What a great year it has been for blockchain. And what an amazing year we have ahead of us. Never before have there been so many startups. Never before has so much money from investors gone into technology. And never before have so many organizations worked on implementations. If we leave all the Dogecoin Drama and the hype surrounding the Bitcoin Boom there and focus on the technology itself, I see a lot of cool developments that are currently playing and will play in the coming year. I share my top 5 in this article.

Blockchain, not Bitcoin or blockchain beyond Bitcoin. Many professionals and enthusiasts around the technology try to make the clear distinction with the best-known cryptocurrencies. Away from the current speculative hype around prices. Focus on the development and implementation of the technology itself. Understandable, although I can see that the current madness in the cryptocurrency market is also positive for blockchain. The news is once again full of it and there has never been as much money invested in the technology by investors as in the past year.

Today, 81% of large companies use the technology. And I also see more and more smaller SME companies experimenting with it or even implementing it. Now I often leave enthusiasts disillusioned by saying honestly that they don’t need the technology in the organization at all. You often see that the wrong thinking sequence is used. We want to do something with blockchain and then we look for an internal problem. Instead of: we have an existing challenge and blockchain is a good solution for that. Nevertheless, I see that there are currently a lot of challenges being tackled with technology.

Startup showtime

It’s not just implementations. At the moment it seems like showtime almost every week, with one after another unveiling a new product or service from a startup in the Netherlands. If we look at the Gartner Hypecycle of blockchain, we see that various elements of the technology have already gone through the tough ‘trough of disillusionment’ and are now walking the ‘slope of enlightenment’. As I wrote before, compare it to the development of the Internet and you’ll see that we’re only just getting started. We are at the beginning of a great technological revolution.

In the next decade we will have more progress than in the last 100 years. — Peter Diamandis, founder of Singularity University

First look back

Also last year I was allowed to look at this year in the glass blockchain sphere of Frankwatching. Back then I already saw many companies that were rapidly making these chains transparent. This very recently published report shows that the number of countable implementations has doubled in the past year compared to the year before.

Another trend that has undergone a lot of development beyond expectations is the “government crypto”, the Central Bank Digital Currencies. I will share an outlook for the coming year about this later in this article. I also foresaw many developments in the field of the ‘fintechization’ of our society, which has entered a fast waters worldwide with the unprecedented development of the Decentralized Finance (DeFi, which I wrote about earlier).

1. DeFi continues to amaze

As I wrote in my cryptocurrency trend article for the coming year, ING published that they find DeFI insanely interesting, we see a lot of established financial institutions worldwide already working with it and I see the ‘total value locked’ in the ecosystem in the coming doubling from $200 billion to $400 billion year on year.

A recent report from investment bank JP Morgan shows that it’s not just about experimenting anymore. $9 billion in profits alone are made each year by individuals and organizations that are “striking”: locking/saving crypto that earns you interest.

Building bridges

I foresee a number of developments in the coming year. Now that big finance, the big banks, are working hard with DeFi, you see many startups building bridges with their products. Bridges between traditional finance and new crypto world. Synthetix is ​​the best-known example of this, Nexis does this nicely with insurance and many other startups will also launch their product on the market next year.

The virtual gas price is going through the roof

The high fees that many people in developing countries pay for sending money are often the marketing argument of enthusiasts to promote cryptocurrencies. Where easily 10–20% is charged by parties such as Western Union, crypto transactions are often a fraction of this. For example, someone recently paid $0.80 for a $2 billion transaction in Bitcoin.

But with the Ethereum blockchain, on which the majority of blockchain applications run, such as ‘smart contracts’, ‘NFTs’ and DeFi products, this is unfortunately no longer the case. The costs for transactions, the so-called GAS, have increased by more than 300% in 1 year. Developers are therefore looking to other blockchain networks for the development of their applications, where Polkadot is currently doing well, which was set up by the co-founder of — yes — Ethereum.

It is a much discussed topic and with all the new technological developments from existing companies and new startups, I expect that the high costs will largely disappear in the coming year.

Decentralized trading platforms

What will certainly not disappear are the decentralized exchanges, such as Uniswap, Pancakeswap and Sushiswap. Names that put a smile on your face at first sight. But when you see how much money these decentralized exchanges (DEXs, cryptocurrency trading platforms) are currently processing per day, the smile turns to amazement.

Nowadays, more is traded on these types of decentralized trading platforms than with central parties such as Coinbase and Binance. Although it is still fairly complex for many users to use and the US government has indicated that it wants to strictly regulate these platforms, I see an insane growth in trading volume in the coming year. All kinds of new DeFi applications are being developed on these trading platforms, which will only increase the growth of the ecosystem.

Blockchain based games

A final development, which is currently emerging in DeFi and could become very big in the coming year, are blockchain-based games. There are 2 billion gamers worldwide who currently spend $150 billion on this. And $250 billion in two years. The in-game purchases are a big part of this multi-billion dollar market and 62% of gamers and 82% of developers have indicated that they would like to see this on the blockchain.

