Will we ever reach mass adoption in Web3

 I have written this article about the topic of Web3 mass adoption and the results are not encouraging, at least for now. Please click on the link 

US Stablecoins and Debt Generalization

 I wrote this article How stablecoins are fueling a global US debt generalization on our Dracoon Ventures blog. 

The article can be summarized as follows: 

Approximately 70% or more of the fiat currencies backing US dollar stablecoins, especially USDT (Tether), originate from outside the US, with strong usage in Asia, Latin America, and the Middle East & Africa. Stablecoins act as a digital proxy for US public debt held mainly by overseas investors.


Tether is now the 17th largest holder of US Treasury securities, with holdings recently reported at around $135 billion, surpassing sovereign nations like South Korea. This represents a significant portion of the reserves backing USDT stablecoins circulating globally.


The US dollar has devalued about 14% against the euro in 2025, amidst economic uncertainty and controversial Fed proposals such as charging fees to holders of US Treasury bonds, which introduces risks to US debt holders including stablecoin issuers.


US government debt stands at some $38 trillion, with total debt including private and bank debt roughly double, highlighting substantial fiscal challenges. Stablecoins embedding this debt exposure increase overseas generalization of US debt risk as crypto adoption grows.


Despite the risks, Tether reported over $10 billion in net profits for the first nine months of 2025, maintaining excess reserves above its liabilities and actively growing USDT supply and ecosystem investment, balancing innovation with significant macroeconomic influences.

Dracoon Ventures is my new Web3 Investment and Advisory Firm

 I have made the decision to set up a new Web3 Investment and Web3 Advisory Firm called Dracoon Ventures. 

The Web3 startup community still lacks experience. Although there are a lot of smart entrepreneurs both on the investors and entrepreneurs side, most managers simply lack the experience of actually having done it. 

While there is a myriad of experienced Web2 professionals that could fill this gap, adoption and transition into this domain is not happening, yet. For instance, if you take a look at some Web3 development growth stats, it is currently around 30k world-wide, rather stagnating. We still have too many scam actors, too many engineers building for geeks only. Furthermore, Web3 is complicated and Web2, Web1 professionals have barely built their position in big data, SEO, affiliate marketing, ecommerce, mobile economy etc. 

With AI now being at the forefront of the narrative, Web3 somewhat has become a second order priority. 

What will Dracoon Ventures offer as a Web3 Advisory? 

1. Tokenomics - how do you come up with the best token economy on the supply and demand side? 

2. DAO & Governance - how do you come up with a sound and balanced decision making governance structure ? How do you manage costs in a treasury ? 

3. Growth and Restructuring - how do you grow without outspending on big media ? How do you restructure and pivot your business for long-term play?

How to predict the future as a VC

 Of course, you can't. But these are ways how to deal with uncertainty and unpredictability 

1. Fast Follower 

Like CZ, just acknowledge that you cannot predict them but have laser-sharp focus on your market screening and intelligence. Once you spot something in order to buy, invest or build, have an organization in place that is able to execute at light speed 

2. Opportunity Observer 

Look for inflection points. What are events that will increase confidence in a breakthrough of something you predict ? This can be big brands adopting a technology (such as NFTs), or certain numbers that are hit in terms of user adoptions, or key opinion leaders who flip their previously negative mindset towards a technology into a bullish perspective. 

3. Tech Visionary  

Do long term bets based on a strong investment thesis. Just like any good company paints a picture of its role in the future (It is called vision statement), paint a picture of how the technology solves an existing problem or disrupts an industry or domain from the bottom up. 

Three current inflation drivers

Currently, I see three major drivers of Inflation 

Covid & the labor market 

We are in the midst of the Covid Cycle called "Intermediate State". Most people will get vaccinated or will get either infected (herd immunity). The intermediate state will most likely last at least until 2024. I expect it to last longer due to Omicron and other variants yet to come. High rate of disabilities (medical, psychological damages), higher death rate, early retirement will put upward pressure on wages which will affect long term inflation. In essence, the labor to capital ratio has been shortened. Ultimately, covid will become an endemic phenomenon just like influenza. 

