How ChatGPT Shapes the Future

Posted on June 7, 2023June 7, 2023 by Jean Chalopin

In recent years, the AI industry has grown significantly, with forecasts that the worldwide market will reach $190.61 billion by 2025, expanding at a CAGR of 36.2% between 2020 and 2025. The Covid-19 pandemic has only hastened this rise, as businesses have been forced to adjust swiftly to remote working and growing digitisation.

The pandemic has brought to light the significance of technology in industries such as healthcare and e-commerce.

Introducing ChatGPT

ChatGPT is an AI model created by OpenAI that can potentially influence the AI market’s evolution in various ways. ChatGPT may be linked to a wide range of applications and services that need natural language processing (NLP), such as customer service, chatbots, and virtual assistants. This may raise the need for NLP-based AI solutions, which would help the AI industry flourish.

ChatGPT may also be used to train other AI models, which can accelerate the development and implementation of AI-powered apps and services. This can improve the efficiency of the AI development process, contributing to the growth of the AI market.

Furthermore, ChatGPT’s capacity to create human-like writing, which can be utilised for various content creation and optimisation activities, has the potential to propel the AI market forward. ChatGPT, for example, may produce product descriptions, marketing text, and even news pieces, reducing the time and effort necessary for content generation while enhancing output quality.

Below is a simple example of how it can write a product description for Coca-Cola within seconds.

The Benefits of ChatGPT

One of the primary benefits of ChatGPT is its ability to help users improve their writing and language skills. ChatGPT can help individuals become more effective communicators by providing real-time feedback and suggestions, whether they are writing emails, composing reports, or creating content for social media.

For example, sales and marketing professionals can use ChatGPT to improve their email writing, helping them to better engage with prospects and customers. Additionally, educators can use technology to help students improve their writing and critical thinking skills without needing human grading and feedback.

Another critical benefit of ChatGPT is its ability to support knowledge management and collaboration. By using the technology to automate repetitive tasks, such as summarising reports or answering frequently asked questions, organisations can free up time and resources for more strategic initiatives.

This can help companies become more efficient, increase productivity, and enhance customer service. For example, customer service teams can use ChatGPT to respond quickly to customer inquiries and resolve issues, reducing wait times and improving the customer experience.

The example below shows how a customer might be able to resolve a query about their home insurance without speaking to a human.

How ChatGPT Augments Roles

ChatGPT can significantly augment the functions of different departments in an organisation, including Data, IT, Marketing, Development, Finance, and Compliance.

Data

For Data teams, it can assist in processing large amounts of data to provide insights and support decision-making. It can benefit data teams in their coding endeavours, particularly when it comes to writing code in SQL or Python.

ChatGPT’s ability to provide suggestions for completing code snippets, identify syntax errors and suggest corrections, and generate complete code snippets based on specific requirements, can save data teams valuable time and effort. Furthermore, it can serve as a repository of coding knowledge that can be easily shared among team members.

For example, if a data team member is working on a SQL query and encounters a roadblock, they can ask ChatGPT for advice on how to proceed. It can then provide suggestions for optimising the query or offer alternative solutions based on its vast knowledge of SQL coding best practices. By utilising its coding capabilities, data teams can improve their coding efficiency and accuracy, freeing them up to focus on more complex tasks.

IT

IT teams can use ChatGPT to automate various IT operations tasks and build a knowledge management system. It may also be incorporated with IT systems to give users rapid and accurate replies to technical assistance enquiries, decreasing the IT team’s burden.

Furthermore, ChatGPT can create a knowledge management system to store and retrieve information about IT systems and procedures, increasing the team’s productivity. IT teams may also use its natural language processing skills to examine massive quantities of log data and give insights into system performance and potential faults.

Marketing

Marketing teams can use ChatGPT to generate high-quality content and build conversational AI chatbots for customer service and sales. You can watch a video below on how ChatGPT built an entire marketing campaign in minutes.

Source

Marketing teams still need to ask the right questions, but ChatGPT saves time and efficiency.

Finance

For Finance teams, it can be integrated into financial systems to assist with data analysis and decision-making. It may assist finance teams in making more informed decisions and improving financial planning and forecasting.

ChatGPT may also help finance teams automate operations, including calculating financial ratios, creating reports, and tracking spending. Furthermore, ChatGPT’s natural language processing skills may be utilised to analyse financial data and discover trends, allowing finance teams to recognise opportunities and possible hazards quickly.

Compliance

Compliance teams can use ChatGPT to ensure compliance with regulations and standards by automating various compliance tasks.

It may also aid in the categorisation and classification of enormous volumes of data, as well as the investigation of complicated legislation and laws. Furthermore, it may give real-time responses to staff inquiries, decreasing the time spent on manual research and enhancing the compliance team’s productivity. The capacity of the language model to interpret and create human-like writing makes it a powerful tool for firms wanting to strengthen their compliance procedures.

By augmenting the roles of different departments, ChatGPT can help organisations increase productivity and improve the quality of their work. Some entrepreneurs are using the technology to brainstorm business ideas. It’s like having a friend to bounce your thoughts between.

Risks of ChatGPT

Despite these benefits, there are also some risks associated with ChatGPT that must be considered.

One of the primary risks is the potential for the technology to promote cheating and plagiarism. For example, students may use technology to generate homework assignments, or employees may use it to create reports and presentations without doing the necessary research and analysis.

To mitigate this risk, it is essential for organisations to communicate the acceptable use of the technology clearly and to have clear policies and procedures in place to monitor and enforce compliance.

Another risk is the potential for the technology to perpetuate bias and harmful stereotypes. As the model has been trained on a large corpus of text, it may generate offensive or inappropriate language or reinforce negative stereotypes. It is vital for organisations to use the technology responsibly and ethically and to regularly review and update the training data to ensure that it is inclusive and free from bias.

AI for People

Despite these risks, companies are already using ChatGPT in innovative and impactful ways. For example, OpenAI partnered with the non-profit organisation ‘AI for People’ to develop a tool that uses ChatGPT to support mental health and well-being.

The tool uses natural language processing and machine learning to provide users with personalised feedback and support, helping them manage stress, anxiety, and depression. OpenAI has also worked with news organisations and journalists to develop an AI-powered writing assistant that can help writers quickly generate high-quality, accurate news articles.

Copy.ai

Another example of a company positively using ChatGPT is Accenture, a leading global professional services firm. Accenture has developed a tool called ‘Copy.ai’ that uses ChatGPT to help businesses quickly generate high-quality marketing and advertising content.

By using the technology to automate routine tasks, such as writing product descriptions and creating social media posts, Accenture is helping its clients become more efficient and effective in their marketing efforts.

Closing Thoughts

ChatGPT is a powerful tool that has the potential to help individuals and organisations across different roles to adapt and develop new skills. While some risks are associated with the technology, companies are already using it innovatively to drive positive outcomes. The key is to use it responsibly.

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.

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.

How Generative AI Transforms Web3

Posted on May 31, 2023May 31, 2023 by Jean Chalopin

As the development of Web3 continues to gain momentum, artificial intelligence is set to revolutionise how we interact with decentralised networks. Among the many AI techniques available, generative AI is gaining increasing attention for its ability to create new and unique content, which has the potential to transform the Web3 landscape.