There is still a lot of work to do in the security shop because of the many major hacks. Recently, $600 million was stolen during the Poly hack and $115 million during the Cream hack. Research shows that 2/3rds of these hacks are due to developer incompetence and almost 1/3rd to code errors.

2. NFT boom or crack?

It seems that if you haven’t made NFT yet as a creative, you don’t belong anymore. My social feeds are full of enthusiasts who mint (make), sell and buy the NFTs. Earlier I wrote about the great possibilities, for both makers and companies. Where with Web1.0 companies made and earned content and the current Web2.0 people create content and companies earn from it, with Web3.0 I see that people not only make content, but also start earning real money from it. NFTs play a key role in this.

In my view, NFTs will really have a major impact on the art, fashion, music and sports worlds. Not only the large companies such as VISA, Disney and Adobe that are working with this, are piling up. There are also more and more possibilities that were not (technically) possible before.

The lazy monkey community

In addition to the flat buying and selling of content and artworks, you also see a new trend emerging: communities. The best example of this is the Bored Ape Yacht Club. All owners of one of the Bored-Apes, which on average sell for a few million each, can become a member. Many owners even buy a Bored Ape to join this community.

Monkey owners make their own monkey their Twitter photo as a sort of status symbol. In addition, they also get a number of benefits with their property: access to a Discord group for other owners, access to virtual merchandise drops, and free additional NFTs. NFTs makes all this (technically) possible and I think this is going to be very big not only next year, but also beyond.

Play to earn blockchain games

In my trend blog about crypto I also wrote about another cool trend within blockchain / NFTs: the ‘play to earn blockchain games’ (P2E). Because who wouldn’t want to make money playing games? For example, Louis Vuitton has launched its own online NFT game and the most famous P2E game, Axie Infinity, has already made $1.6 billion. Players in countries such as the Philippines and Indonesia are now playing these games because they earn more money than regular work.

Also within NFT there are new developments every week. LOOT is really a revolutionary thing in this. The creator of VINE created 8000 ‘LOOTbags’, put them online and all were claimed for free in no time. They have all turned out to be conversation starters. All kinds of communities of fans, artists and creatives are currently looking at future creations. It is inspired by how the famous Marvel spent billions developing all kinds of sci-fi films. Hundreds of writers and artists received money and came up with ideas for the films, where eventually a combination of all ideas was actually produced. LOOT does not want to do this top-down, but directly with the virtual community.

The coming year can’t go wrong in my opinion, with the great drive with which many people continue to develop the NFT ecosystem. A lot of news is still about the insane amounts that are sometimes paid for NFTs, such as $533 million that was supposedly deposited for a CryptoPunk. The great thing about many blockchains is that everything is transparent, so you can also make big data analyzes around the earnings. Then you see that only 2% of NFTs sold are sold for more than $600 and the majority of the large sums end up in the pockets of just 50 artists.

3. Stablecoins on the chain

It is a thorn in the side of lawmakers worldwide: stablecoins like Tether. Earlier I wrote about the importance of this within the global financial and cryptocurrency systems. Due to their rapidly increasing size, according to several governments, they could actually endanger the global financial system.

Credit rating agency Fitch warned this month that the rapid growth of stablecoins could have “destabilizing effects” on short-term credit markets. The global Financial Action Task Force (FATF) recently warned about the huge increase in money laundering. And the Bank for International Settlements wrote in its most recent report that they see no value in it at all.

Tether

While the coins imply bringing stability, the largest stablecoin, Tether, has been in the news on a continuous basis lately. Many people assume that stablecoins are ‘pegged’: 1–1 backed by another asset. So for every Tether in circulation, there would be a dollar stored somewhere. This coin is now worth more than $70 billion. And after great international pressure, it turned out that the company behind Tether had a very strange mix of assets to cover all this money on its balance sheet.

As a result, the company had to pay a fine to the American government and the same government has now urgently developed a framework to severely restrict stablecoins, such as Tether. Trade exchanges such as Bitcoinmeester have already taken the coin offline. It’s not just about Tether, though. There are dozens of stablecoins in circulation and the big wait is still for the stablecoin that shook up many governments: Diem, initiated by Facebook.

In addition to expressing great concerns, European, Chinese and American governments have now rapidly developed legislation that will come into effect next year. President Biden has already indicated that they are in the same category as banks. And the head of the US central bank, Jerome Powell, has already indicated that he does not want to ban them, but that they are strictly regulated. It is important to filter the cowboys out of the industry and actually gain broad acceptance by larger institutions. In a recent Deloitte survey, 83% of executives said they see current fiat money being replaced by such coins.

4. Governments are working overtime

Normally, governments always lag behind technological developments, the so-called pacing problem. In the blockchain field, however, I see a few important developments emerging from governments in the coming year.

MICA Regulations

First, the important MICA regulation is likely to be extensively tested, discussed, and then implemented in the coming year. An extremely important step in the further professionalization of the sector. And with it the entry of even more organizations.

