing on one particular wallet that has become synonymous with online money storage: MetaMask. Let’s start at the beginning.
It all started a while back, but it sparked like a fire in 2009 when people started talking about cryptocurrencies. Shortly after introducing the first cryptocurrencies, it became evident that a secure storage solution was needed. Keeping this new type of currency in mattresses or sugar bags, as done before, was simply impossible. This is where digital wallets come into play, they are virtual piggy banks in the digital realm.
When discussing crypto wallets, the prominent name of MetaMask immediately comes to mind. This wallet has earned a reputation as the top player for storing various ETH-based tokens. Indeed, MetaMask is a robust crypto wallet. Throughout its existence, the ConsenSys product has generated millions of dollars for its creators and significantly advanced technology. It’s high time to delve into what exactly MetaMask is and how the company generates revenue, explained in simple terms.
MetaMask is primarily known as a digital wallet designed to facilitate the seamless transfer and management of cryptocurrencies. Besides its primary functions as a wallet, it also serves as an identifier to access specific online platforms and services via identity verification and interaction authentication. At its core, MetaMask is a browser extension that acts as a crypto wallet and a gateway to various decentralized applications, or “dApps.” It enables you to manage your digital assets, interact with dApps, and execute transactions on the Ethereum blockchain – all from the comfort of your web browser.
Before we dig into the history of the MetaMask wallet, it’s important to describe the state of crypto wallets before their emergence. The earliest crypto wallets followed the birth of Bitcoin in 2009.
These wallets operated through command-line interfaces, requiring users to interact with them via text-based commands in a terminal or command prompt. Though functional, their complexity made them less user-friendly, primarily catering to early adopters and tech-savvy individuals. Bitcoin Core stands out as the most renowned command-line wallet.
To make cryptocurrency more accessible to the general public, the second generation of software desktop wallets arrived fairly soon. These were graphical user interface (GUI) desktop applications, providing a more intuitive and user-friendly experience.
As cryptocurrencies gained popularity, web-based wallets were introduced. The third generation of crypto wallets brought about a significant shift in accessibility and usability. Many third-generation wallets were accessible through a web browser, offering more convenience but also raising security concerns as private keys were stored online. MetaMask, in particular, played a pivotal role in this evolution.
MetaMask’s journey began in 2016 as a humble open-source project by ConsenSys, a blockchain technology company. Originally designed to enable regular users to easily interact with Ethereum’s blockchain, it quickly gained traction due to its intuitive design and user-centric approach. The intensive organic growth paved the way for its official launch in 2016, and it has since evolved into an indispensable tool for the crypto ecosystem.
MetaMask seamlessly integrates with web browsers like Chrome and Firefox, allowing users to manage their Ethereum-based assets directly within their web browsers. This innovation has significantly enhanced the convenience of interacting with decentralized applications (dApps) and the Ethereum blockchain, eliminating the need for users to download and install standalone applications. MetaMask’s success has, in turn, sparked the development of similar browser extension wallets for other blockchains, ushering in a new era in crypto wallet accessibility and adoption.
MetaMask boasts an array of advantages. First, it provides a user-friendly interface compared to its predecessors and competitors, making it accessible to both newcomers and experienced users. The convenience of a single wallet for multiple dApps eliminates the need to manage different accounts for various platforms or download separate wallet applications. MetaMask supports desktop and mobile devices, allowing users to access their wallets across various platforms. Additionally, it supports multiple types of cryptocurrencies, functioning like a Swiss Army knife that can handle different tokens.
However, like any tool, MetaMask has its downsides. As a browser extension, it is inherently tied to the security of your browser, and if you’re not careful, online attackers could attempt to steal your tokens. In mid-2022, some research identified certain encryption issues and clickjacking vulnerabilities in MetaMask which were eventually fixed. However, the risk remains as the product and the tech develop, and there is no entity providing financial insurance in case the risk occurs. ConsenSys even offers a monetary bounty for users who find and report vulnerabilities. Although this is a common problem for all decentralized products, other alternative wallets can provide stronger security if that is a major concern for a user.
MetaMask Snaps will function a lot like an Apple App Store for the crypto wallet, allowing third-party developers to launch new decentralized applications (DApps) — dubbed Snaps — that expand MetaMask’s functionality.
Additionally, the dependency on the Ethereum network can result in slower transaction speeds during peak usage times. Unlike MetaMask, some competitors support multiple blockchains, offering a broader range of cryptocurrency support.
You might wonder, if MetaMask doesn’t use traditional ads and subscription models, how does the company sustain itself? As ConsenSys operates as a privately owned entity, it is not obligated to disclose its annual financial reports to the public. Yet, given the transparent nature of blockchain transactions, we can make approximations regarding their earnings.
Surprisingly, these estimates point to an annual revenue exceeding $200 million. Remarkably, as reported by TechCrunch, the company’s overall valuation surpasses $7 billion, following a successful fundraising effort that garnered over $450 million in capital as of March 2022. So, how does MetaMask make money out of over 30 million monthly active users if the service they offer is free? Let’s take a closer look by breaking down the main sources of income.
MetaMask operates on an open-source model, meaning the core functionality is freely available to users. However, it offers a gateway to various decentralized services and applications, many of which have their own revenue models. A significant portion of MetaMask’s revenue comes from swap fees. Introduced in October 2020, this feature empowers users to seamlessly compare and execute token swaps directly within the MetaMask platform.
For instance, when you use MetaMask to interact with a decentralized marketplace or a gaming dApp, the dApp developers might charge fees or take a small percentage of transactions. In return, MetaMask can form partnerships or collaborations with these dApp developers, receiving a portion of the fees generated from transactions facilitated through its platform. One such example is the integration of the MetaMask Wallet with the Unity Engine.
Typically, a service fee for these swap services ranges from 0.3% to 0.875%. This fee is seamlessly integrated into the trade quota, which also encompasses gas fees. MetaMask goes the extra mile to ensure users can access an extensive array of tokens, effectively curbing prices and gas fees. Moreover, to address slippage issues, MetaMask enables users to set their maximum threshold. Orders exceeding this threshold are automatically canceled, enhancing user control.
In September 2023, MetaMask introduced a new feature that will completely change the rules of the financial system. Previously, users could speculate with crypto assets within decentralized platforms, and cash remained the prerogative of centralized solutions – it’s time for a new alternative.
The integrated approach turns MetaMask into a fiat gateway, where investors can not only sell cryptocurrency but also convert it into fiat currencies and store it in bank accounts.
Initially available in the US, UK, and select regions of Europe, MetaMask has expressed its intentions to expand this service to other geographical areas in the future. The feature will initially support ETH on Ethereum Mainnet, with plans underway to extend its compatibility to native gas tokens on layer 2 networks.
Here are the instructions on how to utilize this innovative feature:
This eliminates custodial control over assets, expands account capabilities, and provides access to this function for users worldwide. It is safe to say that this is only the first step against traditional solutions, where banks remained leaders in the field of asset storage.
The innovation opens up a pool of benefits for MetaMask users:
The introduction of this update is significant as MetaMask continues to be the go-to tool for engaging with the decentralized ecosystem, particularly decentralized exchanges and decentralized finance (DeFi) protocols. By offering users the ability to withdraw funds directly from their self-custody wallets to their bank accounts, MetaMask empowers individuals to embark on a seamless end-to-end cryptocurrency journey, eliminating the need to rely on centralized exchanges. This development is particularly noteworthy as centralized platforms have faced mounting skepticism in recent months and years.
It is still unknown how MetaMask is going to monetize this functionality. At the moment, one thing is clear – this will be in great demand among users and will definitely bring a lot of profit to the wallet.
Today, the entire financial system is undergoing a transformation towards Web3. Centralized services, traditionally dominant in Web2, are merging with decentralized solutions to form a unified financial system. This ecosystem includes fiat currencies, central banks, exchanges, crypto assets, and exchangers, within which MetaMask is expanding its influence, not just limited to cryptocurrencies.
In addition to earning revenue through swap fees, MetaMask likely benefits financially from its specialized product, MetaMask Institutional. This tailored wallet caters specifically to the needs of trading firms and financial organizations. A recent example of such collaboration is its integration with the Qredo Network.
While it shares many functionalities with the standard MetaMask wallet, the institutional version provides access to certified custodians and ensures compliance with current tax regulations. Among its significant advantages are:
Like other custodial services such as Coinbase Custody, MetaMask likely imposes management fees on its institutional clients. However, MetaMask does not publicly disclose the fees for this service. These fees are typically calculated as a percentage of the assets under management and are generally lower than those charged by traditional financial institutions.
Numerous institutions utilize MetaMask Institutional to execute transactions within DeFi and Web3 protocols, effectively integrating it with their custodian’s platform. MetaMask Institutional is unique as the only multi-custodial Web3 wallet designed specifically for institutional use. It integrates seamlessly with a wide range of custody and self-custody solutions available in the market, meeting a diverse array of institutional-grade custody needs.
