Today's society is built upon digital databases. All the data we provide, even at the most basic visit to a medical facility or an office, is ultimately recorded and stored in digital form.

Physical folders serve the same purpose but cannot offer the speed and accessibility of data needed in modern society. If modern databases were to be eradicated overnight, an entire world would turn into chaos.

The time of digital databases seems to be coming to an end with the rise of another technology dedicated to storing and processing data - blockchain technology.

Innovations change societies.

A society storing data in physical folders differs from one with digital databases, and a society using Twitter or Facebook differs from one in which such projects have not emerged. The creation and development of Uber, Airbnb and TikTok have had a profound impact on society that might be hard to see due to their wide adoption.

Getting lost in the details and losing the bigger picture is what happens to almost everyone nowadays. Slow changes are hard to spot.

The world is striving for constant growth and evolution. The next innovation, the first sign of which we can already see, is the change in data storage and processing.

Data is the new oil. If so, we need proper infrastructure to maintain its extraction.

Maturation

Many people associate blockchain with cryptocurrencies and cryptocurrencies with Bitcoin. Blockchain = Bitcoin seems to be a well-established pattern among those who remember Bitcoin's first steps.

Does such a correlation also apply to people who first encountered Bitcoin a year ago?

Bitcoin that was not as hyped as NFTs or Ethereum-killers in 2021, might have created a different association than Bitcoin in 2016 or 2018.

Just as people who remember the early days of crypto perceive Blockchain = Bitcoin and Bitcoin = fraud, those experiencing the early years of NFTs see them as worthless images used only for speculation.

Will NFTs be viewed the same way by those entering the market during the next bull run?

Without going into details, let's remember NFT is just a technology we are slowly learning to use. The potential of NFT is enormous, and as the tech becomes more widespread, we will discover its new use cases.

Blockchain technology is entering the mainstream, led by a maturing crypto market and projects offering users much more than sheer speculation. With each passing year, the term "cryptocurrencies" seems more and more inadequate for the market of digital assets and projects built on blockchain technology.

As the history shows, the term we use significantly affects our associations and how we view technology, phenomenon, or even a nation.

The crypto of 2018 is not the same as the crypto of 2022.

The level of projects' sophistication and the maturity of market participants make the future seem bright. The engagement in dire conditions like the ones we see during this bear market - Luna, 3AC, FTX - don't seem to decrease among buildors and those who are here to stay.

As markets evolve, new trends emerge, new narratives are built, and the beginning often takes place in times like this, during bear markets.

Let's stay active and discover the next big thing in crypto.

Let's be one step ahead.

Multi-Chain

By noticing the changes, we can determine the general direction of development, and by seeing the direction, we can spot future trends.

In recent years, the term "crypto market" seems to have become increasingly generalized due to the formation of particular niches such as DeFi, Data Storage, or Metaverse. While DeFi was losing momentum, the NFT niche began to gain recognition. The market has begun to branch into niches.

Sidechains, Rollups, Parachains, Subnets, and others (I'll refer to all of them as Layer 2) might differ in details, but their end goal is the same. You often hear the aim of Layer 2 projects is to offload the main chain or to move computation to L2. While those are true, there is much more to it.

The more transactions a blockchain has to process, the more congested it gets, hence the high network fees users have to pay. Now imagine scaling the blockchain by adding more and more dApps where each of those will only increase the number of transactions on the main chain. It's a road to nowhere.

That is why the idea of specialised chains comes into play.

Avalanche dApps can shift to their own Subnet if they grow too big to be processed on the main chain - DeFi Kingdoms was an example of such growth. Ethereum Rollups are built from day one to be independent chains like Arbitrum, Optimism or zkSync. Cosmos' zones are more independent than Polkadot's Parachains.

But those are the details we often get lost in. We lose the bigger picture.

By deploying Layer 2 chains, an ecosystem can freely branch into various niches, spread its influence, grow network effect and accrue value. As the crypto industry grows as a whole, Layer 2 will build its own ecosystems by introducing Layer 3 and Layer 4 projects. This way, an ecosystem can maximize its efficiency and reach a variety of niches and industries.

Whoa, whoa... You're telling me even though we don't have solid Layer 2, we are already building Layers 3 and 4?

Indeed. You have to be ready to scale from day one.

As a side note, we can see zkSync being a Layer 2 itself but having "Enterprise-Ready Blockchains" - Layer 3 - suited for the needs of mainstream companies. This way, well-known brands can enter the world of crypto and instantaneously become a part of the Ethereum ecosystem.

The mutual benefits of such cooperation might exceed our expectations.

That's how blockchains will build vibrant ecosystems with specialized dApps offering services tailored to users' needs.

There is one more thing about the Multi-Chain future that might revolutionize the whole blockchain space - Modular Scalability.

Just to be clear, the modular approach fits well in the narrative of multi-chain and seems to meet the expectations and needs of projects BUT it doesn't have to gain wider interest. Explaining the modular approach exceeds the level of this article so let me just say it allows for separation between the execution and data layer of the blockchain.

Huh?

Well... it means you can access the data you need and execute it on your chain. In other words, you are not limited by compatibility or differences in programming languages. Anyone can use it, anyone can benefit from it. The modular approach might sit in the middle of the multi-chain world, but it's a high-risk bet as Layer 2 solutions might be sufficient for the time being.

Metaverse

Metaverse - a word repeated like a mantra but misunderstood just as often.

What is Metaverse?

The same thing the Internet is today.

The Metaverse, or Web3, is an evolution of the current Internet. The main visible change will be a leap in the graphical quality and its transfer to the "real" world via ubiquitous NFTs - but not in the form we know today.

Metaverse will become the digital veil of reality.

The statement that it will be impossible to live without the Metaverse is the same as saying it is impossible to live without the Internet today. Yes, it is possible to live and function without the Internet. However, it is a significant impediment to living in modern society.

Just as world-renowned brands entering into the Internet era resulted in the Dot-com bubble, we will soon see a growing bubble in the Metaverse space of which the NFT image bubble was a precursor. We can already see articles covering famous brands entering the Metaverse world. Adidas, Nike, Prada, Disney... and the onboarding only accelerates.

What makes those brands enter the Metaverse?

The same thing that made companies join the Internet hype we know as the Dot-com era - a new space to find a potential customer and expand one's influence.

Advertising space is extremely valuable, and in the Metaverse, it seems endless.

But what if we won't ever hear about the metaverse again? Will it be the end of the trend?

Well... does the introduction of "Digital collectibles" by Reddit mean the end of NFT on this platform?

Yet again, we circle back to the idea of "proper branding". Don't be misguided by phrasing. Look what's under the hood and you shall find NFT technology, metaverse structures, crypto assets, and who knows, maybe even the meaning of life.

The Internet has become a backbone of modern society as it does not only serve the purpose of entertainment. The high-level use of the Internet is transferring and sharing data in various forms and ways.

The Metaverse will serve the same purpose and become the backbone of the society we will see in the upcoming years. The digitization process is only accelerating, leading to the further evolution of and within societies. The vision of new markets, new economies, and new clients is too promising to be missed. Not only for us, mere market participants, but also for world-renowned brands that have much more at stake.

"Move forward or stay behind" notion applies to them as well.

If you want to discover the Metaverse in detail, here's my article covering the topic - https://moderneremite.substack.com/p/the-metaverse-future-you-cannot-escape

Just before we'll close this section. Some of you might ask where is the catch if everything is so shiny and revolutionizing.

Well...

Attention is key, and you can already see it with TikTok going viral.

In web 2.0 if you weren’t paying for the product, you were the product.

In web3.0, if you don’t get paid for your attention, someone else will.

Gaming

Games are a significant part of the entertainment world, and as society evolves, entertainment becomes more important.

Only a handful of people can escape the overstimulation of daily life and apps competing for every second of our attention. It's easier to stay in the vicious circle than leave it.

The current state of blockchain games does not excite the average gamer, and it's not hard to see why. Present games of the crypto world do not offer anything valuable to attract a potential player and keep him engaged. Creating a game is not the same as creating an average DeFi project, where the main drive is greed. Crypto projects seem to forget about this little yet crucial difference over and over again.

Gamers are not trying to make money with games. Gamers are looking for experiences.

The state of blockchain-based games is not a surprise. The crypto-gaming niche is just emerging and taking its first serious steps in the growing world of Metaverse. As more and more activity will shift towards the Metaverse narrative, games will evolve and become its inseparable part. However, it probably will not happen in the first wave of Metaverse hype.

Will already established gaming studios join forces to build AAA games on blockchains? That might be a song of a distant future.

Will we see game studios incorporate blockchain technology with the "proper" branding of NFT? That's more probable.

So far, gamers have been rather reluctant towards NFT implementation, to say the least. It's not hard to understand their point of view because, with NFTs, games would see an inflow of greed-driven players destroying the positive experience gained from a given title.

Wherever there's money at stake, the sheer experience often becomes a second priority. Micro-transactions are openly despised by most gamers, and NFTs would see the same end result if nothing changes. Hopefully, as time flows, we will see the use of NFTs change to more user-friendly in form of Soulbound items, POAPs, and similar concepts rewarding a player for his true devotion, something that cannot be bought.

Games have become an inseparable part of the entertainment industry in the "real" world, and a similar trend will take place in the metaverse. However, for this to happen, the metaverse needs to grow its roots into the mainstream.

The crypto-gaming market is an undiscovered market that is yet to show what it is capable of. In meantime, it is crucial to look for signs of a change in the attitude, where the user will be treated as a potential "gamer" rather than a "customer of the crypto market."

Social Identity

The proliferation of the Internet has allowed for communication on a previously unparalleled scale, and the growth of the social media industry has only accelerated the changes.

Nowadays, our digital identity seems to be sometimes even more significant than the real one.

Portfolios on personal websites, LinkedIn accounts, and digitally-run businesses will only grow in importance. Numerous accounts on Twitter are pseudonymous and yet have a huge impact on what's going on in various niches. It seems you don't have to present your Social Security Number and ID to be trustworthy anymore.

Personal branding has never been as crucial as today - in the era of digital identities.

The Great Online Game Packy McCormick talks about is all about growing a reputation in a given niche, becoming an expert in your field. It has never been as accessible as it is today thanks to the Internet. However, that's not everything. Looking at Mr Beast's success and reputation he has built, is it even possible to value his personal brand? His recent burger place got the level of attention no one expected. What if he wanted to open a chain of such burger places? How successful can it become by being built on top of a world-renowned personal brand?

As Chamath Palihapitiya stated, the future world-renowned brands will be built on personal branding, and most of the advertising will be spent on the creation of personal brands. Cristiano Ronaldo, MrBeast, the Kardashians, Oprah... all of them gained world recognition and built their brands. Imagine how widespread the creation and importance of personal brands will be in the future.

The name should speak for itself; you are the product you are selling.

Okay okay... but Mr Beast is spending millions of dollars for a single YouTube video. Who can afford that?

Almost no one. Agreed.

But... there are two points I'd like to make.

First, there are multiple YouTube channels, blogs, TikTok profiles, and what have you that create incredibly high-quality content, gather an engaged audience, and seem to be winning at the Great Online Game by building their reputation and personal brands.

The second point is that with the use of AI today, the cost of content creation goes close to zero. With DALL-E, you can create your own graphics, and with tools like Lex, you can quickly create immersive articles.

That's not all of it.

There are Twitter tools that will auto-generate and post Tweets for you, and soon you will be able to create videos or whole movies just by talking to your phone. On top of that, let's imagine what other tools we will use in the near future that will be powered by AI.

AI-generated content is flooding the current market, and those who make good use of it can cut their expenses and time spent on creating content to a minimum. The cost of content creation is going close to zero. In fact, even today, with zero cost and a little bit of effort, you can create amazing content and build a personal brand in any niche you like.

Compare this to the past, when publishing your articles was only possible in printed newspapers and being featured on TV was the only way to speak to a larger audience. The transfer of information was very limited. The Internet has changed it.

However... all the social media we use to create our brands are of web2 origin.

Will today's social media like Twitter, Facebook, Instagram or Reddit transition to blockchain technology?

It is unlikely, but some of their parts will use crypto tech in one form or another. Instagram using NFTs and Reddit implementing "digital collectibles" are the first signs of the changes we will soon see. Not to mention Meta and its Metaverse plans.

However, it will be hard for companies established in the Web2 era to transition to the Web3 world while maintaining the same principles. It is very possible they will not gain widespread recognition in the Metaverse as their roots are coming from the "old" Web2 era, where the user was the customer, not the creator and owner. Just as Facebook is rather unwelcome in the crypto world, the place of Instagram or Twitter in the Metaverse may be taken by something new, something built from the ground up on Web3 ideas.

But what if we take well-established web2 companies like Twitter and try to bake them into web3?

Twitter, or Crypto Twitter, to be exact, is an inseparable part of the whole crypto industry. It's where trends are created, where narratives are built, and where people often get introduced to crypto. Twitter has already been a part of web3 in some way. That is why it will be easier for Twitter to sneak into the new digital era. I'm not going to describe all the theories and rumours as it has already been well-articulated by @CroissantEth in the thread you can find below.

In short, it seems Twitter aims at becoming something similar to WeChat. One app to rule them all. One app to navigate and live in the digital era.

https://twitter.com/CroissantEth/status/1587140066203369472

What about native web3 dApps?

Lens Protocol resembles Twitter in functionality but is built from the ground up in the spirit of the web3. Will it gain wider recognition and enter the mainstream? Hard to say as the mainstream still lives in the world of web2. Will it gain recognition from niche groups and thus enter the mainstream "through the back door"? This is much more likely.

Okay, but for shifting into the metaverse we will need not only platforms to express ourselves but also digital IDs.

Here we come to the projects like Ethereum Name Service - ENS - and their path to serve the purpose of digital IDs. Even today, instead of signing in with your public key, you can use your ENS name to enter various sites, send and receive funds or even enter events where a ticket is stored on your Metamask.

Imagine the future where your digital ID resembles your reputation. Imagine that by holding Soulbound tokens expressing associations with particular groups, you will be granted access to their DAOs, closed communities, or even physical events. Social Identities built in the digital space might - and I believe will - become more significant than the real ones.

Staying pseudonymous will become a standard.

Zero Knowledge

During the recent bull market, Ethereum implemented its first Rollup projects.

If you're not familiar with the concept of rollups, these are projects whose goal is to offload the main chain by shifting the computation to Layer 2 blockchains, i.e. rollups.

The first Rollups were designed as Optimistic Rollups, or Fraud Proofs if you like - Arbitrum and Optimism being the two largest projects by TVL, holding 52,63% and 28,52% of TVL respectively according to L2Beat. However, Optimistic Rollups have their limitations and drawbacks - some quite significant - that could make future adoption much more difficult.

On the other hand, as it is with technology, tools might be developed that will minimize the limitations and ease drawbacks. Will it happen? It might, but if the industry shifts to Zero Knowledge... will there be enough incentive to do so?

Not long after the introduction of Optimistic Rollups, the crypto space got hyped on the Zero Knowledge technology, which is extremely complex and relatively new. However, Rollups based on Zero Knowledge technology allow for much more advanced and complex designs.

One can see a growing belief that ZK Rollups are the future of Ethereum or even its end-game solution.

Before we begin, let's establish four main competitors in the race for supremacy.

zkSync and StarkNet aim for scalability.

Scroll and Polygon aim for EVM compatibility.

It is crucial to note the differences are not implying whether the project is better or worse. The aim is to show the trade-offs made by the teams having to find a balance between Performance and Compatibility. To illustrate the differences, let's look at the chart made by Vitalik and posted on his personal blog.

Now let's get to the details. What makes ZK Rollups so great?

Without going too deep into technicalities, Zero Knowledge solutions allow for greater safety via creating so-called "proofs". In contrast, Optimistic Rollups assume transactions are correct and then proceed to a phase where malicious actors can be caught. Hence 7-days-delay while transferring our funds back to Layer 1 - Ethereum, from Layer 2 - e.g. Arbitrum.

In the case of StarkNet, a single proof might contain 12,000 - 500,000 transactions and is created rather swiftly. Not to mention there is no delay between sending funds between Layer 1 and 2, or the delay is negligible compared to Optimistic Rollups.

Why such a vast range of transactions, you might ask?

The range depends on the complexity of transactions processed on the blockchain. This way, Zero Knowledge Rollups open doors to including more complex transactions in the Ethereum ecosystem. In case you are not aware of the implications, in the next section, you'll find out how DeFi might evolve thanks to the introduction of ZK Rollups.

Okay, now imagine if we took those compressed proofs and made proofs out of them. It's like decreasing costs by another x1000 a while after we made a similar compression.

It's called Recursive Prooving and is being built by StarkNet.

Now add scalability of Rollup ecosystems by introducing Layer 3 and Layer 4 projects which is not only possible in StarkNet. To be more precise, it's something zkSync is working very hard on, and the fruits of their labour will be unveiled in the near future.

Without knowing the details, we can already establish they are working on "Enterprise-ready blockchains", i.e. Layer 3 solutions to boost their ecosystem growth. On top of that, those projects are said to be quite significant mainstream brands that have already shown interest in joining forces. If this happens to be true and zkSync onboards world-renowned brands into the Ethereum ecosystem through their own, it's a huge win for both.

A little mention of two approaches to ZK technology - STARKs and SNARKs. It will be short and easy, I promise.

The whole idea of Zero-Knowledge proofs is that you can prove something to be true without revealing the content. Imagine you want to prove that you have keys to someone's phone without explicitly showing it.

You can take the phone, go to another room, change the wallpaper and then return. The person knows you have the access without you having to reveal how the change was done.

SNARK - Succinct Non-Interactive Argument of Knowledge

STARK - Scalable Transparent Argument of Knowledge

Just by reading the full names, you can see the difference. While one of them needs a trusted environment (SNARK), the other does not, as it is transparent. However, with being transparent comes a little bigger proof size and higher gas requirement - some say more than x3 compared to SNARKs.

Another difference is Post-Quantum safety or Post-Quantum resistance. While STARKs are quantum resistant, SNARKs are not. However, some iterations of SNARKs are said to be quantum resistant, so maybe we will see both approaches being fully resistant.

It's hard to say which approach is better, as both have trade-offs. My point here was to show that by saying "Zero Knowledge" someone might mean different things.

Overall, Zero Knowledge technology can revolutionize the way we use blockchain, not only in crypto. That is why taking a closer look at projects building with the use of ZK tech and picking future winners might turn out to be worthwhile in the long run.

DeFi

Every market needs liquidity to develop and thrive.

The crypto industry has changed dramatically since stablecoins were introduced. It opened the door to broader liquidity to flow within and to crypto.