Self Sovereign Identity

In addition, the EU announced last June that it will further intensify the efforts around ‘Self Sovereign Identity’, about which I wrote earlier. The EU is also making great strides with its own European Blockchain Services Infrastructure. By creating this infrastructure, the European Commission aims to provide a large number of cross-border digital public services. ‘For the benefit of citizens, society and the economy.’

It is the first EU-wide blockchain infrastructure to be created in an effort to make public services more reliable and accessible to European citizens. By making governance more transparent, facilitating compliance with EU regulations and working on data compatibility.

5. Gradually, then suddenly

Bitcoin’s inventor, the still-mysterious Satoshi Nakamoto, is said to be turning in his grave. Several times. The initial idea of ​​the Bitcoin blockchain was to take power away from financial intermediaries (such as banks) and governments and by returning the decentralized nature of blockchain technology to the citizen.

The Chinese government is now using the technology to launch a digital central bank money system, the E-CNY. According to many experts, this gives the Chinese government even more control over its population, by being able to largely control financial transactions in the country. It is only 100 days until the Winter Olympics in the country, where this so-called Central Bank Digital Currency (CBDC) will see the light of day. Meanwhile, the Chinese government has pressured American companies operating in the country, such as McDonald’s, to accept the currency during the games.

The influence of China

Even though there are already countries that use their own CBDC, such as the Bahamas and very recently Nigeria, China seems to be having a major impact on the financial system here. And in the long run, even weaken American power considerably. With its E-CNY infrastructure, it can seriously undermine the current infrastructures, which are dominated by Dollars and American power (such as the SWIFT system).

In the coming year, people are eagerly looking forward to what China will come up with. It will not immediately take over global economic leadership in one year, but as Ernest Hemingway’s beautifully describes in his book The Sun Also Rises: ‘gradually, then suddenly’. Just like the impact of many technologies; slowly, but suddenly extreme and unexpected.

The ‘bank of banks’, the Bank for International Settlements (BIS), recently launched its latest report on the worldwide developments in the field of CBDCs. This shows that 86% of central banks worldwide are looking at CBDC. And 60% are already developing it.

Away with the wallet gardens: power to the people!

Decentralization remains the magic word in many developments. In more and more areas, we see not only the call for the return of certain power to the user/citizen, but also the launch of blockchain solutions that make this possible.

The decentralized storage of big data, no longer in the ‘wallet gardens’ of the ‘big tech companies’.
Putting power and sovereignty back in the hands of makers, owners, small organizations and citizens. What we are now seeing in the major developments around NFTs and DeFi.
Fractional ownership through ‘fantokens’ such as those of Ajax, PSV and Fortuna Sittard and real estate, such as with the Amsterdam Bloqhouse.
It all fits into the next phase of the development of the Internet: Web3.0, built on a decentralized architecture.

Fortune favors the bold

We are looking forward to a very cool blockchain year. I’m really looking forward to all the developments that I don’t see coming at all. It has become clear with all developments that these are often started by the brave, great thinkers. We’ll see if the courage of many of them will be rewarded in the coming year.

Jan Scheele is active in the web3 (blockchain, crypto, NFTs, DeFi) industry since 2013. Besides (former) CEO of a web3 scaleup and founder of an advisory boutique (working for governments, family offices and several multinationals), he is Digital Leader at the World Economic Forum and Board Member at the Blockchain Netherlands Foundation (BCNL). He is writing, consulting, speaking and training regularly about everything web3, all over the world. Furthermore, he is currently finalizing his book about the rise and global impact of blockchain technology.

Perhaps the most beautiful year in the history of cryptocurrencies. Exploding stock prices, records of investments in startups, big as the writing of this blog started, I couldn’t choose what I expect to happen in the coming year. I’m going to try it anyway in this 2022 trend blog about cryptocurrencies.

One day in crypto is equivalent to a year in a human life. Even though the technology is still very young; on October 31, it will be only 12 years since Bitcoin was established, the developments are moving at lightning speed, and it is almost impossible to keep up. Earlier I wrote about Decentralized Financing (DeFi), Non-Fungible Tokens (NFTs), Stablecoins, Central Bank Digital Currencies (CBDCs), and the Metaverse. Many gave developments, which are currently taking place in the sector. Meanwhile, the Bitcoin price has risen to an ‘all-time high’; a record high of $62,600, and the US government approved a so-called Bitcoin “ETF” in 2019.

Looking for the moonshot

This Bitcoin price has doubled this year, at the time of writing, and there are also all kinds of altcoins (alternative cryptocurrencies) that have increased in value by percentages such as 15000% and 10000%. The well-known ‘Stock to Flow’ model predicts that the Bitcoin price could even double again to $100,000 around Christmas, which will also have a positive catalytic effect on the altcoins.

The nice thing about this madness is that I suddenly get a lot of old acquaintances on the phone again, who are looking for advice when buying cryptocurrencies and especially; which altcoin I expect to “moon” (crypto terminology for strong rise). Many people seem to have gotten high because of the crazy price increases that many coins have gone through, the stories of acquaintances who have made a lot of money with them, influencers who promote one coin after another as a new moonshot and the endless stream of positive developments in the sector.

