Parametric Insurance and Blockchain

15

September

2025

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Much hope was placed in blockchain revolutionizing or disrupting the insurance industry. The paper “BlockChain Technology Beyond Bitcoin” (Crosby et al., 2016) named insurance as one promising novel application for blockchain technology, mainly focusing on the advantages in traceability.

Industry reports also mentioned the possibilities associated with KYC processes, smart contracts, Fraud dedication and peer2peer insurance (PWC, 2017).

However, research shows that trust in blockchain investment still has not recovered from the crypto crash in 2022, even though bitcoin has once again started to climb to new heights. The report Crypto and Blockchain Venture Capital – Q2 2025 (Galaxy, 2025) shows that compared to its peak in 2022 at almost 12bn USD per quarter the VC investment has dropped to about 2bn USD in Q2 2025.

One of the most promising fields for new challengers who wish to leverage blockchain is parametric insurance. As opposed to traditional insurance, which covers the actual loss the insured has suffered, parametric insurance instead pays out a predefined amount if a trigger event happens during the coverage period. This allows lean blockchain-based tech start-ups to avoid the costly and personnel intensive claims adjustment process.

Etherisc: A case study

One example for such a company is Etherisc. They are not a traditional insurance provider, but rather seek to enable decentralized insurance. While they also offer depeg insurance for USD stable coins, this is not unique. More interestingly, they offered crop protection insurance and flight delay insurance, which is an important milestone in connecting crypto with the real world.

The company offers a distinct service. It provides a solution for insurance providers who seek to bring their solutions for parametric insurance on the blockchain. 

Then customers are able to buy these insurance contracts with USDC. Payout is based on smart contracts. Coverage, premium payments, claims and payouts are all securely stored on the blockchain. This works well because for the offered risks claims are verifiable based on publicly available trustworthy data (e.g. a traindelay can easily be tracked online).

Additionally, people may invest their cryptocurrency to provide capital for insurance funds and receive returns.

Etherisc logo
etherisc.com

Outlook & Limitations

As the technology has matured in recent years, we also might see more wide scale adoption in incumbents. An industry report from Boston Consulting Group assesses that insurers are now ready to further integrate this technology and can profit from increased efficiency and better processes (Bejarano et al., 2023) .

However, there are also arguments for a more cautious view. Hype has shifted to AI and for many insured risks trigger data is not easily available. Thus, the loss event must be manually assessed, so many advantages of zero-trust smart contracts erode. The functionality of blockchain–based parametric products is also replicable with traditional infrastructure.

The Geneva Association states “DeFi/blockchain insurance remains a niche that has not yet driven major growth of the insurance market nor significantly improved financial inclusion in insurance.” (2023, p. 37), though they highlight long term opportunities.

Sources

Bejarano, F., Mazón, S., Pastoriza, A., Esteban, J., & Salgado, M. (2023). Insurance Is Ready to Leap Forward with Blockchain and the Metaverse. 

Crosby, M., Nachiappan, Pattanayak, P., Verma, S., & Kalyanaraman, V. (2016). BlockChain Technology: Beyond Bitcoin. 2. 

Galaxy. (2025). Crypto & Blockchain Venture Capital—Q1 2025. Galaxy. https://www.galaxy.com/insights/research/crypto-venture-capital-q1-2025 

Geneva Association. (2023). Assessing the Potential of Decentralised Finance and Blockchain Technology in Insurance. 

PWC. (2017). Blockchain, a catalyst for new approaches in insurance. 

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We don’t own anything online – Time for change?

15

September

2025

4/5 (1)
image created with Google Gemini

Everything we do online, from consuming content on platforms like YouTube, TikTok and Spotify, to creating our own content in the form of social media posts, stories, comments and memes, is owned by the platforms that host it (Dixon, 2024, p. 47). In most cases, these dominant tech giants, such as Google and Meta, control not only most of the market (‘Charted’, 2023) or what content / who we see, but also how much the original creator should be compensated (Nicholas, 2022). The idea that this model is unfair is gaining traction, and there is a growing consensus that our collective efforts should be directed towards creating a truly open and democratic internet. One of the main proponents of this approach is Christ Dixon, the author of ‘Read Write Own: Building the Next Era of the Internet’, who explains the desirable shift of the internet.

