In such cases, an overview of the impact of blockchain technology on marketing would help you familiarize with how blockchain will transform marketing now and in the future. The following post offers you an outline of the potential impact of blockchain technology on the marketing activities of an organization or brand.

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Importance of Marketing  

If you want to know the importance of blockchain for marketing, then you must know about the significance of customer-centric marketing. The competitive B2C markets in the present times call for organizations to reach out to customers. At the same time, customers must have the necessary skills to communicate the value for a consumer from their goods or services. The communication methods followed by organizations have been changing gradually from one industry to another over the course of time. 

However, the primary objectives and risks pertaining to consumer engagement would remain the same for marketing in any era. The need for a blockchain marketing strategy seems evident for organizations thriving in an era of transformation of the internet into a decentralized web. As the internet expanded over the course of history and new technologies emerged gradually, the influence on the traditional marketing mix became quite clear. 

Modern technologies have created the need to emphasize on the elements of security, transparency, trust, and privacy. Consumer concerns regarding privacy have been growing considerably in the past few years. Where does blockchain come into the picture? Can it resolve these challenges?

Role of Blockchain in Marketing

Blockchain technology has created substantial hype alongside showcasing proof of its value through proven use cases in different sectors. For example, blockchain has found some notable use cases in the industries of finance, healthcare, real estate, and supply chain management. Therefore, marketing is obviously not an exception in the potential use cases of blockchain. Most of you wondering about answers to “How is blockchain used in marketing?” could figure out the same in the traits of blockchain technology. Let us take a look at the different features of blockchain which make it a suitable fit for blockchain. 

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How is Blockchain Suitable for Marketing?

The global financial crisis in 2008 shattered the foundations of trust in the traditional banking system. During this time, the arrival of the peer-to-peer electronic cash system, Bitcoin, showed the use of cryptographic mechanisms for processing financial transactions. The cryptographic mechanisms underlying Bitcoin include hashing, consensus mechanisms, asymmetric encryption, and time-stamping. 

Bitcoin resolved the problem of double-spending while setting a new precedent for carrying out financial transactions and exchanging value in online environments. Furthermore, the effect of blockchain in marketing would also focus on how the working of blockchain focuses on verifying the validity of transactions. It is impossible to tamper with the public transaction records on blockchain as all the transactions as sequentially arranged in the blocks with timestamps. 

The applications of blockchain for marketing would introduce prolific changes in interactions between a customer and businesses. Blockchain brings the value of multiple technologies and, most important of all, a distributed ledger of transactions carried out by parties involved in the blockchain network. The basic objective of blockchain technology focuses primarily on authentication of assets with the flexibility for application in other business activities. 

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Effect of Blockchain on Marketing

Blockchain technology is highly disruptive in nature, and its impact on the market is not under wraps. Most recently, blockchain technology has successfully introduced massive waves of change with value advantages in use cases such as asset management and tracking alongside regulatory compliance. 

Blockchain technology has offered new avenues of productivity, albeit in the initial stages for different sectors. However, the lack of research on potential of a blockchain marketing strategy can create notable ambiguities pertaining to the significance of blockchain technology for marketing.

Here are some of the important ways in which blockchain could influence marketing for organizations. 

• More Emphasis on Decentralization

The internet provided the initial push for decentralization and offered drastic changes in the distribution of products and services by companies. New digital intermediaries replaced the traditional intermediaries by offering a wide range of services and solutions for modern commerce. 

Some of the examples of services by new ecommerce intermediaries include trust provision, online search capabilities, communication, information brokering, and advertising. In addition, social networks such as Facebook, Instagram, and Twitter offer new ways for brands to reach their customers. The existing digital intermediaries seem to be doing the job of marketing a business to its target audience. 

However, the centralized digital intermediaries can lock your data in their control, which increases the need for a business to depend more on them. On top of it, managing your communication channels alongside concerns about monetizing customer data also create doubts regarding the existing digital technologies for marketing.      

Blockchain could offer an ideal solution to all these concerns effectively with a tool that supports businesses and customers moving around the challenges of intermediaries. Therefore, the answer to “How is blockchain used in marketing?” would reflect on the capabilities of decentralization. 

Brands could improve customer targeting alongside enhancing service responsiveness and expanding their advertising campaigns. The interactive and ubiquitous features of blockchain help marketers in communicating advertising content to customers. The applications of blockchain technology in decentralized marketing could help in removing the activities which don’t add any value to the marketing process. 

Brands could also offer incentives for customers in the form of loyalty programs, thereby improving the prospects for strengthening the direct relationship between consumers and brands. At the same time, decentralization with blockchain technology could offer a new model for better consumer engagement and collaboration. 

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• Fighting against Click Fraud

The lack of examples of blockchain in marketing industry can be one of the most important reasons for limited investigation in this field. Communication is an important tool for customers to know about the latest products, services, and other updates. However, the importance of an online business also comes under question owing to the multiple scandals and fraud campaigns. 

With the popularity of online sponsored search in the business models for various search engines, click fraud has emerged as a notable setback for online advertising. Click fraud has become quite popular due to automated digital marketing and better methods for target marketing. It is actually an intentional act where an organization or an individual attempts to influence the advertising budget of a competitor. 

The necessity of blockchain in marketing is clearly evident in the ability to fight against click fraud. As a matter of fact, the severity of click fraud can show how it can be a major threat to digital marketing. It can account for additional costs for marketers in the amount of $44 billion by 2022. 

Blockchain can reduce specific risks associated with click fraud through a trustworthy digital marketing environment for brands and customers. Blockchain-based marketing would focus on encouraging participants in the marketing sector to work in an open and shared environment, with every individual serving their roles with integrity and honesty.

One of the instances for using blockchain technology in fighting click fraud would refer to the resolution of information asymmetry concerns. The collaborative operations would help in improving control and supervision over publishers through detailed analysis of credibility, historical information, and qualifications. 

One of the examples of blockchain in marketing for dealing with click fraud refers to adChain platform. The platform works as a transformative protocol in the field of marketing technology with innovative facilities for marketers, such as real-time lead tracking and campaign audits. The adChain protocol also leverages the immutability of blockchain to prevent pay-per-click providers from accessing the benefits of fraudulent traffic and ad clicks. 

• Improved Transparency and Trust in Marketing Environments

Blockchain offers the benefits of decentralization as the answer to the control of digital intermediaries over the marketing process and decisions of a business. At the same time, it is also important to note how consumer confidence in brands has been dwindling at unparalleled rates. 

If you want to build a blockchain marketing strategy, then you must understand that the quality of the technical infrastructure determines the level of trust of consumers in the marketing campaign of a brand. Blockchain can help to fuel trust and transparency in the domain of online marketing by allowing consumers and brands to work in a transparent and secure ecosystem. 

The most striking highlight of blockchain technology refers to the advantage of trust by design as the trust protocol underlying blockchain provides assurance regarding the honesty and integrity in behavior of the brand and marketing professionals.

A credible blockchain marketing agency would work towards the creation of consumer-centric transparency, particularly in scenarios where consumers have to share their personally identifiable information or PII. 

In addition, blockchain can also improve trust and transparency by fighting against malicious marketing for counterfeit products, which affect the intellectual property or IP rights pertaining to original manufacturers. Furthermore, the improved visibility and ability to verification of compliance obligations alongside end-to-end product traceability could also deliver better transparency into how a business works.

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• Better Security for Digital Marketing      

Blockchain has been developed on the foundations of cryptographic mechanisms for ensuring security. The discussion on a blockchain marketing strategy would focus on security threats as the circumstances, conditions, or events, which pose formidable risks for marketing campaigns and systems. 

Before adding the element of information security in their marketing campaigns, businesses must work on developing a strong technological infrastructure to resolve the existing loopholes alongside improving the trust of consumers in the digital marketing landscape. Blockchain technology could provide exclusive benefits for consumers and brands with decentralized and distributed data storage. 

In addition, you can also capitalize on the functionalities of different security mechanisms such as access control, asymmetric encryption, and digital signatures. These security mechanisms can help in safeguarding the processes for storing, transferring, and retrieving massive volumes of consumer information. 

Blockchain technology offers a new method for decentralization and self-organization of a business ecosystem with effective synchronization and integration of marketing-related information among network members. The information can include product listings, marketing plans, pricing policies, market research and analysis outputs, discounts and promotional benefits, and advertisements. 

Consumers could make the most of blockchain in marketing with access to a single source of truth about the values, traits, and offerings of a brand. Most important of all, the lack of a single point of failure also provides better assurance of security for digital marketing campaigns. 

• Reducing Privacy Concerns in Marketing

The work of a blockchain marketing agency is not limited to ensuring security, trust, and transparency in the marketing process. Privacy is one of the critical issues which affects the decisions of an individual about using a specific online technology service. Research has proved that customers are concerned about anonymity and confidentiality of their online transactions. 

The increased risks of manipulating users into divulging their PII have been responsible for increasing concerns regarding privacy. On top of it, you can also notice how new data collection and data mining technologies can help brands in identifying, tracking, and collecting consumer data. However, blockchain technology can help in resolving various issues pertaining to privacy in digital marketing. 

One of the notable examples of blockchain in marketing for privacy would refer to anonymity of users in a transaction. Transactions on blockchain are not associated with real identities, and configuration in controlling access of network members to block information can help in improving privacy. 

While transactions are verified by the whole network, no one knows about the details of parties involved in the transaction. At the same time, the use of blockchain for marketing also sheds light on the possibilities for consumers to use transactional history to develop more control over PII in digital marketing initiatives. 

The transaction history on blockchain could provide better and more robust analytics with privacy protection for users. Consumers of a specific brand could also explore the opportunities for trading their PII with brands securely in return for services or incentives. 

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Bottom Line

The overview of the potential improvements in adopting blockchain technology for the marketing sector shows that it is a valid bet. Blockchain is inherently the ideal technology for marketing by its design, which enables decentralization, security, and privacy. The work of a blockchain marketing agency would primarily focus on incorporating these benefits in your existing marketing strategies with scope for improvement. 

Blockchain technology can facilitate the security of digital marketing initiatives alongside supporting consumers in taking control of their data. With the applications of blockchain technology in marketing, brands could also seek plausible improvements in capabilities to fight against scams such as click fraud. Brands could leverage blockchain technology to introduce credible value advantages in optimizing the cost of their marketing campaigns. Learn more about the use cases for blockchain technology in the field of marketing.

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All these questions call for emphasis on the value advantages of web 3.0 and its use cases. The following discussion helps you find more about the future of web 3.0 with a detailed reflection on its importance. You can also learn more about the different use cases of web 3.0, which would strengthen the position of web3 as an important technology trend. 

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What is Web3?

Before you try learning more about web3 future, it is important to understand the term itself. You need to consider the fact that you don’t have ownership over any of your data on TikTok, Facebook, and Instagram. The internet most of us use today is considerably centralized in nature and stays in the control of major corporate houses. 

On the other hand, the new alternative for these issues comes in the form of web3. Web 3.0 or web3 is an interesting concept pertaining to the next generation of the internet, and it shows the ability of users to control and owing to their digital assets and other online content. How will web3 change the world? The simple answer points to how big companies create and offer products and services through a centralized approach. 