Waiting for the black swan

The world is flooded with liquidity by the endless printing of money by governments and the zero percent interest rates. Liquidity, which is partly returning to the cryptocurrency market. We saw in the United States that 7% of the stimulus checks that the government sent out to its citizens were used to buy crypto, and in the Netherlands, 5% of people already had crypto, and 25% are planning to buy it.

In my view, the madness will continue for a while, now that the economy has recovered so quickly after the corona dip and the stock markets are reaching record highs. However, we have to wait for an unexpected ‘black swan event;’ totally unexpected but with great impact.

At the beginning of June, we saw how one tweet from Tesla CEO Elon Musk caused the entire crypto market to collapse.

What did I expect in the past year?

Also, last year I was allowed to make predictions about what trends I expected around cryptocurrencies this year. No pressure for next year’s predictions, but this year has all come true. The large institutional parties have entered with insane amounts, and according to this nice overview, new investments are regularly added. The bull market has started very clearly, with a big dip here and there, but if you zoom out, you see an unprecedented rise in all coins.

Will something be done with the money that all these projects collect and earn from this increase? Certainly! Many large projects are constantly working on major new updates to the platforms, forging new partnerships, and unveiling new technological advances. Bitcoin has published the major ‘Taproot’ update, Ethereum has made a big step forward in its transition with the launch to ‘2.0’, Cardano now comes with an update every month, Binance has just launched a $1 billion fund, and Solana is also hammering hard on the highway.

Unfortunately, we also see the less positive predictions come true; cryptocrime has also taken off. Hacks, scams, pump & dumps, and many other criminal activities are the order of the day and are increasing rapidly. Governments have started to look at their own role at an accelerated pace, with regard to legislation and regulations. Now I very much welcome this, to make the sector mature and ready for the entry of many more (large) investors. Unfortunately, however, several exaggerated and unhelpful responses from governments have actually done damage. More about this in my predictions for the coming year.

1) Bitcoin for the groceries

From a nine-page document, Bitcoin has grown in 12 years into a global ‘reserve asset’ with social impact. In the west, most developments are ‘underground’; the underlying blockchain technology is already used by 81 out of 100 companies but is often not visible to the consumer. In many developing countries, cryptocurrencies have become part of everyday life. If we look at where cryptos are used the most, you will see some interesting countries in the top list; Nigeria, the Philippines, Turkey, and Venezuela. Countries that, not coincidentally, also have problems with their current currency.

The central American country of El Salvador surprised friend and foe by making Bitcoin legal tender. As a result, companies are obliged to accept Bitcoin. I’m still not sure what to think about this step. If you have just converted your income into Bitcoin and an American billionaire has almost halved the price with a tweet, it is inexplicable. But on the other hand, 70% of residents simply don’t have a bank account, often because banks don’t offer it for a variety of reasons.

In addition, a quarter(!) of the national income enters the country via a foreign money transfer, where often high percentages (up to 30% of the amount sent) are charged by parties such as Western Union. More than 70% of residents receive this type of payment, which is on average 50% of residents’ income. Cross-border money transfers via Bitcoin can therefore save $400 million in fees for residents on an annual basis. Money that the population can use hard.

International Monetary Fund

The last word has not yet been said; the International Monetary Fund has put a planned loan to the country ‘on hold,’ and there is also domestic resistance. Even though there are already 2 million ‘Chivo’ wallets in use (on 6.5 million inhabitants), 70% of the residents voted against the introduction in a large survey, and 93% of the companies say they have not yet made a Bitcoin payment.

Ticket to freedom

The precedent has now been set. Countries such as Paraguay and Brazil are now also looking at the possibilities of making Bitcoin a legal tender. In countries such as Afghanistan, it is now called the ‘ticket to freedom.’ And, In the coming year, I expect more countries to use Bitcoin and possibly other currencies as legal tender. In the fight against high cross-border payments, in the fight against inflation, and to reduce the US dollar’s power grab.
Not only as payment but also as an investment. Countries like Bulgaria and Ukraine have already bought billions of euros worth of Bitcoin.

2) Flashes of light

Cryptocurrencies are not only actively used in developing countries; also, in western countries, there are all kinds of applications that are used on a daily basis. In several ways, it has been made possible to thank content creators for their work. Twitter has added the Tips feature to the platform, which allows you to give a Bitcoin tip to your favorite Tweeps. This is now also possible with podcasts, by Podcasting 2.0 from ‘podfather’ Adam Curry.

Both functionalities use the lightning network. This is a so-called ‘second layer solution,’ which is built on the Bitcoin network. It, therefore, offers a powerful response to Bitcoin’s critics that the number of transactions that are possible on the network and the speed thereof, lag behind current payment methods such as credit cards. Where Bitcoin can handle 7 transactions per second and VISA 65,000, Lightning can handle millions.

Just last month alone, the number of Lightning transactions doubled, and the number of users increased by 11164%. This is not only due to the Twitter Tips because it can process very small payments relatively cheaply, it is also widely used in the gaming world for the purchase of small in-game items and in developing countries such as El Salvador for payments. A cool development, because it really has a positive impact in developing countries. In the coming year, I expect the volume of transactions to increase very strongly, with positive effects for Bitcoin itself as well.