Supply & Demand shocks 

We saw a short-term uptake of demand in the transition of the immediate state to the intermediate state accompanied by supply shocks. In the immediate state companies have reduced their production due to the lockdown (layoffs in the workforce and reduction of production capacities) which puts upward pressure on prices and thus inflation. A sudden increase in prices further reduces demand (demand shock), driven by inflation to be expected to be a long-term phenomenon.  

Money Supply

Over the past decades central banks have produced more money than ever. This printed money has been mostly hoarded on balance sheets of commercial and central banks (M0) (Financialization). The inflation powder keg will explode once M0 becomes true M1 Money flowing into the real economy.  

The EURO zone also has a 7x higher M0 than 2008, with 6x more money than GDP.

Zero Interest Rate Policy

The cost of money has been equal since 2015, hence aggregate demand has been growing enormously due to debt (government spending below and corporate spending) 

Government Spending 

Aggregate demand will further drive up prices due to its multiplier effects. Though most government spendings are usually infrastructure related, these spendings end up on the balance sheets of corporations and salaries. However, these fiscal stimulus packages due to their long term bullwhip effect have not panned out in the economy so far. 

How to calculate a simple Bayesian posterior probability tree

We use the example of successful startups that were founded by female founders.*

First start with a tree from both sides of the prior probabilities. P(FE), P(S) is the prior probability of event FE and S to occur. 

Equate both conditional probabilities P(FE|S) and P(S|FE) because P(S∩FE) = P(FE∩S)

P(FE|S) is the likelihood, or the probability of a female start-up founder given a successful start-up

Ultimately, we derive P(S|FE) which is the posterior probability or the probability of a startup success to occur given it was found by a female founder 

Solution: P(S|FE), the probability of a start-up success given that it was founded by a female founder is 0,25%. 

Hint: It is best to memorize the following formula 

* This is by no means an anti-feministic post  

Strategic Dimensions

Here are some useful strategic dimensions that will help you understand how you differ from competitors

Timing

Fast Follower vs. First Mover 

Innovation 

Imitator vs. Innovator 

Openness 

Open Network vs. Top Down/ Curated 

Customer 

Existing vs. New customers 

Value 

Value Capture vs. Value Creation 

Social Media 

User of social media vs. creator of networks 

Governance 

Top Down/CEO vs. Decentral(DAO)

The problem with p-values

Fundamentally, hypothesis testing is based on conditional probability. 

We base our thinking on these premises: 

 

1.    Null Hypothesis H₀ --> no effect

2.    Alternative Hypothesis H₁ -->  There is an effect

If we assume H₀ is true and the P-Value of 5% is. There is a chance of 5% that we would have gotten the test results given the Null Hypothesis is true. Since this is a very low probability, we are rejecting the Null Hypothesis. So usually, a high p-Value indicates that my test results are significant. 

HOWEVER, 

What does a p-value of p=.2 indicate? It means given the Null Hypothesis is true there is a 20% that we would have gotten these effects. 

However, this is the problem: We fail to reject the Null Hypothesis --> 20%, but we can also not accept it. We have absence for evidence for an effect but we don't have evidence for the absence of an effect. 

 In other words, the p-value does not tell us anything about how likely it is that a hypothesis is true. 

SOLUTION: 

Bayesian Hypothesis Testing 

deals with: Which of the hypotheses is better supported by the data? 

Answer: The model that predicted the data best ! 

The ratio of predictive performance is known as the Bayes Factor (over 10 is usually good) 

NFT business models, NFT use cases, NFT taxonomies and future trends

Below are some thoughts about NFT business models, use cases, taxonomies, NFT Marketing and future NFT trends. This blog post is by no means complete and is work in progress. 

For a quick recap, check out the article 'What is an NFT' before reading the post below. 

Form of NFTs

Digital NFTs 

Technically speaking, these are essentially static pictures or animated gifs which are digitally signed and certified via a blockchain. 

Examples are digital collectibles and art NFTs 

Physical NFTs 

Any physical good that is signed and certified by blockchain. Examples are original paper signatures from stars, exclusive luxury goods. The main issue here is to have a tamper-proof anti-counterfeit mechanism. 

A very huge part of NFTs will be ticketing. 

Hybrid NFTs  

The combination of a static and physical NFT. The unique good has both phyi  

Static vs. Dynamic NFTs

Static NFTs 

Most NFTs described above are static yet. Once they are minted and sold, they never change. 

Dynamic NFTs 

The next wave of NFTs will be dynamic by integrating oracles into NFT smart contracts such as random numbers through random number generators (RNG) which blockchains cannot supply securely. Other basic examples are weather (e.g. Daniel Arsham NFT), stock price, time zone data, etc. This will become exciting when data such as sports star performance. Examples: NBA Rookie LaMelo will drop NFTs which will reflect real-life events. In case he is selected as Rookie of the Year, this will be reflected in his Evolve Token. Another recent example is the 'Two Degrees NFT' which has a self-destruction mechanism, once global warming increases by 2 degrees. The data source is Nasa. 

Autonomy & Intelligence 

Most NFTs as of today have no intelligence whatsoever. They have been created and then do not change or react to the external environment or any external stimulus. In case of an NFT ticket, they even lose their value. I believe as NFT technology evolves, new NFT classes will emerge such as:  

Multi-Token Standards 

NFTs can also create fungible tokens out of the same ERC-721 token. A new standard that, for example, allows for the creation of ERC-20 tokens linked to ERC-721 tokens is ERC-1155 developed by Enjin. Use cases in games could be: a quiver (non-fungible) in an NFT game item could generate arrows (fungible). Buying and NFT plant (digital) could generate seeds (fungible).  

Meta Data & Provenance 

Meta Data in particular data on provenance of NFTs will be used increasingly in the future to increase storytelling of NFTs. Uploading a picture 

Chatbot NFTs 

In the future we will have chatbots as NFTs. Though chatbots have been around for quite some time, for instance FB Messenger Bots, they have not reached mass market. NFT technology will provide the missing piece: true personal identity of a chatbot. The first project that goes into this direction is called iNFT . It converges NFT, blockchain and AI/ML technology. The most interesting part: it is a self-learning chatbot and becomes smarter the more you interact with her. 

Avatar NFTs 

The difference to chatbots is that avatars are digital representations of one-self as opposed to chatbots which are a third-party personality. The first avatars based on voxel graphics are the Meebits 3d avatars. The idea is to basically use them as digital avatars in metaverses, games and AR/VR simulations. 

Utility & Use Cases & Users of NFTs 

One of the most important and probably unexplored, at least academically, areas in the NFT space is the question of why people buy NFTs. While there might be NFT-specific idiosyncratic reasons, I believe there are some commonalities when it comes to utility and psychology. 

Personal Value (Collectors)

In particular, digital NFT art purchases are grounded in the same personal value as to why people buy art. People value the artist and simply like the artwork they buy. The more known the artist, the higher the value. Storytelling and provenance increase personal value furthermore. 

Financial Value (Traders)

NFTs have become an asset class of their own. Traders will buy NFTs for purely financial reasons. They hope that the NFT they buy will appreciate in value. What is new is that financial ownership does not only occur on an individual basis. NFTs allow for so-called group ownership where several people join forces to buy, own, sell, trade NFTs as a group. This concept is called fractional ownership and has been practiced in real estate economics for hundreds of years. In fractional ownership, each individual shares the same "usage rights, income sharing, priority access, and reduced rates." 

Psychological Value

Owning NFTs increase psychological value in two ways: 

1. individual value. I have something that is of personal value that no one else has. (an NFT of a star, that I follow)

2. group identity. If I meet someone in social media, who also owns a Crypto-Punk, we are part of a special group. This is similar to product communities such as Mini-drivers, Harley Davidson bikers, etc. In the future, we will see more of that in Metaverses where users will connect better in case they share the same NFT community. 