Essentially, Dixon outlines three eras of internet evolution. In the first era, anyone could freely access information (Dixon, 2024, p. 13). The second era (read-write) allowed users to create their own content via social networks or blogs (Dixon, 2024, p. 13). The problem was, and still is to some extent, the centralization of corporate networks, which grew dominant by storing and hosting user data and extracting high fees, which Dixon refers to as ‘take rates’. This concentration of power will now be broken down in the emerging third era of the internet (read-write-own). Using new blockchain-enabled technologies, users will be able to own a stake in the systems they build, enabling transparent and fair compensation (Dixon, 2024, p. 13). To illustrate the concept of blockchain-based applications, Dixon uses the example of an email system that eliminates centralised points of failure:

Comparison of email stack to an example blockchain stack
(Dixon, 2024, p. 96)

What I found particularly interesting while reading this book was how it changed my view of digital assets. When I was younger, the warning ‘You wouldn’t download a car’ at the beginning of many DVDs made me smile simply because it wasn’t possible, even if I had wanted to (haxorcat, 2007). However, in recent years, many of the assets we consume and interact with on a daily basis have moved into the digital realm — for example, e-books, music and video games — and suddenly, this old slogan seems truer than ever. As Dixon explains, when we ‘buy’ a game or a subscription to a streaming service, we don’t own anything but the licence to consume it, which can be revoked at any moment. This realisation makes the concept of blockchain-based ownership seem less futuristic and more like a necessity in my daily life.

I would love to hear your opinion. Do you also think that the concept of ownership on the web has got out of hand?

References:

  • Charted: Companies in the Nasdaq 100, by Weight. (2023, June 26). Visual Capitalist. https://www.visualcapitalist.com/cp/nasdaq-100-companies-by-weight/
  • Dixon, C. (2024). Read write own: Building the next era of the Internet (First edition). Random House.
  • haxorcat (Director). (2007, December 4). Piracy it’s a crime [Video recording]. https://www.youtube.com/watch?v=HmZm8vNHBSU
  • Nicholas, G. (2022, April 28). Shadowbanning Is Big Tech’s Big Problem. The Atlantic. https://www.theatlantic.com/technology/archive/2022/04/social-media-shadowbans-tiktok-twitter/629702/

Author: Johannes Erath 785513je

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Decentralized Journalism: Empowering the Future of News

20

September

2024

5/5 (1)

A week ago, I was scrolling through Nu.nl, which is one of the most popular sites in the Netherlands for news. Just like other news sites, they have collections of articles which are popular about a certain overarching subject. One of those collections was about the presidential elections in the USA (nu.nl, 2024). The coverage appeared to favour Kamala Harris while portraying Donald Trump in a less favourable light and out of context. Even though I don’t support the Trump campaign, it shouldn’t be the case that a news source is so clearly in favour or against certain political standpoints as it should be objective and let the readers make their standpoints. After digging deeper I found out that Nu.nl is owned by a news company called DPG Media (dpgmediagroup, 2024), which mentioned that their political orientation is leftist (eurotopics, 2024). They also own several other major news sources. Thus having a large influence on the opinions the readers have, especially when news articles are slightly biased but are being masqueraded as objective.

This experience made me question the objectivity of mainstream media and wonder if there’s an alternative that offers unbiased news. That’s when I came across decentralized journalism. By using blockchain technology and peer-to-peer networks, it aims to distribute news without central control, reducing corporate influence and potential biases.

In decentralized journalism, journalists can publish their findings directly to readers, and content is stored across a network, making it resistant to censorship and manipulation. Readers can support journalists through micro-payments, improving transparency and independence from large media conglomerates.

This should be done in a way that journalists publish their findings and the readers can see an overview of these findings to take in multiple perspectives when forming their image of the subject. This is different from traditional news where the findings that are relevant to the story are chosen by potentially biased journalists to assemble an article in line with the perspective of the news outlet.

While challenges like verifying credibility exist, this model offers a promising path toward a more objective media landscape by empowering both journalists and readers.