Generative AI can be used to produce everything from text and images to music and video, providing users with a wealth of new opportunities to engage with Web3 in exciting and innovative ways.

According to a report by ResearchAndMarkets, the generative AI market is projected to reach $200.73 billion by 2032, indicating a growing demand for this technology across various industries.

However, as with any new technology, significant challenges must be addressed, such as ensuring ethical use and mitigating potential biases. In this article, we will explore the key concepts of this form of AI and discuss its potential benefits and challenges to the Web3 ecosystem.

What Is Generative AI?

Generative AI is a type of artificial intelligence designed to create new and original content, such as images, text, music, and even video, without human intervention. Unlike traditional AI models, which are trained to recognize patterns and make decisions based on those patterns, generative AI is focused on generating new data that does not exist in its training data set.

This is achieved by using machine learning algorithms, such as neural networks, to analyse large data sets and identify patterns that can be used to generate new content.

Generative AI can be used in a wide range of applications, from creative industries such as music and art to more practical fields like medicine and finance, where it can be used to generate new drug compounds or financial models.

Art: It can create original pieces of art that range from abstract to more realistic forms. For instance, The Portrait of Edmond de Belamy was created by a French art collective using generative AI, and sold at Christie’s auction house for $432,500.
Music: AI-generated music is becoming increasingly popular, with some AI tools allowing users to create their own unique tracks. A good example is Amper Music, an AI-powered music composition platform enabling users to create and customise their original music.
Writing: Generative AI can also be used to create original written content, including news articles and even novels. For instance, OpenAI’s GPT-3 model (Chat GPT) has been used to write articles that are difficult to distinguish from those written by humans.
Virtual Clothing: It can also be used to create unique virtual clothing for use in the metaverse or other digital platforms. For instance, The Fabricant, a digital fashion house, has created a range of virtual clothing using generative AI.
Video games: AI can also be used to create original video games, from procedural content generation to NPCs with their own personalities and decision-making abilities. An example is Hello Games’ ‘No Man’s Sky’, which uses procedural generation to create an entire universe of unique planets and creatures.
Finance: AI can be used to analyse vast amounts of financial data and generate predictions and insights to inform investment decisions. For instance, the hedge fund Numerai uses generative AI models to analyse financial data and generate trading signals.

In other words, generative AI is the perfect technology to support Web3.

What Is Web3?

Web3 refers to the next generation of the internet, which is focused on decentralisation, security, and user control. Unlike the current Web2, which is dominated by a few large corporations that collect and control user data, Web3 is based on decentralised networks that enable users to own and control their data.

One of the key features of Web3 is the concept of the metaverse, a virtual world where users can interact with each other in real-time using avatars and digital assets. The metaverse is expected to be a key component of Web3, providing users with a new way to interact with each other and with digital content.

Another important feature of Web3 is smart contracts, which are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. Smart contracts can be used to automate a wide range of processes, from financial transactions to supply chain management, without the need for intermediaries.

Generative AI can play a significant role in the Web3 ecosystem by creating new and unique digital assets for use in the metaverse and other decentralised applications. For example, generative AI can be used to create virtual clothing, art, and other assets that can be bought and sold within the metaverse.

Additionally, generative AI can be used to create smart contracts that are more efficient and secure than traditional contracts, thereby reducing the need for intermediaries. However, as with any new technology, there are also potential risks and challenges associated with using generative AI in the Web3 ecosystem, including the potential for bias and the need to ensure ethical use.

Challenges of Using Generative AI Within Web3

While generative AI has the potential to bring many benefits to the Web3 ecosystem, there are also significant challenges and risks associated with its use, particularly in the metaverse.

One of the biggest challenges is the potential for bias in the data used to train the generative AI models. If the data used to train the models is biassed, the generated content may also be biassed, perpetuating existing inequalities and marginalising certain groups. It is, therefore, essential to ensure that the data used to train the models is diverse and representative of all groups.

Another challenge is the potential for misuse of generative AI in the metaverse. For example, generative AI could be used to create realistic deepfake videos or other forms of disinformation, which could have severe consequences for individuals and society.

Furthermore, there is also the issue of ethical considerations surrounding the use of generative AI in the Web3 ecosystem. For instance, generative AI could be used to create realistic avatars of real people without their consent, raising serious privacy concerns.

There is also the question of who owns the rights to the generated content and how it can be used, particularly if it is sold for profit.

To mitigate these challenges and risks, it is essential to establish best practices and guidelines for the ethical use of generative AI in the metaverse and other Web3 applications. This includes ensuring that the data used to train the models is diverse and representative, establishing clear guidelines for using generated content and implementing effective mechanisms for detecting and preventing the misuse of generative AI.

Closing Thoughts

Generative AI has the potential to play a significant role in the Web3 ecosystem, particularly in the development of the metaverse and other decentralised applications. Generative AI can be used to create new and unique digital assets, such as virtual clothing and art, which can be bought and sold within the metaverse.

Additionally, it can be used to create smart contracts that are more efficient and secure than traditional contracts, reducing the need for intermediaries. However, there are also significant challenges and risks associated with using generative AI in the Web3 ecosystem, including the potential for bias and misuse.

To mitigate these risks, it is important to establish best practices and guidelines for the ethical use of generative AI. Despite these challenges, the future of generative AI in the Web3 ecosystem looks promising, with the potential to create innovative content while ensuring that it is used responsibly.

Ethereum’s Smart Contracts Explained

Posted on May 23, 2023May 23, 2023 by Jean Chalopin

Blockchain technology is a game-changing phenomenon that has disrupted multiple industries by enabling safe, decentralised solutions for diverse transactions and operations. Implementing smart contracts is one of the most prominent uses of blockchain technology.

A smart contract is a self-executing contract in which the conditions of the buyer-seller agreement are directly encoded into lines of code. In 2013, Ethereum, the second largest blockchain network, pioneered the notion of smart contracts. Smart contracts have now become a vital element of many businesses, providing efficient and secure solutions for various business activities.

What Are Ethereum Smart Contracts?

They are self-executing contracts with the terms of the agreement between buyer and seller being written into lines of code. These contracts run on the Ethereum blockchain, a decentralised and secure platform. The code in the smart contract is automatically executed when specific conditions are met, eliminating the need for intermediaries and increasing the efficiency and security of the transaction.

Ethereum smart contracts are written in Solidity, a computer language comparable to JavaScript. The code defines the circumstances under which the contract will be carried out and the actions that will be executed if those requirements are satisfied. A smart contract, for example, might be used to transfer ownership of a digital asset from one party to another whenever specific criteria are met.

One of the primary advantages of smart contracts is that they can automate the process of contract execution, saving time and lowering the risk of human mistakes. As a result, they are ideal for a variety of industries, including banking, real estate, supply chain management, and others.

How Do Ethereum Smart Contracts Work?

Smart contracts automate the process of executing specific conditions when triggered by events, such as a transfer of funds. The requirements are pre-written in the code and enforced automatically once met. For instance, a smart contract can immediately release payment to a seller only after the buyer receives a product. In this way, smart contracts enforce the terms of an agreement automatically.

