Based on commercials that aired during Super Bowl LVI, crypto
brands have officially moved from the fringes to the mainstream.
But the crypto ads in this prime time space didn’t do much to
explain the underlying products and services, especially if the
viewers were not already immersed in Web3. Many viewers undoubtedly
were left wondering: What are they selling?
Products Behind the Crypto Ads
- The ad with random people jumping between places with
“Gotta Move” by Barbra Streisand playing in the
background.
- Product: Bud Light NEXT, a zero-carb beer, and Bud Light N3XT Collection, an NFT
(non-fungible token) project, with a community of 12,722 NFT
holders having a role in Bud Light’s Discord server and voting
abilities on future initiatives.
- Product: Bud Light NEXT, a zero-carb beer, and Bud Light N3XT Collection, an NFT
- The ad with the Pong-like QR code bouncing around the
screen.
- Product: Coinbase, a
cryptocurrency exchange platform, which also offers a virtual
wallet for storing cryptocurrency and NFTs. Clicking through the
bouncing QR code linked to some freebies, like $5 in Bitcoin for
signing up.
- Product: Coinbase, a
- The ad with a 2003 LeBron James and 2022 LeBron
James.
- Product: Crypto.com, a cryptocurrency exchange
platform, which also offers virtual wallets