NFTs Ecosystems 

Metaverses and Blockchain Games 

DApps like Sandbox, Decentralland and Axie Infinity cover all of the above. In addition, they introduce decentralized autonomous organizations (DAO) governance and play-to-earn mechanisms via native tokens into their game concepts.

Disruptive Business Models 

NFT experiments like Eulerbeats which Marc Cuban called the most genius idea are here to disrupt entire industries. 

Here is how it goes: 27 AI generated NFT audiotracks can generate 120 prints each. If you buy a print you can return it anytime by burning the token. The great thing is: Buying a print is quite risk free because you get back 90% of the print price. And now it comes: not the one that you spent, but latest one in the chain. So if you spent 1 ETH but the latest print price sold was 10 ETH, you get back 9 ETH and made 8 ETH profit. 8% goes to the original LP holder and 2% goes to the project. What it means for the industry is that you can support your artist directly in the future at a lower risk. All recipients of royalities can be baked into the smart contract itself. The future will even integrate oracles such as Spotify data. This means the exact number of streams will flow back into the NFT so that all royalty recipients will automatically receive their share - straight into their wallet. 

NFT Marketing and NFT Distribution Channels 

These are the main NFT marketing and distribution channels to date. 

Free Airdrops 

Often done prior or with ICO or IDO (inital decentralized exchange offering). Companies just "drop" free NFT's in combination with certain activities recipients have to do prior to the receipt (such as following the twitter account)  

Paid NFT drops 

This is done by companies like DapperLabs, Animoca Brands with games like NBA Top Shot, F1 Delta, and MotoGP. Users subscribe for a one-time NFT Drop and hope to buy a usually limited NFT pack. 

Marketplaces 

Most NFT sellers also run a marketplace either on their NFT Portal or third-party marketplaces to drive secondary sales. In addition, there are agents such as Sotheby's who run live auctions. 

I see tremendous opportunities in running live auctions on marketplaces in combination with strong Twitch and YouTube creators and celebrities. 

what is the best blockchain ?

This is not an easy answer and as usual it depends...on the following factors 

I call it the Blockchain Playbook: 

1. Scalability 
2. Security 
3. Decentralization 
4. Gas Fees
5. Developer Tools & Community 
6. Audience

The first three usually describe a triangular relationship. None of these go w/o sacrificing at least one of the other. Scalability basically means: can your blockchain of choice service millions of users at the same time? Or is it dead-slow like proof-of-work consensus algorithms like Blockchain or Ethereum. Decentralization means: how many independent validators does a blockchain operate ? Is it  100k like BTC or 7000 like ETH, which makes both networks almost impossible to hack, hence provide a higher security. If you want to have highly scalable blockchains that are able to serve 100k TPS, this will come at the expense of lowering security and decentralization. 

The more congested a network and the more nodes needed to validate a transaction the higher the gas fees (transaction fees). High gas fees obviously will have a negative impact on frequent usage and average transactions per user. 

Developer Tools and Community are an important driver as it is necessary to rely on existing developer tools to reduce cycle time and have a community from which you can hire engineers. Since Solidity is the language of Ethereum smart contract it is advisable to rely on languages close to that so that developers can quickly adopt the operating framework in place. If the overall eco-system in terms of vertical overlap is high, it will be easier to collaborate with other companies in the domain, solve difficult problems and exchange knowledge. 

Audience. The higher the existing audience the higher the adoption and conversion rate. Usually, higher audiences indicate that user-facing front-end tools such as wallets already enjoy a high penetration and users do not have to fill their wallets with unknown currencies or tokens previously unknown to them. 

 

What is an NFT and How to define an NFT

What is an NFT ? 

Non-fungible* tokens (NFT's) are tokens that we use to represent ownership of unique items. They let us tokenize things like art, collectibles, even real estate. No one can modify the record of ownership or copy/paste a new NFT into existence.  

Fungibility according to Wikipedia is: 

"In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable, and each of its parts is indistinguishable from another part."

For example, gold is fungible since a specified amount of pure gold is equivalent to that same amount of pure gold, whether in the form of coins, ingots, or in other states. Other fungible commodities include sweet crude oil, company shares, bonds, other precious metals, and currencies.

Fungibility refers only to the equivalence and indistinguishability of each unit of a commodity with other units of the same commodity, and not to the exchange of one commodity for another."

My own definition of an NFT:

NFT's are unique digital assets that allow creators to obtain royalities & profits on their original and scarce work by monetizing their ownership rights via blockchain technologies.

Characteristics of an NFT 

I came up with my own model which I call the 5-0 Pizza Model of NFTs. Here it is: 

Origin: Who is the creator(s)

Originality: Is it authentic? Meta data about provenance and history of the artwork 

Ownership: Certification of ownership 

Obtain Royalties & Profits: Make money of all transactions, incl. future transactions 

Only One or a few works: Who is the owner ?

Superdistribution, blockchain and the concept of NFTs

 Finally the concept of superdistribution by Roichi Mori comes into being: 

This is copied from the following website: 

Superdistribution

"Lets consider a different approach that might work for any form of computer-based information. It is based on the following observation. Software objects differ from tangible objects in being fundamentally unable to monitor their copying but trivially able to monitor their use. For example, it is easy to make software count how many times it has been invoked, but hard to make it count how many times it has been copied. So why not build an information age market economy around this difference between manufacturing age and information age goods?

If revenue collection were based on monitoring the use of software inside a computer, vendors could dispense with copy protection altogether. They could distribute electronic objects for free in expectation of a usage-based revenue stream.

Legal precedents for this approach already exist. The distinction between copyright (the right to copy or distribute) and useright (the right to 'perform', or to use a copy once obtained) is long-established in copyright law. These laws were stringently tested in court a century ago as the music publishers came to terms with broadcast technologies such as radio and TV.

When we buy a record, we acquire ownership of a physical copy. We also acquire a severely limited useright that only allows us to use the music for personal enjoyment. Conversely, large television and radio companies often have the very same records thrust upon them by the publishers for free. But they pay substantial fees for the useright to play the music on the air. The fees are administered by ASCAP (American Society of Composers, Authors and Publishers) and BMI (Broadcast Musicians Institute) by monitoring how often each record is broadcast to how large a listening audience.

Dr. Ryoichi Mori, the head of the Japanese industry-wide consortium, JEIDA (Japanese Electronics Industrial Development Association) is developing an analogous approach for software. Each computer is thought of as a station that broadcasts, not the software itself, but the use of the software, to an audience of a single 'listener' [MORI]. The approach is called superdistribution because, like superconductivity, it lets information flow freely, without resistance from copy protection or piracy.

Its premise is that copy protection is exactly the wrong idea for intangible, easily copied goods such as software. Instead, superdistribution turns ease of copying into an asset. It actively encourages the free distribution of information age goods via whatever distribution mechanism you please. You are positively encouraged to acquire superdistribution software from networks, to give it away to your friends, or even send it as junk mail to people you've never met. Broadcast my software from satellites if you want. Please!

This generosity is possible because the software is actually 'meterware'. It has strings attached that make revenue collection independent of how the software was distributed. The software contains embedded instructions that make it useless except on machines that are equipped for this new kind of revenue collection. The computers that can run superdistribution software are otherwise quite ordinary. In particular, they run ordinary pay-by-copy software just fine. They just have additional capabilities that only superdistribution software uses."

Is securitization the same as tokenization ?

The section below is a quote from https://drfazal.medium.com/from-securitization-to-tokenization-817d4b6ef759 . I have slightly changed the wording due to SEO duplicate content issues 

What is Securitization

"Assets with relatively stable cash flows and related characteristics are bundled into interest-bearing securities with marketable investment characteristics, which is known as securitization. ABS refers to the conversion of an illiquid asset into a tradable security, such as bonds or securities, which is more liquid than the underlying debt or receivables. Asset securitization will reduce risk, increase liquidity, and boost economic performance.

The securitization mechanism divides a bank's conventional position into many specialized roles, such as issuer, underwriter, rating agency, servicer, and, trustee. The issuer, also known as the sponsor or originator holds the collateral assets for the asset-backed security together. Since structured financing provides a convenient platform for financial institutions including banks, finance, and mortgage companies to sell their securities, issuers are often the debt originators of the pool of securitized properties.

Asset-backed security market tends to expand into new securitization deals ranging from gems to agricultural crops to venture capital that have arisen over the last few years, as this mechanism will cover any form of financial commodity and foster liquidity in the marketplace. In the future, investors anticipate even more groundbreaking offers."

Blockchains and Tokens 

"Any blockchain is inextricably tied to tokens or cryptocurrencies. A blockchain cannot be built without giving people incentives to create it, just as a decentralized type of token cannot survive without the protection provided by a blockchain. The reward is a decentralized token or cryptocurrency.

Token is a peer-to-peer digital wrapper that allows us to build, customize, and exchange any conceivable commodity without friction. To summarize, tokenization has the potential to streamline our current capital markets and allow us to build an environment where value can be transferred seamlessly. This may have far-reaching consequences for our economies in the future.

Tokenization not only allows us to build a digital envelope around any physical, digital, or intangible asset, but it also allows us to automate the trustless movement of digital assets by digitally enabling the performance of important contractual deliverables without the need for human intervention.

This means that conventional centralized securitization's trustworthy intermediaries, such as rating agencies, servicers, and trustees, are no longer needed, saving time, manpower, and costs."

Where are we in the crypto cycle?

....Somewhere over the inflection point t(b1) 

Why? When big changes happen it always takes longer than you think ( t(A1)vs(B1)). 

But when it happens it happens much faster than you could ever imagine (t(AB2)

How ETH 2.0 pool staking works with Stakewise

This public post from a Discord moderator sums it up quite nicely: 

"it's very simple in the pool - you deposit ETH, which gets bundled with ETH we collect with other users and is sent to staking. You get the deposit token, sETH2, to represent your stake - you can move it around like you would move ETH, subject to integrations with other protocols (coming soon). As long as you hold sETH2, you will accrue rETH2, which represents your staking rewards. Both tokens are exchangeable back into ETH upon Phase 2, which is when you can withdraw from the pool. So it's simple: deposit ETH -> sit on your tokens -> withdraw in Phase 2. More about the tokens: they represent your staking deposit and accrued rewards, so if you transfer them somewhere else (via a swap transaction or simply send it), it means that you transfer your stake. The advantage of having tokens is being able to swap them for ETH via liquidity pools (coming very soon) before phase 2. Also, in the future, use your tokens as you would use ETH in various protocols, be it for borrowing more crypto, farming etc. Our tokens are uniquely positioned to help you extract the most yield from your capital, so you're in the right place." 

The APY formula works as follows: 

"the APY is based on the following formula: ETH in the Pool * % of activated ETH * network reward rate * (1-StakeWise commission) / ETH in the Pool. What this means is that rewards from existing (activated) validators are being shared with everyone who deposited (regardless of whether their ETH has been activated or not) - the implication is that when deposits grow strongly, APY goes down. We are working to avoid this by removing such socialization, meaning that APYs of our early stakers will be protected in the period of growth in ETH deposits that will follow."

Why Brave might be the future of online advertising

This is a quote from a leading manager at Brave: 

"Brave is a free, privacy-focused browser that blocks all the creepy stuff on the Internet. Users retain guardianship of their data and have a faster, cheaper, and safer browsing experience.

Integrated into the browser is a token called the Basic Attention Token ("BAT"). In a token sale that raised $36 million in 24 seconds, Brave created BAT as a means of accounting for user attention online. Users earn BAT while browsing, and pay BAT to publishers to access and support digital content and services.

On top of the browser and integrated token, Brave has built a blockchain-based, private ad platform. Users, should they choose to opt-in to (and get paid for) seeing ads, are served high quality and relevant ads without leakage of their data, as all ad-matching will be done by local (on-device) machine learning. Having launched >2.5k campaigns for >400 advertisers to date, Brave continues to deliver a >9% CTR."

