Innovation springs eternal, even through crypto winters – EURACTIV.com
As fall descends, it’s popular to talk about crypto being in the middle of another “winter” caused by the fallout from the market turmoil, as well as some high-profile collapses and hacks. Overall, the situation has been sobering for users, challenging for innovators and motivating for regulators.
Lee A. Schneider, Andreina Himy, Wee Ming Choon and Olta Andoni are the co-founders of Owl explains.
We believe this narrative only scratches the surface of the changes that will be wrought by blockchain and Web3. This is why this week we are launching Owl Explains – a new initiative to explore and explain the new world of blockchain and Web3.
Market downturns and volatility are characteristic of periods of intense innovation in underlying technologies and systems. With the advent of Web1, the headlines were about the dotcom boom and bust, while behind the scenes many worked to deliver remarkable innovations right into the phones in our pockets, such as a street-by-street map of the world, all the music ever recorded, and instant translations from all languages.
Likewise, the Web3 revolution built on blockchain continues quietly despite the crypto hype. Blockchain databases continue to function, forming the basis for smart contracts, applications and businesses based on the digital uniqueness that the technology provides. The innovation underway goes well beyond the headlines – often turbocharging peer-to-peer activity and reclaiming ownership of the digital space that has been so dominated in recent times by powerful intermediaries.
Consider the Lemonade Crypto Climate Coalition, which brings weather insurance to farmers in developing countries using public blockchain as its core infrastructure. Lemonade, a modern insurance company, recognized that traditional insurance tools and methods simply could not serve this market. So they rethought the system, capitalized on the global nature of blockchain and its ability to financially connect anyone around the world, and launched a redesigned insurance policy fit for purpose. Now insurance against drought will be available anywhere.
Brave offers a browser and search engine that allows users to turn their search history into a resource that they can either protect or monetize by exchanging it for a “basic attention token” (BAT) paid to them by an advertiser who wants to target them against them. . In this new world, the user is no longer the “product” – they are back in control of their own data.
That same user can then use that BAT token to listen to their favorite artist on Audius, a Web3 music streaming platform that allows musicians to keep a larger share of their revenue by cutting out the middleman.
Or they can use it to buy excess energy from their neighbors’ solar panels through microgrid initiatives like this one in New York.
All of these innovations rely in part on tokenization, the process of digitizing assets through a digitally unique element on a blockchain. Think of a symbol as representing a bundle of rights. In Lemonade’s initiative, these rights could be for an insurance payout if your crops are destroyed by drought. For BAT, these rights may be closer to a means of exchanging value. Blockchains like Avalanche bring these bundles of rights into existence and make them transferable anywhere on the planet and very quickly. On a macro level, tokenization frees up pent-up capital, increases productivity and promotes financial inclusion.
And this is where regulators come in.
Currently, responsible players who want to operate within the rules face a patchwork of different and often unclear rules governing tokens in different territories around the world. The EU’s Markets in Crypto-Asset Regulation (MiCA) is a good start for defining and setting rules for different types of tokens. Other countries, such as Japan, Switzerland and Singapore, continue to develop their regimes, but more needs to be done both in the EU and around the world to define and create sensible, consistent regulation to provide clarity and legal certainty about the core of what tokenization is and how it works.
Politicians should not stop there. They should recognize and encourage the change that blockchain and Web3 are bringing to the way ownership is established and value is transferred. By adopting policies and incentives that embrace good actors and marginalize bad actors, they will facilitate the next stage of the Internet.
The first step towards sensible policy and regulation is to understand the technology, how it works and what it can do. At Owl Explains, we will provide practical explanations of the technology itself, such as consensus mechanisms and personal wallets, and its applications, such as NFTs and DeFi, and lay out some basic principles to shape policy thinking. We don’t plan to do this alone. By building a ‘parliament’ of owls, we intend to bring the best experts into the conversation about blockchain and Web3.
We will also be hosting regular ‘Hootenanny’ sessions on Twitter Spaces bringing industry and regulators together to talk about progress in the sector, highlight good use cases and dispel some myths. The first of these will be Wednesday 19th October at 11am ET / 4pm BST / 5pm CET when we’ll discuss ‘Will Web 3 be better than Web2?with speakers from industry, the media and the European Commission. Join us by setting a reminder here.
For more information, visit our website and follow us Twitter and Linkedin.