A smart contract process follows steps similar to the below example of buying and selling a product.

The buyer and the seller agree on the terms of the sale, including price and delivery date.
The buyer sends the agreed-upon amount of cryptocurrency, typically Ether, to the smart contract’s address.
The smart contract code verifies if the conditions of the sale have been met, such as the receipt of the agreed-upon amount of cryptocurrency.
If the conditions are met, the smart contract executes the terms of the agreement automatically. For example, it transfers ownership of the product to the buyer.
The buyer now has access to the product and the seller has received payment. Both parties can trust that the smart contract has fulfilled and enforced the agreement.
The Ethereum blockchain records the details of the transaction, including the product ownership transfer and payment. This provides a secure and permanent record of the transaction.

This process provides a secure and transparent way for individuals to buy and sell products using cryptocurrency. By using smart contracts, the risk of fraud and the need for intermediaries is reduced, and the process of buying and selling products is streamlined and automated.

The Technology Behind Smart Contracts

The Ethereum blockchain powers the technology underneath. This decentralised and distributed ledger securely records transactions and data. Smart contracts are self-executing computer programs that run on the Ethereum blockchain and enforce the terms of an agreement automatically.

Developers write these contracts in a high-level programming language and compile them into low-level bytecode, which the Ethereum blockchain stores. The Ethereum Virtual Machine, a computer network that runs the Ethereum blockchain, executes the bytecode. When someone makes a transaction on the Ethereum blockchain, it triggers the smart contract to run and enforce the agreement’s terms.

The decentralised and distributed nature of the ledger ensures the security and transparency of the agreement’s terms, as multiple computers store the transaction details, and anyone can audit them. By using smart contracts, individuals can automate various agreements and transactions, reducing the risk of fraud and the need for intermediaries.

Benefits of Ethereum Smart Contracts

Ethereum smart contracts offer numerous benefits to individuals and organisations. They reduce transaction costs and increase efficiency by eliminating the need for intermediaries. The self-executing nature of smart contracts ensures that the terms of an agreement are automatically enforced, increasing the security and transparency of transactions.

In addition, using a decentralised and distributed ledger eliminates the risk of fraud, as all transactions are recorded on multiple computers and can be audited by anyone.

A recent survey by Deloitte showed that 72% of executives believe that smart contracts will play a significant role in the future of business. At the same time, the market for decentralised finance (DeFi) applications built on the Ethereum blockchain has grown to over $40 billion in just a few years. These statistics show that Ethereum smart contracts are poised to play a significant role in shaping the future of various industries and revolutionising the way we do business.

Industries Benefiting From Ethereum Smart Contracts

Ethereum smart contracts have the potential to revolutionise various sectors by providing secure and efficient solutions for different business processes.

Logistics

Smart contracts can be used in the supply chain sector to automate tracking items as they move through the supply chain. This can increase the supply chain’s efficiency and transparency, lowering the risk of fraud and ensuring that items are delivered on time.

Real Estate

Smart contracts can be used in real estate to simplify purchasing and selling property, removing the need for middlemen such as real estate agents. Smart contracts can save time, money, and minimise the risk of fraud by automating the process.

Healthcare

Ethereum smart contracts can transform the healthcare industry by automating and optimising numerous operations. For example, electronic health records (EHRs) can be securely stored and maintained on the blockchain using smart contracts, boosting patient data privacy and security while making it easier for healthcare practitioners to access and exchange information.

Smart contracts may also help clinical studies by automating processes like delivering payments to participants when specific milestones are fulfilled and collecting and storing participant data.

Gaming

Ethereum smart contracts have the potential to change the gaming industry by allowing gamers to engage with games and participate in the gaming economy in new and inventive ways. They, for example, may be used to build decentralised, player-driven markets where users can buy, sell and exchange virtual commodities and currencies. The blockchain secures these markets, giving participants more transparency and security while participating in transactions.

Smart contracts could automate the hosting of in-game tournaments, such as awarding prizes and collecting entrance fees from players. Smart contracts can also build decentralised gaming platforms where participants can play games and earn rewards directly from the platform.

Companies Using Ethereum Smart Contracts

Many companies have adopted Ethereum smart contracts to provide secure and efficient solutions for their business processes. Some of the companies using Ethereum smart contracts include:

Microsoft: Microsoft has adopted Ethereum smart contracts to provide a secure and transparent platform for managing the supply chain of its products.
JPMorgan Chase: JPMorgan Chase is using them to increase the efficiency and security of its cross-border payments.
Accenture: Accenture uses them to provide secure and transparent solutions for its clients’ supply chains.

Companies will continue to adopt blockchain technology as it evolves and offers significant business benefits.

Getting started with Ethereum smart contracts requires a company to understand Ethereum and blockchain technology. They can begin by educating themselves on the Ethereum blockchain, smart contracts, and the Solidity programming language.

Hiring a team of developers with experience in Ethereum and blockchain technology is also a great idea. This team will develop, test, and deploy the company’s smart contracts.

The next step would be choosing a development environment, such as Remix, Truffle, or Ganache, to build and test their smart contracts.

Finally, the company can deploy their smart contracts on the Ethereum blockchain and start using them to automate its business processes, increase transparency and security, and reduce costs. With the right team, resources, and determination, any company can get started with Ethereum smart contracts and leverage the power of decentralised technology.

Closing Thoughts

According to a report by Grand View Research, the global smart contract market is expected to reach $1.4 billion by 2025, growing at a CAGR of 25.2% from 2020 to 2025.

The future of the Ethereum blockchain is exciting and holds great potential for growth and development. In the next ten years, we can expect to see the following:

Increased Adoption: As more individuals and organisations become aware of the benefits of decentralised technology, we can expect to see a significant increase in Ethereum blockchain adoption.
Expansion of Decentralised Applications: The Ethereum blockchain allows for the creation of decentralised applications (dApps) that can run on the blockchain. We can expect to see the continued growth of this ecosystem with the development of new and innovative dApps.
Development of New Use Cases: As the Ethereum blockchain evolves, it will likely lead to the creation of new use cases and applications. This could include decentralised finance, prediction markets, and more.
Scaling Solutions: Scalability has been a significant challenge for the Ethereum blockchain. However, with the development of new scaling solutions, such as sharding, we can expect the Ethereum blockchain to be able to handle more transactions and become more widely adopted.
More Competition: As the Ethereum blockchain grows, we can expect to see more competition from other blockchain platforms. However, the Ethereum blockchain has a large and established community, giving it a competitive advantage.

Overall, the future of the Ethereum blockchain is bright, and we expect to see continued growth and development in the coming years. The decentralised and distributed nature of the blockchain provides the potential for dramatically enhanced security, transparency, and efficiency in various industries.

AI and Its Many Forms

Posted on May 12, 2023May 12, 2023 by Jean Chalopin

Artificial intelligence (AI) is no longer just a science fiction concept but a technological reality that is becoming increasingly prevalent daily. There are several forms of AI, each with unique characteristics and applications.