References

DPG Media. (2024).  https://www.dpgmediagroup.com/nl-NL/adverteren/merken?page=2&configure%5BhitsPerPage%5D=12&configure%5Bfilters%5D=contentType:brandPage%20AND%20($metadata.tags.sys.id:NLCONTENT)&configure%5BmaxValuesPerFacet%5D=15

Nu.nl verkiezinngen VS (2024). https://www.nu.nl/verkiezingen-vs

The Netherlands: diversity despite media concentration. (2024). eurotopics.net. https://www.eurotopics.net/en/149418/the-netherlands-diversity-despite-media-concentration

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Can Blockchain revolutionize the Insurance Industry? A Non-Profit’s Perspective

16

September

2024

5/5 (1)

Just as card collections are being implemented on the blockchain as NFTs, there are also other industries that can capitalize from the adoption of blockchain, such as insurance, especially in developing countries.

Imagine you are a farmer in rural Africa, and you want to protect your crops against drought. Your options will be very limited as there are no or just a few local insurance companies operating in your area. Even if you buy one of the available policies and the drought occurs, the claim process is cumbersome and linked to tight reporting deadlines. Worst case scenario, you might even lose the documentation needed to submit for settlement (Adam-Kalfon et al., 2017).

To tackle this problem, insurance companies can use smart contracts via an underlying blockchain, which are also used to create NFTs, and offer blockchain-based insurance products to its customers. The smart contract automatically triggers the payout when the event encoded in the contract occurs. For instance, the insurance company sets a rain threshold of 3 months and if that threshold is surpassed, the smart contract triggers a pay-out event.

The Lemonade Foundation, one crucial stakeholder in the industry, already launched their blockchain-based crop protection in Kenya which allows farmers for as low as $0.83 to get their plot of land insured with a few clicks on their phone (Wininger, 2023).

When Prof. Ting Li asked the class who bought NFTs before, only three people raised their hand. Why is that and will the same happen to blockchain-based insurance products? There is a multitude of reasons which might explain the lack of adoption. For example, a lot of NFTs have to be bought via cryptocurrencies. Furthermore, older users tend to be less tech-savvy which creates a certain scepticism towards blockchain-based solutions. Nevertheless, I do not believe this applies to blockchain-based insurance products as users can pay in their local currency and the whole user experience runs on an app while having the blockchain-based infrastructure under the hood.

The figure below shows the types of architecture in a blockchain-based insurance industry.

References

Adam-Kalfon, P., PwC France, & El Moutaouakil, S. (2017). Blockchain, a catalyst for new approaches in insurance. https://www.pwc.ch/en/publications/2017/Xlos_Etude_Blockchain_UK_2017_Web.pdf

Smart Contracts in Insurance: A Complete Guide | ScienceSoft 🌐⛓️. (n.d.). https://www.scnsoft.com/insurance/smart-contracts

Wininger, S. (2023). Fighting World Hunger with Blockchain – Lemonade Blog. Lemonade Blog. https://www.lemonade.com/blog/lccc-world-hunger/

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The Rise and Fall of NFTs: A Never Ending Story?

16

September

2024

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In 2020 and 2021, non-fungible tokens (NFTs) took the digital world by storm, bringing with them innovative technology for digital ownership. Verifiable ownership of digital goods such as music, art, and collectibles was made possible by these indivisible, blockchain-based assets (Malik et al., 2023). High-profile sales of digital artwork, such Beeple’s Everydays: The First 5000 Days, which sold for an incredible $69.3 million at a Christie’s auction in 2021, helped bring attention to NFTs (BBC News, 2021). The idea that NFTs would revolutionize the digital economy and the art world was further strengthened by this sale.

The popularity of NFTs spread to the cryptocurrency markets, where certain tokens—like Ethereum and Bitcoin—saw rapid rises in value. Virtual real estate, meme-based NFTs, and digital art have all attained astonishing valuations; two such instances are CryptoPunks and the Bored Ape Yacht Club, whose values have surged into the millions. In June 2021, a CryptoPunk NFT at Sotheby’s sold for $11.8 million, demonstrating the speculative frenzy that was driving the market (Howcraft, 2021).

