by Janus Boye
Purchasing Bitcoin is not quite the same achievement as landing on Mars, even though the recent controversial Crypto.com ad with the famous actor Matt Damon might give you that impression.
Shawn Moore from Solodev presenting the ‘State of the Blockchain’ at our 2022 member kick-off in Florida
At our annual member kick-off in Florida last month, one of the more engaging sessions was titled:
'State of the Blockchain - Autonomous Organizations, Distributed Finance, NFT's and the Role of CMS'
Hosted by Shawn Moore from Solodev, it sparked quite some reflection among the digital leaders. Interestingly, all crypto players have really nice websites and the entire field of crypto is clearly both fast-moving and loud.
To help us tell signal from noise, Matt Garrepy from Solodev offered a condensed version of the talk in a recent member call.
Starting with the mystery of the beginning of P2P electronic cash, he also highlighted some of the current issues. Below you can find my notes from the sessions including enhanced background from our friends at Solodev, the slides, additional links and finally, also the recording from the call.
The mystery of the beginning
So, how did we get here?
In the opening of the talk, both Shawn and Matt reminded us that both blockchain and cybercurrencies have actually already been around for over a decade. Here’s a few important dates from the early days:
A statue in Budapest dedicated to Satoshi Nakamoto
14 August 2008: Bitcoin.org was registered
31 October 2008: Satoshi Nakamoto posted his now famous paper titled: Bitcoin: A Peer-to-Peer Electronic Cash System
3 January 2009: Bitcoin network came into existence with Satoshi Nakamoto mining the genesis block of bitcoin (block number 0)
12 January 2009: Computer scientist Hal Finney downloaded the bitcoin software the day it was released, and received 10 bitcoins from Nakamoto in the world's first bitcoin transaction
22 May 2009: 10,000 mined BTC for two pizzas delivered from a local pizza restaurant in Florida
Remember what also happened around that time? We were still in the financial crisis of 2007 - 2008 and in 2009, a second bailout for banks was considered.
There’s quite some mystery to Satoshi Nakamoto. Who is he really?
Elon Musk denied he was Nakamoto in a tweet on 28 November 2017, but there’s still plenty of speculation about Elon’s role. Have a look at this interview from late 2021, where he swears he is not Satoshi Nakamoto, but he seems to be the one creating the questions around the validity of that claim.
One more thing as Steve Jobs would have said:
There’s also Ethereum. A decentralized, open-source blockchain with smart contract functionality, which was conceived in 2013 by programmer Vitalik Buterin and released in 2015. The below video is quite visionary and dates back to 2014 at the birth of the Ethereum project, and shares how Charles Hoskinson and Vitalik Buterin were beginning to explore how projects could be built on blockchains to address a wide range of community use cases.
ETH, which is the crypto currency of Ethereum has today become the backbone of most crypto projects in play.
Famously, Hoskinson left to start Cardano in an effort to address the political and financial challenges facing the globe. It is the first proof-of-stake community project, which differs from the traditional proof-of-work mining methodologies employed by Bitcoin. As such, it is far more sustainable and eco-friendly, requiring a smaller carbon footprint to generate tokens and store certificates on the blockchain.
The beauty of Hoskinson’s mission is the real impact it can have on democratizing and decentralizing the world to create institutional change - and deliver economic identity to those who don’t have it. The world still lives in either a developed or “developing” world with credentials and access to systems. For example, the Cardano Africa initiative is aiming to revolutionize the continent’s future by simplifying remittance transactions, reducing costs, opening up microfinance opportunities, and giving people more control over proving their ownership of land, deeds, etc.
Globalization is to blame for much of this - but it is brought to clear focus in places like Africa. Blockchain is creating the opportunity to challenge the old central systems and provide scalability to billions of users while creating individual access and equal treatment and access to markets across the globe.
Inspiration from the gaming community
Fast forward to today and we also have the buzz around Web3 and the Metaverse. Our friends at Solodev made a few quite relevant and interesting parallels to recent trends and the gaming community.
