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How NFTs, DeFi and Web 3.0 are intertwined

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While blockchain itself provides the technology constructs to facilitate exchange, ownership and trust in the network, it is in the digitization of value elements where asset tokenization is essential. Tokenization is the process of converting the assets and rights to a property into a digital representation, or token, on a blockchain network. 

Distinguishing between cryptocurrency and tokenized assets is important in understanding exchange vehicles, valuation models and fungibility across the various value networks that are emerging and posing interoperability challenges. These are not just technical challenges, but also business challenges around equitable swaps.

Asset tokenization can lead to the creation of a business model that fuels fractional ownership, the ability to own an instance of a large asset. While discussing asset tokenization in a previous article, I also mentioned the value of an instance economy in democratizing finance, commerce and global access, as well as in creating a broader global marketplace at a scale never before seen.

With digital assets and their fungibility in a blockchain ecosystem, there are various drivers of valuation. These include: 1) tokens based on crypto economic models that are driven by supply and demand, and the utility of the network; 2) nonfungible tokens, or NFTs, which have an intrinsic value such as identification, diplomas and healthcare records — essentially, tokens that are simple proof validations of the existence, authenticity and ownership of digital assets; and 3) fungible tokens that are valued on various bases, such as the sum total of economic activity in the network (cryptocurrency), its utility (smart contracts and transaction network processing), assigned values (stable coins and security tokens), and so on.

In this article, I address the complex issue of the hyperbolic and rapid rise of NFTs, after a similarly meteoric rise of decentralized finance, or DeFi, creating amazing innovations — with immense promise of democratization, new business models and global marketplaces with global access — all fueled by the basic premise of decentralization and fundamental constructs of tokenization and wallets. While NFTs may be characterized as one-of-a-kind cryptographic tokens with some intrinsic value to a holder or to a market (art, collectibles), the NFT movement is indicative of a larger token revolution that will not only fuel massive innovation and growth in Web 3.0 protocols but also test the resolve of the DeFi movement, along with its ability to intersect and provide platforms and an exchange vehicle for all token types.

Growth in Web 3.0 protocols

The first two generations of web protocols were largely about disseminating information and connecting people. They fueled a massive growth in information and collaboration, and did wonders for connecting the world. However, those web protocols were never designed to move things of value. Also, as the Web 2.0 era reached its fullest potential, vulnerabilities such as “fake news” and the “batched relay” of the movement of assets via a series of intermediaries emerged. Threats to the commerce and financial infrastructure of the system risk destabilizing it.

Web 3.0 promises to safeguard all things we value: information, truth and digital assets — both fungible and nonfungible. Whereas Web 2.0 was driven by the advent of social, mobile and the cloud, Web 3.0 is largely built on three new layers of technological innovation: edge computing, decentralized data networks and artificial intelligence.

The growth of NFTs has not only empowered the ability for artists, skilled professionals and entrepreneurs to encapsulate innovation in a tokenized form but has also fueled the democratization of the platform as one of the promises of blockchain technology. The underlying infrastructure includes decentralized storage technologies, efficient consensus protocols, off-chain computing, and oracle networks to provide connectivity and validation to existing systems.

Collectively, the Web 3.0 set of technologies envisions a connected, trustless, accountable network for efficiently delivering value, thus crafting an infrastructure for things of worth. NFTs represent both transferable entities and nontransferable tokens that we value. The latter include things such as our identification, healthcare records and passports, things that represent us and allow us to participate in the digital economy with our own unique, digital identities.

As we dare to envision a shift toward a world with decentralized control, governance based on distributed technology that challenges every business model, and governance structure built upon centralized business frameworks, we do have to ponder some things. Not only the shift itself, but the motivation, incentive and monetization elements that fuel and power the economic infrastructure to move things that have value — thereby keeping up with our changing perception and subsequent realization of that value.