The NFT market’s expansion was not without difficulties, either. Because NFTs and cryptocurrencies are speculative in nature, there was a bubble-like situation where values were frequently not in line with the inherent worth of the digital assets. The NFT market started to fall significantly by the middle of 2022. The value of many investors who had entered the market early on suffered a sharp decline in their money. For instance, in a 2022 auction, Jack Dorsey’s first tweet—which was originally auctioned for $2.9 million—failed to draw bids beyond $10,000 (Handagama, 2023).

NFTs are still useful, but the market drop has made clear how erratic speculative digital assets can be. The rise and fall of NFTs serve as a warning about the dangers of making speculative investments, especially in developing markets. Nevertheless, will the NFT hype rise again like it did in 2021? In my opinion, the bubble in 2021 has shown the potential and the essence of what the NFT market could bring. So in this case, if the bull market cycle for the crypto space rebounds, then the possibility of pixelated art and collectibles hitting the millions will re-emerge.

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References:

BBC News. (2021, March 11). Beeple’s NFT digital art nets £50m at Christie’s auction. https://www.bbc.com/news/technology-56362174

Handagama, S. (2023, May 11). ‘Jack Dorsey’s first tweet’ NFT went on sale for $48M. It ended with a top bid of just $280. CoinDesk. https://www.coindesk.com/business/2022/04/13/jack-dorseys-first-tweet-nft-went-on-sale-for-48m-it-ended-with-a-top-bid-of-just-280/

Howcraft, E. (2021, June 10). ‘CryptoPunk’ NFT sells for $11.8 million at Sotheby’s. Yahoo Finance. https://uk.finance.yahoo.com/news/cryptopunk-nft-sells-11-8-154742975.html

Malik, N., Wei, Y. “., Appel, G., & Luo, L. (2023). Blockchain technology for creative industries: Current state and research opportunities. International Journal of Research in Marketing, 40(1), 38–48. https://doi.org/10.1016/j.ijresmar.2022.07.004



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Decentralized Autonomous Organization (DAO) – The Organization Of The Future?

14

October

2022

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written by Robin Fieseler, 14th of October 2022, 5min read

Table of content:

  1. The $50M ‘The DAO’ hack
  2. What is a DAO?
  3. Opportunities and Threats of a DAO
  4. Key Take aways
  5. References

1. The $50M ‘The DAO’ hack

Spring 2016, the world’s first decentralized autonomous organization (DAO) on Ethereum, ‘The DAO’, was created on a P2P network to be the first decentralized venture capital fund. The DAO raised $168M of individual investors. In June 2016, headlines all over the news stated that The DAO was hacked by $50M (Mehar et al. 2019).
Before the threats are unveiled, let’s start with a simple explanation and dive deeper into the crypto space. Afterwards you will learn what areas DAOs could affect and what opportunities a Dao can create. Finally, the threats of DAOs are discussed by unveiling what caused the hack.

2. What is a DAO?

A decentralized autonomous organization is internet-based globally operating collectives using resources together for a common and predefined goal (creating products or services). Everyone who invests in a DAO benefits from governance, i.e. reciprocal voting rights. This leads to a dehierarchisation. The DAO is a company with programmed rules, e.g. how to use the money or what happens with the money if the project fails. These rules are programmed as Smart Contracts resulting in an action as soon as the needed votes are reached. Everyone can raise new topics on which the DAO investors/members will reconcile (Welpe 2022).

What is DAO, Source: https://cryptooa.com/wp-content/uploads/2018/12/DAO.png

Furthermore, it is stated that it could be a legal organization to acquire goods or art, to focus on a social goal or crowdfunding, functioning as an investment vehicle like The DAO or being a whole decentralized business. The last point could mainly focus on new businesses like start-ups. This example would look like: if a start-up wants to create a decentralized app, the DAO would be the company making the decisions with smart contracts about for example raising the money needed to pay salaries and decisions about the allocation of salaries (Welpe 2022).

3. Opportunities and Threats of a DAO

After understanding what a DAO is and in which area a DAO could operate, the following focus is on opportunities and threats. On the one hand, DAOs are part of the decentralized movement leading to the abolition of the intermediary. This leads to reduction in costs for not needing lawyers, banks etc. Focusing on investments, individuals might not be able to participate in funding due to minimal amount of money to invest (Wang et al. 2019). For example, a DAO called ConstitutionDao was founded and raised $3.5M to buy a rare copy of the U.S. constitution. Not having or wanting to invest that much money would mean there is no possibility to participate in the auction (Rachel Lerman 2021).

