DIGITAL PIVOTS: Know the Decentralization Trends

Are you ready for the WORLD WILD WEB of De-Fi and Web3 and NFTs?

There are seismic shifts happening in the digital universe. All savvy marketers should be aware of these game-changing, if not wildly risky, trends…

De-Fi:

Decentralized Finance [De-Fi] allows digital currencies to be created, traded and managed through smart contracts on blockchains, which are public ledgers. This means everything within the system is transparent.

It also means there’s no role for traditional banks, brokerages, or exchanges. Because transactions are recorded in databases on many different computers, rather than managed by a central entity.

“Proponents say DeFi will cut out middlemen and benefit the world’s unbanked population—1.7 billion people who lack access to financial institutions, according to the World Bank—by providing bank-like services to anyone with a mobile phone.” WSJ

Web3

The next generation of the internet — Web3 — refers to a newly decentralized online experience run on crypto tokens. It intends to eliminate the middlemen in the system. So users will no longer have to log onto Facebook, Google or Twitter to access the internet.

Essentially, it’s a decentralized iteration of the internet where new social networks, search engines and marketplaces exist without private oversight. Instead, they are built upon a system known as the blockchain. And users control their own data.

“Imagine it as a kind of bookkeeping where many computers at once host data that’s searchable by anyone. It’s operated by users collectively, rather than a corporation. People are given “tokens” for participating. The tokens can be used to vote on decisions, and even accrue real value.” NPR

“Supporters say [Web3] will democratize everything, reshaping art, commerce and technology; displacing intermediaries; and putting people more directly in control of their destinies.” NYT

NFTs

Nonfungible Tokens [NFTs] are unique bits of non-interchangeable code on a blockchain that are associated with an image, a video, or any unique item of value. They rely on the blockchain technology — a public ledger managed across multiple computers — to transparently and publicly prove ownership.

“When he taught courses on crypto finance at the Massachusetts Institute of Technology just before leading the S.E.C., [Gary] Gensler told his students to ask, “Where is the value proposition?” Are all of the crypto tokens that are competing with the dollar, or forming the basis of an app, valuable?” NYT

And therein lies the truth of it all. Products and services that are relevant and sustainable deliver consistent value to the marketplace.

At the end of the era, consumers will have determined whether or not these new digital tools have meaningful utility. Or not.