This article will explore the various forms of AI today, including machine learning, natural language processing, computer vision, expert systems, and robotics. By examining each type of AI, we can better understand how these technologies function and the potential benefits they can offer society. By understanding the different forms, we can also better appreciate their implications for the future of various industries and the overall economy.

The Different Types of AI

There are various types of AI, each with specific qualities and uses.

AI can be classified as either narrow or general based on the scope of its tasks. Narrow AI, also known as weak AI, is designed to perform specific and highly specialised tasks.

For example, a chatbot that can answer customer service questions or an image recognition system that can identify particular objects in photographs are examples of narrow AI. Narrow AI systems are designed to complete specific tasks efficiently and accurately but are limited in their ability to generalise beyond those tasks.

In contrast, general AI, also known as strong AI or artificial general intelligence (AGI), is designed to perform various tasks and can learn and adapt to new situations. It aims to replicate the cognitive abilities of humans, including problem-solving, decision-making, and even creativity. It seeks to create machines that can perform any intellectual task that a human can.

While we have made significant progress in developing narrow AI, we are still far from achieving general AI. One of the main challenges is creating machines that can learn and generalise from a wide range of data and experiences rather than just learning to perform specific tasks. Additionally, general AI will require the ability to reason and understand context in a way currently impossible for machines.

Below are the typical applications. Most of these are still narrow bar expert systems which are beginning to show some aspects of general AI.

Machine Learning

Machine learning is one of the most common forms of AI and involves training algorithms on large datasets to identify patterns and make predictions. For example, Netflix uses machine learning to recommend shows and movies to viewers based on their previous viewing history.

This technology has also been applied to healthcare to help diagnose and treat medical conditions.

Natural Language Processing

Natural language processing (NLP) is another form of AI that allows computers to understand, interpret, and respond to human language. One real-world application of NLP is chatbots, which many companies use to provide customer service and support. For example, Bank of America uses an NLP-powered chatbot to help customers with their banking needs.

Computer Vision

Computer Vision is a form of AI that enables machines to interpret and understand visual information from the world around them. One example of this is the use of computer vision in self-driving cars. Companies such as Tesla use computer vision to analyse data from sensors and cameras to make real-time decisions about navigating roads and avoiding obstacles.

Expert Systems

Expert systems are AI systems that use rules and knowledge to solve problems and make decisions. These systems are often used in industries such as finance and healthcare, where making accurate decisions is critical. For example, IBM’s Watson is an expert system that has been used to diagnose medical conditions and provide treatment recommendations.

Robotics

Robotics is another form of AI involving machines performing physical tasks. One real-world application of robotics is in manufacturing, where robots are used to assemble products and perform other tasks. For example, Foxconn, an electronics manufacturer for companies like Apple, uses robots to assemble products on its production lines.

It’s important to note that we now have primarily narrow AI designed to perform specific tasks. However, the ultimate goal of AI is to develop general AI which can perform a wide range of tasks and learn and adapt to new situations. While we may not have achieved general AI yet, developing narrow AI systems is an essential step towards that goal. The interrelated and supportive nature of these different forms is what allows us to make progress towards this ultimate goal.

How People Perceive AI

Artificial intelligence is often perceived as a futuristic concept still in its early stages of development. However, the truth is that it is already a commonplace technology that is widely used in various industries. Many companies have quietly incorporated it into their operations for years, often in narrow, specialised forms that are not immediately apparent to the general public.

For example, AI algorithms are commonly used in online shopping websites to recommend products to customers based on their previous purchases and browsing history. Similarly, financial institutions use it to identify and prevent fraud, and healthcare providers use it to improve medical diagnoses and treatment recommendations. It is also increasingly used in manufacturing and logistics to optimise supply chain management and reduce costs.

Despite its prevalence, many people still associate AI with science fiction and futuristic concepts like robots and self-driving cars. However, the reality is that it is already deeply integrated into our daily lives. As AI continues to evolve and become even more sophisticated, its impact on various industries and our daily lives will become known to all.

Closing Thoughts

The development of general AI will profoundly impact many industries, including healthcare, transportation, and manufacturing. It will be able to perform a wide range of previously impossible tasks, from diagnosing complex diseases to designing and creating new products.

However, with this increased capability comes a need for increased responsibility and regulation. As AI becomes more integrated into our daily lives, it will be essential to ensure that it is used ethically and with the best interests of society in mind. In the future, it is likely to become an even more integral part of our lives, transforming how we live, work, and interact with technology.

DeFi Explained

Posted on May 10, 2023May 10, 2023 by Jean Chalopin

Decentralised finance (DeFi) is rapidly revolutionising the financial industry by offering innovative financial products and services that are decentralised, transparent, and accessible to everyone. DeFi operates on blockchain technology and allows individuals to take control of their finances without intermediaries.

According to Cointelegraph, the DeFi market has seen tremendous growth, with the total value locked in DeFi protocols surpassing $70 billion in January 2023. As DeFi continues gaining momentum, it is expected to change how the world thinks about and interacts with finance.

What Is DeFi?

Unlike traditional finance, which relies on intermediaries such as banks and financial institutions, it is built on decentralised networks that allow for direct peer-to-peer transactions and offer more transparency, security, and accessibility.

At its core, DeFi leverages blockchain technology to create a new financial infrastructure that is open and accessible to anyone with an internet connection. This infrastructure is based on smart contracts, self-executing agreements that enforce the terms of a contract without the need for intermediaries. This means that its users can access a range of financial products and services, such as lending, borrowing, trading, and insurance, without going through a traditional financial institution.

Financial firms and institutions are taking notice and are looking to incorporate its benefits into their operations. The transparency and security offered can help to reduce the risk of fraud and increase efficiency in financial transactions.

Additionally, its decentralised nature means that it has the potential to offer financial services to individuals who are currently underserved by traditional finance, such as those in developing countries or those with limited access to conventional financial services.

How do DeFi and Blockchain Work Together?

Decentralised finance and blockchain technology are two sides of the same coin, enhancing the other to create a new financial ecosystem. DeFi leverages blockchain technology to provide a decentralised and transparent infrastructure for financial transactions, while blockchain technology offers the security and immutability necessary.

Blockchain technology, the underlying technology, is a decentralised and secure ledger that records transactions across a network of computers. This decentralised nature means there is no central point of control or single point of failure, making blockchain networks highly resistant to hacking and tampering. The transparency and immutability of blockchain technology make it ideal for DeFi, as it allows for all transactions to be recorded publicly and makes it difficult for anyone to alter the records.

DeFi takes advantage of this security and transparency to offer various financial services, such as lending, borrowing, trading, and insurance, without intermediaries. For example, a sample lending platform may allow users to lend and borrow assets using smart contracts, with the platform’s underlying blockchain technology providing the security and transparency necessary for transactions. In this way, DeFi leverages blockchain technology to offer a new, decentralised financial infrastructure accessible to anyone with an internet connection.

DeFi and blockchain technology work together to create a new financial ecosystem that is decentralised, transparent, and secure. The decentralised nature of blockchain technology provides the security and transparency necessary for DeFi to function effectively. At the same time, it leverages blockchain technology to offer financial services without intermediaries. This combination has the potential to change the way the world thinks about and interacts with finance, making financial services more accessible and secure for everyone.