3) Art & Capital keep flying

The money that is now going around in the NFT market and Decentralized Financing (DeFi) continues to rise. Not only the smaller ‘retail’ investors but also existing institutions such as ING indicate that they find DeFI an incredibly interesting development. Crypto would make financial institutions, such as banks, completely obsolete. But now we see that many large banks are actually working with it themselves and offering products. The ‘total value locked’ (money that has been invested) in DeFi is now greater than $200 billion, and I see this amount doubling to $400 billion in the coming year.

There are still some really big steps to take to make DeFI mature. Of all hacks in crypto land, 75% take place within DeFi. In addition, the US regulator, the SEC, recently indicated that it will introduce strict regulations for DeFi in the short term. Institutional DeFi will therefore have to wait for a while, the general DeFi world is growing fast in the meantime.

Interest in NFTs also continues to grow. In the past quarter alone, more than $10 billion was traded. That’s not just bored monkeys, the very first source code of the internet, and a spot on the arm of a famous tennis player. More and more larger parties are also entering the NFT market, such as Disney, Electronic Arts, and the WWF. There are also all kinds of new developments, such as ‘play to earn blockchain games.’ Earn money while playing a game; who doesn’t want that? Not entirely unexpectedly, almost 1 million people are already doing this, and the games are shooting out of the ground. Louis Vuitton very recently launched the game ‘Louis: The Game.’

4) The big boys keep coming in

The great thing about blockchain, and especially Bitcoin, is that you can see and analyze all transactions since its inception. This allows parties such as Glassnode and Chainalysis to make the most interesting analyses. From identifying and tracking criminal transactions for secret services to mapping out what accounts hold Bitcoin.

Owners who own more than 1000 Bitcoin, also known as the “whales,” are often followed. Some whales are known to be who they are, but most are unknown. It creates a lot of speculation; are they wealthy individuals or the banks that anonymously buy and trade Bitcoin? There are all kinds of tools that monitor the movements of these ‘whales,’ such as the Twitter account ‘Whale Alert.’ Where Bloomberg wrote that 2% of Bitcoin wallets own 95% of all available Bitcoin, Glassnode shows in an in-depth analysis that this is distributed much better and that this distribution is also increasing.

Due to the reporting obligation that many public companies worldwide have around finances and large investments, large purchases of Bitcoin are often announced worldwide quickly. However, this information is not available from large institutional investors and the so-called ‘family offices’ (management companies of very wealthy families). In a recent event that I organized around the new European crypto legislation MICA, several experts indicated that they also expect that this type of investor will only buy cryptocurrencies on a large scale once this MICA legislation has been implemented.

5) Crackdown the cowboys

This legislation is now being drawn up worldwide at a rapid pace. Many governments realize that they cannot wait for years with legislation and regulations surrounding cryptocurrencies. The US government has woken up and, on the one hand, indicates that it does not want to ban cryptocurrencies but is very concerned about its transactions and stability. Like the European Central Bank, these two power blocs fear that the sudden collapse of the cryptocurrency market could endanger the stability of the global financial system. They refer here to the Bitcoin crash in 2017, where Bitcoin lost 2/3 of its value in a month, and the top 10 altcoins lost 80%.

As I wrote earlier this year, I am and will remain enthusiastic about regulation as long as the balance between regulation and innovation is not skewed. In the Netherlands, we see that too strict legislation, on the one hand driving unicorns out of the country, on the other hand giving Dutch companies a very unfair position vis-à-vis competitors from abroad, who do not have to comply with these strict rules. Governments worldwide are now taking strong action against the trading platform in cryptocurrencies, Binance, about which even the Dutch Central Bank has already publicly warned.

I, therefore, expect many developments worldwide in the field of regulation in the coming year. Stablecoins and DeFi will probably first be looked at closely, in addition to the crypto market in general. The US government already introduced 18 different laws last quarter, and the European Union is now also making major steps with its MiCa legislation, which will apply equally to all countries in the European Union. It is expected to enter into force at the end of next year, early 2023.

It continues to surprise, it continues to be careful

When the iPhone was introduced, nobody knew that we would navigate with Google Maps, edit photos with Instagram, and stream music with Spotify. It is also a surprise every day with cryptocurrencies what new developments are announced. We are working hard on challenges such as the excessive power consumption of certain blockchains, security, stability, and speed. It remains to be careful for investors in cryptocurrencies. TV Program Radar recently showed how easy it is to set up a ‘pump and dump’; a way of significantly manipulating the price, which puts many investors at a disadvantage.

The scam ads with well-known Dutch people such as John de Mol and Humberto Tan have already caused dozens of victims in the Netherlands. Also, ‘fake projects’ that bring in money and then disappear from the face of the earth are still the order of the day. Check this blog I wrote earlier, how you can prevent this.

While I see an insane amount of potential in the possibilities of crypto, in the long run, 95–99% of projects will fall over at some point. We also saw this three years ago; Cryptocurrency projects also remain startups, with all the investment risks that entail. With all the cool developments I foresee in the coming year, my enthusiasm about cryptocurrencies remains insanely bullish!

