What Is Asset Tokenization?

Posted on June 28, 2023June 28, 2023 by Jean Chalopin

In recent years, a new trend has emerged in the world of finance: asset tokenization. This technology promises to revolutionise how assets are bought, sold, and traded. Asset tokenization is converting physical assets into digital tokens on a blockchain network.

In this article, we will delve into what asset tokenization is, the technology behind it, its benefits, and its challenges. We will explore the market size of asset tokenization and how it is projected to grow in the coming years. According to a report by MarketsandMarkets, the global asset tokenization market size is expected to reach US$5.6 billion by 2026, with a compound annual growth rate of 19.0% from 2021 to 2026.

Asset tokenization can disrupt traditional finance by democratising investment access and increasing liquidity. However, some challenges need to be addressed, such as regulatory frameworks, security concerns, and the need for interoperability between different blockchain networks.

What Is Asset Tokenization?

The concept of asset tokenization is relatively new, emerging in the early 2010s with the development of blockchain technology. The first asset to be tokenized was Bitcoin, a digital currency that uses blockchain technology to record transactions and create new units.

However, it wasn’t until later that other assets began to be tokenized. In 2017, a company called tZERO became the first to launch a regulated security token trading platform, allowing for tokenizing assets such as real estate, private equity, and debt.

Asset tokenization is a process that involves turning physical assets, such as real estate, art, or commodities, into digital tokens that can be bought and sold on a blockchain network.

Think of it like a digital version of a stock certificate. Like owning a share of a company through a stock certificate, you can now own a fraction of an asset through a digital token. For example, instead of buying an entire house, you can own a fraction of that house through a digital token.

This is important because it allows for fractional ownership, making it easier for people to invest in assets that were previously only available to large institutional investors. It also increases liquidity, which means buying and selling these assets is easier and creates new investment opportunities for people who may not have had access to them before.

As technology evolves and becomes more accessible, asset tokenization is likely to become an increasingly important part of the financial landscape.

Asset Tokenization Technology

The technology behind asset tokenization is based on blockchain, a decentralised digital ledger that records transactions across a network of computers. Blockchain technology allows for secure, transparent, and tamper-proof transactions, making it an ideal platform for asset tokenization.

Like cryptocurrencies, digital tokens can be bought and sold on the network. Below is an overview of the process.

To tokenize an asset, a smart contract is created on the blockchain that defines the terms of the investment, such as the ownership structure and the rights and responsibilities of the investors. This smart contract is then used to create digital tokens representing fractional ownership in the asset.

These digital tokens are then traded on the blockchain network, just like cryptocurrencies. Investors can buy and sell these tokens on exchanges or through peer-to-peer transactions. As real-world assets back the tokens, their value is tied to the underlying asset.

For example, imagine a real estate developer who wants to raise capital for a new development project. They could tokenize the development project by creating digital tokens that represent fractional ownership. These tokens could then be sold to investors on a blockchain network, providing the developer with the capital needed to fund the project. Investors would then own a portion of the development project and receive a share of the profits when the project is completed and sold.

Another example is the tokenization of fine art. Artwork can be challenging to value and sell due to its subjective nature. By tokenizing fine art, investors can buy and sell fractional ownership in the artwork, making it a more liquid investment. Additionally, the blockchain ledger provides a transparent ownership record, reducing fraud risk.

The Benefits

Asset tokenization offers several benefits over traditional financial transactions. One significant advantage is increased liquidity. Traditional investments, such as real estate or private equity, can be difficult to buy and sell due to high transaction costs and limited market access. Asset tokenization allows for fractional ownership, which means investors can buy and sell smaller portions of an asset, making it easier to liquidate their investment.

Another benefit is increased transparency. The blockchain ledger used in asset tokenization provides a transparent record of ownership, reducing the risk of fraud or errors. The ledger is immutable, meaning once a transaction is recorded, it cannot be altered, providing a secure and tamper-proof record of ownership.

Asset tokenization also offers greater accessibility to a broader range of investors. Previously, real estate or private equity investments were only available to large institutional investors or accredited individuals. Tokenization allows for fractional ownership, meaning investors with smaller amounts of capital can participate in investments that were previously out of reach.

In addition, asset tokenization offers greater efficiency in the investment process. Traditional investments often require a complex and lengthy transaction process involving intermediaries such as brokers and lawyers. Asset tokenization eliminates the need for intermediaries, reducing costs and time.

Asset tokenization offers numerous benefits over traditional financial transactions, including increased liquidity, transparency, accessibility, and efficiency.

The Risks and Challenges

While asset tokenization offers numerous benefits, it also presents risks and challenges.

One of the main risks is the potential for regulatory uncertainty. Asset tokenization is a relatively new concept, and regulations are still developing. Different countries have different laws regarding the use of blockchain technology, and there is no universal framework for asset tokenization. This lack of regulatory clarity can create uncertainty for investors and companies and may slow the adoption of asset tokenization.

Another challenge is the risk of hacking or security breaches. Blockchain technology is secure and tamper-proof but not invulnerable to attack. If a hacker gains access to the blockchain ledger, they could alter transaction records, steal assets, or compromise investor information. Companies must take appropriate security measures to mitigate this risk.

Asset tokenization may also face challenges related to market acceptance. Despite the potential benefits, there may be resistance to investing in digital assets. Investors may be wary of the technology or not fully understand the implications of investing in a digital token. Companies and platforms offering asset tokenization must educate investors and build trust in the technology.

Finally, asset tokenization may face challenges related to scalability. As more assets are tokenized and traded on blockchain networks, the volume of transactions could potentially overwhelm the system, leading to slower processing times and increased costs. Blockchain technology is still in its early stages, and it remains to be seen whether it can handle the scale required for widespread asset tokenization.

Companies Using Asset Tokenization

There are several companies and platforms that are using asset tokenization in various ways. Here are some examples:

Harbor. Harbor is a blockchain platform that specialises in tokenizing private securities. The company’s platform allows issuers to offer securities to a wider range of investors, with fractional ownership, lower transaction costs, and increased liquidity. Harbor has tokenized assets such as real estate, private equity, and venture capital.

Securitize. Securitize is a blockchain platform that enables the tokenization of traditional securities such as stocks, bonds, and derivatives. The platform allows issuers to offer securities to a wider range of investors, with greater efficiency and transparency. The company has worked with several companies to tokenize securities, including Blockchain Capital and SPiCE VC.

tZERO. tZERO is a regulated platform for trading security tokens. The platform enables the trading of tokenized assets such as private equity, real estate, and debt securities. tZERO offers increased transparency, lower transaction costs, and increased liquidity for investors.

Vertalo. Vertalo is a blockchain platform that enables the tokenization of alternative assets such as private equity and real estate. The platform offers a suite of tools for issuers to manage their tokenized assets, including compliance tools, investor management, and cap table management.

Closing Thoughts

Asset tokenization is a relatively new concept, but it can potentially revolutionise the financial industry in the coming decade. As blockchain technology continues to evolve and regulations around tokenization become more explicit, we can expect to see significant growth in the use of asset tokens.

The primary driver of this growth will be the increased demand for alternative investments. Asset tokenization allows investors to access alternative investments, such as art, real estate, private equity, and venture capital, with lower transaction costs and greater efficiency.

In addition, we can expect to see continued innovation in the asset tokenization space. New platforms and technologies will emerge, offering greater functionality and efficiency for tokenized assets. This innovation will help to reduce transaction costs further, increase liquidity, and improve the overall user experience for investors.

However, some challenges must be overcome for asset tokenization to reach its full potential. These challenges include regulatory uncertainty, security risks, market acceptance, and scalability. Companies and regulators must work together to address these challenges and create a framework supporting asset tokenization growth.