The threats incorporate security and privacy issues, and an unclear legal status. For this post the focus lies on the security. How does it come that in a decentralized (more secure) world, security is such a big issue. It comes by the nature of the blockchain itself. The blockchain stores the data openly accessible for everyone. But, if everyone can read the code of the contracts and the organization, then also everyone is able to find bugs. In the case of The DAO, a bug was identified in 2016 and immediately tried to be solved. However, everyone has the same amount of knowledge due to open access to the data. So, in this specific case an anonymous hacker group stole $50M due to a bug in the code. Moreover, a company is succeeding due to it’s unique selling proposition. Now imagine if the data is openly accessible for anyone. Anyone can just copy and paste the data and create a similar company. In reality, it is not as easy as juts pressing ctrl + c, but the threat still exists. Lastly, there is no legal status on DAOs meaning there is a lot of risks of new laws regulating or banning (Liu et al. 2021; Mehar et al. 2019; Wang et al. 2019).

4. Key Takeaways

To conclude, a DAO is the best way to eliminate the intermediary and invest collaboratively with
anonymous others with the same goal into projects. While the opportunities show that it economical
to reduce the intermediaries and gives opportunities to compete with hedge funds, the risks explain
why DAOs are more used as investment vehicles than actual companies. If you invest and use a DAO
as the vehicle, make sure the programmers who created the company know what they do.
For those of you who want to learn more about the hack now, click on the link to learn what a hard fork is, how The DAO programmers made sure people didn’t lose all their money and why we have Ethereum Classic today.

5. References

Liu, L., Zhou, S., Huang, H. et al. (2021), ‘From Technology to Society: An Overview of Blockchain-Based DAO’, IEEE Open J. Comput. Soc., 2: 204–215.

Mehar, M. I., Shier, C. L., Giambattista, A. et al. (2019), ‘Understanding a Revolutionary and Flawed Grand Experiment in Blockchain’, Journal of Cases on Information Technology, 21/1: 19–32, accessed 13 Oct 2022.

Rachel Lerman (2021), ‘A group of crypto enthusiasts lost out on the auction to buy a rare copy of the U.S. Constitution’, The Washington Post, 19 Nov <https://​www.washingtonpost.com​/​technology/​2021/​11/​18/​crypto-​dao-​constitution-​auction/​>, accessed 14 Oct 2022.

Wang, S., Ding, W., Li, J. et al. (2019), ‘Decentralized Autonomous Organizations: Concept, Model, and Applications’, IEEE Trans. Comput. Soc. Syst., 6/5: 870–878.

Welpe, I. (2022), ‘#323: DAO – Modell der Zukunft?’, Podcast, Trends: NFT, Krypto, Web3 & Social Media, 14 Oct.

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Investments in web3 and the Metaverse. Risk, opportunities and managerial implications

9

October

2022

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Let’s begin with what really drives choices in the business world: numbers. The annual  “Follow the Money” report, published by Bocconi’s Digital Enterprise Value and Organization Lab, showcases that the two concepts underlying the new evolution of the internet, the Metaverse and the web3, are able to attract not only media attention, but also substantial financial investments. 

Globally, companies and start-ups operating on Metaverse technologies attracted over $430 million in investments in the last quarter of 2021 alone, compared to a total of 11 million in 2020. 83 percent of investments in 2021 concentrate starting from the month of October, in conjunction with the rebranding of Facebook in Meta. At the same time, since the two issues are often linked in the managerial discussion, an investment trend has started in companies specialised in web3 technologies which has seen a growth of 142 percent between the whole of 2021 and the first quarter of 2022, reaching over 380 million of dollars from January to March 2022, against the total 157 million of the previous year.

But where are these investments headed? Capturing the attention of investors in the Early Stage, Seed and ICO (Initial Coin Offering) phases are Metaverse companies such as NAVER Z, a platform for designing 3D worlds, filling them with virtual objects and launching live streams to interact between users; or Inworld AI, a platform for the creation of avatars and characters driven by artificial intelligence; or Space, a platform that combines digital commerce and socialisation according to the immersive experiential paradigms of the Metaverse. On the web3 front, interest shifts to a more infrastructural layer of technologies, with companies such as Mina, The Graph and QuickNode committed to building scalable protocols to lay the foundations for the new web.

Dwelling on the current managerial debate, an obvious problem is that the concepts of Metaverse and web3 now tend to be superimposed and used interchangeably to characterise the current evolutionary phase of the internet. Seeing the web3 as a new phase of the web – after the birth and growth of the internet (eighties and nineties) and the affirmation of web 2.0 paradigms (from 2004 to today) and placing the immersive virtual worlds of the Metaverse in the new meaning – represents however, an oversimplification, which can lead companies to overestimate some opportunities, as well as underestimate some risks. Opening an immersive virtual space on Roblox, the reference platform for the Alpha generation, does not necessarily mean entering the web3, just as buying an NFT does not make us citizens of the Metaverse. To better understand how the two technological concepts are linked and can be exploited, individually or in association, as well as what risks can derive from them, it is good to focus on their respective definitions and, above all, on the value that each can bring.

The term Metaverse was coined by Neal Stephenson in the novel Snow Crash in 1992 to indicate a three-dimensional space within which individuals can move, share experiences and interact through personalised avatars. To date, the term Metaverse is used to indicate, in a broader sense, an interactive, advanced and immersive experience, in which users can socialise, receive professional training, play, take lessons, participate in meetings, have cultural experiences and much more. other. There are many technologies that enable this type of experience – for example, advanced virtual graphics, computer vision, and data analytics. Of all, without a doubt, a fundamental role is played by virtual reality (or VR) which enables immersive accessibility to these new virtual worlds.

The term web3 was coined in 2014 by Gavin Wood, co-founder of Ethereum and developer of Polkadot. The web3 aims to become a new decentralised internet network thanks to the use of the blockchain, the technological infrastructure on which Bitcoin and other cryptocurrencies are based. In the web3 the data would no longer reside on a network of centralised servers, but would be spread evenly throughout the network. This need arises from very pragmatic evidence.

Currently, the information exchanged via the internet is tracked by some well known tech-giants (especially by the famous GAFA-Google, Apple, Facebook and Amazon) and the levels of privacy guaranteed to users are very limited. Having a more open and democratic web available is the driving force that pushes many techno-utopians to focus on the web3. A cyberspace that should restore to the internet that nature of an open, uncontrollable and accessible to all environment, dusting off the initial promises of the nineties, then broken in an oligarchic structure controlled by well-known actors.

The implications of these initial reflections for companies and managers facing these issues are many. Above all, it is necessary that the initial evaluations of new use cases linked to these paradigms take place precisely on the guidelines of the decentralisation level of the infrastructure (web3) and the level of immersion of the experience (Metaverso), weighing these characteristics on the basis of company objectives and the needs of target users. There is currently no prevailing approach, it will be quite interesting to see which logics will assert themselves in the coming years.

However, it must be said that the benefits of an immersive experience or a decentralised infrastructure correspond to risks. In the case of decentralisation, the risks arise mainly from limited scalability and the absence of governance and control. For immersion, it should not be forgotten that the level of maturity of the enabling technologies, VR above all, is still evolving and not completely adequate to support the long-term vision of many use cases.

These considerations must help us to avoid a repetition of what happened in the 2000s with the Second Life experiment, which, after an initial moment of euphoria, was greatly reduced due to the lack of a strong purpose of the project capable of intercept real needs of users.

References

Minevich, M. (2022) The metaverse and WEB3 creating value in the future Digital Economy, Forbes. Forbes Magazine. Available at: https://www.forbes.com/sites/markminevich/2022/06/17/the-metaverse-and-web3-creating-value-in-the-future-digital-economy/?sh=4a5bf51f7785 (Accessed: October 9, 2022). 

Blockchain and the Metaverse Boost Startup Investments (2022) SDAB. Available at: https://www.sdabocconi.it/en/news/blockchain-and-the-metaverse-boost-startup-investments (Accessed: October 9, 2022).

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Web 3.0 Looks Good On You

3

October

2022

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Can the Metaverse change fashion as we know it?