Intersecting with finance — DeFi

DeFi is the movement in the blockchain applications space that leverages decentralized network technology to disrupt and force a transformation of old financial products into trustless, transparent protocols, facilitating digital value creation and dissemination with few to no intermediaries. It is widely understood and accepted that — due to new synergies and co-creation via new digital interactions and value-exchange mechanisms — blockchain technology lays the foundation for a trusted digital transactional network that, as a disintermediated platform, fuels the growth of marketplaces and secondary markets.

While DeFi aims to deliver the promise of finance democratization, NFTs test the resolve of DeFi by delivering a competitive yet inclusive asset class, plus avenues to provide a medium of exchange, fungibility by other fungible asset classes, and liquidity to a traditionally illiquid market.

Asset classes resulting from DeFi protocols and NFTs avail themselves of the advantages of fractional ownership of the assets, blurring the lines between asset classes and using constructs like digital wallets as a receptacle for them. This is all supported by underlying layers of Web 3.0 that provide security and availability via decentralization, as well as trust and immutability via consensus, extending these principles to basic computer infrastructure like storage and interconnect.

Commercialization of Web 3.0 protocols, which manifest as fungible utility tokens, further blurs the lines with diverse financial innovation products introduced by DeFi (such as base assets and derivatives), products that are also tokenized. So, while decentralization is the underlying theme — and the wallet and the token are fundamental constructs — these blurring lines are quite profound.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Nitin Gaur is the founder and director of IBM Digital Asset Labs, where he devises industry standards and use cases and works toward making blockchain for the enterprise a reality. He previously served as chief technology officer of IBM World Wire and of IBM Mobile Payments and Enterprise Mobile Solutions, and he founded IBM Blockchain Labs where he led the effort in establishing the blockchain practice for the enterprise. Nitin is also an IBM Distinguished Engineer and an IBM Master Inventor with a rich patent portfolio. Additionally, he serves as research and portfolio manager for Portal Asset Management, a multi-manager fund specializing in digital assets and DeFi investment strategies.

How NFTs, DeFi and Web 3.0 are intertwined

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3 Latest Blockchain and Crypto-Related Announcements That You Should Know

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3 Latest Blockchain and Crypto-Related Announcements That You Should Know

This article talks about the 3 latest announcements related to Blockchain and crypto space that every Blockchain enthusiast must know. 

Table of Contents 

  • Overview
  • Latest News and Announcements This Week
  • New Kind of Network(NKN) Price Rallied to a New All-Time High 
  • Indian Tech Giant’ Tech Mahindra’ to Launch Stablecoin Tool for Banks
  • India’s Largest Cryptocurrency Exchange, WazirX Launches NFT Marketplace
  • Concluding Lines 

Overview

The uncertainties in 2020 have resulted in a cryptocurrency boom. Blockchain technology has proven to be distributed, transparent, safe, and reliable. Right from its use-cases in finance to supply chain and healthcare, Blockchain has its use-cases in every domain. 

As this sector is booming and shows no sign of slowing down, Blockchain and crypto always remain in the limelight. Let’s talk about top announcements related to this domain.

Latest News and Announcements This Week

In this section, let’s talk about the latest news and accomplishments in the crypto and blockchain domain.

  • New Kind of Network(NKN) Price Rallied to a New All-Time High 

Backed by Blockchain Technology, a New Kind of Network, also known as NKN, is a new type of peer-to-peer(P2P) network connectivity protocol that uses economic incentives to promote users on the internet to share and distribute their network connections and employ unused bandwidth.   

This network has risen 1,400 percent from a low of $0.052 on March 8 to a new all-time peak of $0.779 within two days on April 6, making it one of the month’s unexpected risers.

According to its official website, since its launch in starting in 2018, the project has steadily expanded its active population to become the “world’s largest blockchain network in terms of full consensus nodes,” with 67,266 nodes already running on the network with the capacity to host millions of full consensus nodes. Following Binance’s announcement on March 11 that NKN holders could gain 20% APY on their assets if they deposited them into their Binance savings account, the NKN price began to rise.