DeFi and Traditional Finance

Traditional finance firms need to care about DeFi because it represents a significant shift in the financial landscape. It offers a new way for people to manage their financial assets and transactions without relying on centralised intermediaries like banks. This decentralised model has proven to be secure, transparent, and accessible to people worldwide, making it an attractive alternative to traditional finance.

By ignoring DeFi, traditional finance firms risk being left behind as more people flock to decentralised alternatives. They need to stay ahead of the curve and understand the growing ecosystem to adapt and evolve their own services to meet the market’s changing demands.

Furthermore, DeFi has the potential to disrupt traditional finance and impact the bottom line of these firms. Traditional finance firms must take DeFi seriously and find ways to integrate it into their business models to remain relevant and competitive.

How Are Start-Ups Using DeFi?

Aave is a DeFi start-up that offers decentralised lending and borrowing services. The platform allows users to deposit their digital assets as collateral and then borrow other assets at a flexible interest rate without needing a central authority.

Aave uses smart contracts to automate the lending and borrowing process and ensure that each loan’s terms are transparent and fair. The platform also offers features like flash loans, which allow users to borrow funds without collateral for a short time, and liquidity pools, which enable users to earn interest on their deposited assets.

Compound is another start-up revolutionising the lending and borrowing world. The platform allows users to deposit and lend various digital assets, including cryptocurrencies, stablecoins, and non-fungible tokens.

Like Aave, Compound uses smart contracts to automate the lending and borrowing process, but it also includes a unique feature called ‘cTokens’, which allows users to earn interest on their deposited assets. cTokens are unique because they represent a user’s stake in a particular asset within the Compound platform, and their value changes in real-time based on market conditions.

Uniswap is a decentralised exchange that allows users to trade cryptocurrencies in a trustless manner. Unlike traditional centralised exchanges, Uniswap doesn’t require users to deposit their funds into a central exchange, which reduces the risk of theft and hacks. Uniswap uses a unique liquidity pool model where users can provide liquidity to the platform in exchange for a share of the trading fees.

Source

The platform’s automated market maker algorithm ensures that users can trade token pairs without needing an order book. This makes it easy for users to trade even less popular tokens that might not be listed on centralised exchanges.

DeFi start-ups are using decentralised finance to disrupt traditional finance and offer new financial services that are secure, transparent, and accessible to people all over the world. By using smart contracts and other blockchain technologies, these start-ups are creating a new financial ecosystem free from centralised intermediaries’ limitations and restrictions.

Moving to a DeFi Model

Fidelity Investments is a traditional finance firm exploring DeFi to offer new financial services to its customers. The company has launched a new division called Fidelity Digital Assets that provide custody and trading services for cryptocurrencies, making it one of the first large traditional finance firms to embrace DeFi.

Fidelity is using DeFi to offer its customers access to new investment opportunities in the cryptocurrency market and reduce the barriers to entry that have traditionally made it difficult for institutional investors to participate in the market.

Goldman Sachs is another traditional finance firm that is exploring DeFi. The company has been actively engaged in DeFi’s value proposition and creating DeFi products. Goldman Sachs is collaborating with other businesses to develop a digital assets framework, per a press release from November 2022.

JP Morgan is another traditional finance firm that is moving into DeFi. The company has been exploring blockchain technology for several years and working on its DeFi initiatives. For example, JP Morgan initiated its first DeFi trade on blockchain in 2022. Project Guardian, a trial programme run by the Monetary Authority of Singapore (MAS) to investigate potential DeFi applications in wholesale finance markets, enabled the trade.

Traditional finance firms are exploring DeFi to offer new financial services to their customers and stay ahead of the curve in an ever-changing economic landscape. By embracing DeFi, these firms can reduce barriers to entry and offer secure, transparent, and accessible financial services to their customers.

Risks and Challenges

One of the main risks associated with DeFi is security. Since it is built on decentralised networks, it is more vulnerable to hacking and other forms of cybercrime. Smart contracts, which are used to automate the process of lending, borrowing, and trading in DeFi, are particularly vulnerable to security threats. For example, if a hacker can exploit a vulnerability in a smart contract, they can steal funds from users or manipulate the platform in other ways.

Another challenge is scalability. As more people use DeFi platforms, the networks can become congested, leading to slow transactions and high gas fees. This can make it difficult for users to participate in DeFi platforms, especially during times of high demand.

Since DeFi is a relatively new technology, there is still a lot of uncertainty about how it will be regulated in the future. Some countries have already taken steps to regulate DeFi, while others have been more cautious. This uncertainty can make it difficult for DeFi platforms to operate and discourage investors from participating in the market.

Lack of liquidity is still associated with DeFi. Although DeFi platforms have snowballed in recent years, they still have relatively small liquidity pools compared to centralised exchanges. This can make it difficult for users to trade their assets and lead to price volatility.

Finally, DeFi can also be challenging for non-technical users. Since it is built on complex technology, it can be difficult for users unfamiliar with blockchain and cryptocurrency to participate in DeFi platforms. This can make it difficult for DeFi to achieve widespread adoption and discourage users from participating in the market.

Despite these risks, by integrating the right technology, such as blockchain, DeFi will still disrupt and revolutionise the industry.

Closing Thoughts

The future of DeFi is exciting and filled with endless possibilities. In the next ten years, we can expect to see it become more accessible and user-friendly, allowing more people to participate in the market. This will likely increase the number of DeFi platforms and the size of the DeFi market.

Additionally, as DeFi grows and matures, we expect to see more innovation in the space, including new financial products and services built on decentralised networks. This will likely include everything from new forms of lending and borrowing to new insurance products and investment opportunities. Overall, the future of DeFi is bright, and we expect continued growth and innovation over the next decade.

Blockchain and AI

Posted on May 8, 2023May 8, 2023 by Jean Chalopin

According to a report by Allied Market Research, the global blockchain technology market was valued at $3 billion in 2020 and is expected to grow to $39.7 billion by 2025. Similarly, the AI market is projected to grow to $190 billion by 2025, according to a report by MarketsandMarkets.

With the increasing demand for both blockchain and AI, combining these technologies can revolutionise many industries and transform the way we do business.

What Is Blockchain?

Blockchain technology is a decentralised, distributed ledger that allows for secure and transparent transactions without intermediaries. It was first introduced in 2008 by an unknown individual or group of individuals under the pseudonym Satoshi Nakamoto to facilitate Bitcoin transactions.

The technology works by recording transactions in blocks linked together to form a chain, hence the name ‘blockchain’. Each block contains a cryptographic hash of the previous block, ensuring the chain’s integrity.

The benefits of blockchain technology include increased security, transparency, and efficiency. By eliminating the need for intermediaries, such as banks, transactions can be completed faster and at a lower cost. The technology’s decentralised nature also makes it more resistant to fraud and hacking. Blockchain is used in various industries, including finance, healthcare, and supply chain management.

What Is AI?