Jan Scheele is active in the web3 (blockchain, crypto, NFTs, DeFi) industry since 2013. Besides (former) CEO of a web3 scaleup and founder of an advisory boutique (working for governments, family offices and several multinationals), he is Digital Leader at the World Economic Forum and Board Member at the Blockchain Netherlands Foundation (BCNL). He is writing, consulting, speaking and training regularly about everything web3, all over the world. Furthermore, he is currently finalizing his book about the rise and global impact of blockchain technology.

Recently, Mark Zuckerberg shared Facebook’s plans to turn its social media business into a metaverse. And other companies are already developing metaverse-like products, such as Christian Louboutin and Fortnite. What is the metaverse? And how can blockchain technology help shape this? More on that in my newest blog.

Wi-Fi, smartphones, cryptocurrencies and augmented reality, they were all predicted in 1992 by ‘tech nostradamus’ Neal Stephenson in his book Snow Crash. Also known as the “Bible of Silicon Valley”. The book was even the source of inspiration for Google Maps. The metaverse is now starting to gain momentum.

What is the metaverse?

The metaverse is a valid social network. Besides communicating with each other here, you can also build and do things that were not possible in real life. Inspired by Burning Man, Second Life was founded 15 years ago, the first major metaverse.

Millions of people were part of this virtual community, including Barack Obama and a few hundred thousand Dutch people. Companies such as Philips, Nike and ABN AMRO had a virtual branch. Artists such as Direct performed on the virtual island ‘DropZone’ and the Dutch Political Party CDA even took to the virtual street to win souls. People paid with the virtual currency ‘Linden Dollar’ and met in the virtual bar, the predecessors of Bitcoin and Tinder.

The hype passed and the idea of ​​a metaverse was brought to the market in light variants, think of Facebook and Reddit. In the meantime, developments in the field of augmented reality and virtual reality have accelerated. Also through the acquisition of Facebook, Microsoft and Google of various companies in the sector.

Online gaming has undergone an insane growth and development in recent years, where various Second Life elements can also be found. Such as buying and setting up virtual environments and developing an online identity. Billions of dollars a year are now being spent in this in-game economy.

Facebook’s plans

Facebook also wants to transform the company into a metaverse. Now all kinds of companies were already developing metaverse-like products, from metaverse Christian Louboutin fashion shows to metaverse mushroom trips. The creator Epic of the wildly popular game Fortnite recently won $1 billion on its own metaverse vision.

It will be a massively participatory medium of a type that we really haven’t seen yet, with a fair economy in which all creators can participate, make money and be rewarded. — Tim Sweeney, CEO Epic Games

A company like Facebook takes this to a much higher level. This is due to the number of users of the platform, the knowledge of setting up a social medium and AR/VR and of course a large pocket of money to develop it.

This is going to be a really big part of the next chapter for the technology industry, It will be the next generation of the internet — Mark Zuckerberg

Zuckerberg wants to connect more than a billion people in this way. So this goes a bit further than reading a status on Facebook from a friend from another country. And also beyond an augmented reality app, with which you can see in real time what IKEA furniture in your home or make-up on your face might look like.

An environment that you are part of
What really matters is that as a user you feel that you are part of it. As if you are physically in it with other people, in a different place. That’s something most Frankwatching readers have probably never experienced, but many gamers have. Gaming platform Roblox, with over 120 million users, already offers such an environment. It is complete with its own identity, social network, its own rules and enforcement and even a functioning economy.

It’s the newest macro-goal for many of the world’s tech giants — Matthew Ball, Amazon

Facebook has now put 10,000 employees on metaverse projects, Google has already launched many cool projects, as has Amazon with Lumberyard and Sumerian. Apple will most likely launch its own AR glasses soon. With an amazing reach, the company obviously has great potential to set up its own metaverse with all kinds of different functionalities, which fit in nicely with its own products. But just like with Second Life, the strength will come from all organizations that will set up one metaverse together. Instead of all making their own world

A vision that spans many companies; the whole industry. It will be an embodied internet — Mark Zuckerberg

Get rid of the walled gardens
Leaving aside the cool plans of the big technology giants… the metaverse could, in my view, put many wrong developments around the internet back on the right track. The endless stream of disclosures and lawsuits surrounding privacy violations, the data silos that give an almost unassailable advantage in the field of AI, but also the far-reaching influence on many aspects of our lives, provide a fairly negative image of the big technology companies.

Everybody from an individual participant to a major developer should participate on equal terms. Only that way can you get a really enduring free and fair economy that is built on the same foundational principles as our country. If the metaverse is open, each company will still want to own some things. The principle here is every creator owns their original creations and has the right to make the profit from them — Tim Sweeney, CEO Epic Games

Within the developments I see a great role for blockchain technology, in 4 ways:

1. Decentralized organization

No central control by a company such as Facebook or Google, a government or a person, but by all participants collectively. In a decentralized way. Decentralized autonomous organizations (DAOs) are organizations without a central authority, which are governed on the basis of pre-programmed smart contracts. What Bitcoin does to money, a DAO does to organizations.