In conclusion, the future of asset tokenization is bright, with significant growth expected in the coming decade. As blockchain technology evolves and regulations become more evident, we expect to see widely increased adoption of asset tokens as investors search for new ways to diversify their portfolios.

Disclaimer: The information provided in this article is solely the author’s opinion and not investment advice – it is provided for educational purposes only. By using this, you agree that the information does not constitute any investment or financial instructions. Do conduct your own research and reach out to financial advisors before making any investment decisions.

The author of this text, Jean Chalopin, is a global business leader with a background encompassing banking, biotech, and entertainment. Mr. Chalopin is Chairman of Deltec International Group, www.deltec.io.

The co-author of this text, Robin Trehan, has a bachelor’s degree in economics, a master’s in international business and finance, and an MBA in electronic business. Mr. Trehan is a Senior VP at Deltec International Group, www.deltec.io.

Tokenization Truly Disrupts

Posted on June 20, 2023June 20, 2023 by Jean Chalopin

Blockchain technology has revolutionised how we think about asset ownership, management, and investment. Tokenization is one of the many innovations that have arisen from this technology. It can disrupt existing asset life cycles, accelerate product innovation, and create customised, hyper-personalised options for investors.

This article will explore tokenization and how it differs from traditional methods. We will delve into the benefits and drawbacks of tokenization, examine real-world use cases, and analyse market statistics to gain a deeper understanding of this transformative technology.

What Is Tokenization?

Tokenization is a process that involves converting traditional assets, such as real estate, artwork, or securities, into digital tokens that can be traded on blockchain networks. These tokens are essentially digital representations of the underlying assets.

They provide investors with a way to own and trade assets in smaller fractions rather than owning the entire asset outright. This allows for increased liquidity, lower barriers to entry, and greater transparency. Think of it like a digital representation of a physical asset, which can be bought and sold in smaller parts, with ownership tracked securely and transparently on a blockchain network.

One real-world example of tokenization in finance is the tokenization of company shares. In traditional finance, owning shares in a company means holding a paper certificate or digital record representing a percentage of ownership. This makes it difficult to trade or sell smaller portions of the shares, as the minimum tradable amount is usually one full share.

With tokenization, a company can convert their shares into digital tokens representing smaller ownership fractions. For example, a company could tokenize its shares, with each token representing one thousandth of a share. Investors can then purchase as many tokens as they wish, allowing them to invest in the company with smaller amounts of capital.

Another example is payment card tokenization. Payment card tokenization is replacing sensitive payment card information, such as the card number, with a unique token. This token can then be used in place of the actual card information for payment transactions. Here is a simplified explanation of how payment card tokenization works:

When a customer provides their payment card information during a transaction, the merchant’s payment processor securely captures the information.
The payment processor then generates a unique token to represent the card information.
The token is securely stored in the payment processor’s system, along with reference to the original card information.
When a payment transaction is initiated using the token, the payment processor retrieves the original card information using the reference and completes the transaction on behalf of the customer.
The merchant never sees or stores the customer’s payment card information, which helps to protect against data breaches and fraud.
The token can only be used for transactions with the specific merchant or payment processor that generated it and is useless to anyone who may intercept it.

Overall, payment card tokenization helps to increase the security and privacy of payment transactions by reducing the amount of sensitive information that is shared and stored.

The Technology Behind Tokenization

The technology behind tokenization is based on blockchain, a distributed ledger technology that allows for secure, transparent, and tamper-proof data recording. When an asset is tokenized, it is converted into a digital representation on the blockchain network. This digital representation is called a token, essentially a unique string of code representing ownership of the underlying asset.

Tokens can be programmed to represent various types of assets, such as real estate, artwork, stocks, or commodities. The programming of tokens can be customised to meet the specific needs of the asset being tokenized. For example, a token can be programmed to represent a certain fraction of an asset, or it can be programmed to pay out a certain percentage of returns on the asset.

Tokenization also offers greater transparency and security. Because ownership of tokens is recorded on a blockchain network, it is tamper-proof and transparent. This makes it easier to verify ownership and track the movement of assets, which can help to prevent fraud and other illegal activities.

Financial Use Cases

Tokenization has several use cases in finance that can benefit both issuers and investors. Here are some of the most common use cases for tokenization in finance.

Fractional ownership. Tokenization allows investors to buy and own a fraction of an asset that was previously not possible due to high entry barriers. For example, a piece of real estate can be tokenized and divided into multiple digital tokens, allowing investors to buy and sell a fraction of the property. This opens up new investment opportunities for retail investors and reduces the risk associated with owning a single asset. Companies like Harbor are using tokenization to offer fractional ownership in real estate assets.

Capital raising. Tokenization can be used to raise capital for new projects or businesses. By issuing digital tokens, companies can raise funds from a global pool of investors without the need for intermediaries like investment banks. This can be a more efficient and cost-effective way to raise capital. Companies like Securitize and Tokeny are providing tokenization solutions for capital raising.

Trading and liquidity. Tokenization can make it easier to trade assets that were previously illiquid or traded on traditional markets with high fees and barriers to entry. Digital tokens can be traded 24/7 on decentralised exchanges, increasing liquidity and reducing trading costs. Companies like tZERO and OpenFinance are building decentralised exchanges for tokenized securities.

Compliance and regulation. Tokenization can help issuers comply with securities regulations by automating compliance checks and providing transparency in ownership and transactions. Blockchain networks can also ensure that only authorised investors can trade certain securities. Companies like Polymath and TokenSoft are providing compliance solutions for tokenized securities.

Tokenization has several use cases in finance, including fractional ownership, capital raising, trading and liquidity, and compliance and regulation. Companies like RealT, Securitize, tZERO, and Polymath are using tokenization to disrupt traditional finance and offer new opportunities to investors.

Challenges of Tokenization

While tokenization offers several advantages over traditional finance, several challenges need to be addressed.

Regulation. Tokenization requires compliance with various regulations and laws, which can vary by jurisdiction. This can be challenging for companies that operate across multiple regions and must navigate different regulatory frameworks.

Liquidity. Tokenized assets can be illiquid, meaning they may not be easily tradable or exchangeable. This can be a significant challenge for investors who need to sell their assets quickly or for companies that need to raise capital.

Investor protection. Tokenized assets may not have the same level of investor protection as traditional securities, such as shareholder voting rights or disclosure requirements. This can increase the risk of fraud or abuse.

Interoperability. Tokenization requires interoperability between different platforms and systems, which can be challenging due to the lack of standardisation in the industry.

Adoption. Tokenization is a relatively new concept, and many investors and businesses may be hesitant to adopt it due to the lack of understanding or familiarity with the technology.

Despite the challenges of regulation, tokenization also has the potential to increase compliance and reduce fraud. Tokenized assets can be subject to ‘smart contracts’, which are self-executing agreements that can automate compliance requirements and reduce the risk of fraud or errors in the investment process. This can increase trust in the investment process and reduce the need for costly and time-consuming audits and regulatory oversight.

In terms of liquidity, while tokenized assets may be illiquid in some instances, as we’ve already noted, tokenization can also increase liquidity for assets that were previously illiquid or difficult to trade. Tokenization can enable secondary asset markets, increasing liquidity and providing an exit strategy for investors.

Ultimately, the benefits of tokenization outweigh the potential disadvantages.

Closing Thoughts

Tokenization has the potential to be a genuine disruptor in the finance industry, particularly within asset management. Tokenization enables fractional ownership of assets, opening up investment opportunities to a broader range of investors and increasing liquidity for previously illiquid assets. Additionally, tokenization can increase transparency and efficiency in transactions, reduce fraud and increase compliance while potentially lowering costs.

However, there are challenges to overcome, such as regulatory compliance, interoperability, and investor protection. Adopting tokenization may be slow due to a lack of familiarity with the technology and concerns about the risks and benefits.

