NFT - web3ideation

Web 3.0 Consulting -A metothodlogical approach

dwaschkowski — Sat, 28 Oct 2023 17:25:59 +0000

Web 3 Consulting

V&IA methodological approach

Despite a noticeable decline in the interest for cryptocurrencies after the last big hype, significant progress has been made in this area. Beyond the gold-rush atmosphere that characterized this hype, the phase also brought positive developments for the Web 3 sector. One of these is definitely the growing interest in the technology and its potential. This has led to the recent establishment of numerous companies working intensively on Web 3, NFTs and DeFi. However, only time will tell what real added value these companies can offer. But how do you get started with Web 3? In this blog article, we would like to present an approach that companies can use to successfully enter the world of Web 3.

What is Web 3.0 ?

If you are looking for a general definition of the term “Web 3.0”, you cannot avoid explaining the first two development stages of the web in more detail.

Web 1 describes the initial phase of the Internet, in which users only had access to static websites. This phase can be dated from the 1990s to the early 2000s.

Web 2, as its successor, is characterized by more dynamic websites and started to gain momentum in the 2005s. Users were no longer just consumers of content, but could also create content themselves. This period also witnessed the emergence of companies such as Facebook and Amazon, which developed innovative business models through the use of user data.

Web 3 represents the next stage in the development of the internet, which currently does not yet exist in its full form. Distributed ledger technology (DLT) forms the foundation of Web 3. In the vision of Web 3, users should control their own data and identity and be rewarded with tokens for using certain services. The goal is to make Web 3 fully decentralized on the basis of various blockchain systems that are currently still under development.

Web 3.0 Use Cases

Looking at current developments and the general understanding of the term “Web 3”, the picture appears to center frequently on buzzwords such as NFTs (non-fungible tokens) and the Metaverse. Given the novelty of the technology and the complexity of the various blockchain and token systems, this limited view is understandable, as there is still a lot of educational work to be done before Web 3 will gain mainstream acceptance.

Nevertheless, several companies are already recognizing the potential. Even if some of them might simply be trying to jump on the trend bandwagon, it is worth acknowledging that many of these companies are doing pioneering work despite the associated costs and risks. Basically, three dimensions can be distinguished in which Web 3 use cases can be found. The dimensions of customer interaction, innovation and integration. Following projects address one of these dimensions:

Starbucks has launched an NFT collection that allows customers access a unique, interactive experience. The “Starbucks Odyssey Experience” aims to increase customer loyalty. Users are rewarded for completing certain tasks and can therefore unlock special events or products. Interested parties can also purchase the NFT on the in-house “Odyssey” marketplace with a credit card – and no longer require any crypto currencies to do so.

Mercedes-Benz is pursuing a truly innovative approach. The car manufacturer has entered into a partnership with the Ethereum Layer 2 blockchain, Polygon, to create the Acentrik platform. Users will be able to upload and offer their data via AWS, while the hash of the Metadata will be stored on the blockchain. In this way, they are taking a step towards data economy and entering the field of “data as a currency”.

The US fintech company Stripe has unveiled a new API that enables Web 3 companies to process payments in Fiat money. Stripe not only aims to facilitate the purchase of cryptocurrencies, but also to support the acquisition of NFTs. A particular focus is on establishing a KYC (Know Your Customer) process to meet future regulatory requirements.

Looking at these three different approaches to integrating Web 3, it is clear that each company has developed a unique approach to integrating the technology into its business model. The approaches of Starbucks (user experience), Mercedes-Benz (business innovation) and Stripe (integration) also demonstrate the three dimensions of Web 3 that should be considered when planning and evaluating a project

The state of Web 3.0

But beyond all the hype, how is development in this area shaping up? First of all, it should be noted that the blockchain topic, despite the often proclaimed revolution, has still not reached the broad population. The collapse of major crypto companies such as FTX and LUNA has shaken confidence in the industry. During this phase, many people realized that the Wild West style in the area of cryptocurrencies and blockchain must be replaced by a clear regulation. With MiCA, the European Union has taken an important first step in this direction by creating a framework for future national legislation.

