It’s time to redefine what has come to be known as the metaverse — a reimagined internet, combining both established and new technologies (think mixed reality) — on the Web3. Although the possibilities seem numerous, the idea of a ‘real digital’ metaverse is far off the horizon and not widely applicable yet.
Rather than focusing on the metaverse, then, businesses should consider the real use cases of Web3 — including decentralization, blockchain, and blockchain-based economics — including crypto and non-fungible tokens (NFTs ), their simulations. real value, stability, and future. Web3 has given us an amazing tool — the ability to create a ‘digital economic value’, where something can have value on its own on the internet, without a trusted intermediary.
That said, we all have a fear of the unknown, as is always the case with new technological developments. Set against the backdrop of last year’s FTX, feelings of distrust have crept into Web3-based projects on blockchain, crypto, and NFTs. The decentralized finance (DeFi) space is taking the crown of uncertainty, with desperate calls from industry players to regulate the ecosystem. This is understandable — the industry has been booming lately, with fraud in the area reminiscent of the early days of Facebook and Twitter.
However, there is a strong opinion from those inside the industry that regulatory measures should be approached with caution and balance, by ensuring that any regulation protects users without preventing the emergence of new things within the Web3-crypto sphere, which still has a large margin of evolution.
Let’s take NFTs as an example: NFTs are digital tokens of virtual and real-world assets that live on the blockchain. They are different from cryptocurrency brands; which are characterized by their unique nature — where the smart contract is encoded — cannot be edited or modified. As a result, these ‘one-of-a-kind’ assets represent digital scarcity in a way that no one can fool.
After all, the business potential of NFTs goes beyond selling pictures of bored monkeys on the internet. NFTs can transform the financial system, creating a safer, more efficient and fairer economy.
Challenging misconceptions
After the demise of FTX, confidence in the wider Web3 ecosystem has certainly fallen. The problem is back in the crypto and finance spheres, but industry players and critics should stop painting all Web3 projects and digital assets with the same brush of distrust.
The core of Web3 is about using blockchains and crypto tokens as tools for governance, strategic decision-making, and financial incentives. FTX, however, was a centralized financial exchange. Its performance barely touched the surface of the types of crypto-backed businesses Web3 developers have been tracking — including the popularity of NFTs.
Just as we saw during the bursting of the dotcom bubble, critics were quick to dismiss the entire internet, and the current crypto winter is reminiscent of this period. The overall macro climate has changed dramatically as the industry moves through this evolutionary phase, which was often inevitable as the market rallied.
Web3 has surrounded many projects on its website, but this does not mean that projects cannot fly. NFT industry leaders have been quick to shun NFTs from the crypto sector, as the asset does not exist in a vacuum.
NFTs are active
It is encouraging that, despite the crypto crunch of 2022, there is still 1.1tn worth of digital assets in circulation, and 300mn people holding crypto assets. A common misconception is that NFTs are only valuable for the likes of art and games, but their usefulness goes beyond this.
Due to the non-selectivity and immutability of NFTs, businesses can hire them to digitize and protect all types of data by document encryption. A certificate can be issued on the blockchain as an NFT and is directly traceable to its owner. Additional use cases take many initiatives from raising money, digitizing assets, monetizing intellectual property, and authenticating physical assets online. Recently, it was reported that almost 90 percent of businesses have adopted blockchain technology. With this, the power of NFTs in business is finally realized.
Another key benefit of NFTs is their ability to redefine how brands interact with consumers. Examples include the likes of Adidas, Gucci and, Amakhulu using tokens to reward big fans. Improving customer engagement and unique experiences is key to ensuring customer loyalty. NFT loyalty programs can be used by businesses in support of blockchain technology to offer customers a variety of different rewards (recent examples include Starbucks’ Odyssey), improving their quality within loyalty programs.
With this, customers can understand the value of their gifted asset income, which can be traded on the NFT market. Customers then get an opportunity to increase their loyalty status and continue to interact with the brand. Businesses themselves have the opportunity to benefit by charging a commission on each trade transaction.
Way forward
As NFTs exist on blockchain technology, these digital assets are not compatible with the current financial ecosystem and regulations. Following last year’s crypto market scandals; from FTX to the failure of Terra and the twin coin Luna last year, the regulatory raft of markets in crypto-assets (MiCA) must be installed in Europe to manage the volatile market.
Addressing the issues facing digital markets is the right step to improve and protect investors’ access to the crypto market, and an important bridge to strengthening confidence in digital assets. The industry has long been anticipating increased focus on the unique regulatory challenge and changing the competitive framework to encourage innovation.
Good regulation that protects consumers in the complex and fast-paced investment environment is essential, and will hopefully begin to establish the legal infrastructure needed to combat fraud and fraud found in the markets.
This is the beginning of a new era, and with this safety net in place, we should begin to see the proliferation of NFT traders and the adoption of digital assets continue to accelerate in 2023, as businesses begin to realize their potential.
Image credit: putilich/depositphotos.com
Alan Vey is the Founder and CEO of Aventus.