DeFi Summer was the evolution of stablecoin utility and another step in providing the whole industry with higher liquidity. Indicators like Total Value Locked - TVL - went through the roof, lending and derivative protocols were gathering insane valuations. Not to mention farming protocols where the only drive was greed, and the music played as long as there was liquidity - if you hold for too long, though luck.

With recent events like the collapse of Terra Luna and its contagion across markets, the whole fucked-up story of FTX and Alameda, and the overall number of scams across the space, the awareness of being the owner of your funds, i.e. self-custody, increased.

Not your keys, not your coins. The slogan repeated by many but applied by few.

The next DeFi adoption wave seems to be centered around the following points:

• DEXes offering futures, perpetuals, and other trading tools

• DeFi Hubs

• Precise DeFi protocols using Zero Knowledge

• Easy Onboarding

• Wallets + DEXes underneath - you swap and don't know it's going through Uni e.g.

Let's go through each of those.

DEXes offering various trading tools aim at taking the major advantages of CEXes off the table. If you can maintain self-custody of your funds and still be able to use trading tools, CEXes seem to lose their importance. Additionally, DEXes do not require KYC and AML procedures which is more than important for some market participants. Also, by evolution in onboarding protocols people will be using DEXes without even knowing what those are - users will only see a well-designed UI, and underneath we will have multiple DEXes and other tools.

DeFi Hubs can be seen as liquidity aggregators helping ecosystems to provide deeper liquidity, instead of having it scattered across various dApps. Imagine having a single project in the ecosystem where most of the liquidity is stored allowing for easier liquidity management within the ecosystem for both, users and protocols. I covered the idea of DeFi Hubs in the article here.

Implementation of ZK technology in DeFi protocols will allow not only for cheaper fees, and by cheaper, I mean orders of magnitude cheaper, but also more complex computation. In return, protocols will offer more precise tools like much higher leverage and very precise oracles. Also, the protocols will gain every benefit of using ZK technology, briefly discussed in the previous section.

In the near future, we might also see trading protocols where transaction fees do not exist because costs will be negligible.

By easy onboarding, I mean protocols enabling seamless conversion of fiat money into crypto - not via offering synthetic assets, but 1:1 tokens. Also, protocols tying together purchases in the real world with cryptocurrencies will boost the overall adoption and add additional liquidity to the market. It is crucial as one of the major bottlenecks is the sheer part of entering the market - it might seem too complicated for some or too risky for others. The aim for particular dApps is to show that it is as simple as using any mobile app. An example of such dApp might be Nested, where users can easily convert fiat money to crypto, create and manage their portfolios, as well as copy other people's portfolios. <FYI I am not partnering with the project, I just like their idea>

Coming back to the overall view of the DeFi niche, protocols will try to be more transparent after all the collapses and personal tragedies that took place. Even today, we see the evolution of CEXes via the Proof of Reserves standard that might become solidified in near future.

As a side note, Vitalik has recently published an article in which he discusses different approaches to Proof of Reserves, one of which - allegedly the most beneficial one - is based on Zero Knowledge technology.

The truth is, as DEXes will mature and offer more robust tooling, CEXes will have to fight for high-value customers who will not be so easily blinded by fake slogans. The next bull run will unveil which protocols have solidified themselves and offer high-quality services, and which ones are just passers-by looking to capitalize on retail's naivety and greed.

Scams will take place, greed will take its toll, fake valuations and opportunistic projects will rise and fall. It's an inseparable part of every market involving money or power. However, as crypto evolves and matures, high-quality protocols will accrue value from those mature enough to see it - including smart money and long-term investors from traditional markets.

The market matures along with its participants, and the evolution of DeFi will be a sign of the changes.

Closing Thoughts

Continuous evolution is changing both the world and societies. From one generation to the next, the changes seem to accelerate. How will society look in 10/20/50 years? It's hard to predict, but it will be very different from the one we see today.

Will blockchain technology dominate the world of data processing and storage, just as digital databases previously dominated physical folders?

This is very likely to happen, as we can already see the limitations and drawbacks of digital databases. Years go by, and along with the evolution of society, more advanced data processing mechanisms are needed to meet the needs of individuals and institutions.

In this case, we shall take a closer look at the trends emerging in the crypto industry as it is the cradle of the blockchain revolution, the early days of which we see today.'

Crypto is changing, evolving, and developing.

Crypto is here to stay.

Let me leave you with some idea you might not fully get at first.

There are two kinds of trends on the markets.

The ones driven by hype and fake narrative built only to bring profit.

The ones created due to structural needs of the industry.

Try to differentiate trends you see and learn to ride both.

If you enjoyed the article, find me on Twitter - https://twitter.com/ModernEremite

Till next time!

~M.E.

The following article is based on the author’s own views and predictions. The examples considering the future shall be taken with a pinch of salt, if not the whole spoon.

Got it?

Okay, so here we go.

The city of the future is abundant with humans but scarce with humanity.

We are told we live in information bubbles, but what about the bubbles of our own lives? Do we look at people and wonder about their stories, struggles and hopes? What were their dreams before reality entered the stage? Do we really care about others, or is it just a façade to feel we are decent?

People pass each other on the streets, busy with their own lives, their problems. Every person you see feels like an NPC, a shallow 3D character that just happens to be at that place in the very same moment as you. As if the simulation rendered them because of your presence.

<Don’t fall into a solipsism-view of the world though as it is a very dangerous path once entered.>

Do you wonder what those people's stories are? What brought them here?

Something catches your attention, a logo on a T-shirt, a silhouette, a hairstyle, a behaviour or a gesture. A detail you don’t remember the moment you enter your office.

The Meeting

David just came back from school and went straight to his room. Threw his bag on the bed and got ready to meet his friends. Today they are meeting in his city, so he put the glasses in his pocket and went outside. It seems he was a bit late, and everyone was waiting as he quickly realized.

-Sorry guys. I missed my bus back home. So are we going by bus or by subway? We’re heading city centre, right?

• Yeah. I’d try out the subway as there are only buses in my small town. – Natsu replied.

• Okay! We’ll go through the park so enjoy the views! Hope you’ll like it. I see everyone’s got the vision. Let me know if something catches your attention so I can give you a closer look.

David bought one ticket with his glasses, as those were constantly connected to his smartphone, and made a reservation in his favourite café.

All four headed to the park to enjoy the stillness of nature and take break from the city’s haste. David saw his friends’ avatars as if they were walking alongside him, while his friends saw the park as if they were with David. The distance was not the obstacle, nor was the fact they all spoke different languages.

This evening was among the best as David finally got to meet his friends again after the last summer camp they met for the first time.

The Hack

Marcus woke up before the alarm chip raised his cortisol level to effectively wake him and get ready for another day of corporate work. After his morning routine, he looked in the mirror to check the weather and stock prices.

The new hue of his iris still seemed to surprise him every time he saw his reflection. At least it’s far more convenient than the glasses. – he thought.

Suddenly, the alert got into his field of vision. Trading bots seem to have been maliciously overwritten with a different algorithm, and no one even saw it.

Those guys are getting more precise day by day, and even the latest Purple team couldn’t stop them; I’m running out of options. – Marcus pondered.

He immediately called a meeting with his staff in the virtual office as the new eye allowed him to instantaneously enter the corporate VR space. Everyone was ready within 30 seconds to make a report and present the relevant data.

• This time… it’s even more complicated. – Marcus gasped as dozens of holographic files filled the virtual office.

• I want a detailed analysis within an hour. – he ordered and cut the connection.

The coffee was ready as he sat with his wife to have breakfast.

How’s your treatment in Singapore? Maybe I’ll find time to visit you next week. – Marcus calmly stated and touched her hand. The trembling seems to be remitted again, but the hand was unnaturally cold.

They finished breakfast in silence before the nurse asked to cut the connection.

The Metaverse – A Short Explanation

What is Metaverse? It is one of the most significant concepts of the future society people often get wrong.

The Metaverse is not some isolated digital world we will live in or get lost in, forgetting about reality. It is possible though, but it will be just a small part of the Metaverse concept which is not so different from the games and apps we have today – the graphics will just switch to VR/AR, and here you have the “futuristic” metaverse.

So if this digital world is just a small part, what is Metaverse then?

Metaverse is the evolution of the Internet we know today. That’s it.

Don’t fall for catchy words or the view that Metaverse is just entertainment. It is far more.

Metaverse is not something new. It is the amalgamation of all the apps, services, knowledge, and entertainment of the present Internet with improved visuals and AR.

To prove my point, let’s take a quick trip to China for a moment.

WeChat

How much do you know about WeChat?

It’s a Chinese version of WhatsApp (2009) launched in 2011.

Well… it’s just another “Made in China” story of stolen ideas you might say.

Yes and no; depends on how well you are familiar with Chinese history and ideology.

The concept was similar at the very beginning, but as with every other concept and idea, China took and sinicized it – adapted it to serve the culture and people of China.

China and its society sinicized not only apps or mechanics. A similar process was applied to foreign dynasties from Mongolia (Yuan dynasty) or Mangurian (Qing dynasty), which over the course of years and decades, adapted to the ever-present culture of China.

The ideas and technologies of the West were also sinicized. All that was taken stopped being a “foreign” addition and became a part of the Chinese world after being modulated, reformulated and redesigned.

WeChat is like WhatsApp, or at least was at the very beginning, but quickly added far more utilities to become the super-app - One to rule them all.

Suffice to say, WeChat implemented voice chat and videoconferences in 2013, while WhatsApp provided such services three years later – in 2016.

Within two years of its inception, 2011-2013, it gained 300 million users. That’s not a lot you might say.

You will be kinda right, but I will respond by saying it is almost the population of the US, and it was achieved within two years. A decade ago. The Internet and the flow of information were quite different back then.

As of Q1 2022, WeChat is said to have 1,288.3 billion users.

With the use of WeChat, you can talk with your friends - that’s obvious. But you can also book a table at your favourite restaurant, make an appointment at the doctor's, call a taxi, order shopping to be brought to your doorstep, send money to your friend and far more.

You can live your digital life to the fullest just with the use of one application.

That’s what the backbone of the Internet looks like – social connections, services and data all available in one place. All you need is the improvement of visuals, and voilà – the Metaverse becomes real.

A detailed description of how WeChat monopolized the services industry in China is presented in “AI Superpowers: China, Silicon Valley, and the New World Orders” by Kai-Fu Lee.

The Metaverse = The Internet V3

Imagine what is possible with the Internet today and how will your life look without it.

Imagine IN DETAIL how different will it be?

That’s how significant the Metaverse is going to be in the upcoming years and decades.

Metaverse will focus mainly on the graphical aspect of the Internet. Augmented Reality (AR) will be implemented in many fields, and the usage of Virtual Reality (VR) will become broader. Therefore, Metaverse will just add another layer to the Internet of today – the graphical layer.

As if the graphical veil overlaid the city you live in, allowing you to access the service or data with just one click, one scan, one look.

We will experience the revolution in the field of immersion; not only in entertainment but in every aspect of the graphical world added on top of the real one. However, beware of the word “immersive” as some might use it as a fancy word for “addictive”.

*The following is an excerpt from the article titled “The Future of NFTs and Metaverse According to Punk 6529” which you can find HERE.

The real metaverse is the Internet we will see in the near future. The quality of visuals will get much better, presenting users with a wide array of new possibilities. Conference calls might be a good example as nowadays most of us have Zoom calls where we see each other through camera lenses. The improvement of visuals will allow us to use holograms and engage in conversations as if we were in the room with our interlocutor.

Augmented Reality will be with us permanently. During our conversation, we will talk about something and have it displayed in front of us. The glasses and other accessories enabling AR access will become very handy and user-friendly, thus becoming almost inseparable from other daily life items.

The contrarian argument might be that people are not going to wear glasses or similar accessories all the time. Yet, aren’t we having our smartphones with us 24/7? How many of us claimed not to carry mobiles in pockets or bags all the time?

One thing worth mentioning is the fact that people associate “Metaverse” with a closed and separated digital space - hence the assumption there will be multiple "Metaverses". Can we say there are multiple internets today? Well… yes and no.

To clarify… I’m not talking about geopolitical fractures and divisions but the multiple niches and layers of the Internet.

My take is that we have major services and places of interest along with various niches and plentiful subgroups, all linked into one entity – The Internet. A similar thing will happen with the Metaverse in the future as the basic principles stay the same.

Ash durbatulûk.

The Education in Metaverse

How did the Internet change the education system?

How did the Internet change the way we learn outside schools?

Of course, the answers will vary based on the educational system of the country we live in. Nonetheless, we might say the Internet revolutionized the way we learn.

The COVID phase accelerated the transition into a remote working/studying/learning setting. Whether the experience and quality of remote learning were positive or negative is open to discussion and very subjective. Nonetheless, the base experience of remote learning has been gained, which makes it easier now to say what was missing, point out advantages and try to come up with solutions to all the problems encountered.

Now let us think about how the addition and expansion of the visual aspect can impact the way we learn. It might not be the revolution, but it will be a great upgrade for sure.

Virtual classes and vast spaces open to exploration. Infinite possibilities of creative presentations on various topics, completely new ways of learning and understanding things on deeper levels and much more will change the way we educate children and adults.

Imagine going to Chemistry classes, where everyone will be able to perform a variety of different experiments in a safe environment. The other example might be technical classes, where we can break things into parts and analyze them from different perspectives. It’s like making Unity or AutoCAD into Virtual Reality.

What about Biology and learning about the human body in VR? Going into the veins and lungs, looking at how muscles are built, how electrical impulses fire out in the human brain. The ability to zoom in and out and play with models will bring immense benefits to education as the best learning happens through play.

https://twitter.com/Jason/status/1572985530996133889

The threats and disadvantages such a revolution might bring, of course, exist. Examples like social alienation or greater division based on income are the first ones to think of, but it’s crucial to say those do not have to happen if the implementation of Metaverse aspects will be properly designed. One thing to note is that those divisions and threats have been with us from the very beginning. The harsh truth is that socio-economical divisions were, are and will be a thing.

Life is not all unicorns and rainbows; deal with it and move on.

The Importance of Fashion

What is fashion?

Why do we care about the clothes we wear and the way we look?

Is it any different in the virtual world where we create our avatars and digital personalities?

The inner need to express ourselves externally often happens via fashion and… it is not only a human thing.

Does anyone remember Julie?

A chimp that in 2010, began “wearing” a long-stemmed piece of grass in her ear was thought to be an anomaly. Things changed when other chimps began following the new “trend”. Seems like chimps’ fashion begins to flourish.

An interesting phenomenon has been spotted among users on platforms like VR Chat, where a lot of people spent a significant amount of time looking in the mirrors. It might sound silly, but the issue of real-time mirrors in games has been long-discussed as hard to implement due to technical reasons. However, the moment we got mirrors in games, people began to use them just as in real life. It was easier to see how our avatar looks and is seen by others. Now the time spent personalizing the avatar to bring to life the vision we have in our heads seemed more “natural”.

Another step towards full immersion.

Humans are designed by nature to live within societies, to interact with others, to create relationships and become a part of a group. We seek acceptance and a sense of belonging whether we are aware of it or not – and since we are not aware of many things happening in our unconscious, many might argue here that everything they do is a conscious and logical decision.

If you think the same rules do not apply to virtual reality, you are profoundly mistaken.

We are seeing huge brands like Adidas, Nike and Prada entering the world or Metaverse. Is wearing Prada in real life any different from wearing original Prada in the virtual world? Does it elevate your status in the same way? I’d risk stating there are no differences as it shows your status as well in Metaverse as in real life.

Scarce are those who do not wish to climb the social ladder.

How about a situation where you buy a piece of Nike clothing in real life and, additionally, you get an NFT version you can use in Metaverse?

Or in reverse, when you buy a Nike NFT and "burn it" to get the real hoodie, or just get a hoodie shipped as an addition to the NFT?

How does that impact sales and the spread of fashion in the digital world?

The Music

The NFT craze we have seen in the last months was something not many of us expected if anyone.

Since humans are predators from the biological point of view, our most developed sense is vision. Even the fact that our eyes are set in from of our heads allows us to focus on a single object, whereas prey animals like horses have eyes set on the sides of the head to allow for greater scanning of surroundings to quickly detect the predator.

Therefore the fact that the first NFT mania was focused on the visual aspect should not be surprising. However, what will be the next surprise? Will it again be focused on our vision?

Throughout human history, we have had two major factors shaping cultures and societies, visuals and music. While we live in the abundance of visual and musical stimuli today, I’d risk stating that visuals prevail in pop culture and the Internet.

So where is the music? Did we forget about it?

If you are paying close attention to the crossroads between the world of Internet communities and cryptocurrencies, you’ll see that in the aftermath of visual NFTs hype, part of the interest went to the music industry. The first instances of music NFTs were not so popular, but they were present; it was not only the idea but became a product, and that’s worth noting.

Just as the visual and ownership NFTs - like Sandbox parcels – grew in popularity, people began personalizing them and using those to promote themselves and build their digital reputation.

Parties or social gatherings in places like VR Chat are not unusual things. People meet, engage in conversations or just hang out together. In the Sandbox, we have seen digital parties hiring real-life DJs to provide top-quality music to whoever decided to come or to chosen ones during closed parties.

But that’s only live music. What about the music industry as we know it?

Well… Kings of Leon, 3LAU and many others released their albums as NFTs or worked in music NFT-related projects.

What about the Warner Music Group joining forces with OpenSea to extend fan communities in Web3 for WMG artists? It would not only allow them to reach a wider audience but also equip them with the tools needed to host limited-edition projects, drop products and personalize the engagement.

Yeah, yeah… it was just using the hype to get some money and reputation. It might have been, but note we're in a bear market now. On the other hand, it proves a point as there was a demand. Whether the demand for music NFTs will come back with a huge splash, we don’t know, but music plays a crucial role in our lives.

Why shouldn’t it play the same role in digital lives?

The Entertainment

How much of your life is spent on entertainment?

How can we even define entertainment in today’s world, to begin with?

It is such a broad industry, with plentiful different niches finding their way to every aspect of our lives. There is no amount of money people won’t pay to feel better about themselves, to live a “better” life, to escape reality, or “live to the fullest”.

Over the recent decades, entertainment grew to become of the biggest and most influential industries we have ever seen. The introduction of every new medium led entertainment to grow even bigger, and now whatever medium you think of, it is full of commercials, advertisements or other, more sublime forms of advertising aimed at providing new forms of entertainment.

The radio, television, personal computers and many more introduced either new or “upgraded” forms of entertaining the user. The Internet was a game-changer in the field of entertainment, as over time, it allowed entertainment to sneak into every part of our lives.

You might think of movies, games, books, and music as the present forms of entertainment.

Okay, but every one of those branches into different, modified forms. Classical books became e-books, audiobooks, interactive books. Movies branched out to create TV series, interactive series, and the whole YouTube video experience, just to name a few. I’m not even going to touch the games as it is so vast area it can be anything.