Let us assume the example of a social media network like Facebook. Do you own any of the data you have on Facebook? No, Meta has ownership of every asset on Facebook and also exercises complete control over the content created by users. The company has the right to ban or block you according to your needs. Another example of a centralized online platform refers to the online game Fortnite. The game does not allow any control of in-game identities and items. Therefore, it is quite clear that users cannot control or monetize the content they create with web 2.0. 

Importance of Web 3.0

The most critical piece of information you need for the answer to “How important is web3?” would point at how it resolves the problem visible with web3. You can think of the scale of the problem with web2 when you think of the industries and solutions associated with web2 right now. For example, over 2.5 billion gamers all over the world believe that the in-game assets are under their ownership, which is not actually the case. 

Web3, on the other hand, provides an open ground for creating content alongside exercising control, ownership, and monetization privileges. How? Blockchain and cryptocurrencies are prime drivers of the developments in web3 alongside facilitating the foundation for NFTs. 

You can develop a solid overview of the future of web3 by understanding how blockchain technology serves an important role in defining web3. Blockchain technology can help users interact with different online services under the governance of peer-to-peer networks. Peer-to-peer networks are basically decentralized networks of computers rather than centralized servers of a specific entity. In such environments, users have complete ownership of their data and can enjoy the privilege of peer-to-peer, permissionless transactions. 

Therefore, blockchain can easily remove the need for intermediaries. If you have an internet connection along with cryptocurrency wallets such as Metamask, you can connect to world of web3. As a result, users would receive full control of their digital identities alongside the methods and timing of sharing data by using different online applications. Users can capitalize on their private keys to maintain security of their data and identity.

The plausible improvements offered by web3 over the existing web2 landscape showcase significant details about its working. As of now, the world is gradually moving faster towards web3. Who would avoid a decentralized network which can offer decentralization, transparency, and immutability for safeguarding your data? The web3 would spell some notable changes and different implications of data sharing and ownership alongside control over the digital identity. 

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Transformations Induced by Web3

If you want to learn about the answers to “Is web3 the future of the internet?” you must know the different ways in which it is changing the world right now. Web3 solutions have been dominating the center stage of transitions in major areas such as storage, browsers, social networks, finance, and operating systems. Gradually, the internet is moving towards the web3 principles for introducing an internet of assets. How is this change happening? Some of the notable examples of the transition toward web3 include the following,

• Storage systems have been changing preferences from Google Cloud, AWS, and Microsoft Azure towards IPFS. 
• New browsers such as Brave present a decentralized alternative to the popular web2 browser, Google Chrome. 
• The web3 future would also highlight the massive changes in finance with preferences for crypto wallets such as Metamask instead of conventional banks. 
• Centralized operating systems such as Windows, Android, and iOS in the web2 fall short of many capabilities introduced in web3 operating systems such as EOS and Ethereum. 
• The shift towards the future of web3 would also highlight the rise of new decentralized social networks such as Steemit instead of centralized alternatives such as Facebook. 

Another formidable example for showcasing the transition toward web3 focuses on the growth of DAOs as an alternative to traditional operating models for organizations such as LLCs. You can notice how web3 is indeed the future with transitions from centralized systems and processes towards decentralized blockchain networks. 

Will Users Welcome Web 3.0?

The inevitable nature of change in the working of internet and how users interact with it is one of the foundation pillars of web 3.0. The answers to “How will web3 change the world?” are important for every internet user. Web3 not only guarantees ownership of your own data, assets, and digital identities but also enables the benefit of data privacy. 

The existing web2 environment cannot guarantee complete data privacy, especially when centralized agencies have control over user data. You have to register for a particular service before you can use it, and in the process, you offer your private data to access its functionalities. Remember the “terms and services” in almost every application on which you click “I Agree” without reading them in most cases. 

On the contrary, you can find affirmative responses for “Is web3 the future of the world?” on the grounds of decentralized data storage. You don’t have to worry about any single organization or entity taking control over user data. Web 3.0 presents the foundation of an open internet, accessible to everyone, with the advantages of transparency and security. 

You don’t have to register for any service and can exercise complete control over your personal data. On the other hand, web3 imposes the necessity of safeguarding your own data and assets as custodians. Interestingly, some of the renowned players in the web2 domain have been incorporating elements of web3. For example, Twitter has already introduced NFT profile pic verification. 

Above everything else, new consumer behaviors associated with web3 showcase how users are gradually adopting web3. The new initiatives such as growth of NFTs, DAOs, and play-to-earn games show that users are opening up to web3 applications. The most probable explanation for “How important is web3?” is evident in how web3 would find acceptance by users. Web 3.0 would redefine the new generation of internet, governed by a specific set of standards, rules, and guidelines for all internet users. The impact of web3 would not be restricted only to specific applications as it would define the complete internet. 

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Stepping Into the Future with Metaverse

The most plausible explanation for web3 showcases it as a set of standards for the new internet. Where do you see web3 going forward? As a matter of fact, the discussions on future of web3 often revolve around the scope of its applications. The most notable example for proving the same points at the metaverse. Virtual worlds accessible through VR and AR gadgets offering a shared and persistent environment define the metaverse. 

It is a seamless virtual world that would function just in parallel to real-world activities. Although the concept of the metaverse is building up gradually, it would open up many opportunities for the future. The metaverse would develop as a massive virtual world that allows facilities for different tasks and activities such as working, learning, socializing, and entertainment. 

The metaverse draws the best of virtual experiences such as social media and gaming along with virtual reality and augmented reality. You can find answers for “How will web3 change the world?” in the description of the metaverse. It would serve as the three-dimensional internet. The content on web3 is presented in the form of three-dimensional objects, thereby providing a new type of user experience. 

For example, online gaming is possible by playing games in three-dimensional spaces, which allow users to interact with ease other as the in-game avatars. Users could engage with web content and the internet virtually along with an immersive experience of the virtual spaces. The integration of virtual reality headsets could enable users to enjoy physically and visually immersive experiences. As of now, the possible applications of the metaverse are targeted at social media, education, work, and entertainment. 

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Will Metaverse Be the Future of Web 3.0?

Web 3.0 refers to standards, and the metaverse is a technology solution. The metaverse would obviously play a crucial role in the future of web3, owing to its practical value advantages. Most important of all, any single entity does not have control over the data and assets of users. Many of the early-stage metaverse platforms are under the ownership of different service providers. 

The example of Facebook and its transition to Meta is the best highlight for the future of the metaverse. The tech giant has hired a team of 10,000 people to work on its metaverse development project. Most important of all, the influx of capital with around $50 million USD and creation of new jobs offer a solid boost to the growth of metaverse. Companies like Facebook would still remain centralized owners of every interaction and experience on the metaverse. 

In such cases, data custody and safeguards for digital identities become an important concern. New players in the domain of metaverse serve as an effective outline pertaining to the future vision for the metaverse. Therefore, the web3 future with metaverse would only serve some actual change if they help in decentralization and focus on user ownership. 

The different rules and guidelines with web3 for implementing decentralization would develop the trust of users regarding decentralized control over user experiences and data identity. The metaverse is a virtual space, and web3 provides the opportunity for a decentralized internet and can offer one of the foundation elements for connectivity in metaverse. 

In addition, the creator economy concept in metaverse would offer an ideal route for supplementing the vision of web3 in creating a financial ecosystem with decentralized solutions. The transition towards decentralized web3 would also imply the bridging of gaps between the virtual and physical worlds. 

At the same time, the future of web3 would also revolve around the factors of interoperability, open-source verification, safe data storage, and exchange. It can only help in assuring users that they can use and interlink assets alongside transferring them from one world to another seamlessly. 

Other Use Cases of Web 3.0

The important applications of web3 don’t revolve around the metaverse only. You can find many important use cases of web3 building up, such as web3 social media. The future of social apps on web3 would be more similar to the normal social apps of today with a focus on simplicity. Web3 social apps may also fetch the attention of crypto enthusiasts and the younger generation of internet users in future. 

Web3 can gain a lot of traction in the future with play-to-earn gaming. The massive surge in popularity of play-to-earn games such as Axie Infinity has shown the way forward for web3 gaming platforms. Decentralized storytelling would also emerge as one of the significant use cases of web3 in the future. 

It focuses on resolving the problems of community involvement in storytelling. Another notable highlight in “How will web3 change the world?” would point at wallet-aware sites and data ownership. The developments in blockchain technology, such as DAOs and zero-knowledge proofs, serve as an effective boost for the future of web 3.0.

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Bottom Line

The basics of web3 suggest how it can serve as a transformative force in the user experience and the design of the internet. People want to try the new decentralized solutions, and the interest of users in crypto and NFTs proves the same. However, the future of web3 must also cover a lot of challenges before transforming into a full-fledged standard applicable throughout the internet. 

As of now, the developments in the world of web3 have proved how successful web3 will be in the future. Most important of all, the assurance of decentralization, data privacy, and control over digital identities can also serve as crucial advantages for internet users. Learn more about web3 solutions and their value advantages now.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post The Insane Future of Web3 appeared first on 101 Blockchains.

The most common variant of stablecoins which has become a popular choice among crypto users, refers to fiat-backed stablecoins. The following discussion offers you an answer to ‘what is fiat-backed stablecoin’ along with an overview of its significance. In addition, you can also learn about some of the popular examples of fiat-backed stablecoins.

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Understanding Stablecoins

The first thing you need to learn before going through a fiat-backed stablecoin list is a clear understanding of stablecoins. Stablecoins are basically a specific class of cryptocurrencies designed specifically for introducing the price stability of fiat currencies while safeguarding the flexibility of digital assets. Stablecoins achieve price stability through association with a more stable asset such as fiat currencies like the US Dollar or precious metals such as gold. 

The interesting highlight about stablecoins is that they have been tailored for maintaining price stability irrespective of the changes in the crypto market or the broader economy. The issuing organization would employ relevant mechanisms for stabilizing the price peg in event of unprecedented circumstances. 

An overview of the notable stablecoin types can help you understand how stablecoins support price stability through different methods. As of now, you can discover around 200 stablecoins spread all over the world. Stablecoins safeguard crypto users from the unwarranted dangers of market volatility in cryptocurrencies. The most plausible use case of stablecoins refers to the ease of liquidating digital assets into stablecoins. Therefore, crypto users can keep their assets in the crypto ecosystem itself without converting them into fiat currency.

Types of Stablecoin

The next crucial aspect you need to learn to understand “what is a fiat-backed stablecoin” is an outline of the different types of stablecoin. Fiat-backed stablecoins are not the only stablecoins in the crypto market, although they are the most popular and commonly used stablecoins. You can also find crypto-pegged stablecoins and algorithm-backed stablecoins as the new alternatives to fiat-backed stablecoins. 

• Cryptocurrency-pegged Stablecoins

Crypto collateralization is also a proven method for maintaining the price peg for stablecoins. In this case, stablecoins are pegged against reserves of other cryptocurrencies, although with a significant twist. Cryptocurrencies are inherently more volatile in comparison to fiat currencies. Therefore, crypto-pegged stablecoins are generally over-collateralized for maintaining the price peg during periods of market volatility. 

• Algorithmic Stablecoins

Another new entry among the different types of stablecoin draws attention to algorithm-backed or algorithmic stablecoins. As evident from the name, algorithmic stablecoins use algorithms or smart contracts for managing the circulating supply of the stablecoin according to the market conditions. For example, the smart contract would reduce circulating supply when the stablecoin price drops. It would increase scarcity of the stablecoin and drive an increase in its value.

