Basically this post will explore the different possibilities for blockchain. I thought the breakdown was good and also gave a reasonable way to frame even the newer blockchain solutions. Also several of the projects that were mentioned in the lecture either still exist or variations on the theme have popped up, thus I enjoyed taking some time to research them.
Categories
- digital things
- real things represented digitally
Digital Things
Heads up: I wrote this prior to the NFT sale for 69 million dollars by Beeple and before Saturday Night Live did a skit on NFT. I do see the value and that that value is understandable by all involved.
If the things don’t exist in the real world, why not just store them in a blockchain! When Cryptokitties was introduced on Ethereum, they took the Ethereum world by storm. The were tradeable digital cats that you were able to breed and get enjoyment out of seeing what new features could be produced. Several companies have popped up to create virtual baseball cards and other assets. In addition, these new virtual cards allowed for online auctions to get created as well thus supporting a healthy market system. In October 2020, Decrypt did an article about an asset that sold for over $33000 (some representative ether) called “Vitalik Buterin Legendary”.
When these assets first came out, I didn’t really believe in them. For context, I don’t play video games nor do I enjoy collecting things (stamps, coins, wines). However at this point, I’m not surprised and believe that this is one area of digital assets, that may have longevity. First, I didn’t realize this, but a lot of computer games, Fortnite by Epic, have digital assets frequently built into them. These digital assets have legitimate monetary value in and out of the game. Second, these players don’t have to be sold on the notion of owning digital things. Their videos games already did the selling of the concept. Blockchain digital assets are just second nature. Third, people who trade also think of most assets as just pieces of values. While they want real funds at the end of the day, the market maker trading oil, corn, or cattle futures, will never really take possession of these assets. It’s a game of hot potato to buy and sell without every keeping any of these assets. Overall, there are people who can buy and sell as long as there are markets as well as also a market of people who see value in holding these assets. To me, that gives more hold to these assets than say other cryptocurrencies where no one values them except degenerate gamblers ( and yes I think of myself as a degenerate gambler with some FOMO trades).
Name Mapping
Name mapping is using a blockchain as a place of record to store information as well as any updates. One example is Namecoin which is a mapping between human readable names and addresses. Alternatively, this could also be public shareable pieces of information like birth, death, or even housing records.
Storage and Proof
Storj and Sia are two projects that deal with storage, though in two slightly different ways. Self explanatory, one is paying for storage while the other is paying for computation. Storj means that an “agent” lives in the cloud that that make some decision. The agent can rent cloud computing service and then clients can essentially rent the cloud storage space for some time interval.
These were just a few of many examples for representing digital items. Other examples are random number generation and lotteries.
Real things represented digitally
This lecture just touched the surface of the real items that could be represented. Some examples were real currencies, stocks, and other assets. The lecturer brings back colored coins as a core example. However fast forward to 2021, there have been more experiments for this such as digital land.
US Dollar
I think of all the US Dollar equivalents specifically USDC, GUSD, Tether, and DAI that are on Ethereum. Essentially, each have mechanisms that allow holders have confidence that each of these currencies can be turned in for US Dollar. USDC is backed by a consortium with regulated financial institutions where there is actual US Dollars backed and stored. GUSD is similar though instead of multiple organizations its backed by Gemini Trust Company. Tether has had a bit of controversy but again it has a similar story. DAI is different in that the value is held in a collatoralized debt position where Ether is the currency held rather than US Dollar. There are oracles, mechanisms that bring in real world information to a blockchain, and an intricate algorithm that keeps the price of Dai closely aligned to the dollar.