The integration of the Metaverse into our lives will not be a revolutionary event. It will, and already is, a slow evolution most of us don’t even see. The further the metaverse implementation penetrates the present entertainment industry, the more immersive it becomes.

The more immersive the entertainment, the more people will want to engage in it. Some up to the point of truly living a second life in the digital world - which does not have to be a dystopian vision of social alienation.

The Internet and social media allow us to create and develop our careers as well as build our reputations. LinkedIn, Twitter, Fiverr, Skillshare, and many more are places where employees are found, networking is made, and pre-contract discussions are held.

The Metaverse will bring even more options to enter the Great Online Game. Building our social status, reputation, wealth or even meeting new people and hanging out in the digital world will be just the enlargement of the life chessboard. The number of possible moves, tactics and available strategies will increase. Just as it has increased with the inception of the Internet.

The skill of decision-making seems to be more important than ever.

Imagine trying to build your social brand without the use of the Internet or limiting yourself just to the real world. It is possible, but you might miss numerous opportunities.

If we as individuals don't want to miss opportunities, what about world-renowned companies?

We all are familiar with the Disney franchise and its products. While the trend of engaging in the Web3/Metaverse niche seems to spread among various industries, entertainment appears to be a prominent example. Disney recently partnered with Polygon (MATIC) project as a part of Disney's Accelerator Program. It's worth noting the partnership does not have to revolve around NFTs, as Polygon is a vast ecosystem capable of providing various utilities.

Not to mention Polygon has partnered with Reddit, Meta (Facebook), Starbucks and many more...

That's quite the portfolio.

Coming back to the issue of entertainment in Metaverse or digital hermits, I’d like to point out it does not have to be a negative thing.

The term “social” began changing with the inception of the Internet when social connections broke the barriers of distance and physical presence. Imagine people who feel awkward and stressed in social settings. Let’s add the introverted nature and low social skills on top of that. It’s hard to find someone like you in the real world with whom you can really connect and create a true friendship. It’s a lot easier to find such people on the Internet, where you feel more open and unreserved towards others.

Is such a friendship worse than the “standard” one? Isn’t calling and texting our friends the same thing? The only difference is the social interaction in the real world, but maybe not everyone feels comfortable in such a setting? Maybe some people prefer to connect with someone else’s mind and thoughts instead of having a physical meeting?

Blockchain Games

Let’s begin with a question.

Is it necessary for games to use blockchain technology? No.

Does blockchain technology change the way games can be built? Yes.

The introduction of blockchain technology allows studios to create game ecosystems which can be easily connected to other ecosystems, marketplaces and social media, allowing users to transfer game reputation and developments to the outside world.

The creation of bridges between gaming ecosystems might lead to creating an incredibly vast game with a plethora of different niches, mini-games, worlds and spaces designed to allow everyone to meet and spend time together – just as we have seen in the Ready Player One movie from 2018.

To illustrate my example, let’s imagine you are an avid player of The Elder Scrolls Online. A friend of yours is more into classical World of Warcraft, so the vibe isn’t so much different from the third member of your party, who is very much into the Star Wars universe and spends hours in Star Wars The Old Republic. There is also a new member of your party, but he is suspiciously addicted to Genshin Impact, so you decided to keep the distance until things will clarify.

Nevertheless, all of you are limited to your own world and cannot play together or even meet as your game avatars. Imagine what would happen once all such gaming worlds will be bridged, allowing players to meet in some “Leisure District” or “OuterSpace Inn”.

It would change lots of aspects such as the way games are designed, in-game economies and reputation mechanics, and the way people would spend their time in the digital world would lead to the evolution in social contracts of the digital world. It is impossible to stress enough how big of a game-changer it would be.

Additionally, it might bring decentralization benefits to games; but this can be hard to achieve as the vast majority of blockchain games and gaming ecosystems are centralized in some way.

The Collapse of Auction House in Diablo III

While trading for real-world money was a standard in World of Warcraft for a long time, it was not so established in the Diablo series. Additionally, the end-goal and game mechanics are different, but it’s just another reason why the marketplace wasn’t a good idea, to say the least.

Diablo III allowed users could buy in-game items with in-game currency earned while playing. Wherever there is a limitation to buying things, the black market emerges. The possibility of buying in-game items for real money became quite widespread, which means nothing else than cheating through pay-to-win in a game that has never seen such an incentive before.

The Auction House allowed players to buy items with real money. The bottleneck of buying items on the black market ceased to be the issue. It changed the game significantly by changing the core philosophy and mechanics.

If something works out for your neighbour doesn’t mean it will work out for you.

If you play the game to get the better loot and the only way is to devote yourself to becoming better and better over time, what happens when at some point someone comes having far better items than you while being new to the game?

Imagine working years to become a manager, and just as you’ve earned your position, a post-graduate without any experience comes and says he is now superior to you because his daddy bought him a higher position.

• Know your place, fool. – he says as you are trying to not let out any emotions whatsoever.

Is it frustration that would fill you? Is it something else? I bet it wouldn’t be a positive emotion – at least in my case.

Don’t get me wrong, we have a variety of games with micro-payments or pay-to-win mechanics. It’s not a bad thing if it’s something you wanted from the very beginning and players are aware of it.

But what happened in Diablo was changing the core incentives of the game. It was against the Diablo player ethos. It was against the unwritten rules.

The idea and implementation of Auction House quickly collapsed. The Diablo franchise lost not only devoted players, but also intangibles like trust and status that cannot be easily regained.

The story of Diablo is here to show you one thing – using real-money assets in the game doesn’t have to be a bad idea if it is there from the beginning. It allows players to earn money by doing what they like – playing games. However, the rules and incentives have to be clear from the very beginning to create a solid community playing the same meta-game.

The incentive has to be established from the beginning not to confuse players and set the in-game economy. Otherwise, the potential player will be confused when rules and mechanics change. It is not confusion that leads to dedication.

We don’t want to play games where rules constantly change, do we?

The Revolution – Non-Fungible Tokens

Most of you associate NFTs with pixilated profile pictures, Crypto Punks, Bored Ape Yacht Club (BAYC) or some digital picture with no logical use or value.

Fair enough.

Why do people buy paintings or posters to hang on the walls? What is the logic behind it?

I am neither an art critic nor a scientist, so I can only assume certain things and construct a thesis open to public or private debate.

To me, it all comes down to the question of what is art and what role does esthetics play in our lives. Why do we value it so much, and why throughout the centuries it played such a vital role?

Non-Fungible Token standard, also known as NFT, is a technology that not only allows us to expand the accessibility of art and esthetics in a digital society but also gives us the possibility we didn’t have before to such an extent.

Nowadays, you can visit Fiverr and ask an artist to create digital artwork to use it as a background on your website, as an avatar or just post it to share your taste in fine arts. You can visit ArtStation and look for artists you would like to hire or purchase their paintings available for sale.

The outcome is you have the original piece of art or design suited to your business or personality. It is very personalized, but top-notch artists don't have time to work on your background picture or logo.

Other possibility is you can purchase an NFT you like or the one that perfectly suits your style and the sublime message you want to share.

Okay, but I can just copy such NFT, save it and use it on my profile.

Well... you can also buy a forged painting or a substandard copy of the Mona Lisa to hang on your wall.

It looks like it, but it doesn’t feel like it. It is not the original, and you know it deep down, just anyone you show your painting to. It’s not an issue if you are fine with having a copy and you do not brag about it being the same quality as the original – then things might get strange.

But if you copy/save NFT and brag you are the owner…

The fact of having the original artwork is hard to value – It’s intangible. It’s emotional. It’s social.

What are intangibles, you might ask?

“Well… those are the things we can grasp with our minds but not with our hands. The United States, the Statue of Liberty, the US flag, the land of free and the home to the brave, the American Dream; all those are social intangibles. How can we even ascribe value to it? What would be the fair price?” – an excerpt from “The Future of NFTs and Metaverse According to Punk 6529” by Modern Eremite.

It all might sound like some mumbling of a deranged individual, but NFT technology is in its infancy, and we don’t even know how much potential it holds. We have barely scratched the surface of what is possible, and it is not something we will find in labs, writing code or doing mathematical calculations.

The use of NFTs will be discovered and created within social groups and within societies. We only have to be attentive and sensitive to the most subtle signs of something new emerging.

And above all, remember that NFT is not just about visual arts and pictures. It is far more than this. Just as a wheel is not only applied in a car but has thousands of different usages.

The years will pass, and you will not even be aware of the NFTs you use or see on a daily basis as they will become consumerized. It will be baked into society as the Internet.

Various tickets, billboards, advertisements, loyalty cards, digital stickers or even posters you can use to decorate your house will bear the NFT tech inside.

With every new medium or technology, there comes a moment we stop seeing it, stop thinking about it. It just is with us every day. It is something we get used to over time.

Like the Internet. Like the smartphone. Like the running water and electricity.

People can and will get used to everything over time. It’s just the way we cope with reality. We adapt and go forward.

The Future Marketplaces

OTC Trading, Decentralized Exchanges, Centralized Exchanges, Marketplaces like OpenSea or LooksRare, the evolution of marketplaces and exchanges is stunning. However, evolution happens when there is the demand to serve people the best experience possible. To make it easier, smoother and faster to make a transaction. To become a user of the given platform.

Marketplaces are one of the most significant aspects of any market. The easier it is to buy and sell, the faster growth happens. The easier the onboarding process, the faster consumerization occurs.

It’s obvious when we think about it but so overlooked in daily life. Marketplaces became something we take for granted while those mirror the demand of the public.

With the beginning of the NFT craze, when the demand skyrocketed, the need to provide potential clients with the highest quality service became a priority as the potential client was not a technical person. The potential client was someone who has never seen or used any cryptocurrency or Metamask before.

That’s not an easy issue to solve when you are entering a new market, where clients have a different background than the one you are used to. And so we have seen the emergence of various NFT marketplaces and the evolution of those that have been here for quite some time, like OpenSea, founded in 2017.

However, the NFT mania was mostly about visual NFTs and collectibles. What about the future niches NFTs will find their way to?

What about music NFTs? Written NFTs like the ones on Mirror? In-game and Metaverse collectibles? Fashion NFTs? What about those NFT concepts we cannot even come up with today?

How the issuance and demand for those will change marketplaces?

How different and well-thought will be the onboarding of new users?

How perfected and sublime will be the experience of purchasing NFTs?

How will it impact the concept of Metaverse and Digital Life we all will live in some way?

The Metaverse – Is It Already Here?

Metaverse is seen as a futuristic concept, the distant future we may not live up to see.

What if Metaverse is already here, and we haven’t seen it because of the slow pace and organic changes?

We tend to overlook slow changes if we are not cautious and attentive. That’s why we find ourselves in some dark places, and we cannot exactly say how it happened. We haven’t seen the process. Now we have to face the results.

That’s also the case of how we perceive others' success. We look at the achievements, not at the process.

We see the Metaverse as the future where we have to carry devices everywhere we go. Constant connection to the Net, ever-present commercials and sensory overstimulation are ever-present features. People live in their life and information bubbles, leading to being locked up in their heads. And above all, spending a lot of time in the virtual world.

Look around you.

The smartphone you carry everywhere you go, constant connection to the Internet, overstimulation due to notifications, new YouTube videos, Netflix series, and information bubbles we live in. Spending time thoughtlessly scrolling through TikTok, Instagram, Reddit…

We focus so much on details that we are missing the bigger picture.

Till next time!

~M.E.

<Lead image made with DALL-E>

List of References:

1. https://nftnow.com/music/top-music-nft-moments/

2. https://zipmex.com/learn/nft-music/

3. https://www.statista.com/statistics/255778/number-of-active-wechat-messenger-accounts/

4. https://www.thedodo.com/for-the-first-time-chimpanzees-605888880.html

5. https://www.bloomberg.com/news/articles/2022-07-15/polygon-crypto-jumps-on-disney-selection-for-accelerator-program

6. https://egamers.io/starbucks-partners-with-polygon-for-its-web3-experience-starbucks-odyssey/

7. https://blog.bybit.com/en-us/post/polygon-nft-partnerships-with-meta-reddit-smartphone-integrations-blt32a8c8feae4132cd/

8. https://www.wmg.com/news/warner-music-group-and-opensea-join-forces-to-expand-web3-opportunities-for-artists

Can language influence the way we think?

Can it change our perception of the world?

According to the theory of linguistic relativity — yes, it can.

The Language

We will get a little bit theoretical here, but I will get to the point soon, I promise.

Each of us lives our own life. Everyday routines, people we meet, things we experience, the music we listen to, the food we eat, the culture that surrounds us, or even the way our apartment is set up. Every little detail impacts our lives in some way. Everything we encounter or decide to avoid shapes us as humans.

Considering all of the above, if I would like you to tell me exactly, with every detail and association, what comes to your mind when you think of, e.g. snow? I bet your idea will differ from other people’s answers, maybe not a lot, but it will not be the same thoughts they had. Even a common thing such as a *car *will show us how differently we perceive and think about the world, looking through the lenses of individual experiences and knowledge.

The language is a tool we use to describe the world around us.

Over the course of centuries, languages have evolved and were shaped to suit the needs of societies. The tribes in the far North have multiple words describing snow, while the tribes living in tropical forests have none or close to none.

Necessity is the mother of invention, as the famous proverb says. The languages evolve according to the needs of societies using them. The example of snow can clearly show the need, or its lack, to come up with words to describe the world around us as accurately as possible.

An example as simple as that can be extrapolated to different niches, showing us how divergent the languages are.

If it is still hard to wrap your mind around it, let me give the example that will resonate with you. The English language is very straightforward in addressing other people as there are no obligatory honorifics involved. In contrast, Japanese is full of hierarchical honorifics you will have to use while addressing other people, even as simple as kun, san, dono, or sensei. Once again, societal needs and values are easily seen while dissecting languages and focusing on the differences between them.

While writing a story, we might even not know the gender of the main character if we decide to write the sentences in a certain way. Such a thing will be impossible in some languages as those have different flexion in e.g. verbs. What it means is you will use a different ending in a verb when the activity is performed by a man and a different one if it is done by a woman. To make things even more complicated, let us have different endings if those are plural. In fact, that’s also the case.

Pardon me for the lengthy introduction since I could not resist scratching a little bit of the linguistic surface I find fascinating. The way in which languages have been shaped and evolved over the course of centuries and how the same languages shape our societies today.

And now, let us dive into the main topic of this article — the wallet.*Ohhh finally — they sigh*

The Wallet

The passage of time and the evolution of technology can be seen even in everyday objects like wallets. The leather rectangles we used to carry in our pockets became obsolete. While the ones who value the traditional approach to money are still carrying their wallets, the youth does not seem to be bothered to carry any wallets whatsoever. The only *wallet *young people seem to care about is their digital wallet since paying with phones and other gadgets became prevalent.

So what IS a wallet today?

What is its function?

If someone from the distant future asked us what was that *thing *we called a wallet, how would we answer?

A wallet might be described as an object people used to carry their paper money and coins in. It was also used to store credit cards, photos of kids, and other things like business cards or coupons.

But how did we end up with the word wallet? What is its story? To answer this question let us dive a little into the etymology of the word *wallet *itself.

late 14c., “bag, knapsack,” of uncertain origin, probably from an unrecorded Old North French *walet “roll, knapsack,” or similar Germanic word in Anglo-French or Old French, from Proto-Germanic *wall- “roll,” from PIE root *wel- (3) “to turn, revolve.” Meaning “flat case for carrying paper money” is first recorded in 1834, American English.

As we see, the meaning contains a use case — to carry paper money. Not much has changed since then, as we use it mostly to hold our fiat money. However, things are going to change dramatically in the years to come as we are approaching the era of CBDCs, digital money and a cashless society. The era of modern slavery, one might say.

The Future

Now the question arises… What happens to wallets once we become a cashless society?

Are we still going to carry wallets with us?

What about the domain of cryptocurrencies and their wallets?

We have multiple projects we refer to as wallets, for the lack of a better word, but are those really wallets?

For the sake of making the following example easier to digest, we will stick to the Metamask *wallet *since it is the most prominent one in the whole crypto world.

One can say, Metamask is a wallet because we store our funds, like Ether, inside. Well… not exactly. Those founds of yours are not in your Metamask wallet per se. Those funds are on the Ethereum blockchain.

So what is Metamask doing? What is it?

In short, Metamask is the application which allows you to store your private keys leading to the part of the Ethereum blockchain where your funds are. It is as if we went to a bank, and the clerk gave us a note with the amount of funds we have at our disposal and a set of words (seed phrase) being our private key to access those funds.

Can you call such a note a wallet then?

We might have reached the time when we are using something like Metamask but still haven’t come up with a proper name for it.

The Use Case

Let us dive into the most common use cases of the Metamask to see what it really is.

• The Storage

• The Authentication

• The Identity

The most common usage of the Metamask is the storage utility. In other words, we are using it to *store *our funds in it, or as you already know, to store keys to access our funds. There is not much to be said here as the purpose is obvious and similar to the old-fashioned leather wallet.

The additional use case of Metamask is authentication. What does it mean? It means you can access certain sites or engage in different activities like DAO voting, with the use of a crypto wallet, by signing a transaction, providing you are eligible to cast a vote or access certain pages. The closest analogy from the real world will be using Metamask as an ID card, proving our identity with all the privileges and entitlements in the digital world.

The last use case of Metamask is manifesting your identity and personality. Along with the NFT hype in the recent bull run, we came closer to the Metaverse, where having a digital identity will be as important as having one in the real world.

Let us imagine having a backpack with lots of pins and badges or seeing a car with lots of stickers varying from the purely artistic ones to those manifesting our beliefs, interests and even events we have been to. On the basis of such pins and stickers only, we can tell a lot about people by looking at the manifestation of their identities and personalities to the outside world. Having seen someone wearing a T-shirt with a Sharingan print, I might offer such a person a cup of coffee. However, upon seeing someone wearing a hoodie with the “I ❤ king Joffrey” text on it, with a certain probability, I would prefer to not have anything in common with that individual.

With the idea of Soulbound tokens swiftly approaching the crypto space, we will see the advent of digital identities being more and more personalized, creating the foundations for the upcoming evolution and shift towards the world of Metaverse and Augmented Reality.

The Final Thought

After discussing all the ways in which we can use Metamask, we can see the following analogies.

• The Storage — The Wallet

• The Authentication — The ID card

• The Identity — The Sticker

The question remains open as to whether we should call Metamask a wallet or maybe come up with something new. Do not get me wrong. I do not mind referring to various crypto wallets as wallets. I just find it somewhat misleading to the newcomers since they see Metamask as a storage, similar to the old-fashioned wallet we used to carry.

In the future world where the Internet we know today will merge with blockchain technology and Augmented Reality, creating the Metaverse, individual avatars will be a must-have. Having a personal inventory of various badges, stickers, items, and membership cards will be as obvious as having a personalized social media profile today.