The emergence of immersive interaction spaces is transforming digital environments into outstandingly collaborative and sensorial virtual worlds. Such potential levels of engagement presented by the future Metaverse are opening the door to a new era of fashion. Brands and designers are accordingly making out the opportunity to take their engagement with consumers to the next level and to unlock completely new revenue streams.
This new digital world brings the concept of virtual fashion to life in multiple shapes and disciplines where the industry can reach new cohorts.
In this regard, gaming is currently a major target for fashion brands, as it gradually turns into a near substitute of the real world where clothes are becoming a sign of in-game status (McKinsey & Company, 2022). Several brands are already partnering with immersive games such as Fortnite or Roblox by offering exclusive digital garments or ‘skins’ in the shape of in-game merchandise. In June 2021, a player acquired a Gucci bag on the game Roblox for more than $4,000, an amount that overly exceeded the price of the equivalent real-world physical bag (Gonzalez, 2020). And this is just an example of the new fashion wave in videogames, which is creating a new revenue stream for brands.
A considerable part of the enthusiasm about the Metaverse points in the direction of NFTs, as they can bring value in several ways that the fashion industry can utilize to their benefit. For instance, and more importantly, by utilizing blockchain, NFTs have undeniable proof attached to them of both the creator and the owner of the item (Joy, et al., 2022). This can solve the everlasting problem of authentication in the fashion industry, but now in the digital paradigm. Blockchain provides uniqueness and traceability, so brands’ identity is protected, together with their revenue streams (Gonzalez, 2020).
The rise of digital fashion in immersive platforms is also setting the scene for an emerging business model in the industry that plays a crucial role in the inevitable disruption process. Direct to Avatar (D2A) consists of the sale of items to game avatars or characters through the digital environment, and thus omitting all types of supply chain management steps needed to deliver physical products to a consumer (McKinsey & Company, 2022). Multinational brand American Eagle was one of the first to step into this disruptive initiative in July 2021, when it released a fully digital collection for Bitmoji, an avatar creation platform (Adams, 2021).
These and more advantages offered by the coming Metaverse is turning the fashion industry towards fully digital offerings and creating infinite opportunities for new revenue streams. This is especially shocking in an industry which has traditionally been sustained on physical interactions with consumers.

References

Adams, P., 2021. American Eagle debuts digital clothing on Bitmoji in creator-focused push. Marketing Dive, 5 August, pp. Retrieved from: www.marketingdive.com/news/american-eagle-debuts-digital-clothing-on-bitmoji-in-creator-focused-push/604402/.

Gonzalez, P., 2020. Digital Fashion In The Metaverse, Milano: Politecnico di Milano, School of Design. Retrieved from: https://www.politesi.polimi.it/handle/10589/188809

Joy, A., Zhu, Y., Peña, C. & Brouard, M., 2022. Digital Future of Luxury Brands: Metaverse, Digital Fashion and Non-Fungible Tokens. Strategic Change, 31(3), pp. 337-343. Retrieved from: https://onlinelibrary.wiley.com/doi/epdf/10.1002/jsc.2502

McKinsey & Company, 2022. The State Of Fashion 2022, Retrieved from: https://www.mckinsey.com/~/media/mckinsey/industries/retail/our%20insights/state%20of%20fashion/2022/the-state-of-fashion-2022.pdf?shouldIndex=false: McKinsey & Company

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The “Merge” killed Ethereum mining, what does this mean for other blockchains?

17

September

2022

5/5 (1)

Ethereum is a popular cryptocurrency and is the second largest blockchain network after bitcoin. It distinguishes itself from bitcoin by being open source. In other words, anyone can use it to program a blockchain-based digital technology, several examples of the use of Ethereum are NFTs, decentralised finance and smart contracts.

Before the “Merge” Ethereum used a proof-of-work (PoW) concept, i.e. a group of participants would run software to prove that the encrypted number was valid – this process is called mining. For their contribution, these miners were rewarded in a cryptocurrency called Ether. The mining process required a large quantity of processing power from GPU, which intern, required large amounts of electricity. This process was, however, very profitable at the cost of the environment. One main criticism of blockchain was the huge amount of electricity required to keep up the network. In Ethereum’s case, it was 78 Terawatt hours each year, for comparison that is equivalent to the power consumption of Chile. Not always is this electricity sourced from green energy, often it comes from fossil fuel power plants (Howson, 2022).