  • Indian Tech Giant’ Tech Mahindra’ to Launch Stablecoin Tool for Banks

Indian tech firm Tech Mahindra is revealing and developing a new stablecoin service targeting financial institutions and banks. The tech giant has collaborated with Dutch blockchain application incubator Quantoz to launch a “stablecoin-as-a-service” tool to lessen transaction fees and processing rates.

As a part of the announcement, Rajesh Dhuddu, Blockchain and cybersecurity leader at Tech Mahindra, expressed his views and stated that the recent OCC statement promoting the use of stablecoins for the settlement of financial transactions by banks would drive demand and accelerate innovation in global payments.”

Tech Mahindra’s collaboration will help users integrate Quantoz’s Nexus transaction processing platform into their legacy infrastructure. 

  • India’s Largest Cryptocurrency Exchange, WazirX Launches NFT Marketplace

Another big announcement related to Blockchain and crypto space came from one of the leading largest crypto exchanges, WazirX. Recently, the Indian-based crypto exchange platform announced that it is launching the NFT marketplace for the exchange of digital art, assets, intellectual property, and more. This announcement comes after a strong month for the exchange’s in-house WRX token.

WazirX founder Nischal Shetty believes that it is the first of its kind in India. He further expressed his views regarding the launch and stated that his entire team is delighted to launch India’s first Non-Fungible Token marketplace. As a part of the launch, he explained that creating and listing NFTs will be free on the platform, and work is apparently underway to repeal the bedrock gas fees that increase when minting NFTs on multiple Blockchains. He further stated that, at present, his team is working around certain basics to make NFTs more profitable for their customers.

Concluding Lines 

Apart from these announcements, the XRP price surges 55%, as it has renewed its aim on the creation of a cross-border payment network. The number of crypto projects has also risen, according to Cointelegraph. It says that a new benchmark has been achieved, with the market capitalization of 100 cryptocurrencies reaching $1 billion.

If the domain of crypto and Blockchain interests you, you can get enrolled in Blockchain Council and become a Certified Blockchain Expert. 

To get instant updates about Blockchain Technology and to learn more about online Blockchain Certifications, check out Blockchain Council.  

3 Latest Blockchain and Crypto-Related Announcements That You Should Know

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DeFi’s money markets are finally luring in institutional investors

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Bitcoin’s bull run from last year has caused even some of its biggest skeptics to soften their stance. From economists to hedge fund managers, the world is opening itself up to technology, and at the center of this movement is decentralized finance, or DeFi. While the market capitalization of all cryptocurrencies has hit $2 trillion, worth as much as Apple, it’s the promise of DeFi — a small corner of the blockchain industry today — that’s grabbing the attention of institutional investors.

As Bitcoin’s (BTC) bullish trend persists, interest-bearing crypto products have become all the rage. Some services offer up to 8% returns on Bitcoin holdings. For investors who are already expecting a rise in value, this can be incredibly useful for maintaining cash flow without selling any assets.

The three main factors solidifying institutional interest in Bitcoin are the current historically low interest rates, the inflation rate and geopolitical instability. With near-zero interest rates expected for the foreseeable future, investors are gearing up to move their funds into alternative locations for securing wealth.

The United States Federal Reserve’s 2% inflation target has incited concern in investors fearing devaluation, and with tensions between the U.S. and China on a precarious edge, portfolios denominated in U.S. dollars are becoming riskier by the day.

A market for money

Buying, storing and using cryptocurrencies securely is still quite a complex ordeal — far more involved than setting up a bank account. However, according to Larry Fink, the CEO of BlackRock — a global investment management fund with nearly $9 trillion in assets under management — Bitcoin could evolve into a global market asset and achieve new highs in the upcoming years.

In the traditional financial system, money markets are parts of the economy that issue short-term funds. They usually deal with loans for periods of a year or less, and offer services like borrowing and lending, buying and selling, with wholesale trading taking place over the counter. Money markets are composed of short-term, highly liquid assets and are part of the broader financial markets system.

Money markets are traditionally very complicated, with expensive overheads and hidden fees pushing most investors to hire a fund manager. However, their existence is paramount to operating a modern financial economy. They incentivize people to lend money in the short term and allocate capital toward productive use. This improves the overall market’s efficiency while helping financial institutions meet their goals. Basically, anyone with extra cash on hand can earn interest on deposits.

Money markets are composed of different kinds of securities, such as short-term treasuries, certificates of deposits, repurchase agreements and mutual funds, among others. These funds generally consist of shares that cost $1.

On the other hand, capital markets are dedicated to the trade of long-term debt and equity instruments, and point to the entire stock and bond market. Using a computer, anyone can purchase or sell assets in mere seconds, but companies issuing the stock do so to raise funds for more long-term operations. These stocks fluctuate, and unlike money market products, they have no expiration date.

Since money market investments are virtually risk-free, they often come with meager interest rates as well. This means that they will not produce huge gains or display substantial growth, compared with riskier assets like stocks and bonds.

DeFi vs. the world?

To hedge against currency risk, institutions have started using Bitcoin, and retail investors are following their lead. More than 60% of Bitcoin’s circulating supply hasn’t moved since 2018, and BTC is predicted to push well above $100,000 in the next 24 months.

If the current trend carries forward, investors will continue to stockpile BTC. However, while much of the supply of the world’s first cryptocurrency remains in storage, the DeFi industry is constantly producing alternative platforms for interest-bearing payments through smart contracts, which increases transparency by allowing investors to view and track on-chain funds.

The average return for DeFi products is also much higher than in traditional money markets, with some platforms even offering double-digit annual percentage yields on deposits. From asset management to auditing smart contracts, the DeFi space is creating decentralized infrastructure for scalable money markets.

According to Stani Kulechov, co-founder of the Aave DeFi protocol, rates are high during bull markets because the funds are used to leverage more capital, with the cost of margin pushing up the yield. “New innovation in DeFi is consuming more stablecoins, which further increases the yield. Unless there is a new capital injection — these rates might stick for a while,” he said.

The Ethereum network currently hosts most of the DeFi applications, and this has barred tokens that aren’t available on the network from participating in decentralized finance. Bitcoin, for example, despite being the largest cryptocurrency by market capitalization, has only recently found its way onto DeFi platforms.

Related: DeFi yield farming, explained

With Kava’s Hard Protocol, investors can yield farm using Bitcoin and other non-ERC-20 tokens like XRP and Binance Coin (BNB). Backed by some prominent names (Ripple, Arrington XRP Capital and Digital Asset Capital Management, among others), the platforms allow users to stake their cryptocurrencies into a pool of assets, which is lent out to borrowers to generate interest.

The team also plans to add support for Ethereum-based tokens in the near future. The network’s upgrade to Kava 5.1, which was postponed to April 8 after failing to reach the required quorum, will also introduce the Hard Protocol V2, bringing powerful incentivization schemes and enhancements to its governance model.

Most loans in DeFi are overcollateralized, meaning the pool always has more money than it lends out. In case the value of the issued token drops, funds in the pool are liquidated to compensate.

According to Anton Bukov, co-founder of decentralized exchange aggregator 1inch, blockchains are the first-ever unbiased executors in human history — very limited, but ultimately fair — and could deliver new services and new flows of interactions in future. “Developers are doing their best to solve potential dishonesty issues of existing flows and invent new flows by replacing intermediaries,” he said.

By creating an automated platform to borrow and lend assets, decentralized finance enables money markets without intermediaries, custodians or the high fees that stem from high infrastructural costs.

Honest work

Of the many trends DeFi has set into motion over the last few years, yield farming has attracted quite a lot of attention. Yield farming is when the network rewards liquidity providers with tokens that can be further invested into other platforms to generate more liquidity tokens.

Simple in concept, yield farmers are some of the most vigilant traders out there, constantly switching up their strategies to maximize their yield and tracking rates across all platforms to ensure they’re getting the sweetest deal. The potential rate of return can become obscenely high, but it’s still unclear whether yield farming is just a fad or a phenomenon in the making. Kulechov added:

“Yield farming is simply a way to distribute governance power to users and stakeholders. What actually matters is whether the product itself would find protocol market/fit. Most successful governance power distributions with yield farming have been with protocols that have found protocol market/fit before such programs.”