Till next time!

~M.E.

The following is a list of key takeaways from the article concerning NFTs in a form of a “knowledge pill”. It will bring you closer to the idea of NFTs having almost nothing to do with graphically substandard profile pictures.

However, spending time reading the original article will help you see a bigger picture of the societal changes that are about to take place as a consequence of the use of Non-Fungible Token technology.

Let us recap the most significant points.

The Bitcoin

The introduction of Bitcoin created a new way to transfer funds.

But there is more to Bitcoin than transferring funds, both technically and socially. It might allow us to rebuild huge parts of societies in various ways.

The Database

The present world is built on databases, which leads to entrusting a number of Trusted Third Parties with our personal data. The more data we entrust to some entities, the more dependent we become over time.

The New Medium

The inception of the Internet led to immense change within society.

All of a sudden, people have realized you do not have to be New York Times to publish online, and you do not have to be Walmart to sell things via the Internet. The individuals got the chance to express themselves and connect with people across the world.

The foundation of the further revolution has been built.

The Consumerization

The technology becomes consumerized once we stop talking about the technology per se.

The fun and ease of using NFTs allowed the consumerization of crypto without talking about technology. People were more interested in the graphical aspect of the technology than its possibilities and vision.

The Distorted Image

The distorted image of Bitcoin, Web3 and NFTs comes from trying to understand it via theory and not by practice. It is as if you were reading how to ride a bike without ever seeing the bike itself.

One cannot understand something without doing it.

The Incentive

The leading incentive for any large company or brand out there is monetization, straightforward or not. The end result is profit or building community to monetize it along the way.

The Aggregate Level

Everyone belongs to some community.

On the individual level, we might be very similar as members of two different or even opposing communities. Yet the differences will be clearly visible if we look at the aggregate level.

We might be similar as individuals, but we differ as a group.

The Distribution

The art distribution is making a transition from the pre-internet to the post-internet business model right now.

The traditional art galleries and similar places are here to stay, but things are going to change.

Democratizing the technology

The wider range of audience gives you higher chances of finding a group of people who will truly like your style and will buy your creative endeavours.

Gaining access to the global market and global audience is a game-changer for all the people working in creative professions. The moment we, as a society, will acquire decent technology to transfer intangibles, the spread of art and creativity will accelerate immensely.

The Lifestyle NFTs

By being a holder of a BAYC NFT, you are allowed to freely use the franchise or even create your own brand based on the Ape you own. It is a game-changing idea as you are not solely responsible for growing your brand.

This is how communities can scale globally and gain millions of followers.

The Visual Arts

The NFTs today are primary visual arts, but there are a variety of things that can and almost certainly will happen with music as well.

Building really good games is like making a movie. The process takes time and money, as well as extremely talented people. It is way more complicated than just putting a random NFT collection into some low-quality game.

The societal intangibles

Humankind is designed to live and think in narratives. It is how individuals and societies organize themselves.

The Human Rights, General Motors, the US. None of these things exists. Those are just frameworks allowing us to organize people and resources in a coherent manner. It is how you go from societies of 150 people to millions.

The Medium

A society with TV is different from the one without TV, just as a society with the Internet is dramatically different from the one without it.

Each time new technology or service got consumerized we ended up with a slightly different society.

The social construct

The law is also a social construct.

The sole reason paper means something is because we, as a society, have agreed upon it a long time ago. Over the course of the decades and centuries, it has solidified so much we are not even aware of the underlying social agreements anymore.

The house itself is very tangible, but the right to live in it is not.

The Real Metaverse

The real metaverse is the Internet we will see in the near future.

The Augmented Reality will be with us permanently. During our conversation, we will talk about something and have it displayed in front of us. It will be another layer of the Internet we use every day.

The problem with Web2

Integrated ecosystems are limited to the will of the creator companies.

Twitter might not want someone to use its platform, and it is a completely sensible business decision. No biased opinion or affections, sheer business. The issue is, once you are banned from a platform like Twitter, you are cut off from the global short messaging centre.

That is something far more significant than just a business decision.

The Modern Exiles

We are not going to be able to live in a modern society without the use of even small parts of the metaverse. Socializing with friends, getting a job, and using the basic services become unavailable once we get banned from the metaverse.

The Endgame

Any system capable of having God’s eye view on people will not be tolerated by the state as it would be too influential and powerful to exist on its own.

The social credit system being built and used in China is strangely similar to what metaverse might look like. Leaving the visuals aside, the mechanics and possibilities of usage are astoundingly similar.

The power of CBDC

How can you stop a person from taking a taxi in New York?

You have to arrest the person; otherwise, you have neither the authority nor the possibility to lawfully stop someone from taking a taxi.

The moment we introduce and spread the metaverse with the use of CBDCs, within seconds, we will be able to flip a switch and revoke the access to use taxis in a given region or the service as a whole.

100 million people of NFTs

Within the next couple of years, we will see more and more brands and institutions issuing NFTs.

The default thing to do with NFT is to use it; whereas the default thing to do with Bitcoin is nothing. That is why user experience and interfaces have to be easy to navigate and use.

The UX — we’re hiring!

The user has to be sure his funds and NFTs are secure even when his knowledge of the technology is limited.

Transactions have to be easy to make, and every potential user’s mistake identified and prevented. In the world of multiple blockchains, common standards have to be set in order to reduce or even remove the boundaries separating users.

The Game with Institutions

If we were to maintain the same attitude towards the Internet in the early 90s as we are having towards Web3 nowadays, the Internet would have never become what it is today.

The Impact

The impact we can make today might set the rails for future generations and the technology of NFT. Therefore, we cannot play games on our own within small communities; otherwise, we will end up being a niche community — forgotten and neglected.

NFTs can represent any off-chain asset that is non-fungible and move it to the metaverse allowing us to build bridges between the off-chain and on-chain world.

The simplest strategy

Remove emotional bias — Buy a coin or NFT and assume it will go to zero.

Stay active — Wisdom comes from experience. You cannot short-circuit it.

The changing world

There is nothing more painful than working in an industry that is slowly shrinking.

You worked as hard as anyone else, but you cannot win against the whole market. The economy constantly gives signals, and all we have to do is to stay alert, observe the world and make the change when the time comes.

Look through the developing industries and see where your core skills might be in need. A little bit of learning and shifting your core skills to work on other tasks will be a life-changing decision.

Conclusions

Stay active, learn, experiment, and help build the future.

Here is the link to the original article concerning NFTs.

I highly recommend reading it if you want to understand the true idea of NFT technology instead of listening to hate comments providing no value besides emotional stimuli.

Enjoy!

Till next time!

~M.E.

Intro

When I first entered the stage a couple of years ago, I stumbled across a bold statement saying, “Bear Market is a blessing”. I honestly thought the person saying this was insane or so much at a loss that he was looking everywhere for a silver lining.

Now I am here, making the same claim. Is my portfolio so deep at loss, or maybe now I understand markets better than when I was a newbie?

What to do when the Bull Market ends?

Go on a holiday. That’s for sure. Give yourself time to think, cool your head and distance yourself from the markets. Let your emotions and psyche rest a bit and recharge.

Okay, you have got a couple of weeks or months of free time. Now what?

Now there is a time to answer some questions.

Is there peer pressure in the crypto space to create something until the money stops flowing? Do you sense the need to attract as many new clients entering the space on social hype as possible?

I hope you see an emerging pattern here.

Bear markets give you the time to build decent projects, establish true friendships in the space and create a long-lasting strategy for the next bull run.

Time to take a look back

Without the knowledge of the past markets, you will not be ready for the future.

Now that we have some time to think and look back at our behaviour in the bull market, we should use it to go through our investment or trading journal and analyze the contents.

If you haven’t kept a journal so far, I highly encourage you to write down the following questions. It is crucial to write them down physically on paper or in a notebook. Writing helps us to ponder on answers to the questions we are writing.

What have you learned from the recent bull market?

What mistakes have you made?

What would you do differently this time?

How did you feel during your greatest wins and losses, and what did you do afterwards?

How well did you handle your emotions?

What were the examples of you following the hype instead of making conscious decisions?

The true *you*

After you have gone through the questions, we can distil all the knowledge and experience stemming from your answers.

It is a child’s play to read the chart from right to left — the price goes up, and the price goes down all the time. Okay, but what does it prove?

It shows the real *you*.

You can throw away all the false images of yourself when you look at how you behaved at the given moments in the recent bull market. How well did you stick to your strategy, assuming you have had one.

After this brutal revelation, some of you might have already quit reading the article. The truth is not always pleasant, and one key thing to remember about the markets is the following.

If you are not true to yourself about your feelings and emotions playing an alpha male, your losses will be devastating. Who are you in comparison to the multimillion Venture Capitals? Who has better knowledge and understanding of the markets?

How well do you understand Bitcoin?

How well do you understand Ethereum?

What are the risks of those projects?

Can you give well-researched answers to those questions?

If not, when are you going to build solid foundations of understanding the projects that are the core of the whole crypto space?

Okay. So now I hope we have clarified some things. Let us go now and use the bear market to our advantage.

Time to build a strategy

“Tactics is knowing what to do when there is something to do. Strategy is knowing what to do when there is nothing to do.”

~Savielly Tartakover

I cannot think of a better quote to show the difference between being a master Tactician (quick plays during the Bull) and the grand Strategist (creating a long-term plan working despite dire market conditions).

All the answers to the aforementioned questions will create a base for writing down your strategy. Does it have to be a complex 10-pages-long draft, or can it be simplified into a couple of sentences? It does not matter as long as it will be profitable and you will be able to stick to it even in dire conditions.

It is not about the length. It is about encapsulating the basic rules.

The Art of War by Sun Tzu is not a lengthy volume, yet it became one of the greatest sources for creating a strategy in many fields.

What should your strategy include? The most significant points are as follows:

Rules for picking up the projects

Levels to enter and exit positions

Portfolio management — expressed in percentages (%)

Where to look for high-quality information

Emotions management — both wins and loses

How to get back if you got carried away by hype or negative emotions

Alright, so you know how to build a strategy for the next bull market, but what about the time of the bear? For the rest of the time, you should focus on honing your skills and knowledge to create skill leverage instead of using the financial one, which you should not touch if you are not an expert investor.

Time to learn how to use the hype

The recent bull run gave us hyped trends people got obsessed over. Two trends which gathered the most people were NFTs and dog-themed coins.

NFTs are still a thing and are here to stay, not in the form of PFPs but as a technology — you might read about it in my post about the future of NFTs. On the other hand, dog-themed coins like Shiba Inu served only one purpose, to monetize the hype.

So the moment we spot a growing hype, we should switch to being cautious and leave the space or at least the hyped areas? Not necessarily.

Yearn Finance decided to profit from the hype by creating a Woofy coin. So if projects like YFI are profiting from hyped trends, why shouldn’t you?

What if we spot the growing hype, knowing it is another pump and dump scenario? Cannot we use it to our advantage and profit from it? Indeed we can, but it requires a lot of experience to play it well.

Bear markets give us time to look back at recent trends without the bias of emotion and information. We can conduct a ‘post-mortem’ analysis to look for common traits and mechanisms. The subject of our analysis should not be only the project or trend, but also the psychology of ‘investors’ and their market behaviours.

Along with Shiba Inu, various dog-themed coins emerged, Dogelon Mars, BitShiba or Shiba’s Wife, to name a few. If you haven’t got alerted seeing those projects growing in price and gaining social hype, what would convince you to realize the bull market entered the last phase? How does Jesus coin from 2018 differ from 2021 Shiba’s Wife?

Learn to see the patterns and evaluate the state of the market.

Projects and trends change, but the emotions always stay the same.

Time to stay active

The bull run came to an end, and so did the emotions. The space became calmer and quieter. The music grew so silent, it meant the party was over for some market participants.

But is the party over for everyone?

Is there a better time to research and analyze projects than times of boredom and cooled emotions? The number of “breaking” news heating up the space and disrupting common sense is close to zero. Even when some positive news does hit the space, it is taken with a pinch of salt.

The time of bear is the time to build and look for future investment opportunities. It is also the time to stay active and look for potential big players in the next bull run. The projects with the highest ROI, like Solana or Terra Luna, have been created during the recent bear market, so let’s dig a little bit and look for future gems.

Time to network

How many people are going to leave crypto space during the bear market? It’s hard to tell, but any number you give will not be enough.

Who stays active in the space?

The ones with a long-term vision.

Those are the people you should reach if you want to grow and become a better investor. People who are going to stay active, even the new ones, have an incredible opportunity to reach individuals, ask questions or offer their help in building projects. The space is full of wonderful people who are happy to help or point you in the right direction. Particularly during bear markets when all the people who got here on hype are gone.

The markets are not zero-sum games if you are building friendships along the way.

Time to rest emotionally

Finally, after all the emotional struggles of the bull market, give yourself time to emotionally withdraw from the markets. Focus on your family, friends or your animal companion. Take care of the bonds with the ones you care about, and devote your time to those people. Money is not the most important goal in life, especially if you have no one to cherish little moments of happiness with.

Okay, okay, but we have to work after some peaceful moments, don’t we?

Indeed, we do. When we rest a while and cool off our heads, we may get back to learning and experiment with the tools at our disposal. Maybe working with some Layer 2 testnets like StarkNet? *ekhem*

Conclusions

The next bull market will come sooner or later. Don’t doubt that.

It is not the first time I see claims “Bitcoin is dead, and so is the whole crypto”, and it is definitely not the last time.

In the meantime, devote yourself to double down on your knowledge and experience gained in the previous bull market. If you are new to the space, take your time to learn the basics and build solid foundations of knowledge. Bear Markets give you the opportunity to learn without all the information biases and “missed chances” on investments.

One more thing for all the new investors here, if you haven’t experienced a bull run before, take into account that you cannot be sure about your emotions and how well you will handle them in extreme situations, both wins and losses. Consider this while creating your long-term strategy.

There is time for planting the seeds, and there is time for harvest.

Stay safe!

Stay active!

Till next time.

~M.E.

The Introduction

The following is a summary of the great interview I had the pleasure to listen to. The podcast hosted by Raoul Pal provided the listener with a deep dive into the idea of NFTs lectured by one of the greatest minds in the space — Punk 6529. Let us grasp the OG level of understanding of the world we live in and the changes that are about to happen.

Let us embrace and build the future.

The following article is solely based on the interview with Punk 6529. All the ideas and examples are based on the interview unless otherwise specified.

The examples and additions written by the author are marked with an asterisk sign ‘*’.

TL;DR

Throughout history, humanity has seen times of great leaps in technology and significant transformations within society. The development of transportation, the spread of mass media or the inception of the Internet; all of those events changed the world and societies significantly.

We are on the brink of a (r)evolution regarding another step of communication between people and the ability to express ourselves as individuals or members of a particular community.

The technology of Non-Fungible Tokens (NFT) is something far greater than just profile pictures and collectibles of questionable quality. We have barely scratched the surface of what is possible with the use of NFTs, and only a handful of individuals are experienced and devoted enough to see the prospects it may bring.

The Bitcoin

*Imagine living in a world where all the financial transfers between individuals cannot be made during weekends. How does it sound? It might not seem so taxing at first, but when you think of it, about 30% of the time — weekends and bank holidays — you are unable to transfer the funds even in dire need.

*It seems there is a limit to how you would like to use and transfer your funds after all.

One of the first moments of realization what Bitcoin can become happened on a Saturday afternoon when 6529 made a transaction with his friend from another continent using Bitcoin. The transaction took minutes to reach the recipient, cost a fraction of the bank’s transfer fee, and was made on Saturday afternoon.

Some people claim Bitcoin is the hedge against inflation, hence its popularity and growth. It is a common narrative one can often hear when discussing Bitcoin’s purpose, especially during the last Bull Run. In fact, there are other inflation hedges being far less volatile, thus preferable as an investment.

There is something more to Bitcoin, both technically and socially.

It is claimed Bitcoin has solved the Byzantine General problem which stems from the field of game theory and distributed systems. In short, the Byzantine General problem describes the scenario in which all of the involved parties have to agree on a single strategy in order to avoid failure or defeat. The whole problem revolves around the issue of limited trust or unconfirmed reliability between involved parties.

*The Byzantine General problem in Bitcoin involves validation and passing on the information that is not stored in a centralized database. It is a decentralized network of miners and validators who are ensuring the functionality of the blockchain via the Proof of Work mechanism. The individuals do not have to know each other; the trust is established via their commitment to the network and gaining rewards in return.

The Database

The life of every citizen nowadays is organized by thousands of databases. The banking system, hospitals, hotels, and even taxis you use have their own database to run the entire infrastructure needed to provide all the necessary services.

It was not an overnight change. It has been slowly and gradually built with the use of the new infrastructure, like the Internet — it is a very important piece to bear in mind. In the world before the inception of the Internet, databases were not a big thing in society, not in the form we have it today. All the information has been stored in files, on paper sheets or other means of storing records.

Nowadays, databases have become inseparable from the society.

The world lives and thrives on databases.

One of the most significant features of using databases is the need to trust someone with the provided information. There are thousands of TTP — Trusted Third Parties — we are entrusting our data to on daily basis. How can we be sure no future data leaks will happen or that the entrusted data will not be misused? We cannot, it is the harsh truth which has to be embraced. Yet in order to be a member of modern society, we have to trust some counterparties.

The basic examples of running databases and shared trust might be found in everyday life in a form of money we are using every day, the privileges of citizenship or the right to a given property.

All those databases run in centralized systems, which is not a bad solution as everything has been working decently due to provided security.

*Just a short note to all the acolytes of total decentralization; not everything is meant to be decentralized. Both centralized and decentralized systems have their advantages and disadvantages. In fact, quite often, centralized systems might be a far better solution than decentralized ones when considering the needs of present societies.

The early problem in crypto was — and still might be — the widespread belief and custom to trust and use centralized databases for their higher security profile. The common notion of running things on Amazon Web Services and being astounded by the number of transactions per second is missing one significant point; the question of what are the social implications of this.

The social implication of running things on AWS is you have to trust someone with your data.

The more digital we become as a society, the fewer large entities we trust with our data, becoming more and more centralized and dependent.

The New Medium

The inception of the Internet broke the barriers impossible to overcome for people before; the barrier of physical presence or the barrier of distribution, once broken, allowed a number of individuals to elevate their skills and ideas to another level. All of a sudden, people have realized you do not have to be New York Times to publish online, and you do not have to be Walmart to sell things via the Internet.

The change of mediums led to the immense growth of small businesses across the developed world. The sheer fact of gaining access to the Internet opened the doors only a few imagined to ever exist.