Overall, while tokenization has the potential to be a game-changer, its success will depend on overcoming these challenges and convincing investors and businesses of its value proposition. If successful, tokenization could benefit the finance industry significantly, revolutionising the investment process and opening up new opportunities for investors and companies alike.

The Future of NFTs

Posted on April 11, 2023April 11, 2023 by Jean Chalopin

NFTs had their breakout year in 2021, bringing to the art world a digital revolution. They became one of the year’s fastest-growing asset classes.

Non-fungible token technology has allowed artists to offer digital originals while cutting out art broker intermediaries, also being able to receive royalties on their work’s secondary sales. However, art is just the simplest of use cases of the growing functionality being realised with NFTs, blossoming into a new world of web 3.0.

NFTs have an evolving utility that is expanding daily. NFTs are already building communities, enabling novel and tradable assets for gaming, and providing the foundations for ownership and identity outside the coming metaverse. This article will delve into several aspects that NFTs will be used in our lives going forward and why they are beneficial in these roles.

NFTs and Digital Ownership

Because of their blockchain-based immutable nature, NFTs provide a complete history and proof of ownership, what the art world calls provenance, for digital assets and for any other class that is represented by a non-fungible token.

This functionality allows for the creation of unique digital assets or items that anyone can buy or sell freely with confidence in an open marketplace.

NFTs of today have already evolved, creating further utility spanning a variety of industries:

Digital community keys
Ownership of a username and assets in the metaverse
Ownership of game assets, including avatars and virtual real estate

As our online world shifts from web 2 to web 3, NFTs will form the foundations of digital communities, assets, and economies.

NFTs as Entry Keys

One of the first use case evolutions of NFTs is as a form of ‘membership pass’ for a digital community. The ownership of NFTs that were part of a collection, like the Bored Ape yacht Club (BAYC) or the CryptoPunks, became the keystones that were required for membership in the communities that holders built.

More recently, the picture NFT collections such as Oni-Ronin have expanded on this idea, giving owners exclusive access to workshops and events as well as free airdrops of additional NFTs and even private raffles for a trip to Japan.

This type of entry is moving beyond the digital space, with NFTs now being used to provide their holders access to in-person events. Because NFTs are an immutable proof of ownership maintained on their blockchain, NFTs are in a position to solve some of the most common issues with event ticketing, such as digital theft and forging.

Digital Identities and Assets Redefined

There is no need to worry about someone taking your username in the metaverse. Some NFTs already allow for the ownership of custom “.eth” Ethereum wallet addresses (Ethereum Name Service).

So far, there have been nearly 3 million names created by over 600,000 participants.

Being in NFT form, these custom addresses can be integrated into other decentralised applications or Dapps, and they simplify the previously complex wallet addresses, allowing them to be personalised and much easier to remember. Rather than a long string of numbers and letters like ‘0x0078784ef055b06FC5A76B90c26’, it would be a much simpler address, like an email address or Instagram name such as ‘johnsmith.eth’.

Additional projects, such as NFT.com, use NFTs to provide the custom ownership of a personal profile like www.nft.com/johnsmith. The owner can share and display their NFTs on a decentralised social media network.

Tradable and Exportable NFTs

Gaming is a nascent sector where NFTs are already proving their utility. NFTs allow players to own in-game assets. There are some crucial differences between the typical ‘owning’ of assets in games and what NFTs provide. Projects such as DeFi Kingdoms, which is on the Harmony blockchain, have their own ‘NFT heroes’. These heroes can be bought, sold, and even rented out on an open market.

Along with providing ownership of these in-game assets, these Heroes can be productive assets. They can be sent on quests and earn in-game items (also in NFT form). The gained in-game assets can be exchanged for cryptocurrency or used to build other items to ‘power up’ the heroes.

The integration of NFTs into blockchain-based games like DeFi Kingdoms, Axie Infinity, and Crabada have created new and vibrant in-game economies where the NFTs are valued based on their attributes and statistics. The amount of time played is rewarded by these games, resulting in increased earnings and greater chances of finding rare item drops.

The Metaverse Economy

Beyond usernames, Ethereum wallet addresses and in-game characters, NFTs are becoming the technology used as a foundation for assets in the metaverse. The Sandbox already uses NFTs to represent the ownership of digital land, virtual spaces, as well as furniture, décor, and other metaverse assets. In November of 2021, the Sandbox saw a peak monthly sale of NFT assets totaling $47.4 million changing hands.

However, transactions have since plummeted to only about 1.1-1.2 million per month. Buyers have run the gambit of companies and celebrities, including Snoop Dogg, the South China Morning Post, and Atari, all purchasing their own real estate within The Sandbox’s metaverse.

NFTs have only just started to revolutionise the ownership and trading of digital assets, providing the foundations of digital communities and blockchain gaming, but they are poised to move well beyond these digital borders.

Blockchain is the Key

NFT’s utility is based on the use of blockchain tech. These decentralised digital ledgers are almost impossible to hack or alter. Beyond their use in proving the ownership of unique digital assets, NFT technology has nearly limitless applications beyond 8-bit art and in-game swords.

It is easy to imagine a world with a deed to a home existing as an NFT. Rather than having to conduct a title search every time a property is sold, the NFT deed would be a ledger of all changes, showing who is the current owner, when they took ownership, from whom, and the price paid. Closing would be as simple as fulfilling the requirements of a smart contract.

Such a process would be much more secure–no one could forge the ownership of a home because the log of ownership would be transparent and unalterable on the blockchain.

Not Just Real Estate

The real-life applications go far beyond real estate. NFTs would be helpful in any environment where the ownership of something should be tracked and proven. Rather than keeping paperwork needed to prove that you purchased and have ownership of something, an NFT could provide a record of the ownership history of an item and could be used for either a sale or a warranty.

NFTs could be applied to the bidding process of any job or project, ranging from simple gig work to government infrastructure projects. NFTs can also allow for built-in timekeeping and pricing mechanisms, which can make them a digital work order which can be changed in real-time as a job progresses.

A prospective college student could mint an NFT which represents their application profile, allow colleges to bid on them, offering admission and scholarships, turning the college acceptance process on its head.

A Secure Transaction Platform

Paper-based legacy transactions are called red tape for a reason. They are inefficient, require human intervention, and can be misplaced or lost. However, paper transactions have one advantage over more recent cloud-based documentation that is being used today; a paper document’s authenticity is often easier to prove. Cloud-based documents have the potential to be altered, hacked, or duplicated, costing companies millions in losses yearly.

NFTs can solve both of these problems. They provide documentation and digital transactions with a new layer of security while concurrently improving transaction efficiency. Those involved with the transaction can see the life of the NFT from creation to the current version.

NFTs form a virtually unhackable, encrypted system that is easily distributed and unalterable. Identity theft could be greatly reduced or eliminated. The NFT’s underlying asset is tracked and verifiable, providing confidence and security.

Closing Thoughts

Widespread NFT adoption could bring us many benefits. As businesses incorporate more blockchain technologies into their operations and a wider adoption happens among consumers, the sum of benefits is hard to limit.

NFTs will likely become the ‘how’–how we are identified, how we transfer personal data, and how we engage in digital commerce, particularly as the metaverse increases in popularity. Instead of overpriced art, NFTs will be seen as digital objects bringing much-needed ease to everyday business and to our daily lives.

What Are Dynamic NFTs?

Posted on December 30, 2022March 11, 2023 by Jean Chalopin

Non-fungible tokens, NFTs, are finally making their way into the mainstream after achieving widespread adoption among the Web3 community. Despite the recent boom and bust of crypto and the accompanying spotlights from media outlets, digital influencers, public figures, and professional athletes have continued to jump on the bandwagon of NFT collections.