Within a DAO there are no hierarchies, everything is transparent and people who do work for the DAO are paid in cryptocurrencies.

You can already see this nicely in action at Decentraland, an open-source virtual reality initiative. It calls itself the first truly decentralized world, fully operating as DAO. In this interactive 3D world, anyone can buy a piece of LAND, visit a museum or club and take a gamble in a casino. Companies such as Coca-Cola sell virtual products and recently the first VR music festival was also organised.

2. Self-sovereign identity

Decentralized organizations are also nicely in line with a topic I wrote about in my previous article on Frankwatching: Self-sovereign identity (SSI). As a user, you are completely in control of your own identity and data. An ‘open metaverse’, built with ‘privacy by design’ and SSI, provides a great foundation for a world where the user decides with whom he/she shares his data and in what way.

No more creating an account for every part of the virtual environment, where you are obliged to leave all your identity and name and address details. Only 1 account that you manage yourself, carry with you and of which you only share the necessary.

3. Zero knowledge proofs

Going a step further Zero-knowledge proofs (ZKP), a blockchain solution that allows you to prove to another party that you are real. Or that you share your age or gender, for example, without revealing your identity.

An example is a mortgage at Rabobank or ING, which ZKP uses to verify whether your income is in the range to get a certain mortgage amount. Without disclosing your actual income. This principle can of course be used very widely, in metaverse, for example, if you speak white to a medical specialist and want to share certain data, but you prefer not to identify yourself.

4. Non-fungible tokens

One of the major contributions of blockchain technology to the metaverse is the Non-fungible tokens (NFTs), which I also wrote about before on Frankwatching. The buyer of the digital artwork Beeple, who paid $69 million for this NFT, has now built up an NFT collection of $189 million and wants to use it to set up virtual museums within metaverse.

Adidas held a virtual fashion show at Decentraland, where the designs were auctioned as NFT. Gucci has sold exclusive virtual bags for $4,000 each, more than the regular physical retail price. Rapper Travis Scott has sold 27.7 million tickets as NFT with his in-game Fortnite concert. Pieces of land on Decentraland have recently sold for more than $500,000.

Online environments are going to be very very big. NFT real estate could one day fetch millions of dollars — Frederic Chesnais, voormalig CEO

More and more companies and industries are working on concepts within metaverse environments. I can already see different brands capitalizing on the metaverse trend in all sorts of cool ways by launching products or boosting their branding. Accenture is even taking it a step further with the ‘Nth Floor Project’, building a metaverse for its more than half a million employees worldwide. This way these employees can come together.

Metaverse: Critical Sounds

As with many other technological developments, metaverse is also dismissed as a bubble and doomed. Think of online gaming and Bitcoin. The amounts paid for a virtual Gucci bag or a piece of virtual land are also grist to the mill for critics. In metaverse, everyone should be equal and the big differences that we see in our contemporary society should not exist.

Unfortunately, social networks without central control and monitoring have already shown what they can cause. Parler and Gab are ‘good’ examples of this. The main criticism, however, remains that “big tech” should not be given too much power within the metaverse, as they already control more and more of our daily lives. However, it is the parties that have the reach, the money and the knowledge to set up a metaverse.

A sandbox for nerds and innovators

In the past year we have rapidly started organizing, arranging and experiencing many more things virtually. Not only the vrimibo, entire weddings and funerals were organized online and the fitness industry is trembling with the masses of athletes who have exchanged the gym for online classes. Although the technology still seems far away, developments are moving very fast.

Although it is still mainly a sandbox for nerds and innovators to play in, I can already see a broad, far-reaching metaverse emerging in 2025. I’m looking forward to going to a virtual concert with a good friend from Singapore with a beer in hand. And doing a calisthenics workout with my sister. Until then, I will continue to satisfy my skin hunger in the old, familiar, physical world.

See, the world is full of things more powerful than us. But if you know how to catch a ride, you can go places — Neal Stephenson

Jan Scheele is active in the web3 (blockchain, crypto, NFTs, DeFi) industry since 2013. Besides (former) CEO of a web3 scaleup and founder of an advisory boutique (working for governments, family offices and several multinationals), he is Digital Leader at the World Economic Forum and Board Member at the Blockchain Netherlands Foundation (BCNL). He is writing, consulting, speaking and training regularly about everything web3, all over the world. Furthermore, he is currently finalizing his book about the rise and global impact of blockchain technology.

Having a driver’s license or identity in your wallet is something normal in our Western society. It’s something everyone has as standard, so we hardly think about it. Whether you are rich or poor, young or old. From the moment the parents register a child with the Municipality, the official identity is recorded in the Personal Records Database and you will receive a Citizen Service Number. Will it soon be replaced by a digital identity, or a Self-Sovereign Identity? In this article I will tell you all the ins and outs about this new form of identity.

An official identity is important and necessary in arranging many things in life. From arranging a bank account and insurance, to obtaining a loan or mortgage. And for access to almost all government services and nowadays even buildings. The privacy laws and regulations have only made this more strict. As a result, more and more people are asked to identify themselves.