However, the Power Law Distribution applies to everything and so the Internet, at its core, tends to be centralizing. That is a fact some people might not agree with or might not be aware of. Yet we see huge oligopolies of the digital world being built and expanded thanks to the Internet. A similar tendency applies to technologies like Big Data or Machine Learning which also might become centralized in the near future.

Economies of scale, economies of data, and economies of scope; all lead to centralization.

At some point, a new invention has entered the stage — Bitcoin.

As with every new technology, we will finally see a group of visionaries seeing possibilities no one else will be able to comprehend at the very beginning. The revolution takes time. That is why Bitcoin is not an overnight evolution, nor is it a quick-rich scheme. Bitcoin is the idea that, over the next 30–40 years, might re-architect vast chunks of society if used properly.

The Consumerization

When does new technology become consumerized?

Does it happen while trying to explain how many transactions per second (TPS) can be performed on Solana and how many on Ethereum? I doubt that.

How about discussing the security measures? Not even close.

Do people discuss Instagram through the lens of technology?

Oh, look! That’s some nice Python script that just got released, let’s try it.

The technology becomes consumerized once we stop talking about the technology per se.

The DeFi Summer of 2020 led to the surge in valuations of tokens connected with decentralized finance. People were talking about projects, implementations, and cashflows; they were talking about the technology and numbers while the core problems and ideas were left behind or barely mentioned.

DeFi did not yet hit the core societal problems with its implementation. It needs time to grow and evolve to address the needs and become widely consumerized.

The fun and ease of using NFTs allowed the consumerization of crypto without talking about technology.

The Beginning of Punk 6529

What was the initial view of the NFTs, even by the true OGs in the space, when Punk 6529 decided to explore the area and see if there is any potential to grow?

That is some goofy thing. Let’s go back to real work; building projects, writing smart contracts or whatever.

Towards the end of 2020, the spidey sense made Punk 6529 dig deeper into the world of NFTs despite initial views of crypto OGs he spoke with. The hunch turned out to be the spark that led to unravelling the possibilities of the NFT technology.

One cannot understand something without doing it, as the best learning is through practice. That is why Punk 6529 decided to roam OpenSea and buy cheap NFTs just to get the feeling of playing and owning them. Exploration of the space and playing with it turned out to be fun so the further investigation began.

The next step was getting his friends to own and play with NFTs by sending them to different wallets and checking what else can be done with them at that point.

The feeling of using and owning NFTs began to grow, not only in Punk 6529 but also across the crypto community as well leading to the growth of a trend which can change the crypto world forever.

The Distorted Image

Consumerization of crypto through NFTs has at least one major point of failure — centralization.

The moment we do not care about technology, we do not care whether the infrastructure is centralized or decentralized. The end-user cares about the nice look of the application, decent UX and low transaction fees. It does not matter whether the NFT is stored in a centralized and custodial wallet or not.

The bold guess might be that most people in Silicon Valley and Crypto Twitter have the majority of their crypto stored in Coinbase’s custody or other centralized entity. One of the reasons for such behaviour might be the fact that most of them treat Bitcoin as a financial investment and not as a way to organize things; to build the society anew.

The distorted image of Bitcoin, Web3 and NFTs comes from trying to understand it via theory and not by practice. Therefore, let me repeat the words of Punk 6529.

One cannot understand something without doing it.

The Incentive

Imagine being a well-known company with an established position on the market. What might be your incentive to mint NFTs?

The answer is monetization.

DolceGabbana is a world-renowned brand known for luxurious clothing and cosmetics. Relevant position, customer base, social intangibles and the lifestyle or social position tied to wearing DolceGabbana; everything is out there, waiting to be monetized.

The largest brands, especially in the fashion and lifestyle industries, have already begun building their position in the digital space and their influence will only grow in the following months and years. The recent purchase of RTFKT by Nike only proves the thesis. *Another example might be the recent Prada announcement to enter the world of NFTs via the Ethereum blockchain. It is a gradual process, but everyone is slowly coming with their own NFTs. Sports teams will distribute NFTs for their fans, Universities for their alumni base; the number of possible examples is astounding.

*The incentive to mint NFTs is not only limited to the producer brands like DG or Nike. The significance of personal branding has been booming in recent years, creating “big names” in the social media space such as MrBeast or Peter McKinnon. However, people who got into the “big names” league through social media are neither the only nor the first ones to partner with crypto brands. The Sandbox entered the partnership with Snoop Dogg almost a year ago, enriching the space with a well-known personal brand from the “traditional” world. Just recently, Binance secured a deal with Cristiano Ronaldo bringing another highly recognizable individual to the game. In the upcoming years, we will see a number of strong personal brands entering the space either by creating their own NFTs or by engaging in partnerships with crypto brands.

NFT technology gives us the possibility to represent ideas, granular ideas.

Minting NFTs by large companies does not have to be in a form of PFPs and, with utmost certainty, will not. How can they use NFTs then? The only limitation is creativity. NFTs used as pre-sale tickets, redeemable goods in the real world, social position signifiers, QR codes with redeemable NFTs, emblems presenting how avid users of the brand we are, etc. The possibilities are countless.

The Aggregate Level

A publicly readable and writable database is a significant factor in building a community interested in establishing its own position in the space, not as individuals but as a unique group.

Taking a look into the psycho-demographics of already well-established communities like Punk holders, we might see particular traits on the individual level that can be applied to the majority of members. Moreover, we might look at Azuki’s or BAYC (Bored Ape Yacht Club) and also spot common traits on the individual level.

Each community differs from the other. Punks are different from Azuki’s, BAYC holders are different from Punks, and Catholic Church members are different from the members of the Lutheran Church.

Everyone belongs to some community.

On the individual level, we might be very similar as members of two different or even opposing communities. Yet the differences will be clearly visible if we look at the aggregate level.

Azuki holders will share a common set of traits on the aggregate level, just as any other community built around an NFT project. Therefore, it is possible to label a certain group with a set of particular traits. On the individual level, though, the differences between a member of the Azuki community and a BAYC holder can be indistinguishable.

We might be similar as individuals, but we differ as a group.

The Distribution

Thesis — NFTs will flip fine art distribution.

Living in SoHo, Manhattan, for almost 20 years might contribute to developing a taste for fine arts. Wandering through museums, art galleries, and similar places where you can find yourself immersed in the art is one of a kind experience that adds up over time. All of a sudden, you might see yourself dreaming of buying one of Andy Warhol’s Soup Cans.

Once you begin pondering about purchasing fine arts, what are your options? Common sense tells us to make a visit to an art gallery.

Everything is fine if the desired piece of art is there. However, what if not?

The distribution and selling process of art is unsatisfactory, to say the least. In the beginning, you have to visit the place and enquire about particular works of art as well as their availability. If the desired painting is not available at the moment, you have to make sure to be notified once the painting is within the reach of the art gallery you spoke with. However, how can you be sure no one is going to outbid you? In such a case, you will end up losing your time while waiting in eternity for an availability notification.

What about the process of verifying the painting? How can you be sure the piece you are buying is not a forgery? You might get a couple of responses like “Here is the signature of the author”, “We are going to give you the certificate of authenticity”, and afterwards you are seeing the certificate being printed in front of you. What kind of confirmation is this? Definitely not the one you expect from a notable art gallery where you are purchasing a painting worth a significant amount of money.

What happens when you want to buy e.g. Punks? Let’s go once again through the process.

No need to physically visit the place; you do not have to make a visit to an art gallery or similar places. The only thing you need is an internet connection and a Metamask wallet.

How can you be sure the price is fair? At any moment, you can access the global orderbook and see every transfer, every sale, bid price, and ask price that has been made for the desired piece since its inception. You can bid on any piece you would like to, even if it is not for sale. Full transparency is the standard.

The art distribution is making a transition from the pre-internet to the post-internet business model right now. Some will say you could have bought artworks on websites a long time ago. Indeed, however, the cost of shipping, ordering procedure, and time needed to finalize the purchase is daunting to a great number of potential customers.

eBay was not a substitute for a small antique shop in Pennsylvania; it became the global marketplace for such goods.

The fine art galleries are not going to disappear or become replaced. The sheer pleasure of going to an art gallery and purchasing a work of art is a priceless experience. However, things will evolve and change over time.

Democratizing the Technology

Would you buy one of Damien Hirst’s The Currency** paintings **if you had to travel to Geneva, Miami, New York or London? What if you could purchase it from your couch within seconds?

The truth is Damien Hirst will be fine in both cases. He would just have to wait a little longer to sell his collection of ten thousand artworks. The most significant change takes place on the other end of the spectrum, and that is where we should focus our attention.

Being a passionate butterfly photographer from Knoxville, Tennessee gives you little chance to monetize your work or gain significant recognition. Let’s be realistic, you have zero chances of making a living off your photos. Assuming you will find a place where you can sell your photographs, how many of them will you be able to sell on a monthly basis?

Things change if we take NFTs into consideration. It is far easier to go out to the public and sell your photographs. The wider range of audience gives you higher chances of finding a group of people who will truly like your style and will buy your photographs.

You will not have equal opportunities as Damien Hirst, let’s be realistic. The distribution advantage will more or less disappear, however other advantages like worldwide recognition will not be so easy to make even; but that is a good place to start.

Gaining access to the global market and global audience is a gamechanger for all the people working in creative professions. The moment we, as a society, will acquire decent technology to transfer intangibles, the spread of art and creativity will accelerate immensely.

The Lifestyle NFTs

Almost every NFT existing today can be assigned to one of three main categories: art, collectibles or PFPs. Among all of the collections, there are some which are not so easy to assign. One of those is the Bored Ape Yacht Club collection.

Is BAYC art? Is it a collectible? It might be a PFP, but it is not its desired usage. What is BAYC then?

The answer is — Lifestyle.

If you want to enter the McDonald’s franchise, you have to earn it. Spend time and money to get educated in one of McDonald’s educational sites and be graciously granted the license to use the franchise in accordance with the standards and regulations.

Is it the same with BAYC? Not at all; by being a holder of a BAYC NFT, you are allowed to freely use the franchise or even create your own brand based on the Ape you own. It is a game-changing idea as you are not solely responsible for growing your brand.

Imagine being one of 10k BAYC holders who create their own brands with the use of their Apes. The more one grows their brand the more popular BAYC becomes as a collection. The same thing happens in reverse; the more popular the BAYC franchise becomes the more recognized and valuable individual brands are. Now let us assume a half of the owners decide to create their own brands with the use of the BAYC franchise. It gives us 5 thousand unique business ideas across the whole spectrum of services and goods.

This is how communities can scale globally.

In the following 3 to 5 years, we will see global brands built from NFT collections, and along with it, new business models will emerge. One of the two things for creators to consider will be either granting holder’s commercial rights to the franchise or issuing CC0 (Creative Commons Zero) approach.

To illustrate how significant the business model is, we should look at what happened to Punks. To put it bluntly, the moment Yuga bought Punks IP and took it over to BAYC commercial model, it was over for Punks. You cannot make a project competitive if you can do nothing with it.

Nowadays, we see different approaches to the use of the franchise. BAYC holders are following the way similar to the idea of Web3, whereas the mfers are free to use their NFTs however they like.

*Determining the better approach might be short-sighted and unwise as not much time has passed since the beginning of the trend to build communities off NFT collections. The space has to grow, the experience has to be gained, and things have to evolve over time.

The Visual Arts

What has been more culturally important across the decades, music or visual arts?

The concluding answer might be rather subjective, but according to Punk 6529, societies and cultures have been influenced mainly by music, leaving visual arts behind.

The NFTs today are primary visual arts, but there are a variety of things that can and almost certainly will happen with music as well. Creating a hybrid between off-chain and on-chain music is just a matter of time. The introduction of music NFTs will lead to a similar phenomenon of creating collections, communities and niches with a direct connection to the author which, from the aesthetic point of view, will create a completely different experience for the consumers.

The next step will be the gaming world. Present games have been shifting towards the online experience and multiplayer gameplay in recent years. *Not to mention the phenomenon of the e-sport industry and its influence on the whole gaming world. The games, just as any other business, are evolving over time, with each epoch having its identifiable features and traits. That is why the assumption of having the next generation of games in the following years does not seem irrational.

Although we see approaches to creating blockchain games, those are idle efforts aimed at monetizing the trend rather than building a game to last. The business model where you have everyone creating their own 10k NFT collections and merging it with some half-baked game for the holders is neither a model that will last for years nor a model that will attract players.

Building really good games is like making a movie. The process takes time and money, as well as extremely talented people. It is way more complicated than just putting a random NFT collection into some low-quality game.

The Societal Intangibles

As mentioned before, once the technology allows transferring social intangibles, a vast chunk of society will change as well.

But what are social intangibles? Well… those are the things we can grasp with our minds but not with our hands. The United States, the Statue of Liberty, the US flag, the land of free and the home to the brave, the American Dream; all those are social intangibles. How can we even ascribe value to it? What would be the fair price?

*Once we talk about prices and valuing things there will be voices claiming it is just another step of world financialization. The greedy capitalists just want to make more money. However, let us look at it from a different perspective. Let us take into account how the world is changing and where we are headed as a society.

*Automated infrastructure supersedes people in different branches of various industries. The unlocked workforce has to find a new place in the world and stay productive in order for the society to grow. The number of people going along the way of creative expression will be greater than any of us assume.

The technology industry has absorbed most of the people’s potential in the last two decades because it was useful and financially rewarding. It has favoured a certain type of person with a particular set of traits, just as any other industry favours different types of people. The question worth asking is what type of people, what kind of skills and traits will be in demand once the creative industry will begin to gain even more attention?

The Human Rights, General Motors, the US. None of these things exists. Those are just frameworks allowing us to organize people and resources in a coherent manner. It is how you go from societies of 150 people to millions.

The idea of Nike can be presented in three simple words — Just do it. How much value do those three words add to the company? Will it be possible for Nike to reach the same sales targets and prices without the intangible idea and narrative that has been baked in overtime?

Humankind is designed to live and think in narratives. It is how individuals and societies organize themselves. What we are seeing is the shift of narratives from the centralized parties into the hands of the individuals. The narratives are gradually being communitized.

A random company cannot compete with Nike by having a nice logo and high-quality goods. It needs to create its own narrative and intangibles people can identify with. The very moment intangibles will be distributed on the rails between people in a permissionless system, Nike will lose the advantage of intangibles. However, there are other advantages Nike will still possess, such as marketing advantage or world recognition.

There are always going to be advantages of some sort that cannot be made equal.

The starving artist is a bug, not a feature. In a world where more and more things get automatized each year, intangible culture providers should be highly paid.

The Medium

Medium is a message.

The message changes with the medium; and the medium has changed dramatically over the recent years.

There is a finite period when you can set new cultural and societal standards. This period is now, and within the next 10 years, it is going to solidify. In the next 20 years, there will be something else, another change of mediums, and another evolution.

*The process of constant renewal and change is embedded into our existence.

A society with TV is different from the one without TV, just as a society with the Internet is dramatically different from the one without it.

All of the mediums have changed society in some way. Everything having the aspect of human interaction within itself is changing society. The introduction and broad consumerization of the Internet has changed society. After that, other forms of mass media like Twitter, Facebook and Instagram have been introduced. However, not only mass media have shaped society. The idea of modernizing the system of taxis and delivery infrastructure by Uber, utilizing the accommodation space introduced by AirBnB or *the recent trend of TikTok has influenced and shaped the society in a significant way.

Each time new technology or service got consumerized we ended up with a slightly different society.

The Social Construct

Isn’t it just a social construct, one may ask?

Tell me then, what is not a social construct?

Is the title deed to your house not a social construct? What about the fiat money you use every day? The Castle Doctrine gives you the right to shoot anyone coming to your property with ill intentions, isn’t it a social construct? The sole reason paper means something is because we, as a society, have agreed upon it a long time ago. Over the course of the decades and centuries, it has solidified so much we are not even aware of the underlying social agreements anymore.

Is it any different with NFTs? If you own the token 6529 in the ERC-721 standard we all agree you are the owner of the Punk 6529. It is not in any way different from agreeing you own a house or a property. The only difference might be found in additional laws established over the years to ossify the social agreement. It is all equally made up.

The house itself is very tangible, but the right to live in it is not; now, we are slowly developing the technology allowing us to move intangibles. Calling it a huge change might be an understatement as we have not explored it much.

The surface of what is possible has barely been scratched.

The Real Metaverse

Most of us associate the idea of metaverse with some kind of an application resembling Second Life which you can access with the use of VR glasses.

This might be fun, but it is not the metaverse.

The real metaverse is the Internet we will see in the near future. The quality of visuals will get much better, presenting users with a wide array of new possibilities. Conference calls might be a good example as nowadays most of us have Zoom calls where we see each other through camera lenses. The improvement of visuals will allow us to use holograms and engage in conversations as if we were in the room with our interlocutor.

The Augmented Reality will be with us permanently. During our conversation, we will talk about something and have it displayed in front of us. The glasses and other accessories enabling AR access will become very handy and user-friendly, thus becoming almost inseparable from other daily life items.

The contrarian argument might be that people are not going to wear glasses or similar accessories all the time. Yet, aren’t we having our smartphones with us 24/7? How many of us claimed not to carry mobiles in pockets or bags all the time?

The next step, after the improvement of visuals, is going to be the innovation of scalability and transferability of data. The Internet is filled to the brim with data. Every application and every platform is abundant with a variety of data; Twitter or Instagram is uploading and processing enormous amounts of data every minute. One key point is nowadays we need some kind of an API key to access the desired information and this might become a significant obstacle on the path to smoothening the user experience in the metaverse.

*It does not mean API will be gone forever and access will be granted without any verification procedure. What it means is that the sheer procedure will be smoothened to the point where the user will be able to access or display the data almost instantaneously while having a conversation with the use of AR technology.

The Problem with Web2

*The rebranding of Facebook into Meta has intrigued many and worried even more.

The creation of Facebook’s own metaverse is the opposite of the dream of a decentralized metaverse. A centralized company like Facebook has no intention or incentive to build a decentralized infrastructure for its own metaverse. On the other hand, running the created metaverse on centralized servers provides the control and agency over the direction and regulations of the new metaverse.

Integrated ecosystems are limited to the will of the creator companies.

The case of Meta and its vision of a centralized platform is not the only example of how the creator’s will can be decisive. Taking the political affections aside and sticking to the sheer facts, we have seen the removal of a quite recognizable person, the president of the United States, from Twitter. The First Amendment does not apply to private companies; however, what if a company’s platform has become a global messaging tool, a place for geopolitical debates, and the creator of trends in politics? How powerful the will of the creators can be in such a scenario?

Twitter might not want someone to use its platform, and it is a completely sensible business decision. No biased opinion or affections, sheer business. The issue is, once you are banned from a platform like Twitter, you are cut off from the global short messaging centre. That is something far more significant than just a business decision.

Who should be responsible for making such judgments? Who is not biased and competent enough to bear the responsibility of making the right decision?