Gamers were the original inhabitants of the metaverse and have also influenced crypto and the usage of blockchain heavily. Gamers understood the concept of rewards long before the idea of transacting with crypto. They were buying shields and other attributes with stored value in-game. This was a prototype for “metamoney” in the metaverse.
Play is an established driver for innovation, and multiplayer experiences fueled the rise of social communities. As Shawn said in a follow-up conversation:
That’s what the metaverse really is: a collection of interconnected digital communities where many of us will be transacting across our lives, from personal to business. It doesn’t seek to rebuild the physical world but offer unique alternative experiences and crypto will be a part of it.
Games have been driving the adoption of these multi-sensory environments, but now we see this tech expanding into other commercial applications like distance learning.
From a real-world perspective, Accenture has launched an employee training environment where people can interact as avatars to learn and collaborate. The idea being that virtual realities can increase efficiency, productivity, and profitability.
The key to world-building in the metaverse is persistence: the idea that a player no longer leaves a game and returns to the same conditions. The game continues “living” as other participants connect and collaborate. When a player re-enters their world, be it Fortnite or Minecraft, things have changed.
The connection back to blockchain is the need to certify ownership, even within a gaming community. Axie Infinity uses NFTs to create collectible, character-based gameplay and drive value around the buying and selling of “Axies” in their world. There are now over 2 million participants earning AXS tokens in a billion-dollar metaverse marketplace. The most expensive Axie ever sold: $820,000 USD. But beneath it, they’re using blockchain to certify ownership and decentralize it.
Just one example: Gamestop is focusing on metaverse by launching their own NFT marketplace. This represents a big shift in their market strategy according to Shawn.
Wallets (like Meta Mask) represent the gateway for crossing worlds in the metaverse. Imagine gamers tapping the value of their rewards or purchases from one system to the next – or even leveraging their digital assets as collateral for buying other assets. Wallets may replace fixtures like SSO as the key for unlocking access to a myriad of systems.
All of this is ushering in the era of web3, when more of these shared experiences will be decentralized. We still require infrastructure, manufacturing, banks, government services, etc. to be centralized on some level – but web3 is transforming how we relate to those central systems. Wallets will be key to that.
Finally, Solodev launched its own set of cloud services for building an NFT marketplace on either Ethereum or Cardano, two of the leading public blockchains. Focused on enterprise at the moment, providing greater control over the brand and digital experience. Also providing multi-chain integration with other channels such as OpenSea.
Introducing NFTs
NFTs, or Non-fungible tokens, are all the rage right now. Even to an experienced crypto expert like Shawn, it is difficult to discern the hype from the real value.
By definition, NFTs are unique digital assets or tokens that are stored on a blockchain. Unlike cryptocurrencies like Bitcoin, which are identical from token to token, an NFT is a one-of-a-kind asset.
By storing NFTs on a blockchain, users can again publicly certify their ownership outside a third-party entity. This means no more big tech servers owning the data, but an immutable authentication of ownership from a shared ledger.
An NFT can be anything from digital art, animated GIFs, a snippet of a song, a cell from an animated film, even “microgames.” Nike is creating companion NFTs that accompany their shoes, enabling buyers to engage with their digital footwear in the metaverse.
NFTs have also become a cultural phenomenon in part because of their relationship to art. Artwork is as much about artists as it is about collectors and communities. Art represents a sort of social contract between creators, viewers, and buyers – and the value of art is (in part) derived by what people are willing to pay for it.
Beeple recently sold an NFT artwork for $69 million at Dreamverse in NYC. People want to send social signals in both the real world and the metaverse, so adding an expensive painting on the wall of a virtual house in Decentraland is part of that newly shared experience.
Solodev has been engaging with the purchase of intangible, digital assets for a long time already – think about web domains and how they are sold through brokers. Someone paid a lot for business.com, and it only exists in the digital realm.
The question is: How big will NFTs become? Coinbase, the leading crypto exchange, believes it will overtake its core business.
