What are NFTs?
NFTs are non-fungible tokens.
Non-fungible means that each token is unique and therefore cannot be replaced with another token.
US Dollars are fungible because if you swap one US Dollar for another you get exactly the same thing - this is the same for Bitcoin.
However, if you traded an NFT for a different one, you would have a completely different one.
NFTs are made on blockchains like Ethereum, and you can buy them with cryptocurrency.
NFTs can be a digital version of anything (such as art, land and music).
A lot of the current excitement is around using NFTs to sell digital art, as you may have heard some art NFTs selling for millions of dollars.
However, NFTs are much more than just art. It could be inevitable for all our homes to be sold as NFTs, as NFTs represent ownership rights digitally. Having data of items that you own on the blockchain provides significant benefits, including the ability to trace the data and the efficiency of transacting.
Why have some NFTs sold for millions of dollars in some cases, when they are just pictures of monkeys?
The reason why some NFTs have been adopted already, has been due to a sense of belonging, as opposed to ownership…
The value of an NFT lies in part to the scarcity of a specific JPEG
But, more importantly, the value lies in the access to a community which the NFT enables.
In the increasingly digital world, people feel the calling to be associated with a wider group that shares their ideals, their goals and aesthetics.
Some of the top-rated NFT collections, like Bored Ape Yacht Club, World of Women and Proof Collective, prove just that, by offering an exclusive membership club-like feel for their owners.
Communities in Web2:
For the most successful businesses, dedicated communities are at the core.
The social web has allowed people to connect and share knowledge and ideas across huge distances, form communities, and build friendships across social and cultural boundaries.
Why are communities important for Web2 (traditional) companies?
Firstly, friends tell each other about these cool new products, rapidly growing the customer bases of these companies.
This transforms these brands into cult brands.
Early members get the benefit of feeling like they discovered these cool products before they were cool.
Also, communities can allow brands to better determine what their best and most loyal customers want and hence deliver on that need.
What’s the issue with community engagement in Web2?
The system of communities benefiting companies in the Web2 world is ultimately extractive.
This means that value flows from the customers (who are the ones paying and buying the product) to the company.
It is hard for earlier members of the community incentivized and rewarded for their contributions.
What does Web3 offer for communities that Web2 does not?
In Web3, communities are a start-up’s customers, supporters, and funders.
An engaged community helps projects improve products with their feedback, add more features based on their needs, and onboard more people onto Web3.
You must know your audience and how you want to help them achieve their goals, or you'll be spinning in circles with no compass.
This is a fundamental difference between Web2 and Web3 communities.
By owning an NFT associated with a particular project and becoming part of the community, you potentially stand to financially benefit from the strength of the community – strong community means higher perceived value for those outside the community, which drives the price of the NFT up.
Increase engagement from your community
The fact that the community have financial ownership in the product means that, in theory, members have a vested interest in the ‘health’ of their community
This means that they are incentivised to be more engaged and to contribute.
If we compare this to a traditional business, you might just pay a flat fee for a product or an annual subscription, which means that community engagement is separate from a product or service being offered.
A community in Web3 enables you to attract believers to your project and engage them until they automatically become brand ambassadors. Web2 businesses spend significant effort to attract customers for the sole purpose of selling to them, whereas Web3 allows a project to nurture the user base and turn them into an army of free marketers. This is why many communities/successful businesses, like Nike and Adidas for example are turning to Web3 by launching their own NFT projects.
What is the metaverse?
The metaverse is a 3D virtual space where humans experience life in ways they could not in the physical world.
The metaverse as a concept has been around for a few decades, but interest in this virtual world has increased dramatically since last year, after some of the biggest tech companies announced their interest in the space.
The biggest announcement was Facebook hiring 10,000 people to work on their own metaverse integration and changing their name to Meta.
How do we experience the metaverse today?
Today, using a virtual reality (VR) headset, such as Oculus, is the most popular way to experience the metaverse.
But what can Web3 provide for the metaverse?
Blockchain plays a key role in metaverse development because it allows it to be decentralised.
If we want the future of the internet to be decentralised, like it is today, then metaverse projects need to be built as decentralised platforms.
Blockchain technology can allow the metaverse to transform various industries including commerce, art, media, advertising, healthcare, and social collaboration.
How big could the metaverse become?
The total addressable market for the metaverse could be between $8 trillion and $13 trillion by 2030, according to Citi, with total users reaching around five billion.
This is because the metaverse would potentially be accessible via personal computers and smartphones, hence providing ease of use even for less developed countries.
How do we get to the adoption of billions of users?
Significant investment in metaverse infrastructure, like storage, compute and consumer hardware.
An improvement in the efficiency of streaming environments over 1,000x today’s levels.
Global regulators, policymakers, and governments will need to provide more clarity on certain issues, like property rights in the metaverse and anti-money laundering regulations.
What is DeFi?
Decentralised finance (DeFi) offers financial services without relying on third parties like banks and brokerages.
What are the biggest DeFi projects?
Aave, Maker and Compound are some of the most established DeFi projects.
How do these DeFi projects work?
The protocols mentioned above allow you to borrow and lend cryptocurrencies
You can borrow instantaneously if you can provide a certain amount of collateral
You can also lend out cryptocurrencies and earn interest.
Other DeFi projects:
Uniswap – a decentralised exchange
This allows you to trade any cryptocurrency for another, on the Ethereum platform.
This means you can trade a cryptocurrency for another without any intermediary involved.
Synthetix – synthetic assets
This allows you to buy tokenised stocks, which means you can have exposure to the stock market without having to use a traditional stock exchange or stockbroker.
What is the future of the DeFi industry?
The most impactful opportunity for DeFi is to provide financial services to the 1.7 billion unbanked people of the world (according to the World Bank’s estimates).
DeFi can not only provide access to financial services to the unbanked, but it can compete with traditional financial systems too.
Banks and intermediaries can take days to complete a single transaction between parties, as well costing the user a big percentage of the transaction.
However, DeFi transactions can take seconds, and for most blockchains can be significantly cheaper.