Crypto, Blockchain and Web3 for Humans
At Engelworks, we always get excited about new technologies, gadgets, apps, and the opportunities they create for businesses. Our job is to help companies grow by taking advantage of market and technology changes.
We have been following what started as Bitcoin (BTC), widened to the blockchain, and then morphed into Web3 for a long time, initially observing from a sideline, then, later, taking positions in several crypto assets (and getting that roller coaster feeling in your stomach when your balance halves from one day to the next).
As entrepreneurs, when we look at new shiny tech, we always ask ourselves, ‘So What?’. And for a (long) while, it felt like use cases for blockchain were quite limited, and we struggled to find any projects that went beyond the early stage into wider adoption. In the meantime, some of our friends have started taking up jobs in the space, starting new ventures or buying sports cars, having sold a few Bitcoin.
As we immersed ourselves in this new and exciting space, we struggled with the lingo. We have technical, financial and business backgrounds and don’t shy away from complicated stuff, but we often find ourselves hopelessly lost (and often asleep) by the third sentence of anything blockchain-related. It felt like geeks were trying to keep everyone else out of it.
However, we persevered, and it has become clear that Web3 has reached a stage where a wider community should take notice of it, as there are more and more valuable things that you can do with it.
In our work, we always tell clients how important it is to communicate in clear and concise language, without jargon. This doesn’t mean dumbing anything down. Gaining clarity is about intelligence, as it does help get to the essence quicker.
So our new blog aims to highlight Web3 / blockchain/crypto developments that matter to the broader business community, be it BlueSky innovations or specific applications. We will also try to strip off jargon and hype and focus on ‘So What’, saving our audience time. We’ll also discuss specific use cases for various industries.
Perhaps a good place to start is what we like most about blockchain and crypto
A modern solution to the issue of trust: instead of the need to have faith in a particular institution, trust is codified and therefore can be enforced automatically and cannot be changed.
SO WHAT: this can power complex systems where no single party is trusted by everyone. A good example is decentralized finance (DeFi).
A fairer distribution of value within the system: an opportunity and mechanism to reward all parties contributing to the community, including developers, customers and creators. It is most peculiar that in promoting the virtues of Web3 and blockchain, hardcore libertarian West Coast VCs sound like extreme left socialists. (Beware, they are not that cuddly. The latest mechanics of raising funding involve the proportional (free) conversion of VC’s equity stakes in Web3 companies into tokens.)
De-centralisation of power: community ownership of later stage crypto projects creates a viable alternative to the centralized power of governments and Big Tech, although governance in crypto does require further perfecting, as it is cumbersome.
A useful tool for building networks: tokens are an excellent instrument for building multi-sided networks, which have been traditionally very expensive and hard to get off the ground.
In short, we don’t believe that (decentralized) Web3 will completely replace its (centralized) Web2 predecessor, but it will disrupt many industries, particularly multi-sided network models.
Next week we’ll talk about what we dislike about Web3 and where we recommend proceeding with caution.
In the meantime, let’s kick off our ‘What we have found most useful this week’ section
According to Arcane, correlations between crypto and stock markets and among crypto have risen to very high levels, with Bitcoin’s correlation to tech stocks reaching 0.7.
SO WHAT: this means BTC is not a very good hedge for anyone who is heavily invested in the stock market, notably (Big) Tech. For diversification, look further, for example, into commodities.
Commerzbank has applied for a crypto license, which would allow it to offer exchange services along with custody and protection of crypto-assets.
SO WHAT: This is one of many examples of Traditional Finance (TradFi) institutions jumping on the crypto wagon. FOMO has swept across Finance, and as per one of our clients, every (larger) financial institution now has a crypto team. Fidelity Digital has more than 200(!) employees, while still at an early stage of their crypto offering, currently limited to BTC.
Metaverse Market Map by CBInsights. WHY: everyone is talking about Metaverse, but everyone struggles to define it. Here’s the first attempt that we have seen to categorise it properly.
… and we’ll leave you with the Fun Fact of The Day: you can get crypto from calves.
While thinking about the name for our new blog, we googled ‘Crypto for Humans’. Being helpful as usual, Google has suggested to us a few further questions to explore, such as ‘Can humans get crypto?’, ‘Does crypto ever go away?’, and perhaps the most puzzling, ‘Can you get crypto from calves?’. If you wondered, the answer to the last question is ‘Yes’, if crypto is short for ‘Cryptosporidium’, a bacterial infection that triggers diarrhoea.
#crypto #web3 #metaverse #blockchain #bitcoin #fidelitydigital #arcane #bigtech #defi