However, blockchain technology has not yet found many real-life applications in practice. The complexity and lack of understanding of the technology in particular represent a considerable hurdle, with the result that the use cases of blockchain and Web 3 technology still remain in a niche and in most cases do not extend beyond a proof of concept.

Methodical Blockchain and Web 3.0 Consulting

But what options are there to change this and establish blockchain technology and Web 3 in the company?

When implementing blockchain and Web 3, you first need to bear in mind that two factors need to be taken into account. On the one hand, the technical aspects, such as architecture, security, programming languages and tools, and on the other, economic-sociological aspects, such as use cases, business models, regulations and processes.

In order to manage the implementation methodically and to facilitate the steps into Web 3, web3ideation has developed an approach that enables companies, organizations and private individuals to get started with Web 3. The approach consists of three pillars, each of which is divided into three different blocks. The methodology is based on the classic procedure used in innovation management, taking into account the specific requirements of blockchain technologies. Each individual block forms the basis for the next block and makes it possible to systematically structure the entry into Web 3.

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Web 3 Innovate

In the Innovate area, the primary goal is to create a solid basic understanding of the challenges and opportunities of Web 3 technology. This first step focuses on creating the necessary knowledge about distributed ledger technology and its possible applications.

The next step is to develop a suitable Use Case by generating Web 3 ideas and application cases and prioritizing them based on their benefits and feasibility. Once a specific use case has been selected, the Web 3 utility must be determined by focusing on the user. In most cases, these two aspects in particular are only half-heartedly examined, causing many projects to disappear into the canyons of insignificance.

The last step of the Innovate pillar is to better understand the market and the target group and, based on on-chain analytics as well as qualitative and quantitative research, to make initial assessments regarding the possibilities of a potential Web 3 solution.

Web 3 Plan

The pillar Plan aims to take all necessary measures to ensure internal legitimization for the Web 3 project. First, a comparison of the various public blockchains needs to be drawn up. It is advisable to define concrete metrics in order to determine which blockchain meets the requirements.

Once a suitable blockchain has been selected, the legal aspects and possible implications of the Web 3 solution should be clarified. It is important to follow this up by calculating the business case and defining a go-to-market strategy.

Finally, the resources required for implementation must be defined and a clear roadmap, including a milestone plan, must be drawn up. In doing so, you should also consider which additional processes need to be established in order to guarantee the process-related and technical operation of the Web 3 solution.

Web 3 Deliver

The Deliver pillar focuses on the technical implementation of the Web 3 solution. This could be a decentralized marketplace, a Decentralized Autonomous Organization, a NFT project or something else. First, a prototype is developed and published on the Public Testnet. Here, initial experience with the Web 3 solution can be gathered and user feedback can be collected.

The quality of the Web 3 solution is ensured in the ‘Review & Testing’ area. The code undergoes a comprehensive audit and performance tests will be conducted. The tests provide suggestions for optimization. Finally, the revised code, which is tested in several iterations, goes live on the mainnet based on a detailed deployment plan.

Methodical blockchain and Web 3.0 consulting

As outlined in the following blog article, Web 3 is redefining how we interact on the web. Some large companies have already taken the first steps, with mixed results. From some projects and initiatives, we have seen some impressively innovative solutions that, if successfully implemented, could increase the adoption of the Web 3.

In order to successfully introduce Web 3, it is essential to follow a methodical and systematic approach. This should ensure that internal stakeholders are involved and that the target group recognizes the real benefits of the Web 3 solution. The methodology used by web3ideation is not completely new, but complements existing approaches from innovation management, lean product design and agile development with the technological components of blockchain and Web 3.

The post Web 3.0 Consulting -A metothodlogical approach first appeared on web3ideation.

Tokenization of Assets – Approaches and Challenges

dwaschkowski — Sun, 19 Mar 2023 16:06:53 +0000

Tokenization of Assets

V&IApproaches and Challenges

When we talk about blockchain technology, the first thing many people think of is cryptocurrencies such as Bitcoin or Ethereum. However, there are other smart contract-capable blockchains that all compete for one thing. The first use case in the real economy to be widely adopted. There are some voices suggesting that this use case is the tokenization of assets.

In this article, we would like to look at what tokenization means and what challenges are associated with it.

What are Tokens?

In the traditional understanding, tokens were basically the representation of a certain value. These could be scooter coins, food tokens or a winning lottery ticket. The use of such tokens brings various advantages. These include the simplified transfer of specific values and the possibility of dividing an asset into partial values.

In the blockchain world, a token is a virtual object that exists within the blockchain network. They can be linked to rights, access and identities. They are created on the basis of a smart contract, which not only regulates the emission of the token, but is also responsible for its monitoring.

What are Token Standards?

To create a token on a blockchain, you first have to choose a blockchain with smart contract capability and (in most cases) set up a smart contract that regulates and monitors the issue of the token. In practice, various token standards have been established over the years to serve as a guideline for the creation of certain tokens. For Ethereum, the largest smart contract-capable blockchain, the following three most commonly used token standards can be defined:

The ERC-20 token is the earliest form of the token standard and was first proposed in 2015 in the Ethereum Improvement Proposal (EIP) by Vitalik Buterin. The token standard allows the creation of fungible tokens that are interchangeable and follow the same rules. Examples of ERC-20 tokens is the USDC stablecoin.

The ERC-721 token is currently the best-known token standard when it comes to the definition of non-fungible tokens (NFTs). Each individual token from a collection has a token ID that is unique to the token address. For this reason, NFTs created with this token standard are not considered interchangeable.

The ERC-1155 is a multi-token standard that allows both fungible and non-fungible tokens to be created. In addition to these features, this token standard also allows the so-called batch transfer, in which several assets can be sent simultaneously

Over the years, many different token standards have been developed that can be used depending on the use case. Be it to enable metadata customization within the token or to meet compliance guidelines for security tokens.

What does Tokenization mean?

Tokenization is an economic system based on the principle of linking goods and services with tokens managed in the blockchain. Here, a token represents a specific good to which an intrinsic value is assigned. The associated token economy can generally be divided into two areas:

The first area relates to Token Incentivization. It aims to create a system in which participants are rewarded with tokens for certain actions. These tokens can then be exchanged for physical and digital goods, services or FIAT money. Token incentivization therefore aims to establish tokens as incentives for desired actions.

The second area concerns the Tokenization of Assets. These can be securities, capital goods, commodities or digital media. The tokenization of assets pursues the goal of mapping ownership from the real and digital world in the form of digital tokens on the blockchain in a forgery-proof manner. In this way, the ownership and transfer of these assets can be digitally recorded and verified using blockchain technology without having to rely on a middleman.

Both types of token economy open up a wide range of potential use cases. The tokenization of assets is currently considered to have the greatest potential to reach mass adoption.

Tokenization of Assets explained with examples

Looking at the development of the tokenization of assets, the first thing to note is that the market for this is still relatively young. Nevertheless, there are already initial approaches to the tokenization of physical and digital assets.

Tokenization of Art is probably the most obvious example when it comes to understanding how physical assets can be mapped using blockchain technology. Two forms of tokenization can be distinguished here.

Holistic tokenization is primarily about creating a certificate of ownership for an artwork. Holistic tokenization allows the ownership of a painting to be represented digitally on the blockchain. The artworks themselves are often digital, but tokenization is also possible for physical pieces of art.

Fractionalized tokenization involves dividing a work of art into pieces and assigning an NFT to each of these pieces. A painting can be divided into one hundred, one thousand or ten thousand parts and offered for sale. Fractionalization allows a physical object to be distributed among several owners, which also makes it possible to acquire shares in high-priced works of art.

In the Tokenization of Real Estate, there are two forms of tokenization. A distinction can be made here between the strict and the extended definition.

In the strict definition, the intention is to digitally certify the ownership rights associated with a property. The buyer of the token therefore acquires a corresponding part of the property and the resulting income and expenses as well as the legal claims and obligations arising from this.

In the extended definition of tokenization, on the other hand, the token holder is entitled to a portion of the income generated by the property in certain periods. These tokens have similar characteristics to shares or securities.

The Tokenization of Commodities includes the mapping of commodities such as gold, oil or coffee. As with works of art, the advantage of tokenizing commodities is that both holistic and fractionalized commodity tokens are available for purchase and trading. Offering, buying and selling these goods can be done more cost-effectively and efficiently.

In practice, the tokenization of commodities has emerged in the form of so-called commodity-based Stablecoins. Each token is backed by a corresponding quantity of the commodity, which means that the price of these stablecoins reflects the real price of the commodity.

Tokenization of Assets - Advantages and Challenges

In theory, the tokenization of assets seems to offer only benefits through the elimination of intermediaries.The tokenization of real assets through smart contract technology promises great efficiency gains in purchasing and administrative processes. While the use of smart contracts automates processes, the underlying blockchain synchronizes payment flows, which simplifies the process of buying and selling assets. In this way, many manual steps and involved third parties become obsolete. The result is a streamlined process in which all relevant information is available on a blockchain.

In practice, however, many hurdles still need to be removed in order to create an actual token economy of real or digital assets. The first aspect involves regulatory requirements. It is still not clearly regulated what a tokenized secondary market could look like and which rights can be granted with the respective tokens.

Further questions regarding the tokenization of real and digital assets also relate to the technological side. It must be clarified which blockchain (layer 1, layer 2, sidechain, public, private, hybrid) can be used for tokenization, what a KYC process should look like, how the internal business workflow will function in the new business model, what the customer journey should look like i and how data security will be guaranteed. All of these questions require well-founded answers that can only be provided by interdisciplinary collaboration between blockchain specialists, technical experts and a connecting, generalist instance of the Web 3 Business Analysts.

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The post Tokenization of Assets – Approaches and Challenges first appeared on web3ideation.

NFTs – Why they are no Art

dwaschkowski — Sun, 19 Mar 2023 16:06:46 +0000

NFTs

V&IWhy they are no Art

In recent years, few topics in the technology world have been as controversial as the idea of Non Fungible Tokens (NFTs). In the blockchain world, this concept has made waves and experienced an unreal hype, full of scams and false promises. Yet the NFT vision is indeed very promising. But it will be some time before the first significant use cases emerge from the experimental phase and reach the real economy.

In this blog article, we would like to discuss why NFTs are not art and what potential opportunities NFTs actually offer

What are NFTs?

NFTs can be considered as a type of asset that represents ownership or proof of authenticity of a unique item or asset. In this context, the proof of ownership is verified using the Distributed Ledger Technology. For the first time, the emergence of NFTs has made it possible to create a digital proof of ownership of an object that is forgery-proof and transparent. As such, NFTs are a type of a digital counterpart to the “original” in the physical world.

Each NFT is unique and contains metadata which, together with the token ID, determines the uniqueness of the NFT. The metadata can include information such as the creator, the date of creation and any specific features or characteristics of an object.

This uniqueness makes NFTs a collectible and speculative item in the world of digital collectibles, art and other forms of digital content.

NFTs also offer creators the opportunity to monetize their work in a new way. Through the underlying smart contract, creators can tap into new sources of income by participating in every resale of their products through the implementation of license fees (royalties). NFTs therefore have the potential to influence many areas of the real economy and create new use cases in the fields of real estate, virtual fashion and banking.

In theory, NFTs have created a new potential market for digital property and unique assets, allowing creators and users to participate in a decentralized economy. As such, NFTs also play a key role in the tokenization of assets.