Yield farming has an incredibly positive feedback loop, with an increase in participation pushing the value of its governance token up, driving further growth. According to Kava CEO Brian Kerr, while this feedback loop can produce very positive results in bull markets, it can have entirely the opposite effects in falling markets:

“It will be up to the governance groups of the various projects to navigate bear markets effectively, by ratcheting back rewards before a full-on death spiral occurs. Regardless of bull or bear markets, yield farming will be a mainstay in blockchain projects for years to come.”

Money markets are the pillars of our global financial system, but most of its transactions occur between financial institutions like banks and other companies in time deposit markets. However, some of these transactions do find their way to consumers through money market mutual funds and other investment vehicles.

Decentralization is the next frontier for finance, and as prominent investors continue to engage with the DeFi space, a decentralized economy seems all but inevitable. Participating in the burgeoning environment may be a risky bet today, but what decentralized finance platforms learn now will be the foundation of the robust DeFi applications of the future. According to Bukov, the higher interest rates of DeFi platforms are “absolutely sustainable.” He added:

“Higher profits are usually involved with higher risks. So the risk-profit model of all these opportunities is always nearly balanced. Normalizing risks would decrease profits because more participants will join to share the rewards.”

From smart contract malfunctions to the unauthorized withdrawal of community funds, the DeFi space is a place of both miracles and nightmares. DeFi-based yield farming platforms are still in their very early stages, and while the numbers can be all too tempting at times, it’s crucial to do your own research before investing in any platform or asset.

DeFi’s money markets are finally luring in institutional investors

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A 3-Year in Ripple Price, Seeing a 55% Surge

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A 3-Year in Ripple Price, Seeing a 55% Surge

According to the latest announcement, the XRP price surges 55%, as the sixth-ranked cryptocurrency by market capitalization, has renewed its aim on the creation of a cross-border payment network. 

It was announced that in January 2021, XRP cryptocurrency hit a value of more than 0.40 US dollars per coin, more than double what it was in December 2020. Over the past year, Ripple’s value has been below a dollar, indicating little or even no signs of improvement.

The uptick in trading volume was seen when XRP renewed its center on the creation of a cross-border payment network that is inclusive and sustainable as well. 

XRP, which stands for ExpandThe Ripple coin, is a currency on the Ripple network. It is best known for its digital payment network and protocol, and it can be used by banks to source liquidity on-demand in real-time, as well as by payment providers to extend their scope into new markets. It facilitates faster payment settlements and lower foreign exchange costs.

Factors That Surged XRP Price

According to Data from Cointelegraph Markets and TradingView, XRP dropped to a low of $0.566 in the early hours on April 4. But after Ripple posted a blog titled “Creating a More Financially Inclusive and Sustainable Future,” it triggered a 55% rally in XRP price.

A blog titled “Creating a More Financially Inclusive and Sustainable Future” discussed how XRP has collaborated with “mission-driven financial technology corporations, reputed universities, NGOs, social entrepreneurs, and others in order to create higher economic fairness and opportunity for all, and this post has triggered XRP price to a great extent.

Another factor that triggered its price was when Ripple announced that it acquired a 40% stake in Asia’s leading cross-border payments specialist, Tranglo. 

The cumulative impact of these two recent announcements has resulted in a 257 percent surge in XRP trading activity over the last two days, from an average 24-hour volume of $5 billion on April 4, 2021, to $18.4 billion on April 5. 

To get instant updates about Blockchain Technology and to learn more about online Blockchain Certifications, check out Blockchain Council. 

A 3-Year in Ripple Price, Seeing a 55% Surge

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Cryptocurrency Exchange Coinbase is Permitting Traders and Investors to Purchase Stocks

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According to the latest announcement, Coinbase, an American cryptocurrency exchange platform, is all set to go live within two weeks, allowing investors and traders to purchase stocks in the trading platform. 