AI, or artificial intelligence, refers to the ability of machines to perform tasks that would typically require human intelligence, such as learning, reasoning, and problem-solving. The history of AI traces back to the 1950s when researchers first began developing algorithms for machine learning. Since then, AI has evolved to include many technologies, including neural networks, natural language processing, and computer vision.

AI has rapidly transformed the finance industry by providing faster, more accurate decision-making capabilities and improving operational efficiency. Some examples of how AI is being used in finance include:

Fraud detection: AI-powered fraud detection systems use machine learning algorithms to identify unusual behaviour patterns and detect fraudulent activities.
Trading and investment: AI-powered trading algorithms use natural language processing (NLP) to analyse news articles, social media, and other data sources to identify patterns and predict market movements.
Customer service: Financial institutions use chatbots and virtual assistants to provide customer service and support.

Financial firms worldwide are increasingly turning to artificial intelligence (AI) technologies to improve their efficiency, automate their processes, and provide better customer service. Three examples of financial firms that have successfully adopted AI are Capital One, Citigroup, and Ping An.

Capital One, a US-based financial institution, has implemented natural language processing (NLP) to enhance customer service. Its virtual assistant, Eno, can understand and respond to customer inquiries in natural language, available via the company’s mobile app, website, and text messages. The system has helped Capital One reduce wait times and enhance customer satisfaction. The company has also used machine learning to detect and prevent fraudulent activity.

Citigroup, a multinational investment bank, has been utilising computer vision to analyse financial data. Its research team has developed an AI-powered platform to analyse financial statements and other data to identify patterns and trends.

The platform can also provide predictive insights, assisting investors in making well-informed decisions. The system has improved Citigroup’s research capabilities and enabled the company to provide superior investment advice to its clients.

Ping An, a Chinese insurance and financial services company, has been using machine learning to improve its risk management. Its risk management platform, OneConnect, can analyse large amounts of data to identify potential risks and provide real-time insights.

The system can also offer tailored risk assessments for different types of businesses. OneConnect has assisted Ping An in reducing its risk and enhancing its operational efficiency.

Financial firms are increasingly adopting AI technologies to remain competitive and enhance customer service. By leveraging NLP, computer vision, and machine learning, financial institutions can streamline operations, improve customer service, and make informed decisions. Firms that fail to embrace these technologies may risk falling behind their competitors.

Why AI and Blockchain Must Work Together

AI and blockchain are two of the financial services industry’s most innovative and disruptive technologies. While they are often seen as separate technologies, AI and blockchain are becoming increasingly interdependent for several reasons.

One of the most significant advantages of blockchain is its ability to provide secure, transparent, and tamper-proof transactions. However, blockchain cannot detect fraud, which is where AI comes in.

By integrating AI and blockchain, financial firms can build more secure and transparent systems that leverage AI’s fraud detection capabilities to enhance the trustworthiness of blockchain. This combination can offer improved security and transparency in transactions, which is crucial in financial services.

Another advantage of integrating AI and blockchain is the improved accuracy and efficiency of financial services. Smart contracts built on blockchain can automate financial transactions and self-execute when predefined conditions are met. By integrating AI, smart contracts can also be made more intelligent and capable of automatically adjusting to changing conditions. This integration can lead to the creation of more efficient and accurate financial systems.

Integrating AI into the blockchain can also help financial firms to detect and mitigate risks more quickly and effectively. AI can analyse vast amounts of data in real-time, making it an ideal tool for risk management. For example, AI can identify anomalies in financial transactions and flag them for review or rejection, making detecting fraud and other risks easier. This benefit can lead to better risk management, an essential component of financial services.

The integration of AI and blockchain can also help financial firms to comply with regulations more effectively. Financial rules are complex and ever evolving, making compliance a significant challenge for financial firms. By combining AI and blockchain, financial firms can improve their ability to comply with regulations and reduce the costs and risks associated with non-compliance. For example, blockchain can provide an immutable record of transactions, while AI can be used to analyse the data and ensure that it complies with regulations.

AI Creates New Business Models

Finally, integrating AI and blockchain opens up new business models and opportunities for financial firms. Decentralised finance (DeFi) applications are leveraging AI and blockchain to create new financial products and services that are more efficient, accessible, and affordable than traditional financial services. The combination of AI and blockchain technology creates new opportunities for financial firms, leading to the development of new financial products and services that were not possible before.

In practice, many examples of financial firms are already successfully leveraging AI and blockchain to enhance their services. For instance, Ripple, a blockchain-based payments solution, has integrated AI to improve its fraud detection and risk management capabilities. JPMorgan Chase is using blockchain to develop a decentralised platform for tokenising gold, and AI is being used to analyse the data generated by the platform. Visa also leverages blockchain and AI to enhance its fraud detection and prevention capabilities.

AI and blockchain can transform financial services, enhancing security, transparency, accuracy, efficiency, risk management, compliance, and new business models. By working together, AI and blockchain can create synergies that make them greater than the sum of their parts. Financial firms embracing AI and blockchain are likely better positioned to succeed in an increasingly competitive and complex financial services landscape.

Closing Thoughts

The future of AI-enabled blockchain in financial services is promising, with significant advancements expected in the next decade. Here are some potential developments:

Financial firms will continue integrating AI and blockchain to improve their operations, increase efficiency, and reduce costs.
By combining AI’s ability to analyse data with blockchain’s secure and transparent ledger, financial firms can develop systems that provide more secure and private transactions.
Decentralised finance (DeFi) applications are already leveraging AI and blockchain to create new financial products and services.
As AI and blockchain become more integrated into financial services, regulatory oversight will increase.
Integrating AI and blockchain will likely create new business models and revenue streams for financial firms.

Overall, the future of AI-enabled blockchain in financial services looks bright, with continued growth and development expected in the next decade. As financial firms increasingly adopt and integrate these technologies, we can expect to see significant advancements in efficiency and security as new business opportunities emerge.

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 Wrapped Tokens?

Posted on February 15, 2023February 15, 2023 by Jean Chalopin

If you’ve been investing in cryptos, you may have likely heard the term “wrapped” Bitcoin or wrapped tokens. This article will explore the types of wrapped tokens in the crypto space, why they exist, and what benefit they have to you as a crypto trader or long-term investor.

Blockchains Are Separated

Different blockchains like Ethereum and Bitcoin use different protocols and have different functionalities. Moreover, due to the fundamental differences in their algorithms, they cannot talk to each other. While this independence preserves the blockchain’s sovereignty and increases security, it makes the existence of an interoperable distributed ecosystem with easy data exchange challenging.

The ideals of decentralized finance, or DeFi, is a smooth, efficient, and speedy movement of the value, and this is why wrapped tokens can find a place as a practical application. Newer blockchains, such as Polkadot, were developed to solve the interoperability issue that plagues separate blockchains. However, the need for communication between blockchains became apparent, and this communication was possible through the development of wrapped tokens.

Wrapped Cryptocurrency Basics

Wrapped cryptocurrencies and crypto tokens are cryptocurrencies and assets pegged to the value of another cryptocurrency or asset, such as a precious metal, stock, or real estate, and then minted on a DeFi platform. They have become popular as retail crypto brokers made this asset class more accessible and more advanced in tandem.