MetaMask Portfolio offers a decentralized application (dApp) that provides a convenient way to view and manage your MetaMask accounts and assets. Within the portfolio, you can engage in activities such as buying, swapping, bridging, and staking your assets.
The central feature of MetaMask Portfolio is its dashboard, which consolidates information from up to 10 accounts, allowing you to easily track your total holdings and view their value in your preferred currency. You can access the portfolio at portfolio.metamask.io. On mobile and through browser extensions, simply click the portfolio button on your wallet homepage for quick access.
As MetaMask serves as your gateway to the decentralized web across multiple Ethereum-compatible networks, your dashboard displays assets across these networks. Currently, the supported networks include:
The list of supported networks is constantly growing, enhancing the versatility and utility of MetaMask Portfolio for a wide range of users.
MetaMask diversifies its revenue sources by selling branded merchandise through its online store. In this virtual boutique, people can explore a range of products including t-shirts, hoodies, caps, mugs, and even hardware wallets. Prices for these products range from $15 to $42.
Beyond financial gain, these merchandise sales serve as a powerful branding channel for MetaMask. Users who proudly wear or use MetaMask-branded items contribute to the company’s bottom line and act as enthusiastic brand ambassadors.
ConsenSys may soon introduce a more traditional monetization method for the industry, primarily due to rumors about the launch of MetaMask’s own token. The MASK token will serve as a form of payment within the MetaMask ecosystem and play a pivotal role in governance.
With the MASK token, users can have a say in shaping the platform’s future by proposing and voting on improvements, updates, and new features. This democratization of decision-making aligns with the spirit of decentralization, where power is distributed among the community.
Beyond governance, the MASK token can also provide additional utility within the MetaMask ecosystem, ranging from incentivizing user participation in certain activities to accessing premium features and services.
Despite advanced technological solutions and a seemingly impeccable reputation, even the most promising platforms can have their shadows. MetaMask, despite its undeniable utility, has not been immune to controversy.
As the MetaMask platform gained traction and became an essential tool for crypto enthusiasts, calls for community ownership grew louder. However, the parent company, ConsenSys, found itself in the midst of a dispute over transferring control to the community.
In early 2022, ConsenSys CEO Joseph Lubin noted that the organization is not planning to transfer complete power over the platform to the community. Instead, DAO members will be allowed to fund the development of functionality for MetaMask.
This approach does raise questions about the concept of decentralization. By not completely transferring control to the community, it can be seen as contradicting the core principle of decentralization. The community has expressed mixed feelings. Some appreciated the cautious approach, while others advocated for a more hands-off, fully decentralized model.
It is unclear what exactly determines the reluctance of ConsenSys to transfer control over MetaMask. However, the company raised $450 million from ParaFi Capital, SoftBank Vision Fund 2, and Microsoft. ConsenSys stated that they intend to spend the investments not only on forming capital for staking at the consensus level but also on the development of MetaMask.
Ultimately, the success and acceptance of this approach will depend on ConsenSys’ ability to strike a balance between decentralization and maintaining quality and security, as well as maintaining community trust and involvement.
One of the most notorious chapters in MetaMask’s history was marked by unforeseen errors that led to substantial losses for users. In December 2021, scammers distributed fake MetaMask tokens. Reportedly, the attackers inserted a code with a link to a verification icon in the description and title of the token. This trick made the scammer’s token appear as a legitimate asset.
Due to flaws in the platform’s code, the display of the verification icon also erroneously showed a textual confirmation of the smart contract’s authenticity. Once the scammers collected $1 million in tokens, they closed the protocol, and it is likely that the investments had already been laundered by that time.
In one notable instance, an investor, in an attempt to buy fake tokens quickly, sent over $340,000 in ETH to the scammers. Despite constant errors with transfers to the contract address, the victim proceeded with the transaction, as evidenced by a published screenshot of the transactions.
Later, in April 2023, MetaMask developer Taylor Monahan reported that since December 2022, an attacker had withdrawn more than 5,000 ETH and an unknown number of tokens from 11 different blockchains due to a bug. Monahan noted that no one on the team understands how the exploit works, making it impossible to determine the exact extent of the damage. The investigation revealed that the attacker targeted addresses created between 2014 and 2022. These incidents have cast a cloud of uncertainty over the platform’s reliability, prompting users to question the robustness of its underlying technology.
The period between August 2021 and February 2023 was not without its challenges when unauthorized individuals gained access to a third-party service provider used by ConsenSys customers, leading to a user data leak within the MetaMask platform. This incident impacted users who submitted a MetaMask support ticket between August 1, 2021, and February 10, 2023.
ConsenSys quickly announced that the MetaMask crypto wallet, one of its flagship products, had experienced a data breach. Importantly, the breach targeted a third-party service provider, not the application itself. ConsenSys estimated that approximately 7,000 individuals worldwide were affected by this breach.
This revelation raised concerns about the platform’s security measures and its ability to protect sensitive user information. The incident highlighted potential vulnerabilities and underscored the need for rigorous security audits in the rapidly evolving cryptocurrency landscape.
In a twist of fate, in November 2022, ConsenSys published details about its privacy policy, sparking concerns about user privacy. Allegations arose that MetaMask and ConsenSys were monitoring user activities and potentially collecting data without explicit consent.
The MetaMask browser extension wallet utilizes a node called Infura, owned by ConsenSys. Infura collects Internet Protocol (IP) addresses and wallet addresses of users who connect their MetaMask wallet to it. Not only does Infura gather information about all the wallets within a MetaMask account by linking them together, but it also collects IP addresses that can be used to locate individuals.
The ambiguity of this privacy policy led users to question the extent to which their digital activities were being tracked and analyzed. The responsibility of the company in these practices is debatable. As the crypto world becomes increasingly less anonymous, significant financial gains, Big Data, high-quality marketing, in-depth market analysis, and strategic business planning become imperative. Similarly, Google provides value to users largely through data collection about themselves, to the extent that most people do not perceive any disadvantages in it.
As mentioned earlier, MetaMask was created by the American company ConsenSys. The company was founded by Joseph Lubin in 2014 and since then has received more than $750 million in investments from various funds, including SoftBank, Microsoft, JPMorgan, Bank of America, HSBC, and many others.
On March 15, 2022, ConsenSys raised $450 million in a Series D funding round led by ParaFi Capital, reaching a valuation of $7 billion. This round featured participation from new investors, including Temasek, SoftBank Vision Fund 2, Microsoft, Anthos Capital, Sound Ventures, and C Ventures, in addition to several existing investors.
Joseph Lubin announced that the funds raised in this round would primarily be allocated to expanding MetaMask and the recently launched Infura NFT service. Additionally, a portion of the investment will be dedicated to the development and strengthening of the company’s flagship project, the ConsenSys ecosystem.
Currently, the developers are actively working on scaling solutions to address Ethereum’s scalability issues, aiming to enhance transaction speeds and reduce fees. Their commitment to security is unwavering, with ongoing efforts to make the platform more secure than ever and fortify the wallet against potential threats.
Furthermore, MetaMask is poised to expand its support beyond Ethereum, enabling users to seamlessly interact with multiple blockchain networks. This development will solidify MetaMask’s position as a universal gateway to the world of cryptocurrencies, connecting users with the broader blockchain ecosystem.
The evolution of digital wallets, as exemplified by MetaMask, has reshaped how we interact with digital assets, offering unparalleled convenience and security. This journey began with early command-line interfaces and progressed to user-friendly browser extensions, democratizing access to the decentralized world of cryptocurrencies.
MetaMask’s success is a testament to its ability to balance accessibility and security while continually evolving to meet the needs of its users. With innovations like fiat gateways and institutional solutions, MetaMask is poised to remain a cornerstone in the ever-expanding cryptocurrency ecosystem, providing individuals and institutions alike with the tools they need to navigate this exciting digital frontier.
By exploring various revenue streams, from swap fees to institutional services, MetaMask has found a way to sustain its growth and continue delivering value to its users. This ability to adapt and innovate is what sets MetaMask apart and ensures its place at the forefront of the digital wallet landscape.
This is the market sectors research conducted by Whatdahack?! and first time shared on the webinar “Web3 Tech: The Future of Sports & Entertainment” and also presented as a YouTube video “Web3 Tech: The Future of Sports & Entertainment 🏀🎬🚀 Market Research June 2024 📅 | Blockchain AI ML”.
As we stand at the cusp of a technological revolution, it’s imperative to understand how new technologies are not just redefining user interactions but are also paving the way for massive potentials in dynamically growing sectors such as Sports & Entertainment.
In today’s market sector research we uncover the potential for increased transparency, enhanced fan experiences, and novel revenue streams that Web3 technologies offer. Through our analysis, we aim to provide insights into current trends, identify challenges and opportunities, and forecast the impact of web3 technologies on the future landscape of sports and entertainment.
Since we’ve deeply reviewed the web3 technological shift in other video series you can find on this channel, go and check the description, for this time I want just to highlight the major differences between web3 and web 1.0, 2.0.
Web 1.0, known as the “Static Web” from the early 1990s to 2000s, primarily consisted of static pages for content display, lacking interactivity and limiting users to reading only. It utilized HTML for creating pages, URLs for addressing, and HTTP for server-client communication. User interaction was minimal, as there was no provision for users to engage with or contribute their own content, establishing a distinct division between content creators and consumers.
Emerging in the early 2000s and still prevalent, Web 2.0, or the “Social Web,” revolutionized the internet by emphasizing user-generated content, usability, and interoperability. It introduced dynamic web technologies like AJAX for more engaging web pages, RSS for content sharing, and Web APIs for online applications, fostering the rise of social networks, blogs, and wikis. This era significantly enhanced user interaction, transforming users from passive consumers to active creators, sharers, and collaborators, marking a significant shift in the internet’s evolution towards a more interactive and participatory platform.
Web3, arising in the 2020s, marks a leap towards a decentralized, secure internet, leveraging blockchain and AI to offer privacy and meaningful digital connections. It introduces a semantic web for smarter content organization, enhanced by spatial computing and the metaverse concept, blending digital with physical experiences in diverse applications beyond gaming. This integration not only boosts security and personalization but also revolutionizes digital interactions, providing immersive, trustless environments. This evolution represents a significant milestone in the internet’s progression, fundamentally changing how users engage with digital content.
Want to learn more about the technological shift? Check out our in-depth review on the subject from this article "Web3 As A Future Of Internet" published on Whatdahack?! website.Doing this research we could not find any finite and trusted web3 technologies taxonomy, so I decided to take this responsibility and provide the first in the market web3 tech landscape as we see it at Whatdahack?! I want to highlight that many consider web3 as a technological landscape built on blockchain solely, though we want to summon other modern technologies under the term web3 also as we see that only together they categorize and define the technological shift from the previous internet epoch. Thus we see five foundational pillars that together present the backbone of the technological construct. Each pillar addresses a different aspect of the Web3 experience, ensuring that the internet of the future is more equitable, efficient, and immersive. Let’s review these five pillars in some detail.
Personal Data Full Control (Blockchain)
Blockchain stands at the forefront of personal data control within Web3, instilling a framework where privacy is not just a privilege but a fundamental standard. This pillar empowers users with unparalleled management over their digital identities, ensuring that the control over online presence, data, and financial transactions remains firmly in their hands. It redefines the very nature of data ownership and transfer, making it a peer-to-peer exchange that is direct, transparent, and without the need for intermediaries. With blockchain, the transfer of money becomes just as fluid and user-controlled as the transfer of information, enabling secure, instantaneous financial transactions across borders, with the assurance of full ownership and reduced reliance on traditional banking systems. This level of control and autonomy not only enhances security but also ensures that users have the unfettered ability to manage and monetize their personal data and assets as they see fit in the Web3 economy.
Tokenization of Illiquid Assets (Blockchain)
In the sports and entertainment sectors, blockchain’s asset tokenization unlocks the potential of a vast array of previously illiquid assets. This includes not just physical goods but extends to the very essence of these industries: the performers and athletes themselves. For instance, an athlete might tokenize future earnings, allowing fans to invest in their career progression, while a movie franchise could tokenize and sell digital collectibles related to its cinematic universe. It also embraces non-tangible assets such as broadcasting rights or musical royalties, offering a piece of the revenue to supporters in exchange for early or enhanced financial support. This shift empowers creators and performers to harness their success potential directly, with blockchain ensuring transparent, secure, and equitable transactions, inviting fans and investors alike to engage with the sports and entertainment worlds in a novel and direct manner.
In the context of sports and entertainment, blockchain’s decentralization paradigm transforms traditional structures of authority and power. It enables the formation of decentralized autonomous organizations (DAOs) that can govern leagues, teams, or entertainment collectives, where decisions are made collectively rather than by a select few executives. This could manifest in fans voting on team decisions, plot directions in interactive media, or concert locations for musicians, effectively giving stakeholders a direct voice in the inner workings of the industry. Furthermore, decentralization through blockchain could facilitate more equitable distribution models for revenue and recognition, ensuring that the creators, athletes, and performers who are the lifeblood of sports and entertainment are rewarded fairly and transparently. It sets the stage for a collaborative and participatory future where the lines between creators, performers, and consumers are blurred, creating a more engaged and invested community.
Operational Automatization (Blockchain Smart Contracts, IoT, Computer Vision, Big Data, ML, AI, GenAI)
The sports and entertainment industries are poised to benefit greatly from Web3’s emphasis on operational automatization. For example, smart contracts on blockchain could automate ticketing processes, eliminating fraud and ensuring authenticity, while IoT devices could enhance live events through improved security and personalized fan experiences. In the realm of sports, computer vision and machine learning algorithms could analyze gameplay to provide real-time statistics and insights, improving coaching and player performance. Similarly, in entertainment, AI could tailor content distribution to viewer preferences, automate royalty payments via smart contracts, and use Big Data for predictive analytics in marketing strategies, leading to more successful launches and campaigns. GenAI might further revolutionize content creation by generating personalized media, like customizing a game or show’s difficulty level or plotlines based on user interaction, creating a highly immersive and customized experience. This blend of technologies streamlines operations, making the sports and entertainment sectors more responsive, user-friendly, and innovative..
Integrating the latest in spatial computing, the Metaverse, and BCI/BMI with the expansive potential of Web 3.0 and GenAI, we’re on the brink of a revolution in user experience across sports, entertainment, and education. These technologies allow for immersive VR experiences for fans, interactive virtual worlds for events, and thought-controlled digital interactions, enhancing engagement to unprecedented levels. Furthermore, they facilitate immersive, AI-customized sports education environments and BCI/BMI games, offering seamless integration of thought and action. This amalgamation promises a future where digital and physical experiences are not just blended but indistinguishable, offering personalized and deeply engaging ways to learn, play, and interact.
These five pillars of Web3, as outlined, offer transformative insights for the sports and entertainment industries. Blockchain empowers users with control over their data and finances, while tokenization opens investment opportunities in previously illiquid assets like athletes’ earnings or digital collectibles. Decentralization shifts power, enabling fan-driven decisions in teams or entertainment content. Automation through smart contracts and AI streamlines operations, enhancing efficiency and personalization. Lastly, spatial computing and BCI/BMI* technologies promise highly immersive experiences, revolutionizing how fans engage with sports and entertainment, ensuring a more interactive and personalized future.
*A brain–computer interface (BCI), sometimes called a brain–machine interface (BMI)
Let’s start with the most recent and overhyped use case in Sports & Entertainment, let’s start with digital collectibles or memorabilia minted on blockchain and well known as NFTs. I bet that most of you are familiar with the term NFT and its application, however I want to bring it up once again, so we are on the same page. Here is the term explanation from Wikipedia.
“A non-fungible token (NFT) is a unique digital identifier that is recorded on a blockchain and is used to certify ownership and authenticity. It cannot be copied, substituted, or subdivided. The ownership of an NFT is recorded in the blockchain and can be transferred by the owner, allowing NFTs to be sold and traded. NFTs can be created by anybody and require few or no coding skills to create. NFTs typically contain references to digital files such as artworks, photos, videos, and audio.”
“A non-fungible token (NFT) is a unique digital identifier that is recorded on a blockchain and is used to certify ownership and authenticity.
Despite the fact that the digital collectible market has been experiencing a dramatic drawdown, according to Statista it will recover with 0.19% of user penetration in 2024 to the expected 0.20% by 2028 and the projected revenue to reach US$2,378.0m in 2024.
NBA Top Shots stands out as a notable example, showcasing a successful partnership between the NBA and the FLOW blockchain. This initiative allows fans to buy and trade video highlights from NBA games, illustrating the potential of NFTs in enhancing fan engagement. However, the excitement around NFTs is not without its challenges. The current common misconception that owning an NFT grants secured access to digital art or assets, despite the ease of duplication, poses a significant hurdle. In fact, almost all NFT existing in the market can be easily downloaded and copied and thus it makes the whole idea of value transfer insecure and creates a risk of fraud and unauthorized content usage on the secondary market.
An attempt to solve the problem was taken by the authors of the Barcelona Football Club NFTs case. A well known club together with Sotheby’s auction house conducted a closed auction where the auction house provided infrastructure and resources to maintain secure access to the physical files and their transfer. However the auction house contract outlined that, beyond the authenticity guaranteed by the seller, no further representations or warranties are made about the NFTs. This includes no guarantees about copyright status, the technical aspects and condition of the NFT or associated content, the absence of digital vulnerabilities, the uniqueness of content, the functionality and compatibility of the NFT with various systems, or the correction of any defects.