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Definition of Fiat-backed Stablecoins

Stablecoins have been developed with the objective of facilitating broader adoption of cryptocurrencies. You can understand the importance of fiat backed stablecoin by identifying a clear definition of the same. The term “fiat-backed stablecoin” basically points to a stablecoin backed by a reserve of fiat currencies in regulated institutions like banks. 

Fiat-backed stablecoins have an advantage over the other two stablecoin types in the fact that they are backed by actual fiat currencies. Crypto users can buy products and services online with fiat-pegged stablecoins, just like any other digital currency. 

Another significant highlight of fiat-pegged stablecoins refers to the fact that their value is associated with the price of the underlying asset, i.e., fiat currency. Unlike the other two types of stablecoins, fiat-backed stablecoins don’t rely on the implications of supply and demand. As a result, fiat-pegged stablecoins are generally perceived as a more reliable form of cryptocurrency.        

Using Fiat-backed Stablecoins 

One of the significant highlights in a guide on ‘what is fiat-backed stablecoin’ refers to their usage. How can you get fiat-pegged stablecoins? Investors can exchange their fiat currency or cryptocurrency for purchasing fiat-backed stablecoins. You can sell the fiat-backed stablecoins by redeeming them for the corresponding amount of fiat currency. Crypto users can also sell their fiat-backed stablecoins for purchasing other cryptocurrencies. 

Before you dive deeper into the importance of fiat backed stablecoin, you must note that fiat-pegged stablecoins don’t require mining processes. Fiat-backed stablecoins use centralized servers rather than blockchain technology and involve third parties in charge of the transactions. 

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How Can Stablecoins Serve You?

The purpose of stablecoins is also a critical element you need for understanding how fiat-backed stablecoins are relevant to the evolving crypto ecosystem. Stablecoins have been designed to offer a bridge between stable real-world assets and volatile digital assets. Apart from the inherent advantage of price stability, stablecoins serve many use cases. One of the prominent uses of stablecoins refers to liquidation of highly volatile crypto assets without leaving the crypto ecosystem. 

Crypto users capitalize on the price stability element of stablecoins to reduce the transaction fees in purchasing or selling crypto assets. How? Many exchanges don’t impose transaction fees on crypto conversions to or from stablecoins. Rather than purchasing a specific cryptocurrency in fiat currency with transaction fees, you can use stablecoins. You can also cash out cryptocurrencies by converting them to stablecoins to ensure lower transaction fees. Therefore, stablecoins become popular during the time of market volatility. 

Significance of Fiat-backed Stablecoins

The value benefits of stablecoin for crypto users serve a clear impression of how fiat-backed stablecoins can emerge as popular crypto assets. At the same time, you must be curious about the significance of fiat-backed stablecoins in the crypto landscape and the broader economy. Let us assume the best-case scenario for fiat-backed stablecoins to understand how they can shape the future of cryptocurrencies. The ideal fiat-backed stablecoins must prove successful in the three crucial areas of audits, regulations, and strength of reserves. Here is an overview of the essential pointers which validate the importance of fiat-pegged stablecoins. 

• Assurance of Regulations 

The most noticeable highlight of a fiat-backed stablecoin is the need for regulation. Regulated stablecoins are obviously more trustworthy stablecoins, especially when they are pegged against fiat currency reserves. The fiat backed stablecoin example of Binance USD or BUSD shows how investors could capitalize on the safeguards of a regulatory body. On top of it, cooperation with regulatory authorities is an essential requirement for the future of stablecoins. 

BUSD is under the regulatory ambit of the New York State Department of Financial Services. The issuer of BUSD, Paxos, and the stablecoin are under the regulation and supervision of NYFDS. As a result, BUSD is easily one of the first members among stablecoins with the support of regulatory compliance to safeguard user security. BUSD has also been green-listed on NYFDS, thereby offering pre-approval for trading and custody by virtual currency licensees of NYFDS.

• Credibility with Audits

The example of BUSD in a fiat-backed stablecoin list also shows another aspect pertaining to their importance in the crypto ecosystem. Fiat-backed stablecoins could be as reliable as the reserves of fiat currencies backing them up. What if there is no cash reserve and stablecoin issuers claim otherwise? 

Therefore, the ideal fiat-backed stablecoin must feature the facility for regular verification by trusted and neutral auditors. Regular audits can help stablecoin users know that they can access the reserves backing up their stablecoins. In most cases, stablecoin issuers release the audit reports on the underlying collateral on a monthly basis. 

• Strength of Reserves

The timely and credible audit of cash reserves underlying a fiat-backed stablecoin is obviously an important requirement for gaining the trust of users. On the other hand, the strength of the reserves of fiat currency backing up fiat-pegged stablecoins is an integral aspect of their functionality. What is a fiat-backed stablecoin without the fiat currency reserve to back it up? The fiat currency reserves are essential for maintaining the price peg, irrespective of market changes. 

Therefore, an ideal fiat-backed stablecoin always comes with the backing of secure assets, which are less likely to experience any loss in value. Fiat-pegged stablecoins are the best option among stablecoin types as they offer price stability with reserves of steady currencies. The example of BUSD can showcase the importance of the strength of reserves for fiat-backed stablecoins. 

BUSD maintains around 96% of reserves in cash and cash equivalents alongside the remaining 4% in US Treasury Bills. As a result, BUSD can have the best anchor with the USD peg, particularly when they are associated with US Treasury Bills, one of the most trusted securities. In addition, the issuer of BUSD, Paxos, offers a transparent process for minting and burning BUSD tokens. Regulations help the issuer impose remedial measures in response to illegal activity. 

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Advantages and Limitations of Fiat-backed Stablecoins

The understanding of fiat-pegged stablecoin basics and their importance bring you closer to the benefits and setbacks of fiat-backed stablecoins. Fiat-pegged stablecoins can ensure price stability and keep crypto users safe from market fluctuations. In addition, they allow users to stay within the crypto environment. Another significant advantage of fiat-backed stablecoins points to the ease of understanding the concept behind pegging against fiat currencies. 

The importance of fiat backed stablecoin in the growth of crypto is clearly evident from their advantages. At the same time, you should also notice their limitations, such as the burden of regulations and intervention of centralized authorities. Fiat-backed stablecoin owners have to trust the custodian for safe storage of the cash reserves backing up the stablecoins. Regular audits can be quite resourced intensive for stablecoin networks, which might reflect in their collateralization. Above everything else, the centralization element in fiat-backed stablecoins deviates from the concept of decentralization in cryptocurrencies. 

Examples of Fiat-backed Stablecoins

The discussion on fiat-pegged stablecoins is incomplete without a fiat backed stablecoin example and an understanding of how they are unique. Here are some of the most popular fiat-pegged stablecoins you can find right now.

• Tether 

Tether or USDT is one of the first stablecoins and is the most popular one. It has been pegged against the US Dollar, and the average trading volume of Tether amounts to almost $4 billion USD. As of now, it is one of the top cryptocurrencies in terms of daily trading volumes and market capitalization. However, Tether is a controversial entry in this fiat-backed stablecoin list considering the recent criticisms for the stablecoin.  For example, Tether does not have adequate transparency pertaining to its methodology or official audits of its reserves.

• Gemini Dollar

The Gemini Dollar or GUSD is another top example among fiat-backed stablecoins. The GUSD fiat-backed stablecoin has been created by the cryptocurrency platform Gemini and has the backing of the same. Gemini Trust Company is the issuer of the stablecoin and offers the advantage of regulation. 

It has been subject to regulations under the New York State Department of Financial Services. You should notice the fiat backed stablecoin example of Gemini Dollar as an interesting improvement in over-centralization aspects in fiat-pegged stablecoins. Gemini Dollar is also available as an ERC-20 token which owners can redeem for the corresponding amount of USD through the Gemini exchange. 

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Final Words

The detailed introduction to what is fiat-backed stablecoin and its importance showcase the massive scope for future of stablecoins. Designed as a tool against the price volatility in crypto markets, stablecoins can urge more users to adopt cryptocurrencies. As a trustworthy crypto asset, fiat-backed stablecoins offer the assurance of regulations and audits alongside powerful cash reserves. 

The effectiveness of fiat-backed stablecoins is also evident in the opportunity to stay within the crypto landscape. However, it is also important to notice the critical limitations associated with fiat-backed stablecoins, such as centralization. On top of it, the impact of regulations could also create setbacks for adoption of stablecoins in certain use cases. Learn more about stablecoins and how they will shape the future of crypto-assets and the economy in general.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post What is a Fiat-Backed Stablecoin? appeared first on 101 Blockchains.

With a Proof of Stake consensus algorithm already in place, it is reasonable to wonder about the necessity of DPoS consensus mechanism. The delegated PoS consensus protocol comes with the advantage of helping users spend coins for different delegates. After selection, the delegates can implement critical decisions for the whole network. The following discussion offers you an introductory guide on delegated proof of stake algorithm and how it works.

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Need for Consensus Algorithms

Before you learn about delegated PoS consensus algorithm, you must know the importance of a consensus algorithm in blockchain networks. Consensus algorithms are an essential requirement for ensuring decentralization in blockchain networks. Every node in the network must verify the transactions before adding them to the blocks. 

The blockchain network must use a method for ensuring that the nodes agree on the validity of transactions, and the method is the consensus algorithm. Any delegated proof of stake blockchain would follow the delegated PoS consensus mechanism for verifying transactions. Similarly, other blockchain networks also have their own consensus algorithms. For example, Bitcoin uses the traditional Proof of Work consensus mechanism. 

Definition of Delegated Proof of Stake

The first thing in any discussion on delegated proof of stake explained comprehensively would obviously focus on its definition. Delegated PoS is similar to the Proof of Stake or PoS protocol, with a subtle difference in how they function. Delegated PoS features a voting and delegation process that also includes incentives for users. The incentive mechanism helps in securing the network with the collateral staked by users. 

Users have to stake their cryptocurrency or tokens for participating in the Proof of Stake and delegated PoS consensus mechanisms. Is there any viable answer to the proof of stake vs. delegated proof of stake comparison? Yes, the working of delegated PoS is different in the fact that nodes elect witnesses or delegates for the block production process. In delegated PoS, only voters and elected delegates can participate in validating transactions. 

The elected delegates in delegated proof of stake consensus mechanism serve the role of block producers. Nodes can vote on the delegates by pooling all their tokens in a centralized staking pool, followed by linking the tokens to a particular delegate. Another important highlight of delegated PoS is the fact that users don’t have to transfer their tokens physically from one wallet to another while linking to a delegate. The elected delegates must have the ability to agree on the rejection and approval of transactions. 

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Working of DPoS

The most reasonable way to understand the delegated proof of stake algorithm would point to a detailed impression of its working. You must notify the different components associated with delegated PoS, which makes it an effective consensus algorithm than others. As of now, majority of blockchain networks use the Proof of Work and Proof of Stake algorithms. However, the stake-delegated proof consensus has been tailored for resolving the problems with Proof of Work and Proof of Stake consensus mechanisms. 

As a matter of fact, you can learn more about PoS vs. DPoS with an overview of how delegated PoS works. The stake-delegated proof consensus algorithm features a unique election method for selecting nodes, which can help in block verification. The primary criterion for voting in delegates is their reputation. Any owner of native delegated proof of stake coins can vote for the nodes they want to be elected as delegates.

Here is a detailed overview of different aspects of the working of delegated PoS consensus mechanism –

• Voting 

The foremost highlight in a proof of stake vs. delegated proof of stake comparison would point at the voting method. Delegated PoS uses the voting mechanism to elect witnesses for transaction verification. Every delegated PoS network features a distinctive voting system. However, most of the delegated PoS blockchains allow users to vote directly or delegate their voting power to another user. 

The nodes for which users vote in a delegated proof of stake consensus are known as witnesses. The witnesses are responsible for validating transactions and creating blocks. Upon successful verification of all transactions in one block, the witnesses receive special rewards. Subsequently, the rewards are shared with the users who voted for the witnesses. 

On the other hand, if a witness fails to verify all transactions in the allotted time and misses a block, they would not receive any reward. Generally, the reward for a failed witness may pass on to the next witness if they verify all transactions. Such a process would imply that the block is stolen. 

• Delegates 

As discussed frequently, delegates are an integral part of every delegated proof of stake blockchain network. They are basically users responsible for governance in the blockchain network. Other users of the network vote in for the delegates. The special privileges of delegates include proposing modifications in the size of a particular block. In addition, delegates can also modify the share of rewards paid to witnesses for validating blocks. Users in the blockchain network vote on the proposals put forward by delegates.

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• Witnesses

The difference between witnesses and delegates can be quite significant for any individual seeking a detailed account of delegated proof of stake explained carefully. Witnesses take over the responsibility for security and validation of transactions in the blockchain network. Interestingly, users don’t need cryptocurrency to become a witness. 

On the contrary, the reputation of the user helps them in obtaining votes to be elected as a witness. The successfully completed transactions by a witness are recorded officially on a ledger. At the same time, the number of witnesses on a single server can fall somewhere between 21 and 101. The voting process is continuous, and witnesses can be kicked out when voters choose other witnesses. 

• Transaction Time

The transaction time is also another important highlight in the working of delegated proof of stake consensus. Stake-delegated proof consensus can emerge as a better alternative to existing algorithms only if it offers better efficiency. Delegated PoS has been designed as a more efficient technology in comparison to Proof of Stake and Proof of Work consensus algorithms. It is important to note that transaction times vary from one delegated PoS network to another. 

A delegated proof of stake example can offer some clarity regarding transaction time on different networks. The TRON blockchain network leverages the delegated PoS network and features a transaction time of almost one minute. On the other hand, the PoS-based USD Coin takes around 5 minutes to process a transaction. However, TRON blockchain network completes the necessary 20 confirmations in consecutive order when one block falls chronologically after the other. 

• Validators

Another notable aspect in the working of delegated proof of stake algorithm refers to validators. The validators or block validators are basically full blockchain nodes capable of validating blocks created by other witnesses. Block validators ensure that the blocks created by witnesses comply with consensus rules. Any user selected as a block validator would have to run the validator node to verify the network. However, validators don’t have any financial incentives like witnesses. 

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How is Delegated Proof of Stake Different?

The discussions on DPoS generally paint it as a better alternative than the Proof of Stake consensus algorithm. However, it is important to note the differences between PoS and delegated PoS before making any assumptions. The overview of a PoS vs. DPoS comparison with an outline of the advantages of delegated PoS over proof of stake consensus can clear your doubts. 

First of all, you must notice how stake-delegated proof offers a more efficient and democratic variant of Proof of Stake. Proof of Stake blockchain users develops blocks on the basis of the stake they have in the blockchain platform alongside the time they stay invested in the network. On the other hand, delegated proof of stake brings in elected witnesses and delegates to do the heavy work. The democratic selection of witnesses and delegates alongside an incentivized approach for transaction verification serves as striking value advantages in delegated PoS mechanisms.

Advantages and Limitations of Proof of Stake

The Proof of Stake vs. Delegated Proof of Stake comparison must have offered a viable impression of its advantages. Here is an outline of the benefits you can notice clearly in delegated PoS blockchain networks.

• Delegated PoS enables faster validation of transactions within seconds. Block producers can showcase better transaction speed in comparison to PoW and PoS protocols. 
• Delegate PoS also ensures better energy efficiency in comparison to Proof of Stake consensus. On top of it, delegated PoS also implies the use of limited hardware.
• The democratic voting system for delegates and witnesses ensures that every token holder has a contribution to developing the network.
• Block producers or delegates can be voted out anytime if they are suspected of any malicious actions within the network. 
• The flexibility for voting out delegates on the basis of malicious conduct also plays a vital role in enhancing security. 

The advantages of DPoS paint it as an obvious alternative to Proof of Stake consensus. However, it is also important to note the limitations of delegated PoS. One of the foremost risks of delegated PoS consensus refers to the formation of delegate cartels wherein delegates allocate validation power to limited witnesses. As a result, it can centralize the network and improve vulnerability to attacks. 

Top DPoS Blockchain Examples

The introduction to delegated PoS is incomplete without a discussion on delegated proof of stake example such as TRON and EOS. The TRON blockchain network uses Super Representatives as delegates and holds elections for witnesses every 24 hours. EOS blockchain refers to all delegates as block producers, and elections happen at an interval of every two minutes and six seconds. The efficiency of delegated PoS is evident in the fact that EOS blockchain requires minimum hardware requirements for block producers. 

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Final Words

The Delegated Proof of Stake consensus mechanism has come up with innovative solutions to the challenges with Proof of Stake and Proof of Work algorithms. New blockchain networks based on delegated PoS consensus can capitalize on numerous benefits such as better transaction speed. In addition, the concept of delegated PoS also improves the democratic perspective in governance of a blockchain network. 

Furthermore, delegated PoS consensus mechanisms can also offer better energy efficiency with minimal hardware requirements. Therefore, it is reasonable to predict that future blockchain networks would use delegated PoS as their choice of consensus algorithm. At the same time, it is also important to look for the setbacks associated with the new consensus algorithm. Learn more about consensus algorithms and delegated PoS to enhance your knowledge.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post Delegated Proof Of Stake (DPoS) – Explained appeared first on 101 Blockchains.

Quite an exciting improvement, isn’t it? The massive growth in the market value of NFTs has invited many discussions on the possible utilities of NFTs. What are the possible use cases for non fungible tokens now and in the future? The following discussion will help you determine the scope for utility of non fungible tokens along with practical examples.

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What is Utility NFTs?

The domain of NFTs is still in the early stages of exploring any value-based real-world use cases for NFTs. Non-fungible tokens are cryptographically unique and can serve more than just images on a blockchain network. The value of an NFT utility token can transcend the mere boundaries of investment into the transformation of how we work, interact, and play. 

The simplest definition for a utility NFT would paint them as non fungible tokens with applications beyond the representation of unique digital assets. One of the significant traits of top utility NFTs would refer to the facility of privileges, rewards, or rights to owners, which they wouldn’t have found generally. Let us assume the following simple example for understanding a utility NFT.

Imagine that you have planned a concert with around 800 available spaces with 800 paper tickets. All the tickets are unique and different from each other in terms of the ticket number. However, every ticket piece serves the same utility, i.e., entry to the event. Now, NFT utility ideas might imply the suggestion for issuing 800 NFTs rather than 800 paper tickets. Each NFT would be unique and offer the same utility of entrance to the event. 

Working of Utility NFTs

Any individual interested in utility NFT projects would obviously seek clarity regarding how utility non fungible tokens work. The technical specifications imply that the working of utility NFTs is almost the same as that of regular NFTs. Utility NFTs also features cryptographic security like common NFTs, and they are also unique digital assets on a blockchain. On top of it, immutability and transparency benefits of blockchain technology can help NFT owners in verifying provenance of their NFTs. 

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How to Convert Standard NFTs to Utility NFTs?

The most striking highlight in a discussion on utility non-fungible tokens would obviously focus on adding utility to standard NFTs. Many of you must be wondering about how to add utility to an NFT for a specific purpose. Do you have to build a separate NFT with new and advanced technology to ensure desired utility? No. You can add utility to a specific NFT or an NFT collection in many ways. 

The approach for introducing utility in non-fungible tokens depends more on reforms in the application of the technology rather than changes in the technology. A simple example of utility tokens from the music industry can help you develop an idea about adding utility to non-fungible tokens. Kings of Leon released their album as an NFT collection in March 2021. 

The band also used conventional platforms such as iTunes and Spotify while offering different utility NFT variants in the album. The album included an NFT featuring digital artwork and a digital music download option, which owners can redeem for a limited edition vinyl copy. Another NFT variant in the album release also facilitated top seats at Kings of Leon concerts and shows. Interestingly, the NFT music album release fetched around $2 million in sales. 

The example of adding NFTs with a new approach in a music album reinvented the way buyers discovered utility with non-fungible tokens. You can notice how utility NFTs helped in offering more than just a music album to the buyers. Music enthusiasts, the target audience of such utility non-fungible tokens, can redeem the NFTs for real-life vinyl record copies of the album. In addition, the music utility NFT owners can also get exclusive rewards like best seats at shows of the band. The example of Kings of Leon music album release as a series of NFTs presents a solid case for utility non-fungible tokens.

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Special Highlight of Utility NFTs

The discussion on future of NFT turns towards the evolution of utility in non-fungible tokens. On the other hand, it is important to note that the advocacy for utility is not explicit. As a matter of fact, many players in the domain of popular culture and business have capitalized on the utility aspect of NFTs. 

The striking aspect of the evolution of utility NFT projects refers to the fact that many NFTs have developed utility long after they were launched. The Bored Ape Yacht Club NFT collection is the best example of an NFT collection launched without any specific utility. Over the course of time, BAYC NFTs have served many use cases such as rewards of ability for minting new NFTs or offering passes and tickets to exclusive events. 

The important highlight of utility NFTs focuses on the fact that the use of non-fungible tokens extends beyond the scope of visual art. If you look at the future, you cannot expect NFTs to still serve as a tool for flexing your cool NFT collection. Even if NFTs are in the initial stages, the possibilities for adding utility to them in different sectors have become clearly evident. 

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Applications of Utility NFTs

The uses of utility tokens also account for a significant share in determining the future of utility in non-fungible tokens. Here are some of the notable sectors which are gradually opening up to the prospects of adding utility in non-fungible tokens. 

• Gaming

The foremost contender for understanding how to add utility to an NFT is the gaming sector; whether it is the metaverse or play-to-earn games, the applications of NFT blend effortlessly with the domain of gaming. Gaming NFTs such as play-to-earn game NFTs showcase a new approach to exercising ownership over in-game assets and collectibles. One of the best examples of gaming NFTs is evident in the Axie Infinity game.

• Virtual Real Estate

The growth of virtual worlds has also propelled the demand for virtual real estate. Many popular metaverse projects such as Sandbox and Decentraland have introduced the concept of virtual real estate with varying use cases. Virtual real estate is one of the popular NFT utility ideas as it can support many use cases such as advertising and hosting new experiences in virtual worlds. NFT applications can also work in actual real estate for representation of physical properties with the land deed data.

• Social Spaces

The applications of utility in the future of NFT would also help in guaranteeing secure access to exclusive communities and social spaces. A new breed of NFT utility tokens, known as access NFTs, could offer real-time access to communities and content in the virtual and physical worlds. The Bored Ape Yacht Club is one of the best examples of an NFT collection with a utility token. The utility token offers exclusive membership to a special yacht club. 

What can users get for their utility tokens in the special yacht club? The membership of the club can grant you access to some exclusive spaces within the Bored Ape Yacht Club community. For example, you can access the Mutant Apes Yacht Club for alternative and quirky versions of their Bored Apes. Other perks of the membership include access to collaborative art space and a Bored Ape Kennel Club to fetch pets for your Bored Apes.

• Fashion 

The evolution of the metaverse and web3 technologies would also drive the move towards digital fashion. How can an NFT utility token work in the fashion industry? Improvements in the NFT utility prospects could help in conducting virtual fashion shows alongside exclusive shopping experiences. Virtual fashion for avatars in games is only the beginning of the utility for non-fungible tokens in the fashion industry. 

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Examples of Utility NFTs

The scope for introducing utility NFTs across different sectors is not limited to a few selected industries. As the market for NFTs matures, businesses can come up with new ways to leverage them in various use cases. At the same time, it is also important to note whether there are any utility NFT projects working now. Is utility NFT a myth? The following examples present a suitable answer to the question.

• Crypto Baristas

Crypto Baristas is a collection of NFTs which is all about the “complete caffeine experience” for all owners. The Crypto Barista NFT holders could receive discounts at online stores or future café locations as well as on merchandise.

• VeeFriends

The VeeFriends NFT collection has been launched by Gary Vaynerchuk. The utility of the NFT collection is that holders can use them as tickets for the VeeCon conference. In addition, VeeFriends also includes collectibles with different advantages, such as mentoring sessions from Gary. 

• GainForest

The next interesting entry among utility NFT projects would refer to GainForest. It is an international non-profit based in Switzerland, focused on using blockchain technology for safeguarding rainforests. People donating to GainForest can receive NFTs representing the actual forest locations. The NFTs could help the owners in tracking the health of the forest and minting governance tokens. 

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Bottom Line

The development of utility NFTs is still in the nascent stages and would take a lot of time to shape up as a major force of change. The concept of utility in non-fungible tokens showcases proof of the fact that NFTs are more than visual art and collectibles. On top of it, the principles for adding utility to an NFT focus on changing the approaches for using non-fungible tokens rather than modifications in the technology itself. 

The prospects for utility would become more prominent in the future of NFT as utility non-fungible tokens discover multiple use cases. For example, NFTs can replace season tickets, health insurance cards, and loyalty cards. Businesses can use NFTs for advertising purposes by offering discounts to owners. Similarly, many other industries can explore innovative utilities with NFTs.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post Utility NFTs – The Future of NFTs appeared first on 101 Blockchains.

As a result, the interoperability between two networks drops considerably. Some may assume that this highlight reflects the sovereignty and security of each blockchain. On the other hand, the lack of interoperability imposes restrictions on the vision for an ecosystem that enables easy exchange of data and information. Therefore, wrapped crypto tokens emerged as a solution for enabling communication among the earliest blockchain networks. The following post offers you a detailed outline of wrapped cryptocurrencies such as wBTC and their significance. 

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What is Wrapped Bitcoin?

The first thing in a discussion on wrapped crypto tokens would point at the definition of wBTC Bitcoin. WBTC is just a tokenized variant of Bitcoin, which runs on the Ethereum blockchain network. You can think of the simplest answer for wrapped Bitcoin vs. Bitcoin comparison in the fact that wrapped BTC is basically an Ethereum token. The Ethereum token provides representation for Bitcoin on the Ethereum blockchain network. 

Some of you may have assumed that wrapped BTC is another variant of Bitcoin. On the contrary, it is a different ERC-20 token, which has been tailored for tracking the value of Bitcoin. The compliance with ERC-20 standard ensures that WBTC can serve flexible integration within the Ethereum ecosystem. As a result, it can showcase functionality on all the related solutions, such as decentralized exchanges, crypto lending services, and prediction markets.

Origins of Wrapped Bitcoin

The next important question regarding wrapped Bitcoin or WBTC would point at its origins. Interestingly, WBTC is only a part of a larger wrapped tokens project, which has not been developed by individuals. Three notable organizations have contributed to the origins of wrapped BTC, and their names are Kyber Network, Ren, and BitGo. The first-ever instance of a proposal for wrapped BTC was recorded on October 26, 2018. 

Subsequently, the first-ever official release of WBTC was documented on January 31, 2019. It is also important to note that WBTC is the native utility token and can serve different purposes on the Wrapped BTC network. Bitcoin holders could use WBTC to become a part of the decentralized finance ecosystem. You can think of the wrapped cryptocurrency token as a formidable financial instrument for accessing the Ethereum network with Bitcoin. 

From a broader perspective, the wrapped Bitcoin vs. Bitcoin boundary becomes clear with an emphasis on primary goal of WBTC. Wrapped BTC has been designed to employ the price value of Bitcoin into play and blend it with the programmable traits of Ethereum. The origins of wrapped BTC must also reflect on the fact that WBTCs are ERC-20 tokens serving as 1:1 representations of Bitcoin. 

It is also important to note that a network of automatically monitored merchants and custodians helps in achieving the 1:1 representation. Therefore, wrapped BTC can offer better flexibility for transferring liquidity between Bitcoin and Ethereum blockchain networks.

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Special Highlight of Wrapped Bitcoin

The next question on everyone’s mind right now must be, “Is wrapped Bitcoin better?” when compared to Bitcoin. Different renowned DeFi apps on Ethereum demand collateral for offering their services. For example, popular DeFi solutions such as Compound and MakerDAO emphasize the need for locking up crypto assets to access lending services. 

It is also important to note that the overall value associated with ETH is considerably less than Bitcoin. Therefore, both protocols encounter some critical limitations for growth. WBTC Bitcoin can help in introducing Bitcoin alongside offering a boost in liquidity for the protocols for creating more sources of collateral. WBTC can also help Bitcoin owners in holding on to their Bitcoin while leveraging it in DeFi apps. 

The doubts regarding wrapped Bitcoin price seem trivial when you look for the element of trustless interactions. Even if the price of WBTC is pegged at 1:1 against Bitcoin, trust among people emerges as an important requirement. Bitcoin and Ethereum cannot communicate with each other natively, and the interactions between the blockchain networks require security. On the contrary, wrapped BTC cannot offer the same security as Bitcoin or the assurance of trustless transactions. Why? The working of wrapped BTC relies profoundly on people and other organizations for management of the system. 

As of now, the special highlight in a wrapped Bitcoin vs. Bitcoin comparison would refer to increased trust and transparency with wrapped BTC through regular audits. The wrapped BTC network passes through frequent audits alongside ensuring publication of all the on-chain transactions and verification for Ethereum and Bitcoin networks. 

Users could also leverage the features of the platform for independent verification of the number of WBTC tokens delivered to WBTC address on Bitcoin blockchain. Subsequently, users can also verify whether the transactions align with the creation of Wrapped Bitcoin tokens on Ethereum blockchain.

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Value Advantages of Wrapped Bitcoin

The special highlights of wrapped BTC create a lot of curiosity regarding the value advantages of wrapped crypto tokens. The details of WBTC might force an individual to wonder about the reasons for converting their Bitcoin into wrapped BTC. Here is an outline of the value advantages you can find with wrapped BTC.

• Access to Ethereum

The biggest advantage with WBTC Bitcoin refers to the access to Ethereum ecosystem. Bitcoin owners could access the massive network of Ethereum-based applications such as decentralized wallets, crypto exchanges, smart contracts, decentralized applications, and games. Wrapped crypto tokens like WBTC can serve vital support for accessing a comprehensive variety of DeFi lending and borrowing networks. Interestingly, Bitcoin owners don’t have to give up their Bitcoin directly. 

• Improved Functionalities

The special highlights in a wrapped Bitcoin vs. Bitcoin comparison would draw the limelight on the improved functionalities with wrapped BTC. For example, you can avail the additional functionalities through opportunities for leveraging Ethereum smart contracts. Smart contracts offer the flexibility for creating pre-programmed protocols, and they serve as one of the core technologies in the blockchain sector. On the other hand, Bitcoin cannot offer the flexibility for capitalizing on smart contract capabilities. 

• Multiple Lucrative Applications

The innovation in use of wrapped BTC could also provide an ideal answer for questions like “Is wrapped Bitcoin better?” with examples such as DeFi BTC. You must notice that the growth of DeFi resulted in the need for creating wrapped BTC to enter the ecosystem. Therefore, DeFi is basically the spark that fuelled the rise of wrapped crypto token projects. 

Interestingly, WBTC can find promising applications in staking, one of the common DeFi functionalities. As of now, you can discover multiple versions of staking protocols in the DeFi landscape. Users must lock their cryptocurrencies in smart contracts with these staking protocols for earning rewards after a specified time duration. Users can convert Bitcoin to wrapped Bitcoin and use their cryptocurrency effectively in next-gen staking protocols. 

Another significant application of wrapped BTC in the domain of DeFi would deal with yield farming. Yield farming basically refers to a DeFi protocol with considerable differences from staking, such as the shorter lockup periods. The applications of WBTC in yield farming protocols such as Compound strengthens the case for the future of these wrapped cryptocurrency tokens. 

• Liquidity

Another clearly evident benefit of WBTC Bitcoin is liquidity. The massive and diverse Ethereum ecosystem can offer many opportunities while hiding certain setbacks in the background. The distribution of funds could result in scenarios with decentralized exchanges and different platforms lacking liquidity for optimal functions. Without liquidity, an exchange could not serve the effectiveness as it cannot facilitate quick trade of tokens. 

At the same time, users might not find the trading conditions for their tokens favorable. WBTC helps in integrating the liquidity associated with BTC into the flexibility of Ethereum. As a result, wrapped BTC can help in reducing the liquidity loophole for various centralized finance and decentralized finance products. 

• Scalability

The emphasis on scalability is also one of the significant highlights for any crypto owner. Wrapping Bitcoins can help in transferring them to the Ethereum blockchain network. As a result, you don’t have to transfer the Bitcoin directly, thereby ensuring favorable savings with wrapped Bitcoin. The transactions with wrapped Bitcoin cost less and are faster, thereby ensuring additional storage and transaction options. 

The popularity of wrapped Bitcoins is not a joke anymore, as there is almost $1.1 billion worth of WBTCs all over the world.

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Models of Wrapped Bitcoin

The understanding of wrapped Bitcoin vs. Bitcoin differences shows how WBTC introduced major improvements over Bitcoin. Interestingly, you can come across various BTC wrapping models for use within this sector. Every strategy features its unique highlights, albeit with the same outcome of representing Bitcoin on the Ethereum blockchain. Here are the three important protocols which help in the WBTC Bitcoin conversion process. 

• Centralized Wrapping

The centralized strategy for wrapping Bitcoin focuses on choosing an organization that would maintain the value of the assets. Crypto owners have to offer their Bitcoin to a centralized intermediary. They would lock the cryptocurrency in a smart contract and provide the relevant ERC-20 token in return. The only disadvantage of the centralized method for wrapping Bitcoin is the reliance on the firm for maintaining and securely storing Bitcoin. 

• Synthetic Assets

The discussions on “Why would you wrap a Bitcoin?” have also played a major role in advocacy for synthetic assets. The method of using synthetic assets for wrapping Bitcoin has been gaining considerable popularity in recent times. Such designs help you lock your Bitcoin in a smart contract in return for a synthetic asset of equal value. However, the synthetic asset does not have direct backing of Bitcoin. On the contrary, the platform would back up the asset with native tokens. 