To address the sustainability concern Ethereum moved to a proof-of-sake (PoS) model. This differs from mining in that the block creators previously known as miners now become validators. In short, the validators record the transactions, verify activity, and get paid with transaction fees. The cost of equipment and electricity is not a barrier to entry anymore and anyone with sufficient funds can become a validator. Energy-hungry GPU mining rigs have become obsolete as the new model does not require as complex decryption calculations as previously needed, this will cut emissions by 99% according to the conversation.

The move toward sustainability has pleased environmentalists and has sparked a movement to switch all blockchains from PoW to PoS to reduce their energy consumption. The Merge, however, left many crypto-miners disgruntled, with useless hardware. Second-hand GPU prices have dropped drastically since the “Merge” and Nvidia has announced to its investors, that they will hold back production of their newest GPU to avoid further GPU price crashes.

Reference:

Howson, P., 2022. Ethereum: second biggest cryptocurrency to cut energy use by over 99%, but the industry still has a long way to go. [online] The Conversation. Available at: <https://theconversation.com/ethereum-second-biggest-cryptocurrency-to-cut-energy-use-by-over-99-but-the-industry-still-has-a-long-way-to-go-189907#:~:text=Ethereum%2C%20the%20world’s%20second%2Dlargest,the%20power%20consumption%20of%20Chile.> [Accessed 17 September 2022].

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From Game-Fi to Social-Fi: new business opportunities in Web 3.0

14

September

2022

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GameFi, also known as Play-to-Earn games essentially combine Gaming and Finance using Blockchain technology. Similarly, SocialFi, also known as Move-to-Earn apps combine social activities and Finance. Web 3.0 players are no strangers to these concepts as they have existed since the popularity of cryptocurrencies. However, 2022 was a big year for Game-Fi and Soci-fi with more and more traditional industries pouring investments into these emerging activities. In this article, I will discuss how the two business models contribute to the growth of blockchain and NFTs, with a focus on StepN, a Web 3.0 lifestyle app.

The attractiveness of Social-Fi comes from the “earning” perspective. By playing games and being active on the app, users are able to receive income either from in-app token rewards, staking, or minting NFTs from the platform marketplaces. When users receive tokens, they will be able to trade these tokens or derivatives on supported crypto exchanges. The games are normally simple and easy to play, with a twist of NFT integration. For example, in StepN, users first need the NFT sneakers to start earning STEPN, the native token of the platform. After getting a pair of the sneakers, users will be able to earn STEPN by exercising, such as walking, HITT, etc. You now may ask: How do you buy the NFT sneakers? The answer is it all happens on Solana’s NFT marketplace. Solana Blockchain also powers the Social-Fi app StepN so it ensures all users can figure out all activities in one ecosystem.

According to Cointelegraph, by September 2022, over half of the blockchain industry are being used for Gaming (Fortis, 2022). The crypto industry has definitely shifted from simple token and derivatives exchanges to a more beginner-friendly society. However, hackers are targeting these platform with the increasing amount of less crypto-educated users joining the projects. Axie Infinity is one of the biggest GameFi project, but AXIE holders have become easy phishing tagets on telegram because they are relatively new to the industry. Additionally, it has suffer multiple security breaches where users lose millions worth of tokens (NBCUniversal News Group, 2022). Therefore, more educations are definitely necessary for GameFi to penetrated in a broader audience. Meanwhile, projects need to enhance security operations to prevent such events from happening.

References:

Fortis, S. (2022, September 2). Gaming makes up over half of blockchain industry usage, DappRadar. Cointelegraph. Retrieved September 14, 2022, from https://cointelegraph.com/news/gaming-makes-up-over-half-of-blockchain-industry-usage-dappradar

NBCUniversal News Group. (2022, April 10). Axie Infinity Hack leaves players shaken – but still loyal. NBCNews.com. Retrieved September 14, 2022, from https://www.nbcnews.com/tech/crypto/axie-infinity-hack-leaves-players-shaken-still-loyal-rcna23379

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