The original asset gets “wrapped” into a digital vault, with a newly minted token created, which can be used to transact on another blockchain. These wrapped tokens allow non-native assets to be used on any blockchain, building bridges between different networks and creating interoperability in the crypto space.

Wrapped tokens can be created from any asset, art, commodities, collectibles, equities, real estate, and even fiat currencies. However, because wrapped tokens get “pegged” to another asset, it’s required for them to be managed by a custodial entity that wraps and unwraps the asset. We will be discussing why this is a limitation in the crypto world.

The First Wrapped Cryptos

Bitcoin was the first crypto to be wrapped, and the space is dominated by wBTC, which took bitcoin and put it on the Ethereum blockchain using smart contracts. This allowed investors to earn a passive fixed income. There are now many wrapped tokens, most of which use Ethereum’s ERC-20 format or the Binance Smart chain BEP-20 format.

Interestingly, though ERC-20 tokens are issued on Ethereum, the native ETH token is not compliant with ERC-20 standards because ETH was developed before ERC-20. Therefore, Ether must be wrapped to comply with other ERC-20 token standards. A tokenized wrapped Ether has therefore been created on the Ethereum platform.

Cardano, Solana, and Polkadot have begun experimenting with wrapped tokens, facilitating their access to DeFi applications. More recently, projects included the bETH, a wrapped ETH token, which can be traded freely or used as collateral on protocols of the Ethereum network.

Wrapped Token Types

Stablecoins were, in fact, the first wrapped “tokens.” As a result, they have a significant difference from the more established wrapped “coins.” A stablecoin such as the USDT, the Tether, is, for example, backed by a value of approximately one dollar.

However, Tether does not keep the exact amount of USD fiat currency for each USDT minted; its reserves include other assets besides cash, including cash equivalents, T-bills, and more.

There are two general wrapped token types:

Cash Settled

It is impossible to settle these for their underlying asset, only for their cash value.

Redeemable

These wrapped tokens can be exchanged for their underlying asset.

Non-native blockchains will host these two types of wrapped tokens.

Inner-Workings of Wrapped Tokens

Merchants such as Airswap, AAVE, Ox, Maker, and CoinList will mint the number of original tokens sent on platforms such as Ethereum and act as custodians of that value.

A similar process is used when the wrapped token must be converted back into its original coins, such as Bitcoin, Ether, or the asset. The holder of the wrapped token will request the custodian to release the token from the reserves. For every wrapped BTC, there is a Bitcoin that a custodian is holding.

The process employed for minting and managing wrapped tokens remains a limitation in crypto, as a trusted custodian who holds the funds is required. Unfortunately, this requirement needs to be revised for a decentralized distributed network that is supposed to be trustless.

A custodian is required because traders cannot independently use their wrapped tokens for cross-chain transactions. The technology is, however, evolving, and the potential for decentralized options that solve this problem are appearing.

Wrapped Bitcoin (wBTC)

“Wrapped Bitcoin” was first launched in January 2019 and was the first wrapped Bitcoin. The protocol was designed to bring the potential and liquidity of Bitcoin to the Ethereum network and, in doing so, an ERC-20’s flexibility.

The native BTC was unsuitable for decentralized finance (DeFi) transactions; the wrapped version could be used in place of the original asset to transact within the growing DeFi ecosystem and other Dapps within Ethereum’s network.

The wrapped Bitcoin is a significant addition to the cryptocurrency space. While a wBTC’s value is equivalent to the original Bitcoin, the added functionality accrued with the change to wBTC increases its value allowing it to be used in DeFi applications.

A holder of BTC can lend their Bitcoin via smart contracts by simply connecting their crypto wallet to a decentralized lending platform and earning a fixed interest rate each year. Concurrently, borrowers can use their crypto (BTC) as collateral which could automatically go to the lender in case of a default.

Using this type of financing, holders of the currency can still see returns on their holdings even in bear markets if the value of their asset drops.

Wrapped BTC, Unwrapped

There are three primary actors in wBTC’s creation and management.

The DAO

wBTC’s Decentralized Autonomous Organization comprises 17 members, all from the DeFi space, who hold a multi-signature contract allowing them to add to or remove from the list of wBTC merchants and custodians.

Merchants

These administrators trigger the minting of wBTC by sending a defined amount of BTC to the custodian and requesting the mining of an equivalent amount of the wrapped tokens, defined by the investor’s and trader’s demands.

Custodians

These trusted agents act as vaults who provide reliability and security for wBTC, ensuring that all the wBTC will be backed and verified via an on-chain proof of reserves. Custodians mint the wBTC and send that equivalent amount of wBTC (a one-to-one pegged value of BTC) back to the requesting merchant.

In essence, the merchant transfers the real BTC to the custodian’s address on the Bitcoin blockchain, which is then locked. Once the real BTC is received, the custodian’s address mints the equivalent amount of wBTC on the Ethereum network.

The reverse will happen, and the wBTC will be converted back into real BTC through the burning (destroying) of the ERC-20 BTC token, at which point the locked BTC will be released. The minting and burning of wBTC tokens are tracked and verified on the Ethereum blockchain.

Why Is There wBTC?

wBTC was created because of the growth of DeFi applications which are now valued in the billions of dollars. These tokens are sent to lending platforms, options, derivatives, and other financial applications.

The demand for BTC use as an underlying asset in DeFi was such that it needed to be converted to ERC-20 compatible tokens to participate in Ethereum ecosystem Dapps.

Are They Safe?

From a technical viewpoint, a wrapped Bitcoin token is safe. The original BTC will be in the custody of safe platforms like Ethereum or the Binance Smart Chain. When it is converted to an ERC-20 or BEP-20 token, it will maintain the security of the interconnected network.

A flaw with the wrapped BTC tokens is the need for trust in a custodian that holds the underlying asset. If that custodian unlocks and releases the Bitcoin to someone else, the ERC-20-compatible wrapped Bitcoin holders would be holding a worthless asset.

How the original Bitcoin is held determines the security level provided.

Centralized Custodial Bridge

For example, this organization promises to mint the ERC-20 tokens. The centralized entity must be trusted to hold BTC and not abscond. Users must ensure that these organizations are backed with guarantees and insurance in case something terrible happens.

Decentralized smart contract bridge

These would be the best choice in the crypto world. There would be no need to trust a third party, only the immutable time-stamped intelligent contract coding.

The security of wrapped BTC bridges, crossing different chains, has resulted in several arguments in the DeFi community because of the need to rely on custodians to keep the real BTC locked and their financial incentive not to.

Closing Thoughts

Arcane Research reports that the amount of Bitcoin currently locked on the Ethereum blockchain has grown to $3.5 billion as of Dec 2022 (similar to the 3.6 billion Coinbase estimate above). In addition, it is estimated that over 1% (215,800) of Bitcoin’s current supply of 19.2 million coins is now being used in DeFi, all through wrapped tokens of various types.

Wrapped tokens increase the liquidity and capital efficiency of centralized and decentralized exchanges due to their capability to move assets across multiple blockchain platforms that otherwise would have remained isolated.