Lack of formal identity and identity fraud

But an identity is not so self-evident; more than 1 billion people worldwide have no official identity. As a result, they cannot open a bank account, set up a business, vote, receive healthcare or get an official job. One of the United Nations’ Sustainable Development Goals is that all people on our planet should have a formal identity by 2030. It has set up the ID2020 Alliance for this purpose.

But it is not only people who do not have a formal identity who experience major problems in their lives as a result. People with a formal identity in Western countries have problems with their formal identity due to large-scale fraud. In the Netherlands, 1 in 10 people is a victim of identity fraud, worldwide there were as many as there were people living in the Netherlands last year, and another victim is added every two seconds. Last year, the damage to consumers was $56 billion.

One of the most underexposed, but promising areas where blockchain technology will have a tremendous impact, is Self Sovereign Identity (SSI): a digital identity. You are back in control of your own identity. Not only physically, but also digitally. Control how your personal data is shared with other persons and/or parties, so that you only share the necessary data in a transaction or interaction.

One ID to rule them all

Just think in how many places your address details are known because of online shopping. What if you move? What if your password becomes known to hackers due to a data breach? Then you would rather update everything once from your ‘wallet app’ on the phone, than go through all parties one by one.

Storing and monitoring your identity on your own phone is not only much easier to use, but also much safer according to studies. The controlled sharing of your personal data also offers countless invaluable opportunities in terms of analysis, collaboration and predictions. Concrete proposals for this were already made in 1985 by the creator of one of Bitcoin’s predecessors, David Chaum, but it is now really starting to take shape.

Digital identity (SSI) in practice

The best example of the use of blockchain technology within the SSI movement, I continue to find the World Food Program of the United Nations in Jordan. Where 400,000 refugees have been given a digital ID on their mobile phone. By scanning the eye, for example, one can pay in a store without the need for money. Or conjure up your own current medical file with a healthcare provider. Refugees cannot be deprived of money they have received from the UN. And the UN can see perfectly real-time which goods it has to deliver to which stores and the medical file is always up-to-date and never lost again.

The largest democracy in the world, India, already works with a digital ID based on biometric data: Aadhaar. Today, 99% of adult residents have an Aadhaar ID, which is used in all interactions with the government. From paying taxes to enrolling in education. This makes the government a lot more efficient and less sensitive to fraud. The World Bank has already called it the most advanced ID system in the world.

Baby on the blockchain

Many governments are working on a digital identity in the background. From Tanzania, where the first baby has already been registered on the blockchain, to Dubai, which will copy the Indian Aadhaar 1–1. It is one of the fundamental building blocks of European governments for the European Union to focus on in the coming period. A start was made on this in 2014 with the electronic IDentification, Authentication and Trust Services (eIDAS) legislation. It was thoroughly reformed last year after many experiments and experiences from frontrunner Estonia and should really get fleshed out next October.

In our own country, Rabobank has been researching the use of SSI since 2016 and there are great startups like Tykn that offer turnkey SSI solutions. The Dutch Blockchain Coalition and Digicampus have been investigating concrete options for the Dutch government since last year.

DigiD already works well as a central ID solution for governments. So we have to wait for a decentralized SSI, with which you can also authenticate at companies. The corona pandemic has accelerated the urgency of an eID, because of the vaccination passport. All European governments are working individually and jointly on SSI. So we have to wait for the concrete translation, as with the Indian Aadhaar.

Concerns about privacy at SSI

The opponents mainly state their concerns about privacy with a digital identity. Blockchain is known for its immutable nature. While in Europe we know the ‘right to be forgotten’ within the GDPR legislation. Something the EU Blockchain Observatory is currently cracking its brains on. Nevertheless, India is also looking to put Aadhaar on the blockchain, because the system still centrally stores the data. Which of course creates a huge security risk.

In addition, the question arises; do you have to make the ID mandatory when, for example, creating a social media profile, so that you can never respond anonymously again? Fake news, hate speech and rigged elections could disappear like snow in the sun, but one of the most basic fundamental rights; freedom of expression can be seriously compromised.

The many hacks that we see in the news every day are creating more and more pressure to take concrete steps in the SSI field in the short term. The coming year will therefore be an interesting one within the European Union, because of all the concrete plans that will be unfolded. As with new technological developments such as autonomous driving and the CBDCs, the technology is already quite advanced. It is precisely the ethical dilemmas and practical implications that still prevent its introduction. In any case, we are well on our way. And I look forward to all the cool developments in the coming months.

Jan Scheele is active in the web3 (blockchain, crypto, NFTs, DeFi) industry since 2013. Besides (former) CEO of a web3 scaleup and founder of an advisory boutique (working for governments, family offices and several multinationals), he is Digital Leader at the World Economic Forum and Board Member at the Blockchain Netherlands Foundation (BCNL). He is writing, consulting, speaking and training regularly about everything web3, all over the world. Furthermore, he is currently finalizing his book about the rise and global impact of blockchain technology.