• Decentralized Wrapping

The ideal alternative to a centralized method for wrapping Bitcoin refers to the trustless method. A decentralized system for wrapping Bitcoin offers a better and more advanced approach. For example, Keep Network provides wrapped Bitcoin services with tBTC tokens. 

The method of decentralized wrapping basically involves transfer of centralized custody to smart contracts. The Bitcoin of users remains in a network contract that cannot be modified without the approval of users. As a result, users can access a trustless and autonomous system for wrapping their Bitcoin. 

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How Can You Wrap Bitcoin?

The details of different methods for wrapping Bitcoin show how you can try the same easily. Interestingly, you can find platforms such as Coinlist for an easier experience of wrapping Bitcoins. It is important to note that Coinlist offers the assured 1:1 value representation while also ensuring zero spread. The platform takes only a flat fee amounting to 0.025% of the number of Bitcoins being wrapped. Here are a few simple steps for wrapping a Bitcoin. 

1. Access the Coinlist website and register with an account on the website.
2. Click on the “Wrap” button from your Bitcoin wallet.
3. Enter the number of Bitcoins you want to convert into WBTC Bitcoin. 
4. Select “Confirm Wrap” button for processing the transaction. 

If you don’t want to wrap your Bitcoins directly, then you can purchase wrapped Bitcoin from popular exchanges. Some of the notable exchange offerings wrapped in BTC include Uphold, KuCoin, Bitstamp, and Binance. In addition, you should also note that you can use other platforms such as Poloniex and Atomic Wallet for converting Bitcoin into WBTC. 

Risks of Wrapped Bitcoin

The introductory highlights on wrapped BTC show promising answers for “Why would you wrap a Bitcoin?” with practical value advantages. In addition, the overview of methods for wrapping Bitcoin can encourage you to convert your BTC into a wrapped BTC. However, it is important to hold your step and look for the limitations and risks evident with wrapped BTC. 

Is it safe to invest in wrapped BTC? The technical specifications of wrapped crypto tokens showcase that wrapped BTC tokens are inherently safe. Even if the WBTC remains in control of platforms such as Binance Smart Chain or Ethereum, users will have the benefit of safety of the platforms. 

However, the security offered by the custodian may not necessarily translate into positive outcomes over the long term. If custodians unlock and release the Bitcoin associated with an ERC-20 token, then the relevant wrapped Bitcoin would become valueless. Therefore, it is important to note that the security of wrapped Bitcoins depends on the custody and the level of security offered. 

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Bottom Line

The overview of the fundamentals of wrapped BTC shows that the new digital asset could introduce promising improvements for interacting with DeFi ecosystems. Bitcoin and Ethereum have been traditionally separate from each other without any scope for interoperability. Bitcoin owners cannot capitalize on the DeFi services based on Ethereum alongside the other decentralized applications in the Ethereum ecosystem. 

The functionalities of WBTC Bitcoin can help in representation of Bitcoin as an ERC-20 token on the Ethereum network. As a result, Bitcoin owners can become an integral part of the emerging ecosystem of DeFi applications. More than the applications in DeFi, wrapped crypto tokens can open new roads for ensuring better liquidity. Learn more about wrapped crypto tokens and their technical specifications in detail before trying them.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post Know Everything About Wrapped Bitcoin appeared first on 101 Blockchains.

The growth in the domain of non-fungible tokens has been one of the formidable highlights for crypto projects worldwide. Imagine a time when artists had to visit multiple art houses and galleries to put up their work on display. Non-fungible tokens, or NFTs, have transformed the game and offered a new and innovative approach to establishing a broader economy for such artists and content creators. 

Interestingly, the concept of NFT fragmentation has been gaining attention in recent times for dividing non-fungible tokens into multiple parts. While NFTs became popular for the unique trait of non-divisibility, fragmentation can open new roads for NFT adoption. The following discussion offers you an introduction to fragmentation of NFTs and what it entails for users. 

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Definition of NFT Fragmentation

The first thing you need to understand in a guide on non-fungible token fragmentation is the definition of the term itself. You can develop a clear idea regarding the process of fragmentation through a practical analogy. Let us assume that a merchant has a precious stone in his store, and he wants to sell it to the highest bidder. 

As a matter of fact, the precious stone is the only one available in the market, thereby commanding a higher price. Therefore, majority of bidders would have to wait for the price of the stone to drop so that they could buy it. In such cases, the stone would not find any bidder owing to the higher price. 

What if the merchant has a sharp cutting tool for dividing the stone into even pieces? Now, the merchant could sell the stone to buyers at a lower purchasing cost, thereby ensuring asset transfer. On top of it, lower prices of the even fragments of the stone combine together to safeguard the complete value of the collection. The answer to “What is fragmented NFT?” also points in the same direction. 

Non-fungible tokens are precious stones that might be unaffordable for buyers due to their high prices. Bring a cutting tool, i.e., smart contracts, into the equation, and you can divide an NFT so that interested buyers could hold a share in the NFT. The smart contracts help in dividing NFTs based on ERC-721 standard into ERC-20 tokens. As a result, it is easier to split ownership of NFTs for easier trading and transfers. 

Necessity of NFT Fragmentation

The simple definition of NFT fragmentation paints it as a suitable tool for asset redistribution. From a technical perspective, the process deals primarily with modification in the asset standard. Now, it is important to wonder about the need for fragmentation in the first place. Why did anyone think of breaking down NFTs into fragments? 

One of the biggest concerns for growth of the NFT market in the future has been identified as the lack of liquidity. As of now, some of the popular NFT collections command unbelievably high prices, thereby creating difficulties in finding buyers. On top of it, common investors and enthusiasts who want to get their hands on NFTs cannot do so due to the prices. 

The existing NFT market faces many troubles as sellers and buyers are locked in a dilemma. Sellers cannot transfer their assets, and buyers cannot purchase their assets. In such cases, NFT fragments offer the best solution to support both sellers and buyers. Smart contracts can help in dividing NFT ownership, and retail investors could have joint ownership over an NFT artwork. 

The fragmentation of NFTs also ensures reduced entry barriers to the market alongside infusing additional liquidity in NFT secondary markets. Furthermore, artists, as well as NFT creators, can find flexible opportunities for tokenizing a share in ownership of their work. As a result, they can find the opportunity to obtain cash flow without selling the complete work.

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Examples of NFT Fragmentation

The best way to understand how fragmentation works for NFTs is an overview of the NFT fragmentation projects and their functionalities. Practical examples can show you how fragmentation of NFTs can contribute actual value to the broader NFT market. Here are some of the top examples of non-fungible token fragmentation projects you can look up.

• NIFTEX

The first-ever project in the field of fragmentation of NFTs is NIFTEX, a Singapore-based platform. NIFTEX entered the market last year in May when it was launched officially. Subsequently, the platform received a hefty investment of almost $500,000 from various companies such as MetaCartel Ventures, Digital Currency Group, 1kx, Sparq, and CoinFund. 

The investment for an NFT fragmentation platform in such margins is an indicator of favorable market opportunities for fragmentation of NFTs. NIFTEX also launched its second version in the first quarter of 2022. The fragmentation platform has included support for NFT assets following the ERC-1155, ERC-721, and ERC-777 token standards. Furthermore, it has also come up with the proposition for its personal trading platform. 

The NIFTEX platform also features NFT fragments from popular NFT collections such as Axie Infinity, CryptoPunks, and other collections. NIFTEX helps you split NFTs with a straightforward and simple process. Users can select the layer 2 networks Matic or Ethereum for the fragmentation smart contract. All they have to do is copy the URL address of the concerned NFT from the OpenSea marketplace and begin fragmentation. 

In the next step, users can opt to sell the fragments at a price or customize the fragmentation further. For example, users must enter the “99% Fragmentation” option in the “Retain Fragmentation” section. On the other hand, if users don’t want to retain all the fragmented tokens, then the NFT would be sold at fixed prices as determined by the users. 

Interestingly, the case of NIFTEX is unique among NFT fragmentation projects for unique functionality. If the fragments remain unsold for two weeks, then the same will resume from the start. In addition, the “buyout” option on NIFTEX helps buyers receive all the fragmented tokens without any trouble. 

On top of it, NIFTEX also offers a “royalty retention” facility. The platform would reserve 5% of the fragmented tokens for users creating them. The fragmented tokens go to the address under the control of NIFTEX, and users can be eligible for multi-signature in future. 

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• Fractional

The next popular example in discussions on “What is fragmented NFT?” would draw the limelight on Fractional. It is one of the recent players in the market of fragmenting NFTs. Fractional has initiated many frequent activities on different social media networks. Interestingly, the platform confirmed that it received a $7.9 million seed round of funding from top institutions and VCs such as Paradigm, Delphi Ventures, Flamingo DAO, and Divergence Ventures. On top of it, Fractional is similar to other fragmentation projects in terms of user experience and solution design. 

Users can have the facility of non-fungible token fragmentation with an NFT vault, which keeps their NFTs. In addition, users can also issue corresponding ERC-20 tokens for the NFTs in their possession. However, you must use third-party platforms such as Uniswap and SushiSwap to create a liquidity pool of fragmented tokens. Following the division of an NFT, users purchasing the fragmented tokens can have collective ownership over the concerned NFT. 

At the same time, users can also place their votes to determine the reserve price of the NFT. The reserve price is an important aspect in the working of NFT fragmentation as it helps in triggering the auction. The reserve price depends on the votes of the fragmented token holders. Upon the finalization of reserve price and beginning of the auction, the winner would receive the NFT.

The interesting highlight for Fractional, among other NFT fragmentation projects, is the curator asset fees. Curator is the user who decides to split an NFT, and the asset fees imply that they can obtain fragmented tokens at a specific share annually. The curator asset fees depend on the curator, albeit with specific governance restrictions. 

Future of NFT Fragmentation

The value benefits underlying the idea of NFT fragments, especially in terms of market liquidity, shed light on a promising future for the market. However, the concept of dividing and redistributing assets has been around for quite a long time. For example, Rally set up a platform for collectibles in 2017 and divided the company’s shares into different stocks. 

Shareholders can collect a share of the income of the company, and the company securitizes assets to enable ordinary investors to purchase and invest in the collectibles. In the case of the NFT market, it is important to understand that the fragmentation part can create many new challenges. For example, fragmentation solves the problem of liquidity while opening up the roads for transferring the liquidity problem to retail investors. 

In addition, it is important to note that every NFT is not suitable for NFT fragmentation projects as it may limit the growth of the projects. For example, NFTs with limited room for growth and a questionable collection value would barely find a place on the list. On top of it, fragmentation projects must also face market risks due to regulatory precedents. Without any clear regulations pertaining to NFTs, the fragmented NFTs can end up being classified as “unregistered securities”.

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Bottom Line

The overview of NFT fragmentation clearly reflects the promising opportunities for the NFT market. As more and more people start taking an interest in the world of NFTs, the demand for fragmentation might catch momentum. However, the challenges for fragmentation of NFTs also present a distinctive question mark for the future of fragmented NFTs. 

At the same time, successful projects in this domain showcase the potential of fragmentation from a different perspective. As of now, the fragmentation of NFTs is a comparatively new concept and requires some additional time for improvements. Will it contribute to the growth of NFT adoption or set some new obstacles? Learn more about NFTs and the value advantages of fragmentation now.