Additional advantages wrapped tokens provide speedy transaction times and lowered fees possible with newer blockchains, exceeding the capabilities of older blockchains like Bitcoin and Ethereum’s first generation.

Wrapped tokens also offer fractionalized ownership which is not usually possible for some underlying assets such as art, collectibles, or a classic car. We might see wrapped tokens appearing with discount trading platforms or as part of greater liquid portfolios.

These asset-packing solutions make bitcoin and, more importantly, other assets more useful. We will see many items wrapped into fungible and nonfungible tokens that can be used in the DeFi and metaverse moving forward. The ERC-20 and BEP-20 token formats make the world of DeFi possible.

What is Somnium Space?

Posted on January 21, 2023January 21, 2023 by Jean Chalopin

Somnium Space started in 2017 and is by area one of the largest virtual blockchain worlds (VBWs). Like with other VBWs, on Somnium Space, users can create fully customizable environments and programmable independent VR experiences within its larger connected world. These environments are possible through Somnium’s four key offerings:

An SDK to create avatars and property
An NFT marketplace where game-based assets can be traded
A module for building environments and structures within them
Virtual reality experiences

Somnium Space allows creators to build and monetize VR experiences for their users that are from their own imaginations while also integrating blockchain technology. This quality means that the creators are the designers and main recipients of value. Let’s take a deeper look into this second-largest take on the metaverse.

Somnium Space Basics

Somnium Space is a VBW built on the Ethereum blockchain. Somnium is an open-source platform with an immersive VR world that allows users to buy digital real estate, including land, homes, buildings, and several other in-game assets that have value. Somnium’s immersive dynamics allow its players to build and monetize their environments or visit other users’ creations like swimming pools, museums, restaurants, or nightlife and casinos. The possibilities for building within Somnium are nearly limitless, allowing for the construction of unique experiences, worlds, and assets.

While traditional multiplayer VR games have their users divided into mirrored instance rooms via sub-servers, Somnium hosts all the players in a vast interconnected world. Within its broader VR universe, users can create Somnium environments, customized and programmable independent VR experiences.

What’s more, the NFT assets from within Somnium are compatible with other metaverses and platforms throughout the Ethereum blockchain (and potentially other blockchains) ecosystem.

Somnium has its four main elements that are listed in the introduction, and it has deeply incorporated NFTs into its technology, allowing players to bring NFTs from outside its universe (from other parts of the decentralized ecosystem) inside.

Somnium’s Tokenomics

With traditional gaming, the users generate value, which goes to the developer. Players will purchase the game, or with freemium games, they will buy upgrades, access, and customizations a la carte.

They can’t generally take in-game assets out of the game. For example, if the player buys upgraded armor, unlocks a new vehicle, or gains access to a new world, that value remains in-game only. You cannot take the armor or vehicle to another game nor unlock the asset’s value for use in another platform.

However, in Somnium and other blockchain-based games and metaverses, the opposite is true, and assets are valued with tokenization, increasing the benefit to their owner. Being an Ethereum application, Somnium allows for tokenizing in-game assets such as real estate, avatars, wearables, and collectibles, decoupling those assets from Somnium, the company. Allowing for player-generated value allows players to access the token value created in Somnium elsewhere in the broader crypto and token economy.

The Somnium economy is based on three token assets:

Somnium’s Cube Token (CUBE)

The CUBE is an ERC-20 (Ethereum) token that works as Somnium’s native utility token. The CUBE streamlines in-game player transactions and is most similar to tokens bought at an arcade. With an Ethereum wallet, players can hold ETH, CUBE, and NFTs (in ERC-721 form).

CUBE is the bridge between assets for in-game commerce. As Somnium’s universe expands, CUBE will develop in-world utility, allowing players to exist in their VR world.

CUBE’s price, courtesy of Coinmarketcap.com

Somnium’s Land Parcels (PARCELs)

Somnium Space had two “Initial Land Offerings” (ILOs) to issue PARCELs to stakeholders via the OpenSea NFT marketplace. Players who want to build their own Somnium worlds must obtain at least one land PARCEL. Players can also put any NFT on their PARCEL and explore the PARCEL in VR.

Somnium’s Avatars

At the end of 2020, the Somnium team expanded the CUBE’s utility with AVATAR tokenization. Players can mint full-body VR avatars onto the blockchain via CUBE. Players purchase an AVATAR with CUBE, and it’s part of their inventory. AVATARs are compatible with other virtual worlds across many digital platforms.

CUBE tokens can be used to purchase another player’s avatar in NFT form. The buyer’s CUBE is exchanged for the NFT AVATAR of the seller. The ability to create avatars within Somnium exemplifies CUBE’s growing utility.

Somnium’s Karma Levels

The Karma level indicates how VR citizens perceive each other. Somnium will calculate the Karma level of a player with three main metrics:

Rating: how other virtual citizens perceive them based on on-platform interactions.
Engagement: each player’s economic activity value, referring to a score including their time spent gaming, land ownership, and world discovery rate.
Other factors: these include building, public participation, and event organizing.

Players will earn CUBE based on their Karma level, and those that act as instructors or guilds, providing value to the community, will too.

User Opportunities

Somnium offers its Software Development Kit (SDK), Unity, to create customization and personalization for the development of property and avatars, with the avatars interoperable with other platforms and virtual worlds.

The SDK includes a builder mode so that complex and intricate structures can be designed. Once developed, these can be listed as assets on the NFT marketplace and become part of the metaverse.

Somnium is now interoperable with Polygon so users can transfer their NFTs in and out of Somnium, saving on fees. These NFTs can be any of the following:

Cars or other vehicles
Unique avatar wearables
Event tickets for entry to a parcel
Teleportation hubs to travel across the metaverse
Treasure hunts leading to CUBEs

There will be a maximum of 100 million CUBE tokens minted, limiting the availability and generating value for holders. The fees charged by Somnium are minimal, making it easier to gain from a democratized metaverse economy.

Closing Thoughts

VR platforms, such as VRChat, AltSpace, and Rumii, are popular platforms for distanced social interaction and corporate meetings. Concurrently, Ethereum-based blockchain metaverses like Somnium Space have built multiplayer ecosystems, unlocking value in a novel way. The true idea of the metaverse is an entirely decentralized world where we interact using blockchain technology.

By integrating blockchain, Somnium users can create experiences from their imaginations and monetize these VR experiences in a way other platforms do not allow. While the play may be virtual in Somnium’s version of the metaverse, it has created a real economy that moves beyond the space that Somnium inhabits and potentially blurs the lines into the augmented and real worlds.

Somnium could be a hit if it is able to attract the right users that will create exciting experiences that others will be enticed to partake in and, more importantly, pay for. Its potential success is hard to determine. It relies on users for content creation, which is a dangerous proposition, and while it allows creators to gain, it’s always taking its cut.

Somnium has yet to gain a significant following, even though by digital area, it has the second largest metaverse environment, behind Decentraland. At the end of 2021, Decentraland hosted 300,000 monthly users, while in the same period YouTube had 2.6 billion monthly users. Immersive and original content is vital to Somnium’s success. Let’s see what the inevitable future of VR brings.

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.