--> I will come back later with an analysis of their UVP 

What the heck is a crypto token?

I found a variety of definitions and perspectives 

Coingecko: "Tokens and coins are often erroneously regarded as interchangeable terms. However, while both tokens and coins share technical similarity, tokens are usually built on top of a smart contract platform and are issued en-masse during its inception. Tokens grant its holders the right to take part in the issuing parties' network or product."

or short version: "Blockchain based unit of value issued by an organization, which grants token holders a right to participate in a network."

Coinmarketcap: "A digital unit designed with utility in mind, providing access and use of a larger crypto economic system. It does not have a store of value on its own, but is made so that software can be developed around it."

Coinbase gives a more practical definition: "The other increasingly common meaning for "token" has an even more specific connotation, which is to describe cryptoassets that run on top of another cryptocurrency's blockchain. You'll encounter this usage if you become interested in decentralized finance (or DeFi). While a cryptocurrency like Bitcoin has its own dedicated blockchain, DeFi tokens like Chainlink and Aave run on top of, or leverage, an existing blockchain, most commonly Ethereum's. 

Tokens in this second category help decentralized applications to do everything from automate interest rates to sell virtual real estate. But they can also be held or traded like any other cryptocurrency."

Cryptocompare gives a great example of the BAT token: "BAT token is primarily used to pay, or reward, content creators for their work. This type of incentivization scheme is fundamentally different from the traditional web monetization model that relies heavily on generating revenue from intrusive advertisements, in order to compensate content producers and pay for other management costs associated with operating an internet-based information resource."

Cross-Chain Interoperability

Cross-Chain Interoperability will be a major point of discussion of the crypto economy and industry from 2021 onwards. Two contrary positions. First, the side in favor of cross-chain interoperability: 

Many blockchains will cease operations because they lack critical mass. Bear in mind, the just like any other information service, the crypto economy is a network economy in which Metcalfe's law holds true. Thus, in order to survive, smaller blockchains must build their own or build on bridges with other leading blockchains. In case of successful bridging, indirect network effects will kick in. The more chains successfully interlink with other networks, the more others will follow. 

Further, crypto governance is inherently interoperable. There is no single entity like Facebook or Google which aims at dominating a proprietary network or walled garden. Monopolists or oligopolists aim at lock-in effects through the nurturing of centrally managed indirect networks, which business eco-systems of the WEB 2.0 era eventually are. Crypto economies founded on two adjacent concepts: decentralization and interoperability allowing for a co-existence and yet competition of networks. 

The position against cross-chain interoperability: 

It is way too much work for developers to develop and operate a decentralized app ("dapp") on multiple blockchains. Second, the use cases or demand by users might be questionable. Do users really ask for cross-chain interoperability of an NFT token for instance ? Maybe at least not in the early days. They might in future to increase their value of their NFT tokens. However, for now, since it is early days, users rather prefer single blockchains which associate with great names such as NBA top shot. 

Crypto smart-contracts and the crypto economy

A quick recap of important concepts in the crypto-economy. 

Smart contracts: 

These are automatized contracts between two parties without the need of a human notary or certifier. They follow a predefined set of rules and protocols. If condition C happens, it triggers a legally binding event E. And since this is happening on the or a particular blockchain, it is infeasible (not impossible) to hack this contract. 

The worlds most precious asset

Time to re-focus on our most fundamental asset class. Some stats to set this into perspective (Gensler, 2018 and roughly adjusted for growth)
- Global Equities 100 Trillion US$
- Global Debt 300 Trillion US$
- Global Gold holdings 10 Trillion US$

- Crypto-Economy: 1.15 Trillion US$ (as per Feb 4th, 2021)

Amazonas Rainforest valued at 330 US$ Billion (Sinn, 2020) which is 0,08% of the above. Btw: the Amazonas shrunk by 1.2 of the size of the Island of Cyprus fro 2019-20 (Guardian, 2020).  

Edit: Feb 12th, Companies in the S&P 500 Index are sitting on more than $1.3 trillion in cash, according to recent reporting from the Financial Times.