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The promise of a decentralized web with web3 can introduce many innovative advancements for marketing professionals. However, it is important to know the trends that would power marketing in the web3 landscape to overcome the challenges. The following discussion offers a detailed overview of the trends for marketing in web 3.0 and the best practices to make the most of the trends. 

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How Did Web 3.0 Evolve?

The first thing you need before a web 3.0 marketing strategy is a clear impression of why web 3.0 emerged in the first place. You must understand that the internet is not a static network and has been evolving over the course of time with new improvements. Web 3.0 is the result of various challenges evident in the web 2.0 ecosystem, especially in terms of data control and safeguards for user privacy. Even if web2 focused primarily on user-generated content and user experience, big enterprises take control over user data. At the same time, the centralized storage of user data creates highly vulnerable spots for malicious agents. 

Web 3.0 has emerged as a solution to the problems in web2, and the web 3.0 blockchain market is the proof of the same. The important traits of artificial intelligence and semantic web technology in web 3.0 provide the foundation for next stages of growth for online businesses. Web3 introduced decentralization, immutability, and transparency, as well as the possibilities for integrating new technologies such as artificial intelligence and semantic web technology. 

For example, the improvements in web3 include development of virtual worlds on the internet by leveraging websites. Most important of all, web3 comes with the promise of personalization as well as the semantic web. Therefore, users can access a framework of information, which they can reuse or share effectively between companies, programs, and communities. 

Impact of Web 3.0 on Marketing

The statements such as “is web 3.0 the future” show that marketers must prepare for the web3 landscape. Marketing in the web2 phase focused on improvements in the front-end to ensure better user experiences. On the other hand, the impact of marketing in web3 would drive plausible improvements in the backend. 

Rather than vesting control of user data in the repositories of big tech companies, private citizens or users would gain control over data. The lack of any private entity claiming ownership of data in web 3.0 serves as a characteristic highlight of the third iteration of the internet. Web3 prevents centralized storage of data, thereby enabling users to take decisions on the location and method for sharing their data. 

At the same time, marketers can find more stakeholders they can market their services alongside, drawing them into engagement and retention strategies. The stakeholders primarily include users, communities, and developers. Therefore, web 3.0 marketing would emphasize prominently on evolution in community marketing. 

The increasing number of stakeholders helps marketers in investing time and resources in learning about customer experiences. Marketing professionals can find more data points for identifying best practices and strategies to ensure customer satisfaction. How can marketers prepare for the web3 wave?

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Top Trends in Web3 Marketing

The answer to “What is web 3.0 marketing” serves vital support for identifying how improvements with web3 can change the marketing strategies of businesses. Consumers are in control of their data with web3 alongside enjoying other advantages of data privacy, transparency, user utility, and decentralization. 

At the same time, the web3 landscape also introduces new trends such as cryptocurrencies, metaverse, NFTs, and decentralized applications. How can marketing professionals adapt to the new changes with web3? Marketers must look up to top trends for marketing in web3 and adapt their strategies with proactive approaches and the best practices for web3 marketing. Here are some of the top trends in web3 marketing which would dominate the marketing scenario in future.

• NFTs Will Be the Big Guns

The introduction of non-fungible tokens, or NFTs, came as a surprise to the whole world. Million-dollar sales and emerging utilities in the metaverse show that non-fungible tokens have been developed for something different than digital artwork and collectibles. NFTs can serve as crucial assets for marketing in web 3.0, and the trend will continue on an upward trend in the future. 

However, non-fungible tokens would need time to develop an identity and reputation with specific regulations. While brands are readily experimenting with advertisements in the metaverse and NFTs, the complexities present a roadblock for marketing professionals. 

• Content Creators Rise 

The next important trend in the development of a web 3.0 marketing strategy would refer to the dominance of content creators. As of now, the web3 landscape is capitalizing on the themes of FOMO alongside creating a perceived scarcity of access. Marketing professionals would not experience any issues in reaching their audience due to the niche classification of target audience. The demand for creative artists and content creators would grow substantially as the appeal of such assets would drive marketing for businesses. 

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• Advocating for Sustainability

Sustainability would serve as an important concept in the web 3.0 blockchain market and general marketing in the web3 landscape. Many traditional blockchain networks leverage the competition-oriented Proof of Work or PoW consensus mechanisms. On the other hand, people are looking for transparency with a credible deviation from Proof of Work. 

Most of the cryptocurrencies developed recently have utilized the Proof of Stake consensus mechanism. Brands can use the traits of Proof of Stake as a significant indicator of their commitment to sustainability. Marketers could utilize the social, environmental, and governance benefits of Proof of Stake solutions in web3 for driving marketing campaigns. 

• Dominance of Virtual Communities

The shift in control over user data from centralized institutions to users themselves can increase the power of virtual communities. The web3 landscape can empower virtual communities and associated social connections. At the same time, users have better control and autonomy in comparison to web2. 

Therefore, a web 3.0 marketing strategy would focus on active participation of marketing professionals in virtual channels to ensure relevant connections with consumers. The changes in dynamics of control towards user communities would imply the need for research to learn about the basics of web3. 

• Metaverse Becomes the New Virtual Experience

Facebook and many other big tech companies are actively invested in the next iteration of their services for the web3 landscape. The new virtual experiences on the metaverse would specify the new benchmark for all-digital experiences. As a result, web 3.0 marketing would also rely profoundly on the implications of the metaverse. 

The metaverse can introduce many new opportunities for people and businesses to change the way they work. Other brands would also follow in the footsteps of big companies and create their own gaming experiences. Most important of all, the metaverse would expand at unbelievably faster rates. Therefore, it can serve as a vital ingredient for marketing in the web3 landscape. 

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• New Technologies and Platforms

The evolution of marketing in web 3.0 would also focus on new technologies and platforms. Many of the new technologies and platforms have helped in driving the web3 ecosystem and its adoption. Marketing in the field of web3 would also depend on new technologies and platforms which are emerging gradually. Predictions for marketing in the domain of web3 suggest that brands would struggle in certain areas. For example, marketers will have difficulties in alignment of specific areas of business operations with clear trajectories. 

• Regulatory Concerns and Consumer Hurdles

The web3 trends in marketing would imply that the consumer is in control. As a result, brands must identify exactly what the consumers want. Most important of all, marketers have to create engaging and unique experiences for their customers. At the same time, limited access to user data can be quite impactful on the strategies of marketers. At the same time, regulatory obstacles will also impose a strong influence on web 3.0 marketing in the future. The lack of specific guidelines on web 3.0 suggests that marketers have to work with ambiguous aspects in their strategies. 

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Final Words

The final impression regarding the role of web3 for marketing showcases that consumers would be at the forefront. Every new marketing initiative in the web3 landscape would focus on consumers and their preferences. Big companies and their efforts in web3 offer an answer to “is web 3.0 the future” alongside creating new challenges. On the other hand, brands can stay updated with latest web3 trends and use them to their advantage. 

For example, new technologies such as NFTs can serve as a unique advertisement tool. Similarly, the metaverse might emerge as the new platform for advertising brands to a broader or niche target audience. Learn more about the web3 landscape and how marketing would evolve further in this field right now.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post How Marketing For Web 3.0 Will Evolve In 2022 appeared first on 101 Blockchains.

In the initial stages, blockchain was considered synonymous with cryptocurrencies. However, it has evolved into a larger ecosystem featuring the power of decentralization alongside introducing ledger and smart contract services in various applications. As the scope for applications of blockchain networks continues to rise, the demand for scalability is inevitable. How does sharding help in such cases? The following discussion helps you find an answer with an introductory guide to sharding on blockchain.

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Definition of Sharding

One of the first things you must be searching for here is an answer to “What is blockchain sharding?” and its implications. However, you can have a better impression of sharding by taking a look at the background for the same. The example of Ethereum is the ideal foundation for developing your understanding of sharding. Interestingly, the basic idea behind Ethereum focused on more than the motive of introducing a new cryptocurrency. 

The developers behind Ethereum wanted to come up with a ‘world computer’ of sorts that could help in harboring a new ecosystem of decentralized applications. Ethereum aims to serve as a platform for running, managing, and expanding the use cases of dApps across various sectors. Therefore, Ethereum needs the capability and resources for processing and storing massive volumes of data within its ecosystem. 

As of now, Ethereum does not have the capabilities for storing and safeguarding huge volumes of data. On the other hand, Ethereum can find a viable solution to its scalability problem through sharding. In simple words, you can explain sharding as the process of scaling applications to empower them to support more data. 

In the case of sharding blockchain projects, you would basically break the large tables of data into smaller pieces, referred to as shards. Every shard features its own data and makes it unique among other shards. In the case of blockchain, sharding can enable reductions in latency and prevent data overload. 

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Working of Sharding

The understanding of blockchain or cryptocurrency sharding can become clearer with a deep dive into its work. First of all, it is important to note that sharding is applicable in cases where you have a large dataset for a single database. You can notice the same in Ethereum, where multiple developers are working on numerous projects on the platform. 

As of now, more than 3000 dApps work on the Ethereum blockchain, thereby implying the necessity of scalability through sharding. Sharding can help in dividing the network into smaller modules or partitions with the capabilities for processing more transactions every second. Even if the process of sharding seems simple, it involves many crucial components with vital functionalities. 

You can find the answers to “Is sharding good for blockchain?” by reflecting more on the working of sharding for blockchain. It is important to start the explanation of how sharding works by reviewing the functionalities of nodes. At the same time, you must also understand the mechanisms for storing and processing data. 

Nodes are one of the integral components in the blockchain network model. Without nodes, it is practically impossible to access blockchain data. All the nodes in a blockchain network stay connected with each other alongside exchanging data consistently to stay updated. In simple words, nodes serve the foundation layer of blockchain and work on important functions. They support the storage, preservation, and expansion of data throughout the infrastructure. 

• How Are Nodes Relevant to Sharding?

The importance of nodes in blockchain sharding can help you understand the mechanism effortlessly. In the case of decentralized networks, nodes have the capability of storing critical information such as account balances and transaction history. Blockchain networks distribute the data and information about transactions throughout multiple nodes to ensure security. 

On the other hand, the model compromises a lot in terms of scalability. The distributed ledger system in blockchain networks offers security and decentralization. However, blockchain networks fail to cope with a large volume of transactions, and the high volumes of data associated with the transactions can lead to network congestion. As a result, the network can end up experiencing slowness or latency in its operations. 

For example, Ethereum can process around 10 to 20 transactions every second. Is it applicable for a blockchain network that is emerging as the preferred choice for blockchain applications? The successful instances of sharding blockchain projects deliver an impression of how nodes can be reconfigured for handling a large volume of transactions. 

The blockchain network can distribute its workload horizontally, thereby ensuring that all nodes don’t have to manage or process all the transactions. Therefore, the compartmentalized and efficient design of nodes in a blockchain network can shed light on the relevance of nodes in sharding.

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• Horizontal Partitioning

The working of cryptocurrency sharding does not involve physical partitioning of the network of nodes. On the contrary, the horizontal partitioning of the blockchain network or database helps in creating different rows in sharding. The rows are referred to as shards, and the horizontal architecture helps in creating a highly dynamic ecosystem. 

