Iteration Three - Beginning Of The Year - 2022

Believe it or not, but this is already issue #3 of Iteration Three, and I am super happy to deliver this one to your inboxes. The new year hasn’t even really started yet, but it’s a great opportunity to get things rolling. The first week of the year will probably spare us of too many bad news, and many of us slowly get back to work. Time to boot the systems again, get some coffee, and start the productivity booster.

Today’s issue is packed with interesting news and learning resources. Additionally, you will get an in-depth analysis of the current NFT craze, and all the numbers for the top 10 cryptocurrencies at the beginning of this year.

I hope you enjoy reading this issue as much as I had writing it!

2021 has been an insane year for NFTs. You could say that they finally found their way into the mainstream. The news talk about them, entrepreneurs talk about them, many more projects launch than ever before, and people go to buy them like crazy. Just by looking at the numbers of the top sales, you already get an idea of how insane the markets currently are.

These are only the top 3, and you could easily assume that they are an exception. But let’s take a look at some other popular projects first before we already jump to a conclusion

These examples are, once again, only an excerpt from a broad range of projects being listed on many different exchanges on the internet. Still, it gives a relatively interesting picture: NFTs have broadly become an investment vehicle. Many of those projects don’t have much utility. Of course, they are a form of art, which is also worth something. Traditional paintings have always been sold for a lot of money, and they were often only something for the rich people who could afford to pay a higher price. The same is seemingly happening with NFTs now, as well, though.

More and more NFT collections are released every day, and many follow the same pattern. n thousand NFTs, randomly generated from a certain amount of unique traits, programmatically. Often, those drops are lotteries. You stand in line (the project’s website) on launch day, hammer a button, and hope your transaction goes through (which is gambling on Ethereum right now). Next to the minting price, which is often something in the range of $100 - $200, you also pay gas fees, which might go as high as $300 or even more. If your transaction fails and you try again, you pay that gas fee again. That’s around $500 when you’re lucky, or even more when not.

Don’t misunderstand the statements here. It’s perfectly fine to do it this way. The people or teams behind those projects usually put in a lot of work, and they deserve to get paid for it properly. The only issue with all this currently is that many people slowly get left out of the equation. $500 is a lot of money for some people, and even if we take a look at other Blockchains like Solana, we also begin to see minting prices in the range of $200 to $400 there. That’s usually a good chunk of someone’s monthly budget.

The issue becomes clearer when we look at utility NFTs. Those are tokens that not only come with some well-looking graphics but also with additional perks. Let’s take VeeFriends as an example, the NFT project by Gary Vaynerchuck. The images are neat, hand-drawn by Gary himself, and they have utility. They all act as a ticket to the VeeCon, a convention that will be held yearly. The secondary market for those tokens is up, as well, and even the most common of them are already quite pricey. While many more investor-focused holders make quite some money from all of them, and even regularly get rewarded with additional airdrops (an airdrop is an “event” where holders of a certain token get other tokens as a reward for holding), more and more people get left out because they can’t afford a token.

Okay, is this all pretty bad now? No, it isn’t. I also hold quite a few NFTs myself, and most of them are indeed bought for investment purposes. I can afford it. It’s an explicit decision I made. But I think that there is a bubble slowly building up, and it will burst at some point. Until then, even projects with the greatest goal aren’t protected from speculation. Minting an NFT for $100 is fine. That’s $1,000,000 revenue for 10,000 NFTs minted. Many people can afford an NFT for $100. But the secondary markets might explode and quickly make that awesome collection with the greatest goals unreachable for many “small people.” And currently, there is nothing that prevents investors from buying half of your collection. Those investors would then regularly get your airdrops, basically making them more money. Is this the spirit of your collection?

Overall, it’s an interesting dilemma forming here. It all depends on each project’s motivation. All of them should at least ask themselves how they can let as many people as possible participate and how they can ensure that even on the secondary market, the small people are still a part of the equation. Perhaps limit airdrops to one NFT per account, or use advanced identity providers that help to identify secondary and tertiary wallets. There are ways to solve these problems, and we only need to start exploring solutions to them further.

NFTs are an incredible addition to Web 3 and the internet itself. The bubble will burst at some point, making room for healthy and functional NFT collections. Those collections that let you support your favorite creators, providing utility to the community, like discounts on purchases, one on one access, entry to closed communities, and so on. And it will also make room for airline and festival tickets and much more as NFTs. And probably all of that will come with a reasonably priced secondary market.

Until then, your choice is to explore and analyze upcoming projects thoroughly, make a decision, and buy-in when you think it’s worth it. There are still many projects that are not overpriced and worth a small investment. Especially Polygon and Solana are great blockchains with low gas fees that regularly see interesting collections released. You’ll have a better chance at getting yourself one of those tokens, although they might not be the next Bored Ape Yacht Club or CryptoPunks. And if you plan to launch your own collection, make sure to include the people who actually create all your hype. The people with the small wallets usually believe in you, not the whales.

The new year usually comes with new chances for winners and losers in crypto. We will look at the top 10 crypto coins by market capitalization and see how they performed at the very beginning of this year.