Digital art has been prevalent since the inception of digital media, yet the advent of NFT technology hasn’t fully addressed pre-existing issues. However, to tackle these challenges and help our customers realize their project to the full extent, we employ advanced detection and secure storage technologies, enhancing the integrity of NFTs. Our approach leverages a fingerprint mechanism and digital signatures to assess NFT authenticity and rarity. Using deep learning, we create an ‘NFT fingerprint vector’ for each piece, featuring over 10,000 distinct numbers, compared against a vast database to establish a rarity score (0% to 100%). Computer vision aids in detecting slight differences among digital collectibles, enhancing the precision of our authenticity checks. As centralized storage presents hurdles like higher fees and data loss risks we promote decentralized storage solutions, providing better control and minimizing data loss risks. This shift towards decentralization overcomes traditional storage drawbacks, ensuring the security of digital assets in the NFT domain within a concise framework.
If your business may benefit from applying NFT technology either for audience engagement, asset value transfer or authenticity, we are to serve you as technical partners at all stages (research, discovery, development and integration). Amidst skepticism, with some art industry leaders dismissing NFTs as baseless hype, brands like Nike are pioneering the integration of these blockchain-based tokens into their products, marrying digital art with physical goods. Adidas, in collaboration with BAPE, launched a limited edition of 100 virtual sneakers in August 2023, blending digital presence with tangible value. This initiative allowed participants to trade or redeem their NFTs for an exclusive pair of sneakers, demonstrating the high value placed on such items, with bids reaching nearly $4,000.
Despite the nascent stage of generating substantial revenue, companies are exploring innovative applications of NFTs in marketing, overcoming the initial barriers associated with crypto asset acquisition, such as the necessity of browser extensions, crypto wallets, and digital transactions. Beyond marketing, the use of NFTs and NTAG 424 DNA NFC Tags introduces a novel approach to authenticating physical items, such as artworks or collectibles. This technology combination validates the authenticity and ownership of physical goods through digital verification, offering a robust solution against counterfeiting and bridging the digital-physical divide. This innovative melding of NFTs with physical authentication methods signifies a forward leap in securing and valorizing digital assets in tangible forms.
Ticketing and loyalty systems, while serving distinct primary functions, share several key features that underscore their utility in customer engagement and business operations:
Both systems facilitate a form of value exchange between the customer and the organization. Ticketing grants access to events, services, or venues in return for payment, while loyalty systems reward customers for their ongoing patronage with points or rewards that can be redeemed for discounts, products, or services.
Both systems typically involve a redemption process — whether scanning a ticket for event entry or exchanging loyalty points for rewards. This process necessitates robust infrastructure and clear rules to ensure fair and efficient transactions.
Today, I aim to explore the integration of blockchain technology with ticketing and loyalty systems, and discuss why it may not be the comprehensive solution many anticipate.
Blockchain in ticketing can address issues such as counterfeit tickets and scalping, and provide a more secure and transparent system. However, attempts by major brands have yielded mixed results. For instance, consider Ticketmaster’s acquisition of a blockchain ticketing solution called UPGRADED. Despite initial excitement, progress has stalled, with the startup’s website now defunct. Similarly, ventures like FanDragon Technologies have dissipated, casting doubt on the viability of blockchain in ticketing.
Regarding ticketing and loyalty systems, it is crucial to highlight two blockchain applications designed to enhance existing experiences and create new ones for event organizers and attendees: NFTs and their derivative, POAPs.
POAP NFTs, which are still in the early stages of development, are not widely recognized. A POAP—Proof of Attendance Protocol token—primarily verifies event attendance or marks a significant life moment as a digital collectible. The concept of digitally bookmarking life moments may seem peculiar, but let’s investigate its validity and whether it is merely another speculative venture by the cryptocurrency community.
Currently, POAPs provide a novel way to engage with NFTs. They do not possess the same monetary value as traditional NFTs traded on marketplaces. POAPs offer unique advantages that differentiate them from other engagement methods:
mmutable Proof of Attendance: POAPs offer reliable, tamper-proof records of attendance, recorded on a blockchain, unlike traditional methods like surveys or check-ins, which can be prone to manipulation or human error. Additionally, a POAP collection can serve as a blockchain-style resume.
Tangible Digital Mementos: POAPs are digital collectibles that attendees can keep as lasting mementos of their participation. Unlike transient engagement methods such as social media posts or email newsletters, POAPs provide enduring value as commemorative tokens that attendees can treasure and display in their digital wallets. For event organizers, this facilitates better community engagement by minting POAPs to commemorate significant moments or achievements.
Exclusive Access and Rewards: As a form of NFT, functioning as a smart contract or unique identifier, POAPs can grant holders access to exclusive content, benefits, or experiences. Issuing special access POAPs can incentivize engagement and reward participation in a meaningful way. For instance, in some communities, possessing more POAPs can grant enhanced privileges, such as increased voting power in polls or DAO project proposals.
In summary, POAPs provide a unique blend of immutable proof of attendance, tangible digital mementos, and exclusive access and rewards. These elements make POAPs an invaluable engagement tool for event organizers, enhancing the attendee experience and fostering memorable events.
However, NFT tickets still face challenges such as reselling, privacy concerns, and the cost of on-chain operations. While blockchain offers promising solutions across various domains, its application in ticketing presents significant hurdles. It is prudent to approach this technology with caution, considering both the benefits and the inherent complexities.
The programmability of NFT tickets enables more sophisticated interactions by various stakeholders, including owners, sellers, creators, and promoters. These features have significant implications for the industry, affecting aspects such as maximum price settings, resale revenue, digital collectibles, and loyalty rewards.
A maximum ticket price can be set, even during resales, which greatly reduces the incentive to buy tickets at face value and resell them at inflated prices on secondary markets. This mitigates the issue of tickets being sold out from the primary seller and only available at exorbitant prices from secondary intermediaries.
Artists, athletes, and event creators can now receive royalties from ticket resales programmed into the smart contract, ensuring they benefit from each transaction. The NFT ticket can also become an aesthetically pleasing collectible, akin to physical tickets from past events.
Finally, a rewards program for loyal fans can be implemented more effectively with blockchain, facilitating seamless collaboration between parties. This contrasts with previous models where companies maintained their data in isolation, hindering cross-organization collaboration.
While blockchain presents potential opportunities to innovate and address longstanding issues within the event industry, notable collaborations and acquisitions by major players involving NFT-ticket startups have not yielded any notable successes since 2022. This observation suggests that mere adoption of raw blockchain technology is insufficient. Instead, a seamless user experience and robust infrastructure are essential requirements that are currently lacking. These elements must be developed and integrated comprehensively for NFT-ticketing and web3-based loyalty systems to achieve widespread acceptance and use by businesses and their customers.Remember the days when websites were mere collections of pixelated GIFs and clip art text? If you don’t, a stroll down memory lane through Geocities archives might jog your memory. GeoCities, the pioneering web hosting service active from 1994 to 2009, offered users the freedom to create and publish their websites, marking the early days of online creativity.
Fast forward to today, where we find ourselves on the brink of a new era in user experience design, one driven by XR (Extended Reality) technology and UX 3.0 principles. But what exactly is XR UX 3.0, and how is it reshaping the landscape of sports engagement?
The transition from traditional 2D interfaces to immersive 3D experiences marks a significant leap in user engagement and interaction. While 3D representation has been lauded for its effectiveness in various fields like education and entertainment, its integration into web experiences has been a gradual process.
The introduction of WebGL technology in 2009 laid the foundation for 3D experiences online, yet widespread adoption took time as browsers gradually incorporated support for the WebGL API. Despite initial hurdles, the potential for interactive 3D websites began to emerge, offering users a glimpse into the future of online interaction.
UX 3.0, also known as Web3 UX, represents the next frontier in user experience design, leveraging advanced technologies like AI, AR, VR, and IoT to create seamless digital experiences. By bridging the gap between the digital and physical worlds, UX 3.0 aims to provide users with personalized, intuitive, and immersive interactions.
Key advancements in technology, including blockchain, AI, and the growth of AR/VR, have paved the way for the emergence of UX 3.0. These innovations have not only expanded the possibilities for user engagement but have also redefined how we perceive and interact with digital content.
In the realm of sports, XR technology is revolutionizing the fan experience, offering immersive viewing opportunities that transcend traditional boundaries. Virtual Reality (VR) allows fans to step into the shoes of their favorite athletes, providing unprecedented access to live events from the comfort of their homes.
Augmented Reality (AR) and Mixed Reality (MR) enhance the viewing experience further, providing real-time stats and analysis that enrich the overall experience. Whether watching from home or in the stadium, fans are treated to a personalized and interactive journey through the world of sports.
Digital twins, virtual replicas of physical objects or environments, are reshaping the way sports organizations plan and engage with fans. By creating virtual models of stadiums and arenas, teams can offer fans a unique and immersive viewing experience, complete with interactive elements and real-time statistics.
These digital twins not only enhance fan engagement but also offer valuable insights for stadium planning and management. From optimizing seating arrangements to improving crowd flow, digital twins are becoming indispensable tools for sports organizations looking to elevate the fan experience.