As a result, there remains an interest in NFTs as a prominent application of blockchain technology, which retains the speculative asset moniker. However, the first NFTs were simple: often 8-bit style pictures that could be considered novelties and may or may not “boom” in the future.

Yet that was just the beginning of the NFT evolution which may change the broader financial markets as we approach 2023. Dynamic NFTs (dNFTs) are pushing the boundaries of the design space that NFTs address through their ability to adapt and change, responding to external data and events.

This article gives a brief NFT overview and then explains how dNFTs can take the blockchain space to the next level by highlighting current and potential uses for dNFTs.

NFTs in Brief

NFTs are unique digital assets held, managed, and exchanged on one or more blockchains. “Non-fungible” means that every NFT is differentiated from every other NFT, having a one-for-one token ID and unique contract address. From there, data, such as images, video, or other metadata, can be attached to the NFT, meaning it’s possible to own an NFT representing a unique digital object.

The most common use case for an NFT has been digital art. An artist will mint a token representing a digital artwork, and a buyer can purchase the token giving them ownership. Once an NFT is minted, its token ID doesn’t change. In its most simple form, an NFT is a transferable token with a unique token ID.

The metadata ascribed to the NFT, including the image, description, and much more, is 100% optional. As a result, this primary (static) NFT model can provide various benefits for digital artists worldwide.

Before NFTs, digital artists could not stop or track the unauthorized distribution of their work because there was no method to distinguish the difference between digital files. Thus, no single authentic file could be “owned.” Now, digital creators can sell their art to fans and give them verifiable ownership.

Dynamic NFTs

Static NFTs are still the most common type of NFTs available and in circulation, used primarily for art projects and gaming collectibles, such as with NBA TopShot. But, beyond these uses, static NFTs provide a unique value proposition for digitizing real-world items like real estate deeds, patents, other intellectual property, and unique identifiers.

However, the static NFT model is limited by its permanence. Once the metadata is attached to the token and minted on the blockchain, it cannot be changed. The data may require frequent updating, such as with real-world assets, progression-based video games, or blockchain-based fantasy sports leagues.

A dNFT provides the best of both worlds, allowing the retention of a unique identifier while enabling an update to its metadata. In simple terms, a dNFT changes attributes based on external conditions.

dNFTs can be upgraded in several ways based on external conditions. The changes to a dynamic NFT are generally through metadata changes triggered by a linked smart contract. This is accomplished by encoding the automatic changes within the NFT’s smart contract, which instructs the underlying NFT on how and when the metadata should change.

Other dynamic elements beyond metadata changes are possible. For example, dynamic NFTs can be automatically minted when certain conditions are met, such as when a player finds a hidden spot in an augmented-reality game. dNFTs also include “hidden traits,” which are manifested through user interactions rather than within the NFT’s metadata. dNFTs are wholly customizable.

Use Cases of Dynamic NFTs

An NFT’s name is specified in its metadata. This is also where its traits are assigned, including any relevant file links. While its token ID provides a permanent identifier that verifies ownership, the metadata is the soul of the NFT. The metadata contains the elements that make the NFT useful.

Artistic projects using NFTs often have a variety of traits, some rarer than others. These traits are placed within the NFT’s metadata and a link to a corresponding image or video. And with a dNFT, these traits can change based on external conditions.

Progressive Gaming

This functionality benefits character progression, a core tenant of several blockchain game models. When a new player creates their playable, NFT-linked character, the character’s base-level statistics are reflected in the NFT’s metadata. However, as the player continues to level up, the metadata on their dNFT changes to reflect their progression, choices, and growing stats.

Real-World Assets

A second use case for shifting metadata is the tokenization of real-world assets. For example, a dNFT reflecting a property reflects its age, maintenance history, sales history, market value, and so on. A static NFT could only take a single snapshot of the property at one point in time.

Popular Examples of Today

Two prominent examples demonstrate to us the growing potential of dNFTs.

Regenerative Resources’ Short Film dNFTs

Regenerative Resources Co (RRC) is focused on transforming degraded coastal land into highly productive seawater landscapes. RRC has announced that it will launch five short films in dNFT form, designed by prominent artists.

The proceeds from the dNFTs will be used to grow 100 million mangroves within the space afforded by RRC’s current projects.

Each dNFT will have a short film in its metadata, starting with a single frame of the film. Every time the dNFT is bought and resold, more frames of each movie will be added to the respective metadata. This addition will continue until the dNFT holder can view the short film. The metadata will also include the “producers,” or those who buy limited-edition posters.

LaMelo Ball dNFTs

LaMelo Ball, a rising star of the NBA’s Charlotte Hornets, is one of the first professional athletes to create a pioneering dNFT linked to the Chainlink Sports Data Feeds oracle. According to Playground Studio, this dNFT is redefining player-fan relationships.

Before his NBA award of 2021’s Rookie of the Year, fans minted 8,070 dNFTs of four different tiers. However, eight dNFTs recorded the player’s stats, including points, rebounds, and assists.

Holders receive special access to raffles and specific perks based on Ball’s season and lifetime performance. One of the premium eight NFTs, the “Gold Evolve,” came with a promise from the player that if he won the Rookie of the Year title, it would reflect a new image. When Ball won, the NFT image changed.

These LaMelo Ball dNFTs are examples of how dNFTs can continuously change based on oracle-provided external data. With Ball’s dNFTs, the player’s stats are constantly updated on-chain, triggering updates, rewards, and more.

Closing Thoughts

NFTs are highly speculative assets, and dynamic NFTs have just started to appear. They’re more of a novelty for programmers and collectors, adding more functionality to the current generation of static NFTs containing mainly altered pictures or briefly shifting video.

However, dNFT’s underlying abilities have immense potential, especially when more oracles are added to blockchains, increasingly able to provide relevant and curated data. Furthermore, these oracles providing external data can effectively supercharge dNFTs as programmers learn to fuse changing data with NFTs. Mastering this foundation opens new doors for finance, insurance, real estate, gaming, investing, and more as we expand.

The Convergence of Technology and Healthcare

Posted on December 20, 2022December 20, 2022 by Jean Chalopin

We saw the changes to our lives with the Covid-19 pandemic playing the role of catalyst for changes in life sciences and healthcare. This article will discuss how new technologies, including blockchain, cybersecurity, and the needed talent behind these, are impacting the medical sector.

Recent Changes to Healthcare

We have seen how the past few years have been shaped by the Covid-19 pandemic, which disrupted and revolutionized nearly every sector of our economy.

When we look at monetary investment, it’s evident that technology spending is focused on healthcare. A report from Bain and Co found that even with economic uncertainty, healthcare is still planning to invest in tech, with software being a top five strategic priority for 80% of providers and a top three for 40%.

This spending is for several reasons: efficiency, cost reduction, and telemedicine, whether by phone or video. Heavy technology investment in the era of Covid-19 caused healthcare to leapfrog into patients’ homes.

These changes will be the driver of healthcare’s growth for the next few years. Yet we need to have a strong understanding of how the consumer fits into this system of delivering service, what their preferences are, and the new habits they are forming.

Once Before, in the 1920s

Periods of economic and geopolitical uncertainty have led to healthcare advancements.

In the 1920s, there were many geopolitical tensions that eventually led to wars, but throughout the decade and the rest of the 20^th century, there were remarkable advances in medicine.

The construction of hospitals that followed the passing of the Hill-Burton Act in 1946 made the foundation of our current health delivery system, the same way we saw our highway system and other infrastructure change the face of America and its economy. We’ll likely see a similar change around needed vaccines and other due innovations.