Please bear in mind that this section is in no way any form of financial advice. Trading with or investing in cryptocurrencies carries a high risk, and you should only ever invest what you can afford to use. The goal of this section is purely to present the status quo of the top 10 cryptocurrencies to you.

At the end of last year, Bitcoin fell quite a bit (relatively), but since then has been able to continue a sidewards trend. At the time of writing, especially many institutional investors still haven’t had a chance to get back to work after the holidays, which means that the most significant movements will probably still occur. As of now, Bitcoin stands at ~$47,519.31.

Ether shows a similar trend to Bitcoin. The end of last year saw a drop in nearly all major cryptocurrencies and also didn’t spare Ether. Hopefully, we will see an attack on the magical $4k mark within the next few weeks. It currently stands at $3,792.61. The heating NFT market might enable an upwards trend soon, though.

After managing to hit $570 on 12/28/2021, BNB took a hit as all other significant cryptocurrencies did, as well. Like Bitcoin and Ether, BNB currently shows a sidewards trend. Institutional investors getting back to work might spark an upward trend. Right now, BNB stands at $528.89.

If you expected something different for SOL than before, I sadly need to disappoint you. The markets these days are relatively connected, especially on bearish movements. Investors taking profits and clearing positions before the end of the year hit Solana as much as any other major cryptocurrency. At the time of writing, SOL stands at $177.18. Like for Ether, the NFT space and upcoming project releases might help SOL rise again.

ADA dropped the same way that most other top 10 cryptocurrencies did at the end of December. Taking profits home and closing positions over the holidays certainly also took a toll on Cardano’s native currency. In relation to its prior movements, however, ADA is back at where it stood for most of December. As of now, ADA is priced at $1.38.

Ripple shows an image similar to Cardano’s ADA. It also didn’t manage to stay at its heights and was pushed back to the area it sustained for most of December. Overall, not an alarming development, given that the investigation by the SEC is still ongoing. Currently, XRP is priced at $0.8628.

LUNA’s chart is slightly more exciting than the other ones within the top 10. After dropping like all the others, LUNA managed to climb to $0.009061 for around 5 hours on 01/02/2022 before it fell back to approximately $0.008099, where it stands right now.

Polkadot is in the same situation as ADA and XRP. While managing to climb at the end of the last year, it fell in the same way like all other major currencies. Overall, DOT managed to sustain its average level of December 2021, but currently clearly shows indicators of breaking out of the low, with a +9.55% 24h change. As of now, DOT stands at $30.19.

AVAX is one of the few exceptions in the top 10. While falling as much as any of its contenders at the end of the last year and beginning of this year, it managed to quickly climb again and currently shows slight indicators of a short-term sidewards trend. The coming days will hopefully show whether an outbreak is possible to kick off further growth. At the time of writing, AVAX stands at $115.29.

Nearly everyone’s favorite dog-themed meme coin shows a chart similar to almost all other top 10 cryptocurrencies. While managing to climb to solid levels between 12/23/2021 and 12/27/2021, its price dropped as many others did. Overall, DOGE stands at slightly higher levels than its December average but shows no clear indicators of an upwards or downwards trend. As of now, DOGE stands at $0.1751.

Arcane Research is a data research firm that regularly publishes its analyses. This is their final report for 2021, and it contains many exciting predictions for 2022. Here are some of its key takeaways.

The numbers for Bitcoin are currently pretty promising. The S&P 500 managed to finish the year with +28% in 2021, while Bitcoin grew by +73%. Bitcoin will likely continue with this performance and thus also outperform the S&P 500 in 2022. Given that the S&P 500 tracks some of the most valuable companies in the world, it’s amazing to see that a cryptocurrency like Bitcoin can relatively easily compete.

2021 has seen many top performers like BNB, SOL, and Luna. If this development continues, XRP and Cardano will most likely fall out of the Top 10, except they can manage to finally deal with their problems and get up to speed again. Especially Cardano still has a chance to catch up again when issues like slow development cycles are finally fixed. Ripple, however, has a greater enemy in the SEC, and it might well take another long time until the issues can finally be settled.

Ether outperformed Bitcoin this year, but other layer one blockchains outperformed ETH. As long as Ethereum doesn’t get its long-awaited PoS update, it is more than likely that Binance Smart Chain, Solana, Terra, and Co. will see more and more adoption as a way to circumvent crazily high gas fees. Especially the NFT craze on Ethereum and mints that only wealthy investors can sustain for long benefit the adoption of other blockchains like Solana. Gaming companies joining the space faster and faster do usually also choose other solutions as the average player won’t be able to sustain gas fees like Ethereum’s for long, and the companies themselves also have no money to give away.

ProShares recently filed with the SEC to launch a metaverse-focused ETF. After Bitcoin-themed ETFs, more and more financial companies now focus on the metaverse as an emerging trend in the industry. The ETF tracks the performance of the Solactive Metaverse Theme Index (SOMETAV) and contains companies like Apple, Nvidia, and Meta (formerly Facebook).