As we look ahead to the future of sports engagement, one thing is clear: XR UX 3.0 is here to stay. By embracing technologies like XR, digital twins, and IoT, sports organizations can create truly immersive and personalized experiences for fans around the world.
From virtual viewing parties to interactive merchandise stores, the possibilities are endless. As the industry continues to evolve, the integration of XR technology will be key to staying ahead of the curve and delivering unforgettable experiences to fans everywhere.
In conclusion, the convergence of XR technology and UX 3.0 principles is ushering in a new era of fan engagement in sports. By leveraging the power of immersive experiences and digital innovation, sports organizations can create lasting connections with fans and unlock new revenue streams in the process. As we embrace the future of sports engagement, one thing is certain: the best is yet to come.
In the burgeoning landscape of financial paradigms and fan engagement strategies, a novel concept has emerged: talent tokenization. This innovative approach, akin to personal Initial Coin Offerings (ICOs), transcends traditional fundraising methods by encapsulating an individual’s potential future earnings or talents into digital tokens. Such tokens afford investors the opportunity to directly support promising talents, thereby establishing a symbiotic relationship between backers and beneficiaries.
Rooted in the essence of democratized ownership, talent tokenization represents a departure from conventional project-specific funding mechanisms, epitomized by personal ICOs. Rather than tethering investment prospects to singular ventures, talent tokenization broadens the scope to encompass an individual’s overarching career trajectory, thereby fostering a more holistic investment landscape.
Within the realm of sports, the tokenization of club ownership into securities has emerged as a transformative force, offering fans a stake in the financial prosperity of their beloved teams. Through this paradigm shift, supporters transcend their traditional role as mere enthusiasts, assuming the mantle of stakeholders with vested interests in their clubs’ economic success. Moreover, club tokenization injects much-needed liquidity into the sports sector, thereby augmenting financial stability and providing clubs with innovative avenues for capital procurement.
However, the proliferation of talent and club tokenization is not devoid of challenges. Chief among these are the intricacies of navigating the evolving legal framework surrounding tokenization, the specter of market volatility, and the inherent risks associated with investing in the mercurial trajectories of individual careers. Despite these obstacles, success stories such as that of Spencer Dinwiddie, who tokenized his NBA contract, underscore the transformative potential of talent tokenization in fostering financial autonomy and deepening fan engagement within the sports arena.
In tandem with talent tokenization, the advent of club tokenization heralds a new era of fan-centric engagement strategies within the sports and entertainment industries. Platforms such as Socios.com have pioneered the concept of Fan Tokens, which afford supporters exclusive benefits and voting rights, thereby fostering a sense of community and empowerment among fans. Moreover, club tokenization represents a convergence of decentralized finance (DeFi) and sports, offering an alternative to the limitations inherent in traditional financial models.
Notably, the implications of club tokenization extend beyond mere financial transactions, encompassing broader sociocultural ramifications. By bridging the chasm between fans and stakeholders, club tokenization engenders a more profound sense of belonging and investment among supporters, thereby redefining the dynamics of fan-club relationships.
In conclusion, talent and club tokenization epitomize a paradigm shift in the realms of finance and fan engagement. Rooted in principles of democratized ownership and decentralized finance, these phenomena offer promising avenues for supporting emerging talents and fostering deeper connections between fans and their respective clubs. As the journey into tokenization unfolds, it behooves stakeholders to navigate the attendant challenges and capitalize on the transformative potential of these novel financial instruments.
Democratization of Investment: Unlike an IPO, which often requires significant capital, tokenization allows fans to invest smaller amounts, making club investments more accessible to the general public.
Enhanced Liquidity: Tokens can be traded on various exchanges, offering greater liquidity than traditional shares, which are often bound by more restrictive trading regulations.
Flexibility: The terms of fan tokens can be customized, offering various benefits that are not usually part of traditional stock offerings, such as exclusive experiences or merchandise.
Intro
The secret to buying like a billionaire
Token types
Can tokens bring in the big bucks?
Growth of cryptocurrency tokens
Why should you care?
Tokenization possibilities
How tokenization is disrupting ownership of everything
How tokenization transforms the business landscape
In 2021, Italian museums tried to recoup losses caused by the pandemic. It was also a matter of concern for legendary Uffizi Galleries, a museum in the heart of Florence, which housed some of the world’s most famous artworks. Amid lockdowns that followed one another, the number of annual visitors fell from 4.4 million to 1.2 million, so the venue desperately needed financing to offset losses incurred during the pandemic.
A museum’s director researched various options when he looked for a new way to generate income. How could they continue to showcase their priceless artworks to the world and generate revenue while visitors were unable to come and see them in person? The solution came in the form of asset tokenization.
The Uffizi Galleries decided to create NFTs (non-fungible tokens) for some of their most famous artworks. The venue offered Michelangelo’s masterpiece Doni Tondo (1505–06) for sale as NFTs. The customer was found soon. A wife of a famous Italian collector wanted to buy its tokenized version as a birthday gift for her husband. The amount of the deal was 170,000 USD.
The story of the Uffizi Galleries’ use of NFTs to sell their masterpieces highlights the potential of asset tokenization for generating revenue in times of crisis. Tokenization opens new opportunities for other industries as well. For example, real estate properties, commodities, and even intellectual property can be tokenized and traded on blockchain-based platforms. The possibilities are endless, and many companies are already exploring this new frontier to create new business models and revenue streams.
Imagine being able to own a piece of a rare painting or luxury hotel, worth millions, without having to break the bank. Sounds too good to be true? With tokenization, this is now a reality. The innovative concept of tokenization has changed the way people think about owning and investing in valuable assets. Investors can now own a piece of something they may have never thought possible before.
Though the Italian customer mentioned above was ready to purchase the NFT of the masterpiece as a single asset, tokenization provides the possibility of selling fractions of the artwork to multiple buyers. This would allow more people to have a stake in the artwork, and potentially generate even more revenue for the museum. It’s one of the benefits of tokenization – the ability to divide an asset into smaller parts that can be bought and sold individually. This opens up new possibilities for investment and ownership, and could have a transformative effect on business. It means that more people can have a stake in the asset, even if they don’t have the resources to buy it outright. In the following section, we will explore the basics of tokenization, when real world assets are converted into digital tokens. It all actually starts with a token, which is sold to customers. But what exactly is a token?
Token is a buzz word nowadays. With the arrival of blockchain, the concept of tokens extended to digital format. In the past, commodity money such as shells, grain, tobacco, shark teeth, and other items were used as a means of payment. Today, people can use cryptocurrency tokens to purchase goods and services.
The term “token” was originally used to describe objects that replaced money, and it continues to be used in various contexts today. Examples of tokens in daily life include subway tokens or casino chips, which serve as tokens representing money in the gambling venue.
Token is a proof of asset ownership, which can include cryptocurrency. Tokens represent digitized ownership of an asset that can be used as a means of payment.
Token is a piece of code that represent ownership of a specific asset, and are issued via smart contracts on a blockchain.payment.
However, in the world of blockchain, tokens take on a more complex meaning. They are essentially pieces of code that represent ownership of a specific asset, and are issued via smart contracts on a blockchain. You can find more details how users access services and data in decentralized networks in our in-depth review of the web3 technical landscape. In general, token is a broad term, which is used to describe different groups of digital assets. There is no official classification of tokens, so we came up with our own version of how tokens can be classified by purpose of use. It can help you understand the subject better. You should also remember that the content presented below is based on materials from publicly available sources and provided for informational purposes only, hence should not be construed as investment advice.
As the name suggests, these assets are designed to pay for utilities on the blockchain, providing benefits and granting exclusive access to some services within the ecosystem where the token is issued. Used to access a particular product or service, they are not intended to work as a means of payment or investments though they are still used this way when they become speculative and highly valued. These are cryptocurrencies that enable specific actions in an application, for instance, Binance Coin (BNB), which has several utilities within the Binance ecosystem, and Filecoin (FIL), which is used to pay for storage space on the Filecoin network.
It is also worth saying about DeFi apps that need such assets to fuel their systems since they help to provide liquidity and process transactions. Sometimes utility tokens are additionally used as governance tokens, which occurs in the projects with dual structure, for instance, the MakerDAO token (MKR), which serve both as a governance token and a utility token.
As the term implies, these tokens are native cryptocurrencies, which are used for processing transactions and their rewards. This is a type of digital token that is designed to facilitate transactions on a particular blockchain platform. These tokens are typically used to pay for fees associated with using the blockchain network, such as transaction fees and gas fees. They may also be used as a means of exchange for goods and services within the platform’s ecosystem.
The example of a transactional token is XRP (Ripple). XRP is a cryptocurrency that is designed to facilitate fast and secure cross-border payments with low fees. Its main utility is to act as a bridge currency for different fiat currencies and facilitate transactions between them on the Ripple network. XRP is used to pay for transaction fees and can also be used as a means of payment for goods and services, making it a transactional token.