From a high-utility perspective, NFTs are evolving beyond collectibles and into the realm of business and social applications. Healthcare providers are looking at ways to use NFTs to secure health records by printing images to a blockchain. Ticketing for concerts and venues, where companion NFTs can be leveraged for access to unique, real-world and digital experiences.
Still, the criticisms of NFTs are loud and not everyone is excited about what’s going on: Interestingly, about 400 Salesforce employees wrote an open “rebellion” letter to protest the company’s stated NFT Cloud strategy.
Despite ballooning to a $41 billion market in 2021, there are concerns about the environmental impact and sustainability of storing NFTs. That said, newer technologies are already providing more socially conscious strategies for reducing the carbon footprint. Blockchains like Cardano are enabling more eco-friendly solutions to address the first-gen issues that Bitcoin and Ethereum present. More innovation is needed and there are other big challenges as well.
Current challenges in blockchain, crypto and tech
By the time you are reading these lines, some of the below is probably already outdated, but Shawn did take a balanced stab at outlining the action and challenges at the moment:
There continue to be significant challenges when it comes to fraud. While blockchain technology has gained a reputation as being “unhackable,” there are aspects of wallets and systems that are still vulnerable – as well as laundering. Recently, a couple was arrested in an alleged conspiracy to launder $4.5 billion in stolen cryptocurrency, so security will continue to be a key issue, particularly as digital wallets rise in popularity.
Despite being around for well over a decade, crypto is still regarded as the “Wild West,” particularly on a global level. Regulation or lack thereof is another key challenge. The U.S. market has viewed the entire field as speculative – and while significant innovation is happening in crypto tech hubs like Miami, the U.S. financial markets have been slow to fully regulate alternative crypto currencies as “securities.” But that might be changing. Gary Gensler, the Chairman of the U.S. Security and Exchange Commission, has said there are real vulnerabilities with cryptocurrency exchanges, reaffirming that consumer protection is needed.
One big question mark at the current moment:
Will the U.S. adopt a stablecoin strategy to peg value to the U.S. dollar?
There’s broad agreement that regulation could be good – and would help reign in some of the pervasive fraud currently plaguing the market. But it will likely impact the widespread innovation we’re seeing around DeFi (decentralized finance), particularly when it comes to global markets. 2022 seems to be the year when much of this will begin to happen and all eyes are on Gensler.
Gas fees continue to be a key issue (just like it is in the physical world). “Gas” refers to the “fuel” needed to execute transactions on the Ethereum network – basically the cost to perform the transferring of tokens or the swapping of assets on an ETH (the cryptocurrency of the Ethereum blockchain) exchange – referred to as a DEX. Gas fees are exceedingly high, but consumers see it as worth the cost to leverage Ethererum as a trusted network that boasts the highest levels of network security for smart contracts (unhackable? Maybe…).
“Alt” chains and currencies are endeavoring to reduce gas fees, but will take time. For now, moving a small amount of anything can seem extremely costly – but it underlines the opportunity for more ecosystem channels to accept cryptocurrencies natively, such as Overstock.com and others have done with Bitcoin. For example, Sharding is targeting much lower fees and enhanced scalability. As volumes and competition increase – and more regulation enters the equation – we should see fees reduced. But who knows for sure?
Probably the biggest mountain to climb is trust. High utility use cases and developing real world applications will continue to be the Holy Grail of these emerging technologies. They will affect everything, so taking measured steps into the metaverse is essential.
Learn more about blockchain
There’s so much buzz at the moment, that it can be hard to tell the signal from noise. If you attended our European conference back in 2017, you might remember the keynote by Web pioneer Bebo White titled: The End Of The Beginning Of A Totally New Financial System.
Coinbase is powered by Contentful and you can learn more about that implementation in this public case study: Scaling content at Coinbase.
Fast forward to 2022, and NY Times has also kicked off the year with quite some coverage including:
Finally, you can also download the slides (PDF) from the member call or lean back and enjoy the entire recording below.