Rather than creating roads, bridges, and buildings, we’ll see digital infrastructure. Out of the discovery of the first mRNA Covid vaccines, we’ll find many ways to accelerate the process through biotechnology and innovation. Technology is an added dimension to healthcare innovation that has appeared out of the Covid turmoil. When technology is added to the mix, we’re going to see some fantastic opportunities.

The Covid Cause

It’s remarkable to think that a significant, globally impacting event is a catalyst that accelerates healthcare sector tech investment. If the necessary Covid closures were only for a single week, many of these changes would not have resulted.

Doctor visits would have been pushed back for that week instead of finding a remote solution that was needed to provide the required services and the resulting changed behaviors they have brought. The R&D plans that are now part of biotech and medical companies would likely not have manifested.

But we see that necessity is the mother of innovation, and because of Covid-19, these changes are incorporated and permanent. Many experts believe that the two years of Covid moved the industry ahead 5 to 10 years.

A Move Toward NFTs in Healthcare

Non-Fungible Tokens (NFTs) have been an investment darling in the art world but have yet to gain prominence much outside that and the collecting arenas. This lack of diversified uses is starting to change. Healthcare is up next.

NFTs are an exciting area for healthcare services. It’s easy to imagine a world where an NFT can become a patient’s profile in healthcare. An NFT profile has the capability to carry personal information such as the entire genome and all medical history and payment information as a unique footprint.

An NFT can also provide the owner with a pathway to get them into the healthcare system and provide them with services. This information can be combined with the banking system making their help more viable. Imagine a health saving account tied directly to the NFT through an oracle (a third-party gateway).

This will be able to allow someone to fund their health savings account through their W2-qualifying job. Charges that fit under the account can be automatically withdrawn.

This kind of payment system is just starting to happen on the municipal level. Cities like New York and Miami have begun to move toward such a system, with Philadelphia and Dearborn, Michigan, signaling similar moves. It’s not far-fetched to imagine a similar action to healthcare payments.

Cybersecurity in Healthcare

When there is human involvement, there is the potential for security vulnerabilities. The second issue that all companies are dealing with is finding the right talent that is capable of building systems and products able to protect company and personal data. There is an ongoing global shortage of nearly 3.5 million cybersecurity professionals across all industries, with 700,000 unfilled cybersecurity jobs in the US.

Cybersecurity for healthcare also requires the development of technicians that can play defense, quickly responding to cyberattacks in real-time. Hacking is accelerating and is a top risk profile for many companies, not just in tech.

Interestingly, one of hacking’s growing tools, AI, may also be its best solution as more information and services are digitized. Significant investment is happening in software projects that help protect and defend all data. In November 2022, Crunchbase showed 258 privacy startups that have raised over $4.3 billion, with $800 million of this total raised in the last year.

Life sciences and healthcare are industries that drive policies and security. Many boards and audit committees in the healthcare and life science sectors are attempting to identify various cyber risks and vulnerabilities. It’s fully expected that the demand for cyber-fluent personnel will increase dramatically.

Permanent Changes Coming to Healthcare

Tech is now taking over in several areas, including consumer electronics. Wearables and connected devices are becoming a more common source of medical information. Alivecor’s KardiaMobile device is a 6-lead EKG that can send information via smartphone directly to the patient’s cardiologist for review.

The Las Vegas consumer electronics show is filled with sensors, apps, and embedded personalization. This expansion of devices for our health will only increase as the 5G networks expand their reach across the United States. The impacts will be wide-ranging, but ultimately focus on enhancing our lives through tech.

One crucial, long-term benefit is that we are now seeing the healthcare economy moving from a sickness focus to a wellness mindset. This change is easier to accomplish with technology as we can monitor our health and see when things change.

Upcoming Healthcare Trends

The healthcare sector will first see a move toward modernization in human resources, finance, and procurement through cloud services. Moving all legacy enterprise systems to the cloud will take nearly ten years.

Next, innovation must tackle the back office to front office connection, including consumer-level devices. We have been discussing healthcare costs for decades, and the tech is now available to make it more efficient. This change can drive out costs and potentially deliver care to all.

Closing Thoughts

Technology in healthcare has been accelerated by Covid-19, pushing digital health access, and drug and vaccine innovation. These trends are altering research and development pathways for healthcare.

NFTs have begun to enter the healthcare space and, in the future, will likely be a secure way to provide needed information to providers, including genome and medical history. Cybersecurity issues will come to the forefront in healthcare tech with more need for talent and solutions to keep users’ data secure.

This need for talent will include the opportunity for tech to provide equitable solutions that lower costs and bring healthcare to all. A process of modernization that puts enterprise services on the cloud will be the biggest change we will see. Further, it will promote a focus of wellness over sickness as consumer devices become ubiquitous.

NFTs and Deep Learning

Posted on November 22, 2022November 22, 2022 by Jean Chalopin

Non-fungible tokens (NFTs) are becoming more popular by the day. According to DappRadar, the trade volume of NFTs in 2021 was $24.9 billion–over $95 million more than in 2020.

*Source:* *https://www.cloudwards.net/nft-statistics/*

One of the most significant developments in the cryptocurrency ecosystem is the rise of non-fungible tokens. The initial generation of NFTs concentrates on developing the fundamental components of the NFT market’s infrastructure, including ownership representation, transfer, and automation.

Even the most basic kind of NFTs capture great value, but the hype in the industry makes it difficult to tell the difference between signal and noise. As the market develops, the value of NFTs should shift from static photos or text to more intelligent and dynamic collectables. The upcoming wave of NFTs is going to be heavily impacted by artificial intelligence (AI).

NFTs and AI

We need to know what AI disciplines cross with the current generation of NFTs to comprehend how intelligent NFTs can be created. NFTs are represented virtually using digital media, including photos, videos, text, and audio. These representations translate to several AI sub-disciplines amazingly well.

The “deep learning” branch of AI uses deep neural networks to generalize information from datasets. The concepts underpinning deep learning have been known since the 1970s. Still, in the last ten years, they have experienced a new boom thanks to various platforms and frameworks that have accelerated its widespread use. Deep learning can significantly impact a few critical areas, enabling the intelligence of NFTs.

*Source:* *https://builtin.com/machine-learning/what-is-deep-learning*

Computer Vision

NFTs are mostly about pictures and videos nowadays, making them the ideal platforms for utilizing the latest developments in computer vision. Convolutional neural networks (CNN), generative adversarial neural networks (GAN), and transformers are approaches that have advanced computer vision in recent years.

The next wave of NFT technologies can use image production, object identification, and scene understanding, amongst other computer vision techniques. It appears obvious to integrate computer vision with NFTs in the field of generative art.

James Allison, a Nobel Prize-winning cancer researcher, was the subject of an NFT that the University of California, Berkeley auctioned off on June 8 for more than US$50,000. Designers scanned faxes, handwritten notes, and legal documents related to Allison’s important findings filed with the university. Everyone may view this piece of art, titled The Fourth Pillar, online, and the team created an NFT to prove ownership.

Natural Language Processing

Language is the primary means through which cognition, including forms of ownership, may be expressed. Over the past ten years, some of the most significant advances in deep learning have been in natural language understanding (NLU).

In NLU, methods like transformer powering models, or GPT-3s, have achieved new milestones. New versions of NFTs could benefit from research in fields like sentiment analysis, question answering, and summarization. The concept of adding language comprehension to NFTs in their current forms feels like a simple way to improve their usability and engagement.

For instance, Eponym, a program that enables the translation of words into art and the direct development of NFTs, was recently released by Art AI.

*Source:* *https://opensea.io/collection/eponym*

Voice Recognition

Speech intelligence is the third branch of deep learning that can immediately affect NFTs. The field of voice intelligence has recently evolved because of techniques like CNNs and Recurrent Neural Networks (RNNs). Attractive NFT designs may be powered by features like voice recognition or tone analysis. It should be no surprise that audio-NFTs appear to be the ideal application for speech intelligence techniques.