These are cryptocurrencies designed specifically for use as a medium of exchange. These tokens can be used to pay for goods and services, both within and outside of a particular blockchain platform. Examples include Bitcoin (BTC), Litecoin (LTC), and Bitcoin Cash (BCH).
These tokens are backed by a tangible or intangible asset, such as gold or real estate. They can be used as a store of value or as a way to access a specific asset. Examples include Tether (USDT), which is backed by the US dollar, and Paxos Standard (PAX), which is backed by a combination of US dollars and short-term US Treasury bills.
With development of DeFi, the decision making processes become critical, so governance tokens present the solution to manage such issues. These tokens are used to govern a specific blockchain network or protocol. They allow token holders to vote on proposals, make decisions, and participate in the governance of the network. Examples include MakerDAO (MKR), a blockchain platform, aimed to solve volatility issues for the cryptocurrency market, which allows holders to vote on proposals related to the stability of the Dai stablecoin, and Uniswap (UNI), a popular decentralized crypto trading protocol, which allows holders to vote on changes to the Uniswap protocol, though the token has other utilities as well. It is used to attract liquidity and pay transaction fees when swapping tokens on the Uniswap platform.
These tokens are unique and non-interchangeable, and are used to represent ownership of a specific digital asset, such as artwork, music, or in-game items. Each NFT is unique and has its own distinct value. Such assets are often sold at auction. Examples include CryptoKitties, NFTs of unique digital cats, NBA Top Shot, NBA-themed digital collectibles, and Beeple’s digital artwork, a square collage of 5000 artworks created by the American artist, which was sold for $69 million at auction in March 2021.
These are tokens that represent ownership in a real-world asset. In other worlds, these assets are a digital form of traditional investments, such as stocks, bonds, or real estate. Unlike utility tokens or payment tokens, security tokens are subject to federal securities laws and regulations in their jurisdictions. These tokens can offer investors additional benefits, such as fractional ownership, increased liquidity, and automated compliance. Examples of security tokens include tZERO (TZROP), a blockchain asset exchange, which addresses the issues of ICOs’ regulatory compliance and SPiCE VC (SPICE), the first liquid venture capital fund with full compliance.
What is important for us here is that these tokens are created through a process called tokenization. So, we will delve deeper into this particular aspect in this article.
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The rewards can add up round-the-clock in the cryptocurrency sector. There are different ways to earn tokens on different platforms. The methods of obtaining tokens are indeed different from acquiring classic shares of companies. For example, in some blockchain networks, users can earn tokens by participating in network activities such as mining or staking. In mining, users contribute computing power to verify transactions and earn tokens as a reward. In staking, users hold a certain amount of tokens and use them to participate in consensus mechanisms that help secure the network. By doing so, they earn rewards in the form of additional tokens.
By participating in staking, network validators help to increase the value and trust in the project, which can result in increased transaction volume, larger transactions, and higher token values. This can create a positive feedback loop where the value of tokens increases with the growth of network popularity.
Users can also participate in bug bounty programs, when they need to detect vulnerabilities and report security flaws in the system of the platform so that the team can fix them. The size of the reward often depends on the severity of the bug and the potential impact it could have on the company’s operations or the security of its users.
Once users earn tokens, they can hold onto them as an investment or use them to access products or services within the platform. The value of a token received from one company or another depends on various factors, such as the popularity and adoption of the platform, the supply and demand for the token, and market conditions. Some tokens may have a fixed value, while others may fluctuate in value based on market forces, thus enabling traders to earn on high volatility of crypto tokens. As you see, there are plenty of ways people use to make bank in the crypto world. But let’s not forget about the security tokens, the reliable money makers of the bunch. These tokens generate returns for investors through a variety of mechanisms, like regular dividends, profit sharing, interest payments, and good old-fashioned appreciation. And sometimes, the token issuer even buys them back from you just as a publicly traded company buys back its stock.
Tokens can increase or decrease in value, just like company shares, state bonds, or other assets. However, the growth in the token market comes with higher risks due to its relatively new and unregulated nature. While certain tokens may grow in value, there is no guarantee, and investors should be aware that they could also lose their investment. As regulation is introduced in different countries, it is uncertain how many tokens in circulation may be at risk of default or become subject to stricter compliance requirements. This uncertainty highlights the importance of conducting thorough research and due diligence before making decisions in a crowded market of tokens.
When we tokenize an asset, either a digital asset or physical as the painting described above, it is presented as digital tokens on a blockchain. The value of each token is backed by the underlying asset, so the price is determined by supply and demand in the market.
After Bitcoin made its grand entrance in 2009 and Ethereum joined the party in 2015, the world of crypto has exploded! It is worth saying that tokenization has played a crucial role in this growth. It made it easier for businesses to create their own tokens, leading to an influx of new tokens entering the market. As a result, the number of crypto coins and tokens has been growing like a weed.
The number of cryptocurrencies has grown exponentially over the past decade. In 2013, there were more than 50 different cryptocurrencies, and by the end of the following year, this number had increased by almost ten times to over 500. In 2021, the number of crypto tokens reached 9K, but then it doubled in 2023 and reached almost 20K tokens. Though discounting “dead’ cryptos leaves us with 9K tokens, it still seems too much to make a choice! So, the question is: can there be too many cryptocurrencies?
Various tokens are created by different platforms in the blink of an eye. The market is flooded with memecoins, which are cryptocurrencies created for the purpose of humor or satire, like Dogecoin. However, this proliferation doesn’t remove the dominance of Ether and Bitcoin, which take the lion share of the whole cryptocurrency market. According to the data of Coinmarketcap at the time of writing, together these coins take almost 60% of the market, while other tokens have fierce competition.
As newer cryptocurrency tokens arise, the fragmentation of the industry increases leading to more dead coins, the term that was coined for tokens or coins, which are not in use any longer, therefore are delisted from exchanges.
Higher fragmentation of the market contributes to it since coins should have enough liquidity for a healthy ecosystem.Low liquidity has a negative impact on the system, and, ultimately, kills the token, which is in low demand.
As the token market continues to expand, the number of services and companies aimed at evaluating project reliability and market appeal also grows. Investors mainly use tools for tracking token data, exploring various aspects of the token and its underlying project, such as the token’s price history, market capitalization, trading volume, circulating supply, total supply, the project’s roadmap and whitepaper. They can also monitor the token’s performance on different exchanges, check the project’s social media and community activity, and assess notable partnerships or collaborations established by the project. Additionally, investors can use technical analysis tools to analyze charts and trends to make conscious decisions when buying or selling the token.
Despite tools available for tracking token data, making informed decisions requires a more comprehensive approach. This includes knowledge of technology, macroeconomics, statistics, and psychology, among other fields, to meet market demands. Not an easy task, yeah? It can be challenging for non-savvy users to perform due diligence on the tokens to invest in. These should be credible projects that add value to the ecosystem, so it is necessary to study documentation and technical details to understand if the project is worthy.
Since we touched upon different aspects of tokens, the concept of tokenization should be clear to you. Tokens are a key component in the process of tokenization, which involves converting physical assets into digital tokens that can be traded on a blockchain network. These tokens represent ownership rights to the underlying assets, and investors can use them to buy, sell, or trade their stake in the asset. It opens a brilliant opportunity to trade real world assets on the blockchain, and improve their liquidity that refers to the ease to convert assets into cash.
Tokens are a key component in the process of tokenization, which involves converting physical assets into digital tokens that can be traded on a blockchain network.
Here is an example that helps to describe the concept in a simple way. Each token is like a LEGO block that represents a specific piece of value, such as a share of a company or a unit of real estate. Tokenization is the process of breaking down these assets into smaller, more manageable pieces, just like how a LEGO set comes with many different pieces that can be combined in various ways to build something bigger.
With tokenization, these individual “blocks” can be easily traded, bought, or sold, just like how LEGO blocks can be combined, separated, and used to build different structures. And just as LEGO blocks come in many different shapes and colors, tokens can represent a wide range of assets, from traditional stocks and bonds to alternative assets like real estate and art.
Overall, just like how LEGO blocks have revolutionized the toy industry by allowing endless possibilities for creativity and innovation, tokenization is revolutionizing the investment industry by providing new opportunities for access, liquidity, and flexibility in investing.
So, why should you care about tokenization? Well, do you like money? Tokenization works like magic turning physical assets into digital tokens that can, probably, make you rich. You can turn anything into a valuable asset and sell it. If you are still skeptical about the potential of this technology, let me remind you how hard it is to adapt to changes. But those who do it, can become prosperous.
There was a time when people wore handmade clothing and it was the norm then. It took countless hours for skillful artisans to create exceptional, gorgeous garments, which were crafted with care. As technology evolved, people started using machines for that. So, it doesn’t take that long to produce clothing now. It is also made at a fraction of the cost, which people used to spend on garment before.