The Modern Exiles

What if we wanted to apply the feature of revoking access to the e-mail protocols? What about public companies? What if one day you will be revoked the access to use the taxi in a given city or do shopping in a particular chain of stores?

Fast forward 10 years from now, and we have the metaverse far larger and even more rooted within the society than Twitter today. *It will include every aspect of our lives, from shopping to medical care. It will become inseparable.

What if someone decided you should not be allowed to use the metaverse and revoked your access? You are not just going to be cut off from social media as you might be today; you are cut off from the whole society and all the services it provides. The act of cutting someone off the metaverse is equal to being locked in a digital prison.

We are not going to be able to live in a modern society without the use of even small parts of the metaverse. Socializing with friends, getting a job, and using the basic services is going to become unavailable once we get banned from the metaverse.

*We will become ghosts of the society, unwanted, struggling with the basic needs. We will have nothing and still be responsible for living according to the rules society has established.

The Endgame

Thesis — The Endgame is Augmented Reality.

*How does Augmented Reality work? It scans the environment in your field of vision or the field of vision of the used accessory. The scan has to be performed continuously as it has to update what you see with an overlay of digital data. Imagine going into a restaurant and just by looking at the table, you can see the whole menu displayed in front of you along with additional visuals of every course and beverage you want to try. Sounds amazing, doesn’t it?

Every coin has two sides.

Having accessories constantly scanning our field of vision might lead to a suspicious, yet sensible, assumption that there is a company having God’s eye view of our whole life. Everything we look at, every activity we perform, and every word we speak is constantly monitored, analyzed and recorded. All the people we meet, our family, children, fiancée, all of them are constantly recorded and analyzed.

The company might introduce strict privacy policies and assure everyone nothing will be leaked and everything will be performed under strict supervision. Yet the possibility of using the data in any way the company wants remains.

*Blessed are the ones who have never been a part of a data leak in the world of plentiful cyber attacks ranging from data leaks to identity thefts. Feel free to believe the assurances but take care of your privacy with utmost diligence. Worry not if you have nothing to hide, or so they claim.

The problem here is not the individuals and their will as mentioned before. It is the flaw of the system it can be built on. Any system capable of having God’s eye view on people will not be tolerated by the state as it would be too influential and powerful to exist on its own. At some point, the company is going to be either shut down or controlled by some kind of governmental agency.

The social credit system being built and used in China is strangely similar to what metaverse might look like. Leaving the visuals aside, the mechanics and possibilities of usage are astoundingly similar. The ability to monitor the lives of citizens, analyze their behaviours and grant or revoke privileges if needed resembles the backbone of the future AR metaverse.

The cruelty of the system in China is what people often talk about, yet they do not seem to perceive the foundations of the system being built in front of their eyes. Punk 6529 does not claim the system is being built to serve to purpose of controlling the citizens, what he means is we are building a system capable of such procedures.

The Power of CBDC

Should there be national sovereign currencies available online in a form of CBDCs? Should the implementation of CBDCs be followed by abolishing cash thus creating cashless societies?

How can you stop a person from taking a taxi in New York? You have to arrest the person; otherwise, you have neither the authority nor the possibility to lawfully stop someone from taking a taxi. The moment we introduce and spread the metaverse with the use of CBDCs, within seconds, we will be able to flip a switch and revoke the access to use taxis in a given region or the service as a whole. It will be the cheapest way to deprive people of their constitutional rights. *The parts of the infrastructure have already been implemented, and we have seen some similar precedents taking place in some countries of the Northern Hemisphere.

*The Bank of International Settlements, the European Bank, the Federal Reserve and many other banks are already discussing and slowly implementing rails to introduce CBDCs. Their ideas and visions of the endgame might differ, but what ties them together is the creation of a monetary system where every transaction will be supervised and any undesirable ones censored or revoked.

What will happen if some aspiring totalitarian, with connections to the Central Bank, will decide to increase the odds of winning and begin to revoke his opponents’ basic privileges like buying a rotten tomato or renting certain places to gather?

Even the most totalitarian regimes we have seen across history have not been able to effectively prevent their opponents from buying and doing certain things in other parts of the country. It is very hard to prevent people from making transactions in cash. It is even harder to track and supervise their transactions. However, once the CBDC will be implemented, and cash abolished, all you will need to do to limit your opponents will be running a particular algorithm.

Every decision regarding law and order is a trade-off between private and public crime. That is why we have constitutional democracies. If we had a state that is always right, we would not need any civil rights as the state, by definition, would be infallible in its doings.

100 Million People of NFTs

As said before, brands like DolceGabbana or Nike and institutions like Universities will issue NFTs. All they have to do is to digitize their intangibles. The moment they issue 100 million NFTs, the network of users will begin to spread, creating the snowball effect; fast forward a couple of years, and we will see 1 billion people using NFTs, some of them even not aware of it.

Within the next couple of years, we will see more and more brands and institutions issuing NFTs. Even nowadays we see examples of Adidas launching NFTs on OpenSea and Meta creating their own metaverse platform.

The danger lies within the infrastructure. Will people care if their NFTs are stored on a centralized wallet or a decentralized one?

*People follow the trends and the ease of usage. What if Meta creates NFTs with astoundingly great user experience while decentralized platforms will focus on bringing safety to the decentralized infrastructure and will neglect the UX? Will people follow the technology or the experience and fun of using the platform? I suppose the answer is obvious.

The main quest of the crypto world is to make the user experience the best possible within the shortest amount of time. Why does it matter now, when NFTs became a thing and it did not matter as much in the times of Bitcoin’s media dominance? The following statement is the answer.

The default thing to do with NFT is to use it; whereas the default thing to do with Bitcoin is nothing.

The UX — We’re hiring!

The rapid changes and growth in the NFT space during the last two years have made UX developers in high demand. The number of mistakes and disasters that have occurred took its toll on the community and the overall view of the crypto space by leaving the mark of being insecure and not suited to the customer’s needs.

Over the past decades, a significant shift in the car industry has led to a change in the narrative of responsibility. Car producers went from claiming “accidents are users’ error” to “accidents are our fault”, which then translated to a noteworthy increase in the safety of car usage.

Without a similar shift in the NFT space, we cannot expect the growth and consumerization of the technology. The user has to be sure his funds and NFTs are secure even when his knowledge of the technology is limited. Transactions have to be easy to make, and every potential user’s mistake identified and prevented. In the world of multiple blockchains, common standards have to be set in order to reduce or even remove the boundaries separating users.

*We are slowly seeing the change being made when it comes to the UX, UI and to some extent security. What we also might spot is centralized platforms have been taking care of their users for a long time before NFTs showed up. Therefore, time is of great significance as those who will take better care of the users and establish themselves in the space will win in the long run.

The Game with Institutions

The governments are working against us, not with us.

The European Union has lost to Americans the battle of Web2 and now became a digital vassal to the digital empire of the United States. There is a chance for the EU to turn the tables by focusing on the development and embracement of Web3. A move like that would greatly limit the power of technical oligopolies in the US and grant the EU the right to be the decisive player in the future world of Web3.

If we were to maintain the same attitude towards the Internet in the early 90s as we are having towards Web3 nowadays, the Internet would have never become what it is today.

The space of Decentralized Finance (DeFi) has the flaw, from the regulator’s point of view, of not exactly knowing the counterparty. Therefore, DeFi will probably become very hard to implement, at least for US citizens.

The difference between DeFi and NFTs is having a personal counterparty, which makes NFT implementation a lot easier from the legal and regulator’s point of view. It is highly probable we will end up with KYC (Know Your Customer) procedures on large marketplaces, but at least the growth will not be limited by making the purchase and use of NFTs illegal.

Zero-Knowledge

*The recent years of cryptographic development have brought up the concept of Zero-Knowledge Proofs which may revolutionize not only crypto space but also the world we know today. In short, ZK Proof is a mathematical technique to verify the truth of provided information without revealing the information itself.

*It might be a far-fetched idea to some, but definitely the concept of Zero-Knowledge Proofs, once implemented, would bring substantial benefits across the wide spectrum of industries and could be another milestone in the history of humanity.

Nowadays, various institutions gather enormous amounts of user data. Utility bills, ID cards, driving licenses the list seem to have no end; the amount of data collected not only slows down the process of getting things done but also endangers users by processing excessive data with a risk of leaking the data when attacked or by accident. The implementation of ZK Proofs in the administrational and institutional domains would significantly reduce the risks connected with mishandling or misuse of the provided information.

*Zero-Knowledge proofs are the solution to many of the problems the crypto space is suffering from today, especially from the institutional point of view, as it would greatly limit the risk of making a mistake or being unable to provide a meaningful proof of our actions and financial gains within the space.

*You cannot tax what you cannot see. The following statement is a double-edged sword providing some market participants with ways to avoid taxation of their financial gains. On the other hand, avoiding taxation and actively finding new ways to hide profits from the IRS only makes it more difficult for the crypto space to establish itself as a reliable place for investment.

Some people in the space, like Punk 6529, are old enough to remember the old days of the Internet allowing them to spot and analyze the emerging patterns.

In the early days of Twitter, there was a discussion about whether Twitter should be a protocol or a service. What seemed like a normal business decision at that time has shaped a significant part of society and the world in the following years. The decisions of the past which turned out to have a huge impact on the present cannot be easily reversed or changed.

The impact we can do today might set the rails for future generations and the technology of NFT. Therefore, we cannot play games on our own within small communities; otherwise, we will end up being a niche community which will become forgotten and neglected.

*Gather and make a change the space needs because the momentum, once lost, is very hard to rebuild.

We have seen different approaches to business models in the space, from land-based platforms to BAYC’s way of experimenting with ideas. It is worth noting Yuga Labs went from 0 to a multimillion-dollar community in about 12 months. *We have also had different experiments like puzzle NFTs that did not succeed in their vision and the ones that were too small to make any significant change. Nevertheless, we need multiple communities and projects like BAYC to experiment and create new things, to discover and re-discover ideas.

Another step is moving cultural icons into decentralized spaces and having true ownership over them. We need multiple NFT and crypto natives to make the impact, run different funds, Venture Capitals, as well as create and shape the space.

At some point, things like billboards, stadium sponsorships or even hotel rooms will become NFTs.

Imagine working at an office in New York the whole year. When you finally get a week of vacation, you might want to go to the Mediterranean, but all of the places and hotels have already been booked. Are you going to wait another year for such an opportunity to occur? You can call hotels, beg for vacant rooms or attempt to make some shifts among the booked rooms, but the hotel’s databases are too scattered between different chains and facilities to make any changes. Eventually, you will end up spending your vacation in a nice place but still haunted by the vision of yourself lying on a beach by the Mediterranean Sea.

The scenario in which hotel rooms are NFTs looks far better.

The moment you call the hotel to make a reservation, the receptionist can check if there are any rooms left or might inform you about the possibility of verifying the availability of rooms on our own via their website. The site allows you to see which rooms are booked and reach the person who booked the room. You spot the room that has been booked by an elderly couple who, quite probably is already retired, and they would not mind moving their holidays by a week or two. Without any second thought, you offer them 700$ for a room worth 300$ and they seem to be happy to accept the offer.

It is a win-win situation for both of you, and all we needed was the possibility to reach the other person.

Hotels, art galleries and many other goods and service providers have databases scattered across the whole world. Bridging them via NFT technology will be a gamechanger for a number of industries as we will be able to apply similar solutions to almost any off-chain businesses.

NFTs can represent any off-chain asset that is non-fungible and move it to the metaverse. Therefore, we can build bridges between the off-chain and on-chain world.

The Simplest Strategy

If I only knew about Bitcoin in 2013, I would have been a millionaire today.

*With a very high probability, you would not. People claiming “if they only knew” do not seem to take into account the fact they would still not know, at the given moment, what will happen in the future. Let us assume there is a project today that will increase x1000 in the next couple of years. Why aren’t you investing your money into it right now? What holds you back? Uncertainty?

It is easy to pick the winners if we look at the past. Anyone can do it. The real brilliance is choosing the winners of the tomorrow.

Thousands of people investing in Bitcoin back in 2013 still managed to lose most or all of their money. *Why? Because they were not here long-term, they were mere passers-by without any knowledge or experience of being active on the markets and price swings of crypto assets can swipe off even the most experienced players. The second reason was the lack of vision and apprehension of Bitcoin as a technology and investment.

*One key note is that investing in Bitcoin and investing in altcoins is not the same game. One of the crypto natives I greatly value once said “The goal of buying an altcoin is to sell it”. The simplicity of the sentence is what differs between being in the space long-term while sticking to high-conviction assets and being here simply to experience huge gains followed by precipitous losses caused by the lack of knowledge and experience.

What we are seeing nowadays with NFTs seems familiar to the altcoin market in its early days. A number of projects are experiencing high valuations, even those being substandard or ridiculous. Therefore, most of the NFT collections will go to zero. It is a harsh truth, but we all have to bear it in our minds.

On the other hand, by choosing the right NFTs we will experience incredible growth of our portfolio and being a part of a community that is here to stay for a long time.

Buy a coin or NFT and assume it will go to zero.

The following attitude will allow you to stay cool-headed in the harsh times of the market and will hold you back from making decisions you will later regret.

Devote your time to education and experiencing the space step by step. The more you do in the space, the better and smarter you become.

Wisdom comes from experience. You cannot short-circuit it.

If you cannot find enough time to educate yourself, focus on dollar-cost-averaging (DCA) into major projects like Bitcoin and Ethereum by setting a prior strategy. In addition, you can buy some NFTs for fun and build your experience in the space.

*Doing DCA without setting up a strategy beforehand is not any different from gambling on the market as you do not have any boundaries as to what and when to buy or sell. Set up a strategy and make sure you will stick to it, then enter the market.

The crypto space is short of people but abundant with ideas. If you can transfer or modify the skills you already have, in order to be useful in the space, your billing rate is going to grow significantly.

There is nothing more painful than working in an industry that is slowly shrinking. You worked as hard as anyone else, but you cannot win against the whole market. The economy constantly gives signals, and all we have to do is to stay alert, observe the world and make the change when the time comes.

*The Bounded Soul

*The following two paragraphs are not a part of the interview with Punk 6529.

World of Warcraft is undoubtedly a global phenomenon with a variety of different in-game features influencing the game and its mechanics. One of the ideas implemented in the game is the concept of the Soulbound token, which is deeply rooted within the community, and as the name suggests, is bounded to the soul, i.e. the player’s character.

How does it work though? The mechanic behind the soulbound item is very simple, once obtained, cannot be sold or transferred to anyone else. The item is forever bounded to the character who obtained it.

Most of the Soulbound items require completing rather demanding and difficult quests or killing powerful monsters in order to get the bounded item as a reward. In other words, you cannot obtain the Soulbound item without overcoming significant obstacles along your way. Aside from granting you particular bonuses, it might also signify the experience of a player or his devotion to the game and undergone challenges.

What if we combine the idea of soulbound items and NFTs?

Imagine going to an Ethereum conference and gaining a soulbound token, proving you have been an active participant in the event. On the other hand, those who were just passive participants would be rewarded with a soulbound token providing their attendance at the event. Either way, your effort of going to the conference as an active participant or just a listener will be rewarded. After gaining the soulbound token, anyone will be able to see what kind of events you have been to, how dedicated you are as an Ethereum aficionado or just verify whether your claim of supporting the Ethereum in its early days.

Imagine graduating from the University with a soulbound NFT added to your profile, confirming your graduation and all of the achievements you have been able to complete along the way.

How about collecting soulbound NFTs as an active member of a community; anyone can check your profile at any given time and see e.g. your achievements, events you have been to, badges of honour given by other players and many others.

The idea of Soulbound NFTs will soon become widely discussed all across the various communities, not only crypto. Mark my words.

As additional reading, I highly encourage you to read the following article presenting the idea of Soulbound tokens written by Vitalik Buterin.

*The Finishing Touches

The simplified process of spreading the NFT technology might look as follows:

Stage one — get 100 million people to use NFTs of any kind.

Stage two — spread the idea of the possibilities NFTs will bring while creating a network effect.

Stage three — start social debates considering the idea of modern society and its digital future.

Stage four — revolutionize the world with JPEGs in the metaverse.

Let the following quote summarize the article you have just read. Let it sink in. Let us remember and focus on the idea and not the projects that will come and go, rise and fall. Follow the idea and build the world upon it.

We are told to remember the idea, not the man because a man can fail. He can be caught, he can be killed and forgotten, but 400 years later, an idea can still change the world.

~V for Vendetta

Till next time!

~M.E.

Crypto is no longer the domain of nerds and outcasts living in their basement and mining digital coins.

It is entering the day-to-day world of the youth due to the change of the Internet we see nowadays. It slowly becomes the new standard. Constantly growing and solidifying its foundations even during the times of emotional apathy after the bull run hype.

Intro

The price of Bitcoin rose and fell across the previous cycles setting new All-Time Highs each time. However, what matters is not only how high we rise but how low we fall as well. In this case, each cycle’s bottom was set at new and higher All-Time Lows.

One may think there is only one way for us to go — to rise in price after each cycle. Before reaching such conclusions, we have to ask ourselves some questions.

Why does the price of crypto assets rise? Is it only pure speculation on a new asset class resembling the dot-com bubble?

Do we have *new money *flowing into the space?

Are developers devoted to building, or are they leaving the space?

Is crypto space becoming more friendly for newcomers?

What about the change in the perception of digital assets by the regulator and other financial institutions? Is Bitcoin from the 2017/18 bull rally the same as the one from 2020/21?

There is no definite answer to that question. However, we have to consider the massive shift in fundamentals of the whole crypto industry that has been taking place for some time and has rapidly accelerated in the recent year.

The Regulations

For crypto assets to be legally traded on a Centralized Exchange like Binance or FTX, we need legal regulations allowing real-world companies to do so.

The better the regulation, the easier it is for the company to flourish as it does not have to worry about the lack of regulation. Therefore without proper directives, companies have no clear path to follow in order to obey the law and not be sued in the future.

Lex Prospicit Non Respicit — The law looks forward, not backward.

Well… not in the financial world.

Imagine setting up your business where no one tells you what is legal and what is not. Additionally, at any moment, you might be sued for past doings, which the regulator will find illegal. On top of that, we cannot be certain about the future as we might encounter a regulation introduced the following day, crippling our whole business model and making us unable to operate in the same way we did in the past. Not to mention the financial penalties that might follow.

Having established how important proper regulation is for the future of the whole industry, we might advance to real-world examples.

One of the most important legal decisions concerning the crypto industry is coming to European Union. In the following months we will witness the final form of the Markets in Crypto-Assets regulation, also known as MiCA.

In short, MiCA’s aim is to thoroughly regulate the market of crypto assets in the European Union, making it easier for the companies to operate in EU countries. The set of rules MiCA is going to introduce will encourage crypto-related firms to settle down and operate on the Old Continent, increasing the odds of making the EU the world crypto hub.

The European Union became the vassal to the USA in the terms of Web2, in other words, the present Internet. So why not try to turn the tables and become the leading figure in the realms of Web3?

Not every European state is equally safe from the regulator’s point of view, and that is something worth taking note of. Taking a look at the Financial Action Task Force (FATF) list of countries, we might see different levels of trust.

London’s wish to become the crypto hub for various companies does not seem to be disrupted by the regulatory companies as the UK is ranked as a safe state. In fact, London is one of the biggest financial hubs in the world, and such having position might be easily leveraged.

Taking a small trip to the South, we will see Gibraltar, which has been demoted from being a safe state to the grey list of countries and put under increased supervision due to several reasons listed in the FATF report.

The opposite example is Malta, which tightened its laws and vigorously fought illicit funds operations. In response to its engagement, Malta has been taken off the grey list and marked as a safe state. The sheer fact of being on a grey list or a list of safe countries is negligible for the average citizen. However, it is crucial to the reputation and financial possibilities, or their lack, a given country might experience.

The point I wish to make here is that the regulatory foundations are crucial to making long-term plans and becoming a leading figure in the crypto asset industry.

The vision of anonymous crypto transactions and detachment from the state always has been of great importance to many individuals in the crypto space. However, crypto will not be allowed to grow as an industry without proper regulations. It is a sad truth we all have to embrace.

Maybe the development and spread of zero-knowledge proofs technology will change the state of things; however, for this to unveil, we will have to wait for at least a couple of years.

One of the Anti-Money Laundering (AML) procedures, called Know-Your-Customer (KYC), has been opposed by many due to the aforementioned anonymity reasons. However, taking a shift in the perspective, we might see many crypto exchanges and similar crypto-related platforms strictly following the KYC and other AML procedures. The better the procedures, the easier it is for clients to legally cash out their money.

As for those who do not wish to pay taxes, there is always a way to do so if you are very devoted.

Can this be considered a positive phenomenon? It depends on your anonymity and data security attitude. Nonetheless, I would risk stating it is a positive phenomenon leading to faster and smoother crypto industry regulation across the continents.

Why across the continents? Because the laws have to be mutually accepted and introduced to provide a friendly environment for the industry to grow despite the location.

What if, on top of regulating crypto assets, we will establish Bitcoin as a legal tender in the country? El Salvador followed the path of becoming the first country to adopt Bitcoin as a legal tender, in other words, accepting Bitcoin as a currency. Panama took similar steps and accepted Bitcoin as a legal tender in part of their country, creating some sort of a Bitcoin hub.

It might not be huge news today, but who would have thought a couple of years back that Bitcoin would become a legal tender in a country?

Who knows what awaits us in the near future…

The better regulations are introduced over time, the easier it will be for the crypto industry to flourish and grow, increasing the overall safety of both customers and companies.

The Stablecoins

One of the most significant aspects of the whole crypto industry are stablecoins.

Setting up an account on a crypto exchange is neither a complicated nor a lengthy process. Once entered the exchange, you will see the trading pairs available to you, and most of them will be traded to a stablecoin like USDC, USDT or DAI.

For the newcomers, it is rather logical and something they are used to. You are buying Bitcoin with your USDC dollars — BTC/USDC — and not buying an XYZ altcoin with Bitcoin — XYZ/BTC.

Although such trading pairs might not be the first choice nowadays, those were almost the only ones available during the bull run of 2017.

Tether (USDT) was the first stablecoin, out of the main ones today, that got introduced to the market in 2014 and started trading in 2015. The second largest stablecoin by market capitalization is the USD Coin (USDC), issued by Circle and entered the market in the second half of 2018. The third most common stablecoin DAI was issued at the end of 2017 as the Ethereum smart contracts involving DAI stablecoin were officially launched.

During the recent bull run, the stablecoin’s significance in the crypto industry grew immensely and became an inseparable part. The whole submarket of stablecoins emerged, led by the Curve protocol, where most of the volume is created by trading stablecoin pairs and providing liquidity. Additionally, Curve seems to have plans to issue their own stablecoin soon.

Coming back to the previous chapter, we might see that the crypto regulation I have talked about does not only concern Bitcoin, Ether and other cryptocurrencies. It also regulates crypto assets like NFTs and, more importantly, stablecoins which became a doorway to the crypto industry for the newcomers, spreading the adoption of digital assets.

The crypto industry is growing, and so is the importance of stablecoins, their usage and their connection to real-world assets. I will even risk stating that stablecoins became the backbone of the whole crypto industry. Therefore it is crucial for them to be secure, thoroughly audited (yes, I’m looking at you, Tether), and safe to use from a legal point of view.

The Blockchain Security

For those of you who have been in the space for some time, the Chinese crypto banning saga is almost a feature in crypto.

If you are new, let’s do a quick recap.

China has been banning crypto, then saying it is legal, then banning it again, and so on. Those decisions, or manipulations, had a significant impact on the market and the price of Bitcoin. However, each time the ban occurred, the impact seemed to lessen.

The year 2021 brought us a little bit more decisiveness from China as they banned Bitcoin mining and shut down all Bitcoin mining facilities on its territory. The event led to the fall of the Bitcoin hashrate by about 50%. However, the hashrate quickly began recovering as the miners decided to move their facilities to other countries like the United States and Canada.

What could have happened if such an event took place in the early days of Bitcoin? We can only wonder about the consequences and whether it would bring doom upon Bitcoin or not. However, such a stress test proved the security and resilience of the network, strengthening the faith in Bitcoin.

The Merge of Webs

It is hard nowadays to find a person without a smartphone. Having constant access to the Internet made smartphones an inseparable part of our daily lives.

The Internet as we know it today could be referred to as Web2. The upcoming (r)evolution will change the Internet by incorporating blockchain technology, decentralization and other features. Web2 will evolve into Web3, and a new chapter in the era of information will begin.

How is it tied to the fundamentals and overall strength of crypto?

It all comes down to the fact that Web3 is slowly trying to expand and attract new clients by merging with the present Internet.

One of the most prominent usages of the Internet happens with our smartphones being constantly connected to the network. So why crypto companies shouldn’t try to get into the smartphone market?

The recent announcement of Polygon creating a metaverse smartphone along with HTC and Solana designing its own smartphone called Saga* *seems like a reasonable step to establish the grounded position of crypto companies in the real world.

Another example might be the FTX exchange with all its partnerships, sponsorships and company acquisitions. However, it is the topic for another article as the influence and advertising leverage FTX creates is astonishing. Let me just say FTX has bought the rights to the American Airlines Arena in Miami, renaming it to FTX Arena and playing the game of PR incredibly well.

The User Experience

In the early days of crypto, it was quite hard for an average human being to buy Bitcoin or any other crypto asset. Even today, some applications are cumbersome and might overwhelm the potential user, especially the one who does not feel accustomed to the technology.

Along with the shift towards the smartphone industry and the NFT hype, crypto is seeing a visible improvement in providing its customers with high-quality application interfaces leading to a more satisfactory user experience. The visuals are becoming more appealing, and the interface becomes clear and user-friendly, making the apps intuitive and easy to use.

The whole process of onboarding new clients becomes faster, and all the bottlenecks are being identified and solved. The industry prepares for the incoming wave of new clients.

The easier the access and the visuals, the more people will enter crypto in the following years.

I gotta say, I adore the new look of AAVE ghost.

The Retention

The cycles come and go, as does people’s interest in crypto. The market conditions, prices and cycles might differ; however, emotions always stay the same.

It’s one of the most important lessons and rules, not only in crypto but in every financial market. The below graphic is the most iconic one, showing how people behave in the markets. It’s the holy grail of every investor since…

… emotions on the markets always stay the same.

The inflow of new people to the crypto space is extraordinary in times of bull markets, especially during the last phases when the euphoria peaks. The price reaches its heights just to experience the downfall. As the price falls down, reaching lower lows, the emotions change, the interest falls along, and people begin to leave the space full of anger, resentment, and despair.

Once bitten twice shy, as George Michel sang?

Not everyone, as each cycle introduces new people to crypto who are going to stay here long term for various reasons. One might have found a job as a developer, the other might have been very successful as an investor, and someone else might have learnt and experienced so much, that he gained an understanding of what crypto might become in the future by seeing the hidden potential.

More and more people decide to stay in the crypto industry, making it a more secure, vast, and exciting place. New friendships are made, new contracts are signed, and another Arthur Hayes’ article gets published.

Over time the space becomes more solidified and prepared for a new wave of interest growth and emotional rollercoaster. Crypto consists of more and more people who are not going to leave, no matter what happens. No matter the odds.

The Opportunity and Loss

The waves of emotional interest and inertia among retail investors are obvious to anyone who has been in the markets for some time or for people interested in human psychology.

If you master both, well… that’s a worthy edge to have on the markets.

How does it affect crypto-related companies and various crypto projects?

What we see today is a duality of mass layoffs and numerous hiring offers. Even the biggest players on the market are following the scenario of parting ways with their employees. The NFT niche giant, OpenSea, decided to lay off 20% of its staff due to market conditions and decaying interest. It might sound reasonable since the NFT craze indicated this bull run euphoria phase with mindless projects reaching exorbitant prices but…

What about exchanges? Those do not seem to be so intertwined with the NFT hype, yet Gemini exchange laid off 10% of its employees a couple of weeks ago and announced the second round of layoffs. Blockchain.com decided to close its Argentina-based offices and halt its expansion plans in several countries.

The reasons might vary, however, the most common ones might be an overall decrease in profit, negative cash flows, or loss in the value created by holding or trading certain positions. Not to mention the recent events connected to 3 Arrows Capital (3AC) problems that took its toll on the markets and some companies in particular.

On the other hand, going through crypto-related job-offering sites, we will see numerous hiring offers. It indicates the devotion of some companies to building projects despite harsh market conditions. Although devotion is a nice addition, the prerequisite to building projects is the money.

If we take a closer look, those are not only the projects from a certain niche in crypto like DeFi or Metaverse. Skimming through the job offers, we will see companies and projects from the NFT world like LooksRare. The sheer fact of companies spending their money to build their position in the NFT space tells us something about the future of Non-Fungible Tokens and the overall state of particular projects.

Dissecting the job market in crypto might help us see who is building and who is not. What niches and projects are here to stay in the long run, and what has been only a hype-driven trend.

The projects are better managed financially, having saved enough money throughout the recent bull market to operate and build all the way through the crypto winter or have positive cash flows, which is an even more positive indicator as making a profit during a bear market is not an easy thing to do.

What does it tell us about the foundations of crypto?

It is evidence that crypto is growing despite market conditions and constantly strengthening its foundations to be even more resistant in the years to come.

The Onboarding

The growth allures greed.

What is the reason brands are coming to crypto? It is either the financial profit or the expansion to find new clients. To not miss an opportunity to gain recognition in the digital world emerging before our eyes.

On a daily basis, we are bombarded with news about new money flowing into the space and various real-world personas and brands securing deals with crypto projects and companies.

Binance, the leading crypto exchange, has secured the deal with Cristiano Ronaldo bringing the highly influential and world-renowned individual to the space. Adidas entered the metaverse with their own projects, partnering with the most prominent collections in the NFT world and securing their spot in the future market. However, it is not only Adidas who is eager to enter the new market; Nike has bought RTFKT, a company devoted to creating NFT projects and is doubling down on its development.

So far, I have talked mostly about people and brands related to the sports world, and there is a reason behind it. I will try to explain my point of view in the following way.

Digital world -> Digital entertainment -> Games -> E-sport -> Sport

It is not an evolution. It is rather an image of intertwined connections between those domains. In other words, the traditional sport was a natural next step in the growth of metaverse interest as it is focused on entertainment just as a huge chunk of the digital world. That is why brands are flooding the crypto market with acquisitions and investing in various projects, especially the ones from the metaverse niche. It’s a buying spree this market has never seen before. Especially the one FTX is doing.

The metaverse allows us to create our avatars, our digital selves or the digital persona we wish to be. What does the avatar need?

To be personalized. To be one of a kind. To be unique.

So what about clothing and gadgets? Yeah, that will do.

And so we have advanced to the next level. The level where we do not only see Adidas and Nike NFT clothing but also more exclusive brands like Prada and other fashion labels following its way. At the end of day, why should you wear a hoodie if you can yourself a Prada outfit?

One might think the NFT hype has already vanished or will die out during crypto winter. The thought process here is correct, and I do not wish to argue on this matter since the hype around NFT was very similar to any other euphoric trends in the past cycles. However, we have to remember that NFT technology is far more than just silly profile pictures and apes.

It is a game-changer technology in the world of culture and entertainment we can barely use today due to technological constraints and lack of imagination. We have entered an unpaved road and cannot yet imagine what is possible. As we have seen lately, the NFT is associated with overpriced pictures and nothing else, indicating how long is the road before us.

If you wish to learn what NFT is and what it might become in the future, I highly encourage you to read the following article or the short summary where I took a deep dive into the world of NFT and the future of Web3. The article and summary are based on the interview with Punk6529 hosted by Raoul Pal I had the pleasure to listen to.

In short, we are building the digital world of Web3, also known as the Metaverse, where Augmented Reality will be as common as smartphones are today. The world where advertising possibilities are boundless and consumer needs unsatisfied. That is why brands are trying to secure their place in the future market with abundant opportunities for acquiring new clients and growing their recognition.

Therefore the foundations of crypto are strengthened by world-renowned companies and individuals who do not want to miss the once-in-a-lifetime opportunity of* being early*.

The Takeaway

Crypto is here to stay. Developers are here to build. Brands are here to grow.

Do not be mistaken by catchy doom-foreshadowing articles and videos. Their only use is to catch the attention, to profit from the resentment and other negative emotions.

In the world of abundant information, knowledge is scarce.

Take one step away from the biased information and look for the facts. Give yourself time to analyze it and come up with your own conclusions.

Stay safe.

Stay curious.

Till next time.

~M.E.

P.S. If you’ve got any questions, feel free to ask in the comments or on Twitter via DM. Always happy to help.

https://twitter.com/ModernEremite

The Dichotomy

The gaping pit separates the knowledge and understanding of the markets between experienced investors, or at least those who have been active in crypto for more than one cycle, and the ones who are new to the game.

The question arises, how to find the middle ground in understanding the concept between those two parties?

Being on a crypto Twitter space for quite some time, I have seen countless uses of a rocket emoji. 🚀

Additionally, To The Moon is, without a doubt, an iconic phrase in crypto, especially during bull markets. It is striking how the experience changes our perception, even of such small things as phrases. The new ones believe it to be true while the old players see it as an opportunity to find exit liquidity and make a decent profit.

The dichotomy in perception and market experience is stunning.

However, both groups seem to be familiar with the rocket emoji and the moon phrase. So why not use them to create a metaphor?

The Metaphor

As we have all agreed on the familiarity with the rocket icon, let us use it to create a metaphor describing the path of Ethereum.

After all the hardships and improvements over the past seven years, the rocket has to go through a series of five major upgrades before reaching its *almost* final state. *Almost*, because the development will happen all the time, just at a slower pace in comparison to the five prime upgrades.

Throughout this process, the rocket will evolve multiple times to become faster, more efficient, leaving historical overload along the way. However, as Vitalik once stated, even after the first two upgrades, Ethereum might thrive for decades as an ecosystem. What will Ethereum be capable of after the whole series of updates then?

Let us break down the five stages of upgrades into digestible metaphorical pieces.

• The Merge -> The Rocket evolves, changing its core mechanism

• The Surge -> The Rocket surges into space, steadily accelerating

• The Verge -> The Rocket becomes simplified and more efficient

• The Purge -> The Rocket gets rid of all the historical data to optimize the energy usage

• The Splurge ->The Rocket dismounts redundant and outdated parts while adding new features and reaching its *almost* final state

The History — Early Days of Ethereum

Ethereum whitepaper was released on November 27th 2013, and the project entered the Sale Phase on July 22nd 2014. The Public Sale lasted for 42 days, until September 2nd, during which you could buy ETH with BTC.

After raising funds and seeing the initial interest in the project, it took almost a year of arduous work to bring Ethereum to life as the first block, the genesis block, was produced on July 30th 2015, at 03:26:13 PM UTC.

Shortly after that, a black swan event took place…

What happened in June 2016 split the Ethereum community into two opposing camps, the purists and the progressive types. The division happened due to the infamous DAO Hack when over 3.6 million ETH was drained by a malicious actor who, according to Laura Shin, has been finally found.

Such a disastrous incident meant not only the potential loss of investors’ funds but was also a huge existential threat to such a young project like Ethereum in its early days.

In the aftermath of the hack, the community decided, by on-chain voting, that Ethereum should perform the reorg and go back to the state of chain from before the hack. The decision meant the stolen funds would be restored on the blockchain as if nothing had happened.

The Purists, on the other hand, claimed it was against the rules of blockchain principles, even considering the fact, that the malicious actor exploited the vulnerability in The DAO smart contracts. They claimed the chain should not be reorganized and the price for the mistake shall be paid. This stance made it impossible to bridge the gap between the two groups and led to a Hard Fork and the creation of Ethereum Classic.

Additionally, the debate also revolved around the basic principles of blockchain technology which is said to be immutable and censorship-resistant, making the discussion a little bit philosophical.

After the heated debates, on July 20, 2016, at block 192,000, the Ethereum hard fork was implemented.

From that moment, the initial Ethereum community split into two opposing camps with different visions of what Ethereum should be in the future.

The aforementioned events and debates led to the creation of Ethereum Classic (ETC), sticking to the PoW consensus mechanism and Ethereum (ETH), which aims to become the most robust PoS blockchain and the backbone of the crypto industry.

A similar parting of ways might take place after the Merge, where Ethereum will transition to the PoS consensus mechanism, leaving the backbone of the PoW mechanism — the miners — unemployed. However, it is a consideration for another article as there are multiple scenarios at play, and in order to gain a non-biased vision, at least a couple of them shall be discussed.

The Evolution — Ethereum Improvement Proposals

You might have heard about various EIPs across Ethereum history. But what is EIP to begin with?

EIP stands for Ethereum Improvement Proposals — in short, upgrades on the Ethereum blockchain. While some EIPs are less significant, there have been a few which became game-changers for the Ethereum ecosystem. Let’s dive into some of those.

Past EIPs:

EIP-721 — A standard interface for non-fungible tokens (NFT), also known as deeds. In other words, EIP-721 introduced NFT technology to the Ethereum blockchain distinguishing three main use cases:

• Physical property — houses, unique artwork

• Virtual collectables — unique pictures of kittens, collectable cards

• “Negative value” assets — loans, burdens and other responsibilities

While most of you might associate NFTs with profile pictures and CryptoPunks, the technology of Non-Fungible Tokens is far greater than any of us can imagine, as we are only beginning to learn what is possible.