NFTs need voice AI because it enables people to connect with their digital collectables naturally. Voice AI, for instance, may be used to query an NFT or issue commands to it. In the future, NFTs will be even more important since they are now more dynamic and engaging. Platforms such as Enjin allow users to create music industry NFTs, which could be game-changing.

The potential of NFTs is increased by language, vision, and voice intelligence improvements. The value unleashed at the point when AI and NFTs converge will influence several aspects of the NFT ecosystem. Three essential categories in the current NFT environment may be immediately reinvented by introducing AI capabilities.

Using AI to Generate NFTs

This aspect of the NFT ecosystem stands to gain the most from recent developments in AI technology. The experience for NFT creators may be enhanced to heights we haven’t seen before by utilizing deep learning techniques in areas like computer vision, language, and voice. Today, we can see this tendency in fields like generative art, but they are still very limited in terms of the AI techniques they employ and the use cases they address.

We should soon observe the usefulness of AI-generated NFTs to spread beyond generative art into other general NFT utility categories.

Digital artists like Refik Anadol, who are experimenting with cutting-edge deep learning techniques to develop NFTs, illustrate this value proposition. To produce astounding graphics, Anadol’s company trained models utilizing hundreds of millions of photos and audio snippets using techniques like GANs and quantum computing.

Natively Embedding AI

Even if we can create NFTs using AI, they won’t necessarily be clever. But imagine if they were? Another commercial opportunity presented by the convergence of these two exciting technological phenomena is the native integration of AI capabilities into NFT. Imagine NFTs with language and speech skills that can interact with a specific environment, engage in a conversation with people, or respond to queries regarding their meaning. Here, platforms like Alethea AIand Fetch.ai are beginning to make headway.

Source: https://venturebeat.com/games/alethea-launches-fusion-to-combine-nfts-ai-characters-and-games/

NFT Infrastructures With AI

Building blocks like NFT markets, oracles, or NFT data platforms incorporating AI capabilities can provide the groundwork for gradually enabling intelligence across the whole ecosystem of NFTs. Consider NFT markets that utilize computer vision techniques to give consumers intelligent suggestions or NFT data APIs or oracles that provide intelligent indications from on-chain statistics. The market for NFTs will increasingly depend on data and intelligence APIs.

Closing Thoughts

AI is reshaping nearly every industry. By combining with AI, NFTs can go from simple, rudimentary forms of ownership to intelligent, self-evolving versions that allow for richer digital experiences and much greater forms of value for NFT creators and users.

Smart NFT technology does not require any far-fetched technological innovation. The flexibility of NFT technologies combined with recent developments in computer vision, natural language comprehension, and voice analysis already provide an excellent environment for launching new innovations in the ever-growing digital asset space.

NFT and Crypto in GameFi

Posted on November 18, 2022November 18, 2022 by Jean Chalopin

The GameFi sector has been one of the main contributors to the explosive growth of the cryptocurrency market over the past few years.

Gamers can earn incentives while playing thanks to GameFi, a combination of the words “finance” and “gaming.”

With consistent growth, the market has a token market cap of almost $9.2 billion. Notably, despite the crypto winters, GameFi networks have endured and thrived.

*Source:* *https://cointelegraph.com/news/gamefi-is-showing-signs-of-a-mature-landscape-report*

By 2031, the sector is expected to be worth $74.2 billion.

What Is GameFi?

GameFi is a platform that combines blockchain technology, non-fungible tokens (NFTs), and game mechanics to build a virtual world where users may interact and earn tokens.

Video games used to be stored on centralized servers, allowing publishers and creators complete control over everything in their games. This meant that none of the digital objects that players had gathered over many hours or even years of gaming belonged to them.

Few of these objects had any use outside the game, ranging from avatars and virtual territories to weapons and clothes (sometimes referred to as “skins”). Therefore, there was no practical mechanism for users to get reimbursed for their online time or have access to the value of their acquired in-game goods without undertaking a professional gaming career.

*Source:* *https://www.cryptohopper.com/news/5908-press-x-to-earn-the-rise-of-gamefi*

Players earn in-game rewards by completing objectives and moving through different stages in GameFi games. These prizes, as opposed to conventional in-game money and equipment, have monetary worth outside of the gaming industry.

The industry has been dubbed “play-to-earn” because of gaming products given in the form of NFTs as “accomplishment tokens” that may be exchanged on NFT marketplaces or cryptocurrency exchanges.

Even though “play-to-earn” is the preferred terminology, participating in GameFi involves risk, including the possibility of incurring significant upfront fees that a player might lose.

How GameFi Works

There is an in-game currency, market, and token economy in almost all blockchain-based games. There is no centralized authority, in contrast to conventional games. Instead, the community generally manages and governs GameFi projects, and users participate in decision-making.

Although each GameFi project has its own unique mechanics and economics, they have similar characteristics:

Blockchain Technology: The distributed ledger of a blockchain powers GameFi initiatives. This maintains player ownership records and guarantees the openness of all transactions.
In contrast to traditional gaming, where players play to win, GameFi initiatives employ a P2E business model. By providing incentives with measurable values outside of the game, these games encourage players to play more. These incentives typically take the form of NFTs or in-game money.
Asset Ownership: In conventional gaming, in-game purchases are immutable investments that are trapped inside a particular game. Players own their tokenized in-game assets via P2E. In most cases, people can trade them for cryptocurrencies and, ultimately, money. On the blockchain, assets are tokenized and might include anything from a suit of armor to a piece of virtual real estate.
Decentralized finance (DeFi) solutions, such as yield farming, liquidity mining, and staking, may also be a part of many GameFi initiatives. These provide participants more ways to grow their token investments.

Decentraland, The Sandbox, Axie Infinity, and Gala are examples of well-known blockchain gaming networks that use the P2E GameFi architecture.

Axie Infinity

Consider the Ethereum-based game Axie Infinity, which gained popularity in 2021 and became the most Googled NFT worldwide in March 2022. Players in Axie Infinity gather, breed, train, and engage in combat with “Axies.” Each Axie may be exchanged on the game’s market for real money, unlike other in-game products (to give you an idea, the most expensive Axie ever sold was for US$820,000).

Axie Infinity Shards (AXS), which can be purchased and sold on exchanges like Crypto.com, and Smooth Love Potion (SLP), which users earn by playing the game, are the two native cryptocurrencies of the game. AXS is also utilized as a governance token, enabling token holders to decide how the gaming experience will evolve in the future.

Having said that, there may be a significant barrier to entry for games like Axie Infinity. User purchases of three pet characters are required to launch the game. A typical team setup used to cost roughly $300, although prices have recently decreased by approximately one-third.

Despite the price decline, this initial cost remains a significant barrier for many, especially given that the vast majority of blockchain gaming players now come from underdeveloped nations. Due to this barrier, gaming guilds have emerged, which allow NFT owners to lend out in-game assets (NFTs) in exchange for a percentage of the assets created.

GameFi Is Boosting Growth

Because GameFi initiatives use cryptocurrencies to settle transactions, the use of digital currencies has grown significantly in recent years.

The number of Unique Active Wallets (UAW) connected to the blockchain gaming industry increased significantly in the third quarter of 2021, according to a report recently released by DappRadar, a platform that monitors activities on decentralized applications (DApps).

These wallets made up roughly 49% of the 1.54 million daily UAWs registered during that time. The information supports the sector-disruptive potential of GameFi and the rising use of cryptocurrencies, which in turn encourages their uptake and use.

Another study report on the subject was recently made public by Chainplay, an NFT game aggregation platform, and it showed that 75% of GameFi investors entered the cryptocurrency markets as a result of their engagement in GameFi, demonstrating GameFi’s expanding influence on crypto adoption.