Initially, people didn’t believe it would happen. They considered that clothing made by machine is of low quality and it’ll never replace handmade beautiful garments. They were skeptical about it. So, what do we have now? Do you wear handmade clothes? Do you know anybody who does? Thus, the invention of machines created a different reality and changed the world. With time, people adopted new technology and discovered its benefits. They highly appreciated fast production and low prices. In this way, artisans faced serious competition and ultimately lost in that race. Machine-made clothing has finally replaced a more elaborate production, which is a rarity nowadays.
Now the tech world brought other instruments to us. Blockchain-based technologies can make many processes cheaper and faster, but it takes time for people to adapt. Those who do it faster, can win and take the leading position in the market.
You might want to know what exactly can be tokenized. Tokenization is a powerful tool that can be used in just about any industry. The possibilities are almost endless. With tokenization, you can represent anything from real estate to artwork to loyalty points as tokens. Let us look at the opinion of a famous, reputable crypto investor on the subject:
“All the leakage you have today goes away in a world of DeFi because you will financialize every single asset possible. You’ll financialize your homes. You’ll financialize your cars. You’ll financialize your watches, your jewelry, your art. You’ll financialize every random thing including your career.”
Billionaire venture capitalist Chamath Palihapitiya predicted tokenization of all assets in the world driven by the cryptocurrency industry.
Tokenization is a fascinating technique that has numerous applications in the world of business. Companies can create tokens that represent specific projects and assign them a certain value. This makes them super useful for financing new initiatives and automating company processes related to the ownership and transfer of assets. For example, tokenization allows for the creation of smart contracts that can automatically execute the transfer of ownership when certain conditions are met, such as the receipt of payment. This eliminates the need for intermediaries and reduces transaction costs and time.
It is easier to demonstrate the practical examples of tokenization through the particular cases, which are provided below. Thus, we are going to explore the tokenization in the following spheres:
The creation of fractional ownership can boost the real estate industry. Let us suppose, the property owners need money to tackle some problems. Since it’s hard to sell the hotel as a single asset and it takes a lot of time, tokenization can help to address the issue without the necessity to sell it.
The first real estate deal with the help of tokenization was completed in 2018. The St. Regis Aspen, a luxury hotel with views of the Rocky Mountains, offered the public to become owners of 20% of the property through digital currency. It released 20% of ownership in Aspencoins, thereby presenting an opportunity for individuals to attain the status of true owners of the exquisite property. As it was reported, it was possible to spend as little as $100, $1,000, $10,000 or some other amount to become a co-owner of the hotel.
Numerous blockchains such as Ethereum, Solana, Binance Smart Chain, etc. enable smart contracts, which allow to program digital assets for including ownership rights and transaction history. Smart contracts are pieces of code or programs that run automatically when certain conditions are met, hence don’t need intermediaries. In other words, these are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code.
A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code.
The tokens, created as a result of tokenization, include rules that ensure compliance of the asset issuing, distribution, etc. It means that everyone is playing by the same rules. For instance, real estate tokenization can include controls for ensuring the transfer of tokens to the particular counterparties (the terms are specified in the smart contract).
Tokenization of precious metals can be a great alternative for people who want to diversify their portfolio. Let us take gold, for instance. The popularity of this investment option is indisputable. It’s been a reliable inflation hedge for centuries, bringing stability to investors during market volatility.
However, it wasn’t so easy to invest in it. It has always been a headache for people to keep it safe! People used to store it in temples, bury it in the ground, store it in guarded vaults, strongrooms, and heavily fortified castles. Now more sophisticated methods are employed. Many central banks store their gold reserves in secure underground vaults, often protected by advanced security systems like biometric scanners and armed guards. Private individuals can store their gold in specialized vaults and depositories, with high-tech security measures like motion sensors, cameras, and even armed guards.
Buying tokenized gold, you don’t have to worry about its storage. Buying and selling real gold is really a hassle! You have to find a reputable dealer, negotiate a price, and physically transport the gold. Tokenization is an excellent solution that removes all these problems.
With tokenized gold, you can purchase it with just a few clicks from anywhere in the world using Euros, US dollars, Ether, Bitcoin or some other crypto. It is possible to transfer the tokens to any Ethereum wallet or even receive physical gold through global delivery if you decide to.
Art is often considered a luxury investment, only available to the wealthy elite. But what if everyday people could own a piece of a masterpiece by Van Gogh or Monet? Tokenization broke down barriers, so any person can own million-dollar assets nowadays.
Artwork tokenization involves converting the ownership rights of a physical artwork into digital tokens that can be traded on a blockchain. This allows multiple investors to own a stake in a single artwork, making art investing more accessible and democratic. And the benefits don’t stop there. Tokenization also allows for greater transparency in the art market, reducing the risk of fraud and ensuring fair pricing. We have previously discussed how NFTs can help regulate music copyright ownership through blockchain technology. The use of NFTs in the music industry can help make the relationship between musicians and their fans stronger by sharing royalties with supporters. It can also change the current music business model and enter a new era where artists can become independent, and fans can earn along with their favorite bands.You can read more about it in our project “What da hack is music royalty NFT?!”.
Various asset management platforms are now offering a unique opportunity for art enthusiasts and investors alike. With their recent foray into art tokenization, even everyday people can now invest in renowned artworks from world-famous artists like Picasso, Warhol, and Koons using cryptocurrency. This innovative move has opened up exciting new possibilities for those looking to invest in museum-quality art and watch its value grow over time.
In 2021, a Swiss-based bank achieved a significant milestone by using blockchain technology to transfer ownership rights of Picasso’s 1964 masterpiece, Fillette au béret, onto the blockchain. The artwork was divided into 4,000 digital tokens, which were sold to over 50 investors at a price of 1,000 Swiss francs ($1,040) per token. This innovative approach to art ownership allows more people to invest in high-value artworks without the need for large sums of money or specialized knowledge of the art market.
Tokenization in logistics refers to the use of blockchain technology to digitize and tokenize logistics assets and processes. This allows for more secure and efficient tracking, verification, and transfer of goods and services throughout the supply chain. It can be used to represent cargo, shipping containers, or other logistics assets as digital tokens on a blockchain network. This enables easy tracking and monitoring of these assets in real-time, from the point of origin to the point of destination.
It contributes to better transparency and security in logistics transactions by creating a tamper-proof record of ownership and transfer of goods. This can help prevent fraud and reduce the risk of errors and delays in the supply chain.
There are several examples of tokenization in logistics. For instance, in 2019, Maersk, the world’s largest container shipping company, partnered with IBM to launch TradeLens, a blockchain-based platform for tracking and tracing shipping containers. The platform uses tokenization to represent shipping containers as digital tokens, allowing for real-time tracking and monitoring of their movement and condition.
Another example is Walmart’s use of blockchain technology to track the supply chain of pork in China. The company partnered with IBM to create a blockchain-based system that tokenizes pork products, allowing for easy tracking and monitoring of the entire supply chain, from the farm to the store. This ensures greater transparency and accountability in the supply chain, reducing the risk of food contamination and other issues.
Whatdahack?! provides a full package of services for the digitalization of your business, such as Web 3, NFT, cryptocurrency, Open source, etc.
We also participated in the development of the logistics industry product by developing a blockchain system for Volvo Trucks. This product helps aggregate fleet data to a single system allowing bird view control and longer vehicle usage periods.
Currently, there are many collectibles that are being actively tokenized, including sports cards, coins, stamps, rare artwork, vintage cars, luxury goods, and even wine.
For instance, a Swiss company tokenized a rare 1930s Mercedes-Benz 300 SL “Gullwing” model, which is highly sought after by car collectors and enthusiasts. The car was turned into “digital tokens,” which allowed investors to own a fractional share of the vehicle. The tokens were sold to investors through an online platform, with the total value of the car being divided into 20,000 tokens. Investors who purchased the tokens were then entitled to a share of any profits that were generated when the car was sold or leased. The car was ultimately sold for $1.8 million, and investors received a return on their investment based on the number of tokens they owned.
Tokenization penetrated the sports industry as well. Many popular football clubs issued their tokens to boost revenues. As more and more football clubs join the exciting tokenization game, they’re not just looking for new ways to score on the pitch. Now they’re also looking to score big on the blockchain!
With the rise of fan tokens, supporters can now become team shareholders and vote on minor club decisions. Holding fan tokens can also unlock VIP rewards like meeting favorite players or sportsmen and securing exclusive seats. Fan tokens can even provide access to a team’s rare memorabilia, which can increase in value over time. Fan tokens can be bought and traded like other crypto assets, and their value is subject to external factors like market trends and fan interest since it helps to generate a new form of engagement experience.
The same is true for indie artists who turned to tokenization to raise money through the token launch. It helps them to break free from mainstream labels, while investors can support their favorite singers and contribute to their career growth. Singer tokens offer numerous perks such as access to merchandise and concerts. Besides, this is a method to invest in the music industry with the goal of getting potential profit if the artist’s career takes off. It is worth noting, however, that investing in any asset carries risk, and the value of singer tokens can fluctuate based on market conditions and the success of the musician or band. Anyway, music lovers enjoy the experience so this is the investment that truly rocks! With singer tokens, your personal concert pass never expires.