If you wish to learn more about NFTs and the concept of Metaverse, I highly encourage you to take a look at the following article, where I discuss the future vision of NFTs and Metaverse according to the icon and leading mind of the NFT space — Punk 6529.

https://hackernoon.com/the-future-of-nfts-and-metaverse-according-to-punk-6529

EIP-1559 — aka London Fork — One of the most hyped EIPs of all time. EIP-1559 changed the long-term value of Ether (ETH) by introducing a fixed-per-block network fee that is burned, meaning Ether began to be burned on a block basis. The more Ethereum is used, as a blockchain, the more Ether is burned*.

*It is an oversimplification of the burning thesis as there are reasonable arguments to be made, cooling off the “future burn hype” and deflationary ETH thesis.

EIP-3156 — The introduction of Flash Loans. It is one of the EIPs that significantly impacted the DeFi industry by introducing the possibility to process a single-asset flash loan. In other words, a user can borrow funds without any collateral, use it to his advantage and return it in the same transaction. It is a game-changer mechanic in the DeFi space, even more so if we take into account that most of the trades are performed by bots, even in the traditional world of finance, aka TradFi.

EIP-4400 — Also called EIP-721 Consumable Extension, is an EIP introducing a new role for NFT usage, defined in EIP-721. NFTs have other utilities than sheer ownership. You can use them, e.g. as a Land/Parcel and allow various addresses to build something on top of it by paying a commission. In other words, it is the upgrade which laid the foundations for the evolution of NFTs in the future.

Upcoming EIPs:

EIP-3675 — The long-awaited upgrade to Proof of Stake on Ethereum Mainnet.

EIP-4337 — Account Abstraction, i.e. users’ operations will go to the separate mempool (memory pool, i.e. a pool of awaiting transactions/actions), simplifying the overall maintenance of Ethereum by avoiding the changes to be made for the consensus-layer protocol.

EIP-4444 — Removing the need for historical data to be downloaded and stored by the Validators as the historical data is not needed to validate new blocks. A huge step toward the vision of having a Validator node on a smartphone, in contrast to having at least 1TB disc space to store the data today.

The full list of EIPs can be accessed here — https://eips.ethereum.org/

The Roadmap — Five Prime Upgrades

Ethereum is entering the phase of acceleration in development and introduction of significant changes, as presented by Vitalik himself during the recent EthCC event in Paris.

The forecasted slowdown of the system’s capabilities growth will not be a sign of less interest in developing the network. It underlines the amalgamation of the rapid and groundbreaking changes that are about to take place in a short span of time, in contrast to an average development pace that will occur afterwards.

Below are the names of the Ethereum Upgrades in the order of estimated implementation:

• The Merge

• The Surge

• The Verge

• The Purge

• The Splurge

While the names might sound funny at first, those words bear a significant meaning if we put them in the context of a metaphor. Also, it is a lot easier to memorize the names and associated upgrades.

Let us recap the metaphor from the beginning of the article.

• The Merge -> The Rocket evolves and takes off

• The Surge -> The Rocket surges into the cosmos

• The Verge -> The Rocket gets simplified and more efficient

• The Purge -> The Rocket dismounts unnecessary parts to go further

• The Splurge -> The Rocket adds a variety of new features

Okay, okay, but what are those upgrades going to change? Why should I care?

Well, if you put your money into an asset you have little or no knowledge of, it is pure speculation. You cannot call yourself an investor, as investing is a conscious decision based on preceding research.

Also, it is fascinating to see the groundbreaking changes taking place in real-time, isn’t it?

Okay, now that we see the context, it is easier to link the upcoming changes to their meaning and the effects they will have on the Ethereum blockchain.

• The Merge -> Full transition to PoS

• The Surge -> Massive scalability increase for Rollups through sharding mechanism*

• The Verge -> Optimizing data structures with Verkle Trees

• The Purge -> Eliminating historical data and technical debt

• The Splurge -> Miscellaneous, yet important extras like post-quantum solutions

*Sharding itself is a separate and multi-phase upgrade, whereas The Surge is a part of it.

After having established what are the upcoming upgrades, let us dive into them separately and discuss the changes they will introduce.

The Merge — Full Transition to Proof of Stake

The long-awaited transition from PoW to PoS is finally going to happen after being postponed five times over the course of previous years.

One of the main implications of switching to PoS is the decrease in ETH issuance. There are plenty of different estimates of how much the issuance will drop, stemming from a 40% up to 90% decrease. The truth is, currently, about 13,000 ETH is created daily to support miners in PoW. Once we go to PoS, all that ETH issuance will drop. Instead, we will have Validators in PoS issuing about 2000 ETH per day, which might go up to about 5000 ETH in the future. Still, it is a significant drop in ETH daily supply.

As the name suggests, in the Proof of Stake mechanism, anyone holding ETH will be able to stake it and earn percentage rewards in ETH, not in dollars — which is a very significant difference. If you hold 32ETH, you can even become a Validator and propose blocks by running your own node*. If you hold less than 32ETH, you can stake your ETH in pools provided by Lido staking, Rocket Pool or other staking protocols that will emerge.

*Note that in order to run a node, you do not need any economic commitment aside from a computer with 1–2 TB of available data storage and an internet connection. However, without staked 32ETH, you cannot propose blocks to the network and earn protocol rewards. The ability for anyone to run a node is essential to maintaining the decentralization of the Ethereum network, hence different ways to become a validator.

**One key note to all the hyped degens looking to buy and stake ETH with all their fiat money — you have to take into account the possibility of numbers changing. Any APY or APR you see today might profoundly differ in the future. The more ETH staked, the less % reward for individuals which can drop even to 0.1% at 100/120M ETH staked.

On the note of staked ETH, The Merge will not release all staked ETH at once as it will happen after the Shanghai update, which is estimated to be introduced about six months after transitioning to PoS.

Once the Shanghai update is implemented, all validators will be incentivized to withdraw their staked ETH below the 32ETH threshold as those will not earn additional yield and will be otherwise locked for no reason.

Additionally, staked ETH will not be released at once to flood the market with liquidity but will be steadily released for about a year or longer. It all comes down to the withdrawal mechanism allowing only six validators to exit per epoch (every 6.4 minutes), limiting daily ETH withdrawal to 43,200ETH out of 14,250,406ETH* staked. This rate limit prevents a mass exodus of funds from flooding the market.

*Number of staked ETH might change.

Also, such a mechanism prevents a potential attacker from committing an offence and exiting his stake in the same epoch before having it slashed as a penalty.

Another significant improvement coming with The Merge is Single Secret Leader Election (SSLE). In short, it is unknown who will produce the next block, so a potential hacker cannot specify which validator to attack with malicious intent.

The Surge — Scaling Ethereum

The second upgrade aims to scale the Ethereum blockchain with the use of a sharding mechanism introduced in the EIP-4844 called “Shared Blob Transactions” or, as most crypto people know it, “Proto-Danksharding”.

It is crucial to point out that The Surge sets up the scaffolding and most of the logic needed to implement sharding but does not introduce a sharding mechanism per se.

After Sharding is shipped, Layer 1 of Ethereum will only have to interpret the data, not compute it.

But what is the sharding mechanism, you might ask?

In short, data stays on-chain while the computation and storage go off-chain, increasing the bandwidth of Rollup up to, from mathematical POV, 100,000 transactions per second.

Additionally, we might think of sharding as the process of splitting a database horizontally to spread the load by distributing the burden of handling the large amount of data needed by rollups over the entire network. It does not only increase the bandwidth of transactions but also helps decentralize the whole blockchain.

Along with the introduction of Availability Sampling, which is a part of the Sharding upgrade, even minor Ethereum users will be able to become guardians of the Ethereum City by becoming Validators.

The bandwidth will increase, and the average transaction cost might decrease, but as Vitalik stated, one major change that could potentially take place in the long-term is Layer 1 becoming more and more expensive over time for an average individual user. Such price dynamic will shift the growth of the Ethereum ecosystem from building on Layer 1 to building on Layer 2 projects like Arbitrum, Optimism, StarkNet or zkSync, which does not have to be seen as something negative. It would rather resemble the restructuring of an ecosystem similar to the situation when grown-up children are taking more responsibilities from a parent.

Another significant upgrade to the network will be Proposer-Builder Separation (PBS).

To clarify the nomenclature used, we need to understand who is, or will be, a Builder and who is a Proposer in the Ethereum blockchain.

Block Proposer serves the same role as a Miner on the PoW chain. Being a Block Proposer allows you to pick and choose which transactions to include in the block by specifying transactions that are the most profitable to you, taking the advantage of Miner Extractable Value (MEV) mechanism.

If you have stumbled upon the acronym MEV before but haven’t got any interest in checking what it means, here is a short explanation.

MEV is what the name suggests, the value a Miner / Validator / Sequencer etc. can extract due to the capability to arbitrarily include, exclude, or re-arrange transactions within the block they produce or propose, making the Ethereum block highly value-efficient.

It all comes down to the issue of packing as much as possible in the most profitable way. Data is robust, while block storage is limited.

Builders are a new class of actors who are given the list of transactions, from the Block Proposers, in the form of a crList. The list states which transactions builders MUST include limiting their capability of block manipulation. Builders still will be able to reorder the transactions to maximize MEV, but they will not be able to exclude/censor anything. Such a mechanism will nullify one of the most negative aspects of MEV, which is the god-like power to censor and exclude users’ transactions.

PBS aims to maximize the advantages and profitability of MEV to the Ethereum ecosystem, at the same time neutralizing its hindrances for users. It’s a win-win scenario.

The Verge — Changing Trees

The data structure is often presented and referred to as a Tree of a particular kind. One of the most prominent examples of data trees are Merkle Trees and Verkle Trees. The difference between the two can be described in the following way — In a Merkle Tree, a parent node is the hash of its children. In a Verkle Tree, a parent node is the Vector Commitment of its children.

Huh?

To put it in a simplified language, in Merkle Tree structure, to create a valid proof of a node, we need to include all Sister Nodes — nodes that share a Parent-Node — which can be a very data-consuming operation.

Verkle Trees, on the other hand, do not need to provide all Sister-Nodes. Instead, you have to provide the Path from the given node to the Root-Note along the Parent-Nodes, with a small proof validating the Path.

The two following graphs are taken from Vitalik Buterin’s blog post called Verkle trees and illustrate the path we have to follow in order to prove a given piece of data is correct and stems from the given root.

The advantage of using Verkle Trees is in producing lighter proof sizes by about 6–8 times compared to Merkle Trees, and by 20–30 times smaller compared to Merkle Patricia Trees Ethereum uses today.

The switch to Verkle trees will be, without a doubt, a great cryptographic challenge as those have been introduced by John Kuszmaul in 2018. It is not a long time to learn how to use the full potential of a given technology. Nonetheless, if everything goes well, it will be a tremendous upgrade to the efficiency of the Ethereum blockchain.

The Verge is also bringing lots of good things for decentralization with Stateless Clients allowing running Light Nodes on Ethereum.

A light node contains only the chain of block headers without the execution of any transactions or associated states of the chain it validates. When a node comes online, it will be fully stateless since it will hold zero information regarding the state of the chain. You can think of a light node as an individual verifying the titles of top-secret files without the need to know and process the contents.

The Purge — Leaving Historical Overload

The Purge will introduce the aforementioned EIP-4444 changing the game for Ethereum clients.

To proceed, we have to clarify who or what an Ethereum client is.

An Ethereum client is the software needed to allow Ethereum nodes to read blocks on the Ethereum blockchain and Ethereum-based smart contracts. A “node” is the running piece of the client software.

What will EIP-4444 introduce?

It will abolish the need for clients to store and download historical data — older than one year, as stated in the EIP description.

Hold up fellas… So it removes the history from the Ethereum blockchain? What kind of a blockchain does that? It is against the idea, isn’t it?

You will be correct, to some extent, as the removal of the data from the clients, or simply removing the need to download it upon becoming a new client, does not mean the data is lost. All the historical data is going to be stored by third-party projects like The Graph, which already serves such a purpose for some blockchain projects.

Bringing up Vitalik’s simile — A blockchain is like a billboard. It shows the present information you need as you do not have to know all the advertisements from the past.

Leaving historical overload aside will be hugely advantageous for Ethereum as it will allow more people to run Ethereum clients on their machines by removing the need to download and store hundreds of Gigabytes of data.

It is another step along the road to effectively running an Ethereum client on a smartphone.

The Splurge — Zero-Knowledge

In contrast to previous stages of the Ethereum Roadmap, The Splurge might not have the main “theme” upgrade. It is more of a miscellaneous batch of upgrades with some very ambitious long-term extras like ZK-SNARKing everything, working on post-quantum blockchain security and the introduction of EIP-1559 (Burning EIP) improvements.

In case you are not familiar with Zero-Knowledge (ZK) assumptions, it allows you to provide proof of something without disclosing any crucial information.

Imagine having a sealed room with only one exit and having to prove you can open the door and enter the room. Without anyone seeing you entering the password or even entering the room, you can exit the room via the only exit, which will be the proof of having the password to open the seal.

The possibility of Zero-Knowledge proof usage in the real world is astounding as we have to disclose sensitive information on almost every step we make in the bureaucratic world of today. It would not only improve the time efficiency of administrative work but would also be a huge improvement toward fraud protection and would minimize the risk of data leaks which are more common than most people imagine.

While the vision of Zero-Knowledge use cases is fascinating, the technology is still in its infancy. It is hard to estimate how much time it will take to develop and learn how to use Zero-Knowledge technology properly, but we see bold attempts made by zkSync or StarkNet, to build Layer 2 projects on Ethereum with the use of Zero-Knowledge proofs.

Taking a closer look at those projects and engaging with them might lead to gaining valuable experience and may turn out to be quite profitable in the future.

While listening to Bankless talk with Vitalik about the Endgame for Ethereum, I heard a great depiction of ZK in reference to an old Snake game.

Let’s think of Ethereum as the Snake. The more data it consumes, provided by the users, the longer it gets making it harder to operate. With ZK technology, the snake would just need a small proof that it *indeed* has a body attached to its head. The details of the body would not be needed to operate effectively.

In short, we would have just a head of a snake, and the whole body would be ZK-SNARKed, assuring the head everything is safe and sound.

The Splurge — Post-Quantum

One of the aforementioned ambitious upgrades coming in The Splurge is “Post-Quantum Everything”, as described in the Ethereum Roadmap posted by Vitalik on Twitter.

Without a doubt, quantum computers pose a huge threat to blockchain technology in its current state of security. The risk comes from an immense surge in the computing power quantum machines will possess, making it possible to change the state of blockchain, attack it, or simply obliterate it if needed or wanted.

While most of the crypto industry is focused on the current trends, some blockchain projects like Algorand or Ethereum are working on quantum-resistant solutions, trying to be one step ahead.

On the note of quantum resistance, it might be achieved with the use of Zero-Knowledge Proofs of a particular kind, as there are different versions of ZKP using various cryptography solutions. We will take into consideration two types of ZKPs — zk-SNARK and zk-STARK.

While the acronyms might be easy to remember, there is a little more to them in terms of meaning.

• **SNARK **— Succinct Non-Interactive Argument of Knowledge

• **STARK **— Succinct Transparent Argument of Knowledge

Just one letter bears a huge difference in how the technology can be applied. In short, STARK does not need a safe or trusted environment by relying on collision-resistant hash functions; hence it can be transparent. On the other hand, SNARK is designed to work in a trusted environment of a given protocol where the interaction between the prover and the verifier is limited to exchanging one proof.

While it is said zk-STARK proofs are currently estimated to be quantum resistant, zk-SNARKS are considered by some to be vulnerable to quantum attacks.

As stated before, Zero Knowledge is still in its infancy and might develop by A LOT in the future, possibly making zk-SNARK proofs quantum resistant.

What is more, zk-SNARK proofs are said to be quantum vulnerable due to the elliptic curve cryptography in their polynomial commitments. That is why projects like Redshift, created by zkSync, are using zk-SNARK proofs but with hashing mechanism instead of utilizing elliptic curves, making it *possibly* quantum resistant.

To conclude, it is hard to state whether some Zero Knowledge technology is quantum-resistant as it is hard to battle-test it without having quantum computers available at hand. We can only come up with assumptions concerning particular projects as to their quantum resistance. Moreover, ZKP technology is developing all the time, making progress and changing past assumptions just as zkSync did with Redshift, making their zk-SNARK solutions possibly quantum resistant.

Closing Thoughts

The Ethereum Roadmap is an attempt to upgrade a blockchain that grew immensely over the last years, making it an impressive endeavour due to the sheer magnitude of a project.

Ethereum will change significantly in the upcoming years, and it might be the greatest evolution we will see in the whole crypto industry for years to come.

As Vitalik himself stated, just with The Merge and The Surge completed, Ethereum can thrive for decades. Where Ethereum will be after successfully completing its roadmap and what it will be capable of, we can only wonder.

All of the above is written on the assumption that nothing breaks along the way, but let’s be like current Rollups — Optimistic.

Till next time!

~ M.E.

Isn’t it funny how day by day nothing changes, but when you look back everything is different?

C.S. Lewis

List of References:

1. https://ethereum.org/en/history/

2. https://ethereum.org/en/eips/

3. https://eips.ethereum.org/all

4. https://ethereum.org/en/upgrades/beacon-chain/

5. https://twitter.com/VitalikButerin/status/1466411377107558402

6. https://newsletter.banklesshq.com/p/is-the-merge-overhyped?utm_source=%2Finbox&utm_medium=reader2

7. https://www.gemini.com/cryptopedia/the-dao-hack-makerdao

8. https://ethereum.org/en/upgrades/merge/#after-the-merge

9. https://www.forbes.com/sites/laurashin/2022/02/22/exclusive-austrian-programmer-and-ex-crypto-ceo-likely-stole-11-billion-of-ether/

10. https://docs.ethhub.io/ethereum-roadmap/ethereum-2.0/account-abstraction/

11. https://www.smartcontractresearch.org/t/research-summary-redshift-transparent-snarks-from-list-polynominal-commitment-iops/344

12. https://notes.ethereum.org/@fradamt/H1ZqdtrBF

13. https://math.mit.edu/research/highschool/primes/materials/2018/Kuszmaul.pdf

14. https://vitalik.ca/general/2021/06/18/verkle.html

15. https://vitalik.ca/general/2021/12/06/endgame.html

16. https://vitalik.ca/general/2021/05/23/scaling.html

17. https://ethereum.org/en/upgrades/sharding/

18. https://notes.ethereum.org/@vbuterin/proto_danksharding_faq#What-is-Danksharding

19. https://ethereum.org/en/history/#whitepaper

20. 
    
21.