In addition to an expanding crypto universe, and growing retail crypto exchanges, GameFi has significantly contributed to the NFT market expansion. NFTs are used more often on the blockchain since GameFi largely relies on them for in-game assets. The growth of the GameFi market in 2021 closely mirrored the NFT boom.

Sales of GameFi’s NFTs increased from $82 million in 2020 to $5.17 billion in 2021.

Closing Thoughts

Because GameFi is a part of the cryptocurrency sector, it is also impacted by its many ups and downs. As a result, activity in the GameFi sector increases during uptrends while it declines during downtrends.

GameFi platform developers must work hard to create captivating games and help crypto ecosystems withstand market declines if they hope to keep users onboard.

Although the endeavor is easier said than done, GameFi investors are now focusing on enhancing gaming experiences with the clear objective of sustainability.

There are many obstacles for developers to overcome, but if they can draw gamers in with excellent gameplay, the future of blockchain-based gaming is more than promising.

The author of this text, Jean Chalopin, is a global business leader with a background encompassing banking, biotech, and entertainment. Mr. Chalopin is Chairman of Deltec International Group, www.deltecbank.com.

NFTs in 2022

Posted on October 5, 2022October 5, 2022 by Jean Chalopin

Non-fungible tokens (NFTs) are becoming industry standard, but many investors still do not understand what they are and what they do. According to DappRadar, the trade volume of NFTs in 2021 was $24.9 billion–over $95 million more than in 2020.

What Are NFTs?

Artwork is the most renowned form of NFT to date. Additionally, there are online memes, virtual fashion, music, gaming, charity, huge sporting events, trading cards, and event tickets.

*Source:* *https://medium.com/web3labs/blockchain-opportunities-nfts-cddfb48b32aa*

Due to its purported blue-chip position in the cryptocurrency industry and potential reputation for smart contracts, Ethereum is the primary blockchain for NFTs. Markets exist for collector item NFTs, as each NFT is unique.

There are a growing number of markets. A marketplace that allows you to mint, buy, and sell NFTs from different collections is OpenSea.io. People can advertise and bid on their recently issued NFTs in an auction. NFT marketing businesses also assist in marketing your NFTs to receive better prices for them.

What Does Non-Fungible Mean?

What exactly does “non-fungible” mean? Something is non-fungible if it is “not mutually interchangeable,” or unique. There is nothing on the internet, in local storage, or in the cloud that compares to any one NFT. Nothing can take its place.

A bitcoin is interchangeable. You receive the same thing whether you exchange one bitcoin for another. With NFTs, things are distinct.

Jack Dorsey’s first tweet sold for $2.9 million as an NFT.

Thanks to a digital signature granted to the token tied to it on the blockchain, the technology behind Bitcoin, Ethereum, Dogecoin, and so on, no screenshot or download of that tweet can ever be as authentic as the original.

NFTs are desirable because of blockchain’s immutability. Every transaction involving ownership of NFTs is validated and recorded on a blockchain, most often Ethereum. The token indicating that your digital copy is the original enables you to verify you possess an NFT.

*Source:* *https://seng.hkust.edu.hk/news/20220224/blockchain-and-nfts-explained*

NFTs, Present and Future

DappRader reports that the NFT trading volume in the third quarter of 2021 increased by more than 700% from the second quarter to $10.67 billion. Additionally, according to a Morning Consult survey, half of the physical collectors surveyed stated they would be “extremely” or “somewhat” interested in collecting NFTs in the future.

The creator economy is now being fuelled and redefined by the plethora of emerging NFT initiatives.

Through decentralized marketplaces like OpenSea, Solsea, and Magic Eden on the Ethereum blockchain, creators may now profit directly from their fans or following. The decentralization of the internet brought forth by blockchain means that creators are no longer reliant on businesses, agencies, and ads to pay them for their work.

The best part is that NFTs provide creators with the assurance of ownership, giving them greater power over how to monetize their output and audience.

The main benefit of NFTs for artists is that they may continue to make money long after the transaction. An artist, for instance, may use one of their works of art to create an NFT and receive a portion of the proceeds from each subsequent sale of the NFT.

The owner of Digital Zen, Jovaughn Brown, explains how NFTs could create tremendous leverage for brand storytelling.

*Source:* *https://www.99parkrow.com/2021/05/nfts-as-brand-storytelling-devices/*

NFTs Disrupting the Art World

The highest price ever paid for digital art was set by an NFT: Beeple’s Every Day: The First 5,000 Days. For the first time, NFTs’ use of blockchain technology enables us to authenticate the source and ownership of digital data.

In 2022, there will be a market for fractional NFTs of actual works of art created by well-known artists. Fractional NFTs make it possible to invest in precious crypto assets for a small portion of the cost.

NFT auctions are held by several international artists, who have turned them into reliable sources of revenue.

Real estate, digital collectables, and music work similarly to art NFTs. There will continue to be use cases in other industries. Mariah Carey recently released her first NFT and opened it up for competition. The winner and a guest received a ticket that looked like a boarding card for “Butterfly Airways,” giving them access to the celebrity’s personal plane and a meal with their hero.

*Source:* *https://www.rollingstone.com/music/music-news/mariah-carey-nft-songwriters-hall-of-fame-1361982/*

NFTs Transforming Supply Chains

Leading luxury companies in this space, including LVMH and Prada, use blockchain technology to safeguard their brands and clientele.

Customers who purchase (physical) expensive watches, jewelry, purses, or other high-end fashion products may confirm their provenance by using a “digital twin” NFT. The NFT shows the product’s history from factory to shop, thanks to the collaboration that led to the creation of their blockchain named Aura.

NFTs are also used to track diamonds, expensive wine, and other goods in industries with a high prevalence of counterfeit products.

The Risks Associated With NFTs

NFTs come with pitfalls, just like most things in life do. Buyers, vendors, and authorities are all subject to these risks.

Buyers must ensure the NFTs they are purchasing are authentic and come from reputable suppliers. Sellers need to be aware that forgers and hackers are interested in NFTs. Similar to a tangible work of art, fraudsters may make an NFT copy and sell it as a genuine article. Additionally, buyers and sellers need to be aware of the possible danger that hackers may infiltrate NFT markets or personal accounts using sophisticated tactics, move assets to their own accounts, and resell them.

One significant complaint with NFTs is that virtually anybody may “right click and save” the NFT itself, resulting in their own JPEG copy. Even while you may still be liable to copyright rules for keeping and utilizing those NFTs, this still does not provide you ownership of them. As a result, many people have begun to wonder if they are still worth their cost. Additionally, technology has made it easier for thieves to pass off fakes, reproductions, or imitations as authentic.

In a first of its kind, HM Revenue and Customs (HMRC) seized three NFTs in February 2022 “as part of a probe into a suspected VAT fraud involving 250 alleged fake companies.” After receiving a court order, HMRC also seized £5,000 worth of cryptocurrency assets in addition to the three NFTs which have not yet been valued. The first NFT seizure, according to deputy director of economic crime Nick Sharp, “serves as a warning to anyone who believes they can utilize crypto assets to hide money from the HMRC.”

Closing Thoughts

The NFT boom may well continue, but one expectation is that the technology underlying them shall remain useful for the long foreseeable future. When verifying transactions for people and businesses, the authentication component of NFTs proves to be a time, money, and confusion-saving tool.

In a time saturated with news about the upcoming “metaverse” and “Web3,” it’s difficult to see how NFTs won’t be a vital part of our future.

Disclaimer: The information provided in this article is solely the author’s opinion and not investment advice – it is provided for educational purposes only. By using this, you agree that the information does not constitute investment advice. Do conduct your own research and reach out to financial advisors before making any investment decisions.

