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NFTs May Be Central to the Emerging ‘Internet of Value,’ Say Experts at Pulver VON3

Bringing back transaction costs for messages or phone calls may be a way to deter spam messages.

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Jeff Pulver
Photo of Jeff Pulver

February 3, 2022 – The explosion of interest in non-fungible tokens — digital assets of unique internet content — is a result of, and an important player in, the next phase of the evolution of the internet, according to technology experts.

More companies are entering the so-called metaverse, a virtual world that mimics the real world, where real social interactions happen through avatars. Facebook has rebranded to become Meta in an effort to get ahead of this evolution, and Microsoft’s proposed purchase of Activision-Blizzard is to also be in part a proposal to get its foot into the metaverse.

But another relatively recent development in the space is the creation digital memorabilia known as non-fungible tokens, which are purchased and sold through no intermediary — that is, no payment processing company or bank gets involved in the transaction.

The way it works is that users enter a marketplace that features listings for these digital assets, which can be a digitized news item or even a memorable tweet from social media platform Twitter. The users will have a digital wallet that will store the items and will have a purse for cryptocurrencies, which are themselves on a decentralized ledger known as the blockchain.

When a transaction is made, all users of the blockchain will have a copy of the deal. This process is said to make fraud difficult, as opposed to a centralized ledger that would keep all deals on one system, keeping eyes of those not involved off transactions.

The development and increasing acceptance of these assets — and the move toward the metaverse largely — are what experts at The VON3 Summit last month are calling the next phase, the third big cycle, in the internet’s evolution.

In this third phase, the internet is focused on communities and users having control of their creative assets, unencumbered by large technology companies and banks trying to get a slice of them through transaction fees and the like.

“Web1 was a promise of an open internet. Web2 was a promise of social connection. Web3 is a promise of creative content ownership,” said Jeremy Lipschultz, a professor at University of Nebraska Omaha and participant of the conference.

Jeff Pulver, founder and host of The VON3 Summit, declared that Web3 is the “dawn of a new era of the internet.” He said, “Web2 is really about companies, products and then community, and Web3 has a characteristic that is community first.”

By selling, gifting, redeeming or trading NFTs through the blockchain, in other words, creators have complete control of their content and who has access to it, the summit heard.

‘Internet of Value’

Web 3 has been coined by some of Pulver’s contemporaries as the “Internet of Value” because individuals will have complete control of all their assets on the internet without an intermediary. This new reality would mean that the economic world we know today would completely shift, say proponents.

“The tools are there, the value to be created is there, it requires one thing: Imagination,” said Pulver.

Non-fungible tokens are the reason Web 3 could be critical to the creative community, the summit heard. NFTs are defined by Bret Kinsella, VON3 panelist and founder and CEO of Voicebot.ai, as the “bridge between Web 2 and Web 3.”

Beyond creativity, NFTs could also be the future of nonprofits and charities. Carole Baskin from Big Cats Rescue has used the power of NFTs to raise money that will save large cats like tigers and lions around the world. Even wineries are trying to get involved, said Jacob Ner David, CEO of one called Vinsent.

As pioneers discover and decide what is possible for NFTs as a result of Web3, Pulver was quick to remind listeners that “this is new for all of us. We’re in this together.”

Users owning their data

Jeremiah Owyang, an industry analyst based in Silicon Valley and one of the speakers at the conference, said that in the ideal Web3, “we can own our data, we can own our identities, and we can own our equity.”

Instead of internet platforms taking users’ data and making money from that, the users would have ownership and control over that data.

“That’s the vision,” said Owyang.

This vision was shared by other speakers, such as the co-founder and co-chair of location technology company Foursquare, Dennis Crowley. He said that while it would be the user’s choice what to do with their own information, maybe we, as users, would be able to “hold onto some of the value [of our data] and monetize them.”

Bringing back micropayments?

This vision also tied into an idea of Koji CEO Dmitry Shaprio: Bringing back transaction costs for messages or phone calls as a way to deter spam messages and robocalls.

Lower costs for voice and data communications have been a godsend for many. But the fact that there is no charge (beyond access to an internet service provider) to send email messages led in the early internet to the proliferation of spam.

More recently, the widespread use of digital telephony and a U.S. regulatory system in which termination charges have been eliminated for cellular calls has led some to appreciate the value that toll charges impose in ensuring that the communicators aren’t scamming recipients of their messages.

Or as Shaprio put it, “Want to send me a message? Pay the price.”

Chris Fine, a technologist and business leader, also emphasized the value of time, saying that in Web3, there should be “some way to filter” the messages and calls received.

Pulver agreed. “Pay me for my time,” he said.

Theadora Soter contributed reporting to this article.

Blockchain

Payment Stablecoins Should be Regulated for Safety, FDIC Chair Says

“The main benefit…of a payment stablecoin is the ability to offer cost-effective, real-time, around-the-clock retail and business payments.’

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Screenshot of Martin Gruenberg, acting chairman of the Federal Deposit Insurance Corporation.