An official announcement states that Coinbase’s stock will begin trading on the Nasdaq Global Select Market under the ticker symbol COIN on April 14, 2021.

Founded in 2012, Coinbase is a leading U.S.-based cryptocurrency exchange that operates remote-first without an official physical headquarters. It has a strong presence in the cryptocurrency market. The company aims to build the crypto economy to establish a transparent financial system enabled by cryptocurrency assets.

Initially, last year in December 2020, a leading crypto exchange platform announced that it is going public. Brian Armstrong expressed concerns about Bitcoin trading at that time, and despite that, Armstrong appears confident that whatever bitcoin is incurring, it is likely the start of something big.

After deciding to go live, the crypto exchange filed Form S-1 with the Securities and Exchange Commission (SEC). As things are now going in the right direction, one can only conclude that the exchange passed the financial agency’s approval procedure, which is applied to all firms requesting public trade options.

As a part of this announcement, Armstrong commented that we are committed to bringing the potential of crypto to everyone. He further stated that we would continue to strive to provide customers with the highest levels of security, trust, and transparency during times of intense demand. 

The Period of Extreme Demand Has Truly Arrived, Says Armstrong

In December 2020, when Armstrong announced that Coinbase plans to go public, he noted that all have to believe that we are still in the initial stages and that there’s a lot more to come. Now, as Bitcoin is trading for more than $59,000 per unit, it seems like Armstrong’s statement has truly arrived. 

Many major companies, including Tesla, Mastercard, Bank of New York Mellon Corp., Visa, and others, are showing interest in crypto space and allowing crypto payments for goods and services. Tesla announced that people can now buy a Tesla with bitcoin in the U.S. Similarly, Bank of New York Mellon Corp., according to the announcements, is also investing in a cryptocurrency startup named Fireblocks to embrace digital assets. Visa, a major credit card provider, also announced that it is collaborating with cryptocurrency exchange platform and card issuer Crypto.com to facilitate a crypto settlement system for fiat transactions. 

To get instant updates about Blockchain Technology and to learn more about online Blockchain Certifications, check out Blockchain Council. 

Cryptocurrency Exchange Coinbase is Permitting Traders and Investors to Purchase Stocks

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XRP price surges 55% to a 3-year high amid push for financial inclusivity

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XRP price saw a 55% breakout over the past two days as the sixth-ranked cryptocurrency by market cap has renewed its focus on the creation of a cross-border payment network that is inclusive and sustainable. 

Data from Cointelegraph Markets and TradingView shows that XRP dropped to a low of $0.566 in the early hours on April 4 before a wave of trading volume helped lift its price to a high of $0.877 within the last few hours.

XRP/USDT 4-hour chart. Source: TradingView

The uptick in trading volume was sparked after Ripple posted a blog entitled “Creating a More Financially Inclusive and Sustainable Future” which discussed how the project has partnered with “mission-driven financial technology companie, leading universities, NGOs, foundations and social entrepreneurs to create greater economic fairness and opportunity for all.”

A second wave of buying took place on April 5 after Ripple posted the following announcement detailing its most recent acquisition designed to enhance its cross-border payment capabilities:

Combined, these recent announcements have led to a 257% increase in XRP trading volume over the past two days from an average 24-hour volume of $5 billion on April 4 to $18.4 billion traded on April 5.

While this rally caught many traders by surprise, VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for XRP on March 31, prior to the recent price rise.

The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

VORTECS™ Score (green) vs. XRP price. Source: Cointelegraph Markets Pro

As seen in the chart above, the VORTECS™ Score for XRP climbed into the green and registered a high of 67 on March 31, roughly four days before the price began to spike.

The VORTECS™ Score has also risen significantly alongside the price increase on April 5, reaching a high of 84 at the time of writing. Previous backtesting of the VORTECS™ system indicates that based on its rising score, that the price of XRP may still have further upside to go as trading and Twitter volumes continue to show significant increases.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

XRP price surges 55% to a 3-year high amid push for financial inclusivity

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