How To Create An NFT: A Step By Step Guide

Posted on August 2, 2022August 2, 2022 by Jean Chalopin

With the increase in popularity of cryptocurrencies and blockchain technologies, now a global phenomenon, many investors include them as part of their investment portfolios. Non-Fungible Tokens have also increased in their prominence.

We have previously discussed what NFTs are: one-off tokens built on blockchain tech, representing various rare and unique items in both the virtual and real worlds, such as digital art, virtual real estate, and collectibles like sports cards.

Many investors, traders, and collectors have both earned and lost a lot of money with NFTs–and with the stories seen in the media on a regular basis, creators and other artists are now making money from this new digital media. Its growing popularity is prompting many to wonder how they can create NFTs and join this ever-increasing club of digital artists.

This article discusses the benefits NFTs provide to an artist, answers some questions about the space, and gives you a simple guide to produce an NFT of your own.

Why Create an NFT?

Historically, artists have sold works and have not been the beneficiaries of any future appreciation. However, NFT art is different. Artists can gain from the creation of NFTs in three specific ways.

A Less Expensive Global Market. Because NFT art sales are generally conducted online via peer-to-peer marketplaces, an artist does not have to spend money for an auction house or a gallery.

Lifelong Royalties. NFTs can be coded so that the original artist not only makes money when they sell their digital art the first time, but they can keep earning with each subsequent sale of the token. This is generally a rate of between 2.5-10% of the next sale’s price, giving the artist a lifelong source of revenue.

An Authentic Verifiable Chain of Provenance. Though NFTs are famous for being “right-clicked saved as,” the valid owner of the art is the token holder at the time. Once part of the blockchain, this digital ownership certificate is considered authentic. The current owner, their acquisition price, as well as the previous owners and prices paid, are known. This results in market transparency not seen in the art world before.

Making an NFT, Step-by-Step

Creating an NFT now only involves a few steps, with the main part of the creation process done through a marketplace.

Select an NFT Marketplace

There are generally two types of marketplaces that you can use to create your artwork in NFT form.

Curated. This type of marketplace only allows authorized artists to create (or mint) their digital tokens. Curated marketplaces will focus on high-quality art, not simple low-quality collectibles. NFTcalendar.io is a famous curated NFT marketplace. Their transaction fees are higher, and the royalty percentage on secondary market transactions that can be programmed into the artwork is lower as well (usually a maximum of 5%).

Self Service. The more popular is self-service, or peer-to-peer marketplaces allowing any artist access to create NFTs with whatever they like. Artists can create a token with an image, video, or audio file, and set the royalty percentage as they wish. Unfortunately, being open, there are imitators and fraudsters that will use similar images and art to gain from a famous self-service platform artist.

OpenSea.io is the most popular marketplace for NFTs. OpenSea has risen to popularity, becoming the largest platform, because of its ease of NFT creation and extensive catalog.

Rarible.com is another self-service NFT platform. There are several to choose from.

Once your desired platform is chosen, you will need to open an account on that platform. We will be using Opensea.io for our choice, but the specifics for others are very similar.

Create a Digital Wallet

You must start by setting up a digital wallet that will store your cryptocurrency and your NFTs. In most cases, you will have to choose ETH, the native token for Ethereum, but other cryptos can be selected for some platforms. ETH is the only choice for the NFT creation process on OpenSea.io and has the most buyers and sellers of NFTs on any platform.

It helps if you already own some ETH because NFTs created on the Ethereum Blockchain will use ETH to pay for the “gas” (read: transaction) fee needed to list the token you create.

Opensea.io recommends using the MetaMask cryptocurrency wallet extension for the Google Chrome browser. With this wallet/extension, you can purchase a sufficient amount of ETH needed to mint your NFTs.

If you already have another supported crypto wallet with ETH, you can use it, or create a Metamask wallet and transfer it to the Metamask wallet. The gas fees will range from $15 to $200 in ETH.

Build your Digital Collection

You are not quite creating the NFTs yet. On the interface of your OpenSea account, there will be a MyCollections tab. This is where you store your gallery of digital art.

You will need to customize each collection, entering a name, writing a description, and then uploading a display image. This is the foundation for displaying your artwork once you have created them.

Create Your Token

Once your collection is finalized, you will begin the process of creating an NFT. Start by clicking “Add New Item” to your collection. The following will appear.

You can see that several types of digital media can be uploaded: images (JPG, PNG, GIF), Audio (MP3s), and 3D files (GLB), with a max size of 100MB. You will then supply a name for the token.

You can choose to mint an infinite number of tokens, but they must be done one at a time. You should note how many editions of that token you wish to mint as well.

Editions. This is a token with multiple copies of the same digital media. You will have edition numbers that differentiate the tokens. For example, #1 of 500 would generally be more desirable than #346 of 500.

Stand Alone. This is a one-of-a-kind token.

You then add properties (date created, etc.), levels, and relevant stats, which will enable potential buyers who are exploring your collection to filter the artwork, including social links, an image, an art description, and a name. Once complete, you will click “Create” to add this NFT to the blockchain. This is where you will need your ETH to pay for the gas fees.

From here, you can choose the payment tokens you will accept for your new NFT, and you will also designate the percentage of royalty you receive for any subsequent purchases.

List for Sale

Now that your NFT has been created, list it for sale. Sales can be earned either through an auction or a fixed price listing. If this is your first time selling an NFT, you will have to pre-pay for the gas fee.

Promote Your NFT

The final step is to promote your NFT. Sellers who don’t promote will not get a good price for their art, and you need to think of this as a business. Sellers with a substantial fan base do better. Therefore, you should share your direct link to any potential buyers through your fans on social media.

No Coding Experience Necessary

With the tools discussed previously, you don’t need to have any coding knowledge to create an NFT. You can easily create one with OpenSea in just a few minutes. They have experience helping beginners and will set you on the right path to the successful creation of your first NFT. If you can use the internet, you are likely skilled enough to make an NFT with their step-by-step process.

Are NFTs and Cryptocurrencies the Same?

No, they are not the same, but they are cousins. NFTs and cryptocurrencies are digital tokens. However, NFTs are one-offs, all completely different and not interchangeable; one piece of art is not the same as another, even if they are numbered copies. A cryptocurrency token is the same and has the same value as every other cryptocurrency of the same type. A bitcoin is a bitcoin, like a dollar is a dollar.

What Risks do NFTs Have?

Significant Speculation. NFTs have as much or more volatility as cryptocurrencies. They are highly speculative and can both produce and eviscerate profits in short order. There is a risk of losing funds with hyped, and pump and dump NFTs.

High Gas Fees. The rates for gas fees can change drastically on the Ethereum blockchain. This has an effect on the NFT’s price. Exorbitant fees can cause the NFT’s value to decrease, losing buyers and resulting in losses for the creator.

Competitive Market. There are many artists on the larger platforms, and your artwork may be hidden among the abundance of choices. This is why a solid social media presence can move you to the forefront, leading to profits from NFT sales.

Summary

Being a new market, NFTs have significant potential for growth. However, they also come with a familiar amount of risk and volatility.

The market has grown significantly over the past few years and is becoming more established with the NBA and many other organizations embracing NFTs, but it may be a while before the volatility reduces. If you are going to create a series of NFTs, watch the gas fees and make sure that your social media marketing behind them is already in place so you have the most success.

Disclaimer: The author of this text, Jean Chalopin, is a global business leader with a background encompassing banking, biotech, and entertainment. Mr. Chalopin is Chairman of Deltec International Group, www.deltecbank.com.

The views, thoughts, and opinions expressed in this text are solely the views of the authors, and do not necessarily reflect those of Deltec International Group, its subsidiaries, and/or its employees. This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade.