Web3: An Internet Revolution
A Crypto Miniseries (Part 1)
Web 3: An Internet Revolution
A Crypto Series on The Ownership Economy
Web 3: An Internet Revolution
Now that consumers are spending more time and resources online, the importance of digital assets is likely to increaseconsiderably as consumer spending shifts to virtual worlds.
A global framework like Non-Fungible Tokens (NFTs) provides a stable way of taking the ownership and control of digital assets away from corporations, to the benefit of individuals.
By 2030, we expect Web3 to depress annual offline consumption by $7.3 trillion, boosting direct online expenditures at an annual rate of 28%, from $1.4 trillion today to $12.5 trillion per year.
Digital Ownership Could Accelerate The Transition Of Activity From The Physical To The Digital World
We believe Web3 virtual ecosystems will thrive if online human participants can own—as opposed to use or rent — digital assets.
In traditional Web 2.0 business models, end users typically face restrictions on products or services.
They cannot port in-game assets from one game to another, for example, and they risk censorship on the social media platforms that profit from their content.
In contrast, public and decentralized blockchains allow users to store and trade their assets in a legitimate secondary market.
Public Blockchains Enable The Ownership Of Digital Assets
Non-fungible tokens (NFTs) serve as smart contracts that verify the ownership of digital assets on public blockchains. They usurp the power of centralized platforms to house, control, and verify assets.
In 2021, NFTs generated $21 billion in sales as the number of monthly unique buyers soared nearly eight-fold to more than 700,000.
Ethereum Has Been The Chain Of Choice For Smart Contracts Thus Far
Based on public data, Ethereum is the dominant smart contract platform and the blockchain of choice for NFT issuance and transactions.
As fees continue to rise on Ethereum, however, the competition from other layer-1 blockchains and layer-2 scaling technologies is likely to increase.
NFTs Could Shift From Static Collectibles to Dynamic Digital Assets
Currently, collectibles and digital art account for more than 75% of NFT sales on Ethereum.
NFT sales in virtual worlds like The Sandbox and games like Axie Infinity have accounted for less than 25% of cumulative sales on Ethereum.
Based on the evolution of the video gaming market, NFT demand for blockchain-based games and virtual worlds could exceed that for digital collectibles and art, especially as collectibles and art begin to exhibit more utility in various games during the next five to ten years.
Dynamic NFTs Create A New Type of Active Entertainment
The increasing interoperability of NFTs could enable the convergence of collecting, gaming, socializing, and investing.
We Believe NFTs Will Blur The Line Between Consumption And Investment
NFTs offer a liquid marketplace in which consumers can invest in different digital assets and engage in peer-to-peer transactions.
NFT buyers and sellers determine market-clearing prices on blockchains instead of data aggregation platforms, creating new forms of asset monetization.
Blockchain-Based Gaming Can Enable Entertainment And Monetization Simultaneously
Pay-to-Play models require end-users to purchase games at a fixed cost.
Free-to-Play models are replacing Pay-to-Play and unlocking a larger customer base.
Virtual goods and gaming-as-a-service are increasing the revenue upside for game developers.
Because NFTs recognize the ownership of in-game assets, they are enabling Play-and-Earn models.
Games can raise capital and reward users through NFT sales and in-game rewards.
NFT Projects Can Maximize The Returns To Individual Buyers And Sellers
Compared to centralized platforms like Amazon, NFT aggregators like OpenSea charge a fraction of their transaction take rates.
As demand for blockchain-based assets grows, however, the cost to use the blockchain—as measured by gas fees—grows.
Various scaling solutions are in development to help lower the cost of using these blockchains.
Video: The Ownership Economy
This video is from The Best Business Show podcast hosted by Pomp featuring Jesse Walden, Co-Founder of Variant Fund.