It has helped shards in performing various specialized actions on the grounds of their traits. For example, a shard could store the transaction history alongside the state of a specific address. On the other hand, a shard could also perform tasks such as coordinating with other shards for transaction processing. 

Imagine a large database featuring six rows. You can break down the table into three smaller, horizontal rows, which enable easier processing for the large table of data. Horizontal partitioning in blockchain sharding helps in converting the larger database into smaller and more efficient versions of the original while retaining the basic features. However, horizontal partitioning is not the only option for achieving scalability. You can also discover other solutions, such as layer 2 scaling applications or vertical scaling solutions. 

Examples of Sharding

The basic explanation of sharding must have offered a detailed answer to “Is sharding good for blockchain?” with positive implications. As a matter of fact, sharding is truly an innovative method for resolving the problems of network latency and bandwidth. Both these issues can affect the scalability of a blockchain network by huge margins while sharding resolves them effortlessly. On the other hand, many of you must have doubts pertaining to the efficiency of sharding. Is there any better version of sharding? 

What are the practical examples of sharding blockchain projects in the present times? The two most notable variants of sharding include partitioned sharding and state sharding. Partitioned sharding is applicable in scenarios that don’t have the shards communicating directly with each other by leveraging a central relay. 

On the other hand, state sharding involves direct communication among shards with a central or state relay. You can answer the questions regarding the efficiency of cryptocurrency sharding by reflecting on the practical examples of the same. The four top examples of sharding projects can help you identify the significance of sharding for the broader crypto ecosystem. 

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1. NEAR Sharding

The first example for understanding “what is blockchain sharding?” more clearly is the NEAR blockchain network. It focused on developing the foundation for real-time cross-shard transactions alongside maintaining a light load on clients. The blockchain is aimed at enabling any low-end device to run a node working as a part of the network. 

Subsequently, the low-end device can also help in processing a subset of the transactions. The sharded Proof of Stake blockchain features higher scalability and enables nodes to operate on low-end devices. As a result, sharding of the network can enable access to multiple additional devices, which improves the speed of the blockchain.

Apart from the benefits of sharding, NEAR blockchain must encounter the issues of data availability and validity. Blocks must feature a proof of validity, which should be available for anyone to verify the block. The validators in the network take the responsibility of ensuring availability of the proof. On the other hand, it is difficult to prove the failure in message delivery without on-chain transfer of the message. However, you can also look up solutions like centralized governance and infrastructure for resolving such problems.

2. Ethereum Beacon Chain

The doubts regarding “is sharding good for blockchain?” can find a suitable answer in the Beacon Chain of Ethereum. Interestingly, the Beacon Chain is an integral highlight of the roadmap for Ethereum 2.0. As a matter of fact, the Beacon Chain is the “master chain” in the newly evolving Casper Proof of Stake system of Ethereum. 

The Beacon Chain has been tailored for crucial tasks such as processing crosslinks and storage and maintenance of the set of active, queued, and inactive validators. It also helps in processing Ethereum block-by-block consensus alongside the finality gadget. The Beacon Chain not only manages the Proof of Stake protocol but also the other shard chains. Some of the notable functions of the Beacon Chain would include the following,

• Management of validators and their relevant stakes.
• Implementation of consensus rules.
• Organization of validators into different committees for voting on the proposed blocks.
• Allocating rewards and penalties to validators. 
• Nomination of the selected block proposer pertaining to every shard. 
• Serves as the anchor point for shards to register their states and facilitates cross-shard transactions.

3. Polkadot Parachain

The next interesting entry among sharding blockchain projects would point at Polkadot Parachain. It is a productive approach to distributed database sharding and offers a simpler perspective on the blockchain. The parachain basically refers to a simpler iteration of blockchain, which associates with the security offered by a relay chain. One of the significant features of parachain refers to completely independent nature of the computations. 

The generalized systems in Turing-complete smart contracts can face difficulties in identifying the conflicts between transactions. On the contrary, specification of clear boundaries among parachains could help in executing all of them without conflicts. Furthermore, blockchain sharding on Polkadot with highly specialized parachains could help in addressing another significant objective. For example, parachains can help in resolving transaction operations alongside data storage efficiently for a specific problem.

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Bottom Line

The final impression regarding discussions on “What is blockchain sharding?” reflects profoundly on the necessity of sharding. In simple words, sharding refers to the process of breaking down a bigger process into smaller fragments or shards. The shards of smaller processes contribute to the result of the overall process without compromising data integrity. 

As a matter of fact, division of the work into multiple shards helps in efficient distribution of the workload for a blockchain network. The practical examples of sharding, such as the Ethereum Beacon Chain, present a solid case for growth of sharding projects in the future. However, it is also important to improve the process and overcome the challenges to ensure the best results. Learn more about sharding and its implications for blockchain now.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post What Is Blockchain Sharding? appeared first on 101 Blockchains.

Today, the arrival of web 3.0 signifies the onset of a more decentralized web. At the same time, it is also important to wonder whether web 3.0 actually solves all the problems it was intended to. The following post reflects on the importance of zero knowledge proof for web3 and the ways in which they draw value towards the next generation of web solutions and services. You can learn about the working of zero knowledge proofs and their distinct traits alongside the use cases of ZKPs for web3.

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Understanding the Background of Web3

Prior to the search for “why zero knowledge proof is important to web3”, it is important to understand the background of web3. What was the need for introducing web3 in the first place? You can find an ideal answer in the most critical theme for the web2 landscape, i.e., data. The concept of user-generated content has contributed to considerable improvements in user experience with web2 solutions. 

However, data turns out to be the most important commodity in this phase of the internet. Users have to provide personal information in return for access to online services. In addition, the numerous instances of attacks on personal data of users show that personal information of users is never completely safe. 

Web3 arrived with the crucial value advantages of sovereignty, immutability, and decentralization. Did it succeed in solving the problem of data integrity? No. As a matter of fact, the issue of compromises in personal information has evolved into a more dominant force with web3. You can discover the importance of ZKP for web3 in the instances of data compromises in blockchain networks. The root of all problems is data. Therefore, it is important to look for a solution that can help in creating an invisible flow of data throughout the internet to prevent data breaches.

The Necessity of Zero Knowledge Proofs in Web3

The first thing on your mind while seeking answers for “what is zero knowledge proof” and how to use it in web3 would focus on why they are important for web3. Zero knowledge proofs or ZKPs provide the assurance of an invisible data flow. The significance of ZKPs for web3 is evident in need for immersive experiences in web3 alongside the improvements over previous versions of the internet. 

Web3 implies the necessity of introducing improvements over the previous version of the internet and would invite more users. At the same time, web3 can also open up the scope for access to additional functionalities on the internet. As more and more users join the web3 revolution, malicious agents would find more points for data vulnerability.

Will users accept web3 if they find that the solutions put their personal data at risk? This is where you can identify the importance of zero knowledge proof for web3 and its future. Zero knowledge proof or ZKP serves as a cryptographic tool that helps two different parties in exchanging information without revealing anything. For example, you don’t have to use your password to access your mail. Well, how can that be possible? After all, passwords and user identification credentials are significant elements in the foundation of internet security.

Zero knowledge proofs are necessary for the evolution of web3 as there is no way you can remove passwords out of the equation. The basic structure of the internet is like a gated community. You enter the key, i.e., password, and you gain access to the community, i.e., online service. The expansion of web2 led to improvements other than passwords, such as identities for verification. However, the information about the password is open to interception during transfer and can compromise the user’s account. Therefore, zero knowledge proofs or ZKPs offer the assurance of safeguards for user information.

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Working of Zero Knowledge Proofs

The answers to “why zero knowledge proof is important to web3” become clear with an understanding of how ZKPs work. The basic design of ZKPs suggests that they are cryptographic tools and are completely mathematical in nature. You can understand the working of zero knowledge proofs by reflecting on a common example of access to internet services. If you provide your passport number for booking a ticket through online services, you are putting your personal information, such as age and home address, at risk. 

In the case of zero knowledge proofs, you can ensure safety for a prover, even in scenarios where the verifier is not trustworthy. How can you learn about the importance of ZKP for web3 without any idea about their working mechanism? The example of a bank can help you understand how ZKPs are necessary for web3. Banks take personal details from users to provide their credit scores. Rather than providing your personal information, such as your social security number, to the bank, you can use your name. Even if the process appears simple, it involves reliable value advantages for web3.

How effective is ZKP for Web3?

The specific traits of zero knowledge proofs can help you find out their importance for web3. You must follow certain important parameters in the design of a ZKP. 

• Soundness

The most crucial aspect in verifying what is zero knowledge proof for web 3.0 is the soundness trait of ZKPs. For example, if a statement is false, then the verifier could not be convinced in any other way. 

• Completeness 

The completeness trait also ensures that limited parties take part in any process. It implies that all the involved parties must follow due diligence. As a result, the honest verifier can authenticate data without any external assistance. 

• Zero Knowledge

In the event of a true statement, the verifier cannot access any other information beyond the fact that the prover has offered a true statement. The verifier can request statements from the prover, and the probabilistic nature implies that the verifier must be convinced with their information.

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Uses of Zero Knowledge Proofs for Web3

Zero knowledge proofs or ZKPs offer a diverse variety of use cases for the web3 world. The use cases of zero knowledge proof for web3 include authentication, blockchain technologies, and IoT applications in the web3 world. Here is an overview of the uses of ZKPs in the web3 sector. 

• Blockchain

Blockchain technologies promise the assurance of decentralization and immutability, albeit with compromises in data privacy. The facility of audit trails and transparency of transactions on blockchain networks pointed out the concerns of limited privacy on blockchain. 

It is important to remember that blockchain technology is one of the core elements of the web3 landscape. Therefore, the importance of ZKP for web3 is evident in the way they transform the benchmarks of privacy on blockchain. For example, the cryptocurrency Zcash leverages zk-SNARK cryptography. 

The other popular use cases of ZKPs for blockchain refer to the layer 2 zk-Rollups. Zk-SNARKs help in validation while ensuring complete encryption of information and revealing the information required for validity only. If you look closely, ZKPs were developed primarily for authentication purposes. 

ZKPs can achieve promising value advantages for data security in web3 through different methods. For example, ZKPs can convert transactions into expression transactions or arithmetic circuits. Other methods such as elliptic curve pairings alongside homomorphic encryptions can also help in evaluation of underlying polynomials without revealing any other information. 

• Internet of Things

The relevance of ‘what is zero knowledge proof’ for the evolution of web3 is also evident in the growing use of IoT. Internet of Things is gradually gaining dominance over the world and serves the important roles of connectivity and synchronization. At the same time, you cannot undermine the vulnerability spot for IoT in cloud storage. In the case of sensitive systems such as IoT, zero knowledge proofs can help in delivering seamless information flow without any breaches. 

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Bottom Line

The different implications pertaining to importance of ZKP for web3 show that privacy is no more a privilege; it is a necessity now. As the number of users in web3 grows by a huge margin, the ideal tools for preserving data integrity become more important. Zero knowledge proofs not only help in ensuring data anonymity but also favorable outcomes for user privacy. 

As of now, the popular examples of zero knowledge proofs on web3 point to how they can safeguard blockchain networks. On the other hand, it is important to look for new ways to use zero knowledge proofs in other areas of web3. Explore and start learning about web3 and ZKPs with credible blockchain training resources now.

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