It seems like almost anything can be turned into a digital asset nowadays. The ability to tokenize assets is unlocking new possibilities for investors and asset owners alike, offering a new way to trade and exchange ownership stakes in all kinds of things. As the world gets more and more tokenized, many talented individuals are getting in on the game! Also, a number of innovative projects have emerged that seek to leverage this technology in new and exciting ways. Let us take, for instance, the Talent Protocol, which enables artists, musicians, and other gifted people to create their own tokens and let fans and investors participate in their success. At this, patrons of hidden talents are rewarded for their discovery. It’s like buying stock in your favorite musician – only way cooler, because you can say that you own a piece of their talent. Move over, monopoly money – talent tokens are the hot new way to invest in your favorite stars.
Investors can always add a little sophistication to their portfolio, investing in tokenized whiskey! Many prefer to invest in it since it is not just a drink but a lifestyle. Moreover, a high-class hobby can make some serious money for you.
In 2020, a specialized digital asset fund offered tokenized Scotch whiskey casks to customers worth $1,000 per barrel, which was expected to rise 4 times when it matures in 5 years. At the same time, the Singapore exchange offered the tokens of high-end Scotch whiskey collection aged to perfection. The premium whiskey collection is expected to mature from 2022 to 2025. The token holders can trade the asset, which grows in value over time, while real connoisseurs of the drink can opt for physical whiskey delivery.
According to investment experts, rare whiskey has seen a growth of more than 500% in its asset value over the past decade. With the limited supply and high demand for some types of whiskey, it’s no wonder that many investors are turning to it as an alternative investment option during turbulent times. A bottle of single malt scotch seems to be more attractive than stocks and bonds.
While some investors select a rare whiskey token, which may be a luxurious investment, others may prefer the practicality and ease of the water tokens. Given that one-third of the world’s population lacks sufficient water supply for their daily needs, the demand for portable water is on the rise. There are several projects and initiatives related to water tokenization that have gained attention in the crypto and blockchain communities. These projects aim to use blockchain technology to track and verify water usage and ownership, facilitate water trading, and incentivize water conservation and efficient use.
It seems that nothing can escape tokenization, which can be used beyond the realm of traditional finance and assets. Sometimes a huge potential is right underneath your feet! You just need a creative approach to unearth it.
In 2022, the Central African Republic (CAR) came up with a plan to generate investment opportunities in the economy of the country, using this tool. So, it looks like the Central African Republic is jumping on the tokenization bandwagon!
Who knew people could tokenize natural resources? CAR hit the jackpot with all those natural resources like petroleum, diamonds, copper, and more. Since they are so lucky with it, they decided not to sit on all that potential wealth and tokenize it to promote economic growth. And this is a brilliant solution! By doing so, they’re making it easier for investors to get in on the action. Also, it brings more transparency to how they manage natural wealth. No more shady deals in the back room. It’s all out there for everyone to see.
The environmental benefits are also evident. With all that traceability, people of the country can make sure everything’s being managed responsibly. So, this is a win-win solution for all parties involved. Though the process is not that fast since a legal framework should be created for this, CAR is ahead of the game with it. It shows the pattern for others to follow.
Tokenization is no longer just about digitizing assets and streamlining their ownership and trade. With the rise of blockchain technology, some innovators are pushing the boundaries of what can be tokenized. In fact, they are even exploring the potential of tokenizing intangible things like emotions, experiences, and even love.
One of the veterans in the crypto industry Adam B. Levine is a host of the Let’s Talk Bitcoin podcast with over 500 episodes. The podcast has become one of the best Bitcoin podcasts over the web. To facilitate conversation and engagement on the Let’s Talk Bitcoin platform LTBCoin was issued, which can be referred to as a talking coin. It was designed to be earned by users for contributing content and participating in discussions on the platform, which incentivized community engagement. The concept of a talking coin is closely tied to the idea of community building and engagement through blockchain-based rewards systems.
LTBCoin played a role in the early adoption and development of cryptocurrencies and blockchain technology. While it may not have directly kickstarted the token revolution, it was one of the first tokens to be built on the Bitcoin blockchain, which paved the way for the development of other tokens and the wider use of blockchain technology in various industries.
The project of a podcast can be considered an early example of tokenization. It was one of the first tokens to be built atop the Bitcoin blockchain, representing a specific asset (content on the Let’s Talk Bitcoin network) and enabling users to trade, transfer and use it within the network. This laid the foundation for the development of more advanced tokenization use cases, including those we see today in various industries.
One of the startups leveraged tokenization to create limited-edition streetwear that’s unique and easily verifiable. Using smart contracts on the Ethereum blockchain, the company creates digital tokens that represent specific pieces of clothing. A smart technology is used to avoid dodgy replicas and extortionate resales. These tokens are then sold to customers, who can claim their physical counterparts once they’ve received the digital asset. The tokens can also be traded on secondary markets, creating a new form of collectibles for streetwear enthusiasts. The technology helps the company ensure that each item of clothing is unique and not counterfeit, and allows customers to track their purchases from production to delivery.
It means that there is no need to empty the bank account to acquire a piece from your favorite fashion designer. There is also no necessity to line up in the street and wait for hours in rain, hail, or shine, as it often happens on the days of the latest streetwear drops. The collectible streetwear becomes more accessible for token holders.
Tokenization can be also used to protect people’s digital identities. The founder of such a project states that it is one of the biggest challenges for businesses and individuals. Hence, it is necessary to secure digital identity to prevent the threat of identity theft. The identity token was released to solve the problem and create a more secure and trustworthy digital world.
Many companies try to get in on the cannabis industry that is worth more than 50 billion USD in the USA alone and it shows no signs of slowing down. One of the startups tries to leverage the blockchain technology to create a transparent and secure supply chain, making it easier for companies to track and verify the origin of their products. Since recreational marihuana is legal in 10 states of the country, while 33 states have legalized its medicinal use, the potential is huge and high tech technology can contribute to its growth.
People are very creative and very human no matter what they do. Numerous studies were conducted that tried to measure emotion. Scientists investigated the subject for years. The main problem is digitization of the metrics around such non-financial value items as love, happiness, hope, and, in theory, these things can be transacted on a blockchain.
Dr. Hugo Liu is actively working on a project to tokenize love. He believes that love can be quantified and represented as a token on the blockchain. He plans to create a system that allows people to send tokens of love to each other, which can then be traded, collected, and even used as collateral for loans. Some people are skeptical about the idea, while others are intrigued by the concept and see potential in it.
The concept may sound crazy, but it has caught the attention of many people in the tech and finance industries. In this article, we will take a closer look at some of the weird and wonderful ways in which tokenization is being used, and how it could potentially change the way we experience the world around us.
According to the report released in September 2022, the potential of tokenization in the near future is huge. It predicts 50 times market growth, thus reaching 10% of GDP by 2030, which is more than 16 trillion USD. Professionals expect the rise in such spheres as real estate, equities, bonds and funds. It is going to bring significant changes to the business landscape and form a new reality we will have to adapt to.
The advent of tokenization has democratized the market of alternative investments, making it more accessible to a wider range of investors. By transforming illiquid assets like real estate, art, and even whiskey into digital tokens, tokenization has opened up new investment opportunities for individuals with lower net worths. High-end assets that were once the exclusive domain of the ultra-rich are now being democratized and diluted among token holders. With tokenization, anyone can now invest in assets that were previously out of reach, changing the face of investing and wealth creation.
Blockchain transforms the market and ports its model into places where it couldn’t go before. Since the reach of the market extends beyond traditional asset tokenization, it brings new forms of private assets into the focus. We can invest in anything we want, whether it is an enterprise, an art, a singer, a favorite football team, or other assets with traditionally low liquidity. The tokenization process can help to even it out.
Distributed ledger technology employed in tokenization ensures immutability, great transparency and high level security. Smart contracts can’t be misplaced from the blockchain or modified unless this action is initially programmed. It presupposes more convenience and better overall security. Taking into account such benefits as low transaction time, lack of middlemen, and cost-efficiency, tokenization can help to attract investments faster and easier, thus ensuring higher revenues for investors.
Tokenization has the potential to change the landscape of the market since it opens investment to a wider pool of investors. We are just in the early phase of its adoption but its impact is seen already. Digitization helps to facilitate the innovation of new product offerings. It also implies a more democratic approach to investments in expensive assets, such as commercial real estate.
Being highly divisible, tokens remove the need for minimum investments, which is a win-win situation for both parties. Investors can participate in the projects which were inaccessible for them before. Being an easily transferable unit, and representing real value, tokens help to make assets liquid or easily tradable. Instead of registering ownership in the old-fashioned way on paper, investors can transact digitally using tokens. All these factors taken together result in the mitigation of entry barriers to many industries, ensuring a broader investment base, more liquidity in the market and, hence, a more vibrant economy.
Illustrator – TBA
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Editor – Damo Jackson
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