WASHINGTON, October 20, 2022 – Martin Gruenberg, acting chairman of the Federal Deposit Insurance Corporation, on Thursday argued payment stablecoins would be safer if subjected to “prudential” – or risk-minimizing – regulation. 

Speaking at a web event hosted by the Brookings Institution, Gruenberg outlined risks associated with cryptocurrencies – including market volatility and fraudulent behavior – and floated the introduction of “payment stablecoins,” which he said could be used for retail transactions.

“There has been considerable discussion and public debate regarding the benefits and risks associated with the development of a payment stablecoin for both domestic and international, cross-border payment purposes that is subject to prudential regulation,” said Gruenberg. “The main benefit given for the development of a payment stablecoin is the ability to offer cost-effective, real-time, around-the-clock retail and business payments.”

The value of stablecoins, a type of cryptocurrency designed to reduce price volatility, is tied to a reserve asset, such as the U.S. dollar. Stablecoins were developed to trade between other cryptocurrencies without “the need for converting into and out of fiat currencies,” Gruenberg said. Panelists at previous events argued for stablecoins potential ability to increase financial inclusion in the country, and its importance in the technology race with China

Part of the criteria for such stablecoins, Gruenberg further said, is that they be backed dollar-for-dollar by high-quality, short-dated United States treasury assets, and for the transactions to be conducted on well-regulated permissioned ledger systems.

A permissioned ledger system allows moderators to regulate who can participate in the network.  In addition, participants are not anonymous, which, according to Gruenberg, is important for the safety of payment stablecoins. “The ability to know all the parties…that are engaging in payment stablecoin activities is critical to ensuring compliance with anti-money laundering and countering-the-financing-of-terrorism regulations and deterring sanction evasion,” he argued.

Because of the novel and complex nature of cryptocurrency, Gruenberg said, the FDIC should approach its regulation with thought and care. The FDIC issued a letter to its supervised banks that requested information on their cryptocurrency activities earlier this year, and Gruenberg said collaboration with banks would continue.

“There are important risks and policy concerns that will need to be taken into consideration before a payment stablecoin system is developed,” he said.

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Blockchain

Treasury to Release Three Reports on Digital Currencies in ‘Coming Weeks’

The reports will discuss digital asset implications on national security, financial inclusion, privacy and citizens.

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Photo of Treasury Secretary Janet Yellen

WASHINGTON, August 29, 2022 – The Treasury Department announced last week it will be releasing a series of reports about the security and state of digital currencies in the U.S. “in the coming weeks.”

The department said three reports will be released and will discuss the impact of digital assets on issues such as national security, financial inclusion, privacy and on consumers, businesses, and investors.

The department’s August 24 announcement will fulfill a commitment required by a March executive order from the Biden administration that mandates within 180 days the department produce a report about the future of money and payments systems, including adoption of digital assets, and the implications of technology and those assets on the country’s financial system.

The Biden administration has put “a high level of urgency towards research and development efforts into a potential U.S. central bank digital currency,” Julia Smearman, director of international financial markets at the Treasury Department, said Wednesday.

At an event earlier this year, experts pondered whether the U.S. was falling behind other nations, such as China, when it comes to developing their own digital currency.

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Blockchain

IBM Exec Touts Blockchain Technology as Economy Accelerator

Blockchain will be commonplace in the economy ‘within the decade,’ the IBM executive said.

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Screenshot of Jerry Cuomo, IBM vice president of blockchain technologies

WASHINGTON, August 23 – Blockchain technology will speed up the economy in the coming decade in part by making the process of verifying information – such as user identity – more safe, streamlined and efficient, said IBM’s vice president of blockchain technologies at a Tech Forward event on Tuesday.

Jerry Cuomo described blockchain as an “odd duck” type of database with a few defining features, explaining that each blockchain has several administrators, that each transaction must be vetted by the administrators before being recorded to the digital “ledger,” and that transactions, once recorded to the ledger, are essentially impossible to change or delete. Cuomo also explained that each data point – or “block” – in each blockchain is heavily encrypted, which creates high levels of security and user trust.

Although blockchain is most widely associated with the transactions of cryptocurrencies like Bitcoin, Cuomo said it can used for a wide variety of purposes – including identity verification, food safety and intra–supply chain communication. For example, Cuomo suggested that instead of making hundreds of accounts on various websites, a user may soon be able to have a single, blockchain-based identity that would be accessible whenever verification is necessary.

Cuomo said he believes food safety, for example, can be improved by using blockchain technology to document salient information about food conditions during transport. IBM Food Trust is a blockchain-based service that the company says allows participants to track a food product throughout a given supply chain and to ensure that it is safe, fresh, and sustainably sourced.

The company said it offers a wide variety of blockchain services. IBM’s supply chain service, for instance, promises “data integrity and faster reconciliation,” features that are made possible by the immutability of each blockchain record once it is entered into the ledger.

As for the timetable on blockchain technologies becoming commonplace in the economy? “I think its within the decade,” said Cuomo. “This is not an ‘if,’ this is a ‘when.’”

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