NFT - Standards

When we talk about NFTs, we usually refer to smart contracts that are implemented on a blockchain such as Ethereum. For Ethereum, a community has been formed that defines standards (ERC standards) for the Ethereum platform. These standards are specified in the form of the Ethereum Improvement Proposals (EIPs). In addition to Fungible Tokens (e.g. ERC-20), various token standards that cover the area of Non-Fungible Tokens have also become established.

In terms of creating NFTs, the ERC-721 Token Standard has established itself as the best-known form. Other standards for NFTs have gradually emerged, such as the ERC-1155 Token as a multi-token standard, which has proven to be particularly interesting for developers in the gaming industry. The ERC-6551 Token, on the other hand, represents an extension of the current standards, allowing NFTs to execute their own smart contracts and therefore also receive their own (fungible) tokens and execute transactions.

Fundamentals of NFTs

The primary principle from which all use cases relating to NFTs develop is the counterfeit protection and traceability of an NFT and the metadata associated with it. This results in three categories of application fields, each of which can be divided into its own subcategories.

The NFT Identity summarizes all areas that are used to enable access. This can be access to a decentralized app as well as a real entry ticket or a wallet address for receiving cryptocurrencies.

The term NFT Connect is used when a digital and real asset is linked to the metadata of the NFT and the blockchain and a real connection between the NFT and the connecting element is derived from it. Real goods represent artworks or various capital goods such as real estate, gold or securities. Digital goods, on the other hand, can be music, videos or game characters.

NFT Rights cover all areas of the NFT that grant real rights to the real person behind the NFT. These can be rewards for completed quests, rental income or video and music streaming income.

NFT Use Cases

In theory, NFTs provide endless possibilities for a new type of digital and tokenized economy. In practice, however, such solutions have not yet arrived. Many projects have started with unrealistic promises or a non-scalable business model and have not been able to fulfill the expectations placed on them.

Nevertheless, real use cases have also developed in the mass of projects, which could also find their way into practical usage once the Web 3.0 sector matures in the medium to long term.

One possibility offered by NFTs is the establishment of a digital identity. As the TokenID cannot be falsified, NFTs can provide all the necessary information in the metadata that is required to prove an identity. One project dedicated to digital identity is the Ethereum Name Service (ENS).

Another use case for NFTs is the digital twin. Here, we are talking about NFT representations of real entities. These can be digital NFT twins of books or educational certificates.

The goal of music NFTs is to enable artists and fans to participate on streaming revenues from songs, records or music videos. Some US artists have already successfully distributed NFT music boxes as limited editions to their fans.

NFT patents are an approach to tokenize intellectual property with the help of NFTs. The goal is to better protect, store and manage intellectual property. One example of digital patents is currently being implemented by IBM, which stores patents as NFTs on its own IBM Cloud and blockchain service.

NFTs can also be used in the real estate sector. Using an NFT as a certificate of ownership eliminates the need for a notary and the change of ownership can take place within a few minutes if an agreement is reached.

Another use case for NFTs concerns the tokenization of assets such as art or collectibles. Paintings or vintage cars can be tokenized and, if necessary, divided among many partial owners as fractionalized investments.

Outlook - The future of NFTs

Even if overpriced monkey pictures polarize the population, such controversial concepts should not lead to a hasty judgment of Non Fungible Tokens, but rather use the skeptical interest that has arisen to highlight the future-oriented use cases.

NFTs undoubtedly have the potential to create a new type of economy from which manufacturers and owners can benefit. Depending on the use case, different token standards have emerged. Many existing projects are still in the early conceptual development phase, but offer promising approaches for a new level of digital ownership.

The technology and its adaptation are still in their early stages, as there is still a lot of educational work to be done and there is also a lack of significant lighthouse projects that are designed for the masses and thus enable integration into the real economy.

The current challenge is to determine the regulatory clarity for these asset classes and to create the necessary technical infrastructure in order to convince the majority of the population of their benefits and thus finally integrate them into the real economy.

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