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The Ownership Economy Newsletter: The Blockchain Issue (#81)

The Jonathan Kogan Show
What is Blockchain Technology? [A Short Thread]
The easiest way to explain it is by saying that:
Blockchain is a database that is not managed by a single company.
Instead, it’s managed by multiple people, making it a peer-to-peer database and thereby, making it decentralized. But why do we need something this complex?
To build trust.
Let’s see the following example:
Imagine some friend of yours, traveling around the world, asks you $10. You say, “Yes”, and you login to your bank account, and make the transfer. You text your friend saying that you wired him the money and that he’ll get it soon.
But, have you seen what happened behind the scenes?
What happened was that you relied on your bank as the mediator of that transaction.
The moment you click “OK”, the Bank registers the Amount and Date and places it in their internal register stating:
“You transferred X amount to Y person the day Z”
Wiring money from Person X to Person Y has a cost. What does this cost cover? The mediator’s infrastructure costs because anytime you wire money to someone, the Bank has to keep paying for their server costs, human power, money costs, etc. But, wait a minute.
“But, if I handle $5 to my friend, it costs me nothing. Why can’t I replicate the same online? Why can’t I send it directly to my friend?”
Because most of the time we don’t wire money just to our friends, but rather we buy goods and services from random people, too. That’s why we need Banks and other middle entities: to build trust in every transaction we make and mediate each one of those transactions. Whether it’s to buy stuff on the internet or a life insurance policy.
And this is where Blockchain comes in.
Blockchain was built to serve as a mediator in every transaction we make, or in other words, to build trust. And how? By keeping a record of every transaction organized in “blocks” and all the “blocks” in a “chain”. But is it just about wiring money? Not really.
So, what can we do with Blockchain Technology other than wiring money?
Some new use cases are:
  • NFT marketplaces
  • Personal identity security
  • Secure sharing of medical data
  • Supply chain and logistics monitoring
  • Anti-money laundering tracking system
As mentioned above, the Blockchain isn’t a server being run by one single company, instead, it runs on multiple PCs of multiple people. These people are distributed across the world. It keeps a record of every transaction, therefore, making it possible to track every transaction, which raises the questions:
How do we know every transaction is real? By keeping every “block” in a “chain” of blocks that are processed and verified, publicly. But who runs the verification? How can we trust it?
Those are great questions. We will address those in the next thread! :)

Web 3: An Internet Revolution
A Crypto Series on The Ownership Economy
Now that consumers are spending more time and resources online, the importance of digital assets is likely to increaseconsiderably as consumer spending shifts to virtual worlds.
A global framework like Non-Fungible Tokens (NFTs) provides a stable way of taking the ownership and control of digital assets away from corporations, to the benefit of individuals.
By 2030, we expect Web3 to depress annual offline consumption by $7.3 trillion, boosting direct online expenditures at an annual rate of 28%, from $1.4 trillion today to $12.5 trillion per year.
Digital Ownership Could Accelerate The Transition Of Activity From The Physical To The Digital World
We believe Web3 virtual ecosystems will thrive if online human participants can own—as opposed to use or rent — digital assets.
In traditional Web 2.0 business models, end users typically face restrictions on products or services.
They cannot port in-game assets from one game to another, for example, and they risk censorship on the social media platforms that profit from their content.
Public Blockchains Enable The Ownership Of Digital Assets
Non-fungible tokens (NFTs) serve as smart contracts that verify the ownership of digital assets on public blockchains. They usurp the power of centralized platforms to house, control, and verify assets.
In 2021, NFTs generated $21 billion in sales as the number of monthly unique buyers soared nearly eight-fold to more than 700,000.
Ethereum Has Been The Chain Of Choice For Smart Contracts Thus Far
As fees continue to rise on Ethereum, however, the competition from other layer-1 blockchains and layer-2 scaling technologies is likely to increase.
NFTs Could Shift From Static Collectibles to Dynamic Digital Assets
Currently, collectibles and digital art account for more than 75% of NFT sales on Ethereum.
NFT sales in virtual worlds like The Sandbox and games like Axie Infinity have accounted for less than 25% of cumulative sales on Ethereum.
Based on the evolution of the video gaming market, NFT demand for blockchain-based games and virtual worlds could exceed that for digital collectibles and art, especially as collectibles and art begin to exhibit more utility in various games during the next five to ten years.
Dynamic NFTs Create A New Type of Active Entertainment
We Believe NFTs Will Blur The Line Between Consumption And Investment
Blockchain-Based Gaming Can Enable Entertainment And Monetization Simultaneously
Pay-to-Play models require end-users to purchase games at a fixed cost.
Free-to-Play models are replacing Pay-to-Play and unlocking a larger customer base.
Because NFTs recognize the ownership of in-game assets, they are enabling Play-and-Earn models.
NFT Projects Can Maximize The Returns To Individual Buyers And Sellers
Compared to centralized platforms like Amazon, NFT aggregators like OpenSea charge a fraction of their transaction take rates.
As demand for blockchain-based assets grows, however, the cost to use the blockchain—as measured by gas fees—grows.
Various scaling solutions are in development to help lower the cost of using these blockchains.
Video of the Day:
Jack Dorsey | BITCOIN IS THE 8TH WONDER OF THE WORLD!! (This Is Crazy)
Jack Dorsey | BITCOIN IS THE 8TH WONDER OF THE WORLD!! (This Is Crazy)
Top Links
Codeless Conduct: Hacking Web3 With No-Code
Ceramic Network – Let Your Data Flow
Bitcoin Is The Freedom Technology The Western World Needs
Don’t miss out on the other issues by Jonathan Kogan
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Jonathan Kogan
Jonathan Kogan @kogz

The Jonathan Kogan Show brings you the most important, underreports news (and hot takes) that you need to know but the mainstream media is not covering. If you are searching for the truth, and of course the cold hard facts, then this podcast is for you. But, if you are looking for fake news and distractions from the real news, then you will be better off going to CNN, MSNBC, or Fox News. We do not cater to any corporations or powerful elites, but rather everyday peasants who simple want to know what is really going on without the propaganda.

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