Traditional money flowing into the metaverse and NFT space is a pretty interesting development, but it also carries the risk of outside influence. The NFT space itself is already overvalued here and there. Many incredible NFT projects are only enjoyable from the outside if users don’t have enough capital to afford even the most common NFTs of a collection (thanks to gas fees). Huge investors demanding their share of the pie could drive prices even further upwards.

The Shanghai city department recently released its 5-year development plan. And to everyone’s surprise, this document also mentions the metaverse and NFTs. The goal is to include the ecosystem into public services, social entertainment, and business offices, although it is still unclear what the implementation will look like. As local 5-year plans in China need to conform to the corresponding 5-year plan by the central government, it gives a clear signal that China’s Communist Party seems to have no issues with the metaverse and NFTs. A result of this development might be increased investments and developments in the space. Additionally, cities or regions in other countries might take Shanghai as an example to also begin experimenting with this exciting technology and ecosystem.

You can either use NFTs to drop collections of multiple thousand NFTs and hope for the markets to take off, or you use NFTs to preserve a cultural beverage. In this case, the Belgian Barrels Alliance did exactly the latter. The alliance drops a total of 3 NFT collections that all give different utilities and a way to support the foundation and Belgian beer.

NFT #1 provides an “Actor role in the ‘Belgian Barrels’ movie. This movie will be produced by the alliance, based on "a series of true stories”, which is currently in the process of receiving Netflix funding. Additionally, 80% of the earnings will be donated to a charity in Belgium.

NFT #2 allows interested buyers to co-own a unique Barrel used to brew the famous Belgian beer. Co-owners of the barrel receive the following perks:

NFT #3 provides the opportunity to fund the planting of one Schaarbeekse cherry tree each, used to create the Belgian sour cherry beers. Each NFT sale makes one tree planted, up to a total of 200 trees a year. Additionally, the NFT provides the following perks:

Shiba Inu initially launched as another meme coin and a direct contender to DOGE coin. Interestingly, the contributors behind SHIB do seem to focus more and more on real utility and a thriving ecosystem. Shiba Inu now aims at launching a DAO (Decentralized Autonomous Organization) to give users more control over the chain’s ShibaSwap. The launch itself is designed to be a two-phase one:

Phase 1 will see the release of the Doggy DAO as a first iteration by “providing immediate power to the community to decide which crypto projects and pairs on the ShibaSwap WOOF Pools will be, and how the $BONE rewards (Allocation Points) are to be distributed amongst them,” as the team said.

Phase 2 will see the rework of the DAO as a DAO 2 to make generic proposals for consideration or review by a “Multisig-Team, and Breeds.”

To prevent whales from rigging the process, “the guardians (6/9 wallet)” will still have the right to a final review and decision on whether pairs should be listed or not.

Solidity is the language of the Ethereum ecosystem, and Ethereum is unquestionable (although currently dampened by high gas fees) still the leader of smart blockchains. Many chains run on the same technology (Polygon, Binance Smart Chain, etc.). This makes the Ethereum development stack a major player in the space.

Whether you like it or not, Solidity is the language of the Ethereum Virtual Machine, and it’s one of the more accessible languages out there. It’s straightforward to use, and it is usually relatively clear what functions and statements do. Learning it can only benefit you.

This article is an excellent roadmap to help you learn as much Solidity as possible in only 30 days. It’s well worth a read but is hidden behind Medium’s paywall. If you still have free articles left, especially at the beginning of the month, give this one a read.

Oracles are one of the most important concepts for any aspiring Web 3 and blockchain developer to understand. Without Oracles there would be no communication with the outside. This article explains the concept pretty well and gives you a good general understanding of the concept, the technology involved, and the reasons why they are needed.

Did you ever wonder how Ethereum works? It’s only one of many blockchains out there, but understanding one already gives you about 80% knowledge of any other blockchain. Learn how Ethereum works in this article. It covers everything you need to know for a good general understanding of the Ethereum blockchain and the technology building its foundation.

Do you know what’s better than using a blockchain or building on top of it? Building one! This excellent multi-part tutorial walks you through implementing a blockchain with JavaScript. When you finish this one, you’ll not only know the theory but also can state that you implemented a basic blockchain yourself. This is, of course, nothing you would deploy to the world, but learning the very fundamentals is the clear focus here.

If you are not into JavaScript, what about Python? This mini tutorial walks you through the process of implementing a tiny blockchain in Python. Doing something usually strengthens knowledge more than only reading about it. So, why don’t you take this opportunity to leverage Python to go deep down to the fundamentals?

This is the end of this issue. I hope you enjoyed what I packed inside it for you this time. Feel free to drop feedback, as usual, and if you have ideas, share them with me! The goal of this newsletter is to be something well worth a read, and I do my very best to drop valuable content to you. Sometimes, however, a little help from the outside can make a huge difference.

Now it’s time to get to work, and to explore the insane opportunities Web 3 offers everyone of us. Learn a smart contract programming language, build your first dApp, invest into crypto, or buy your first NFT. And if that is nothing for you, you can find plenty of dApps out there, all offering unique features to their users. What about decentralized writing, for example? It’s all up to you to explore this amazing field. No one can stop you.

Last but not least: Have an awesome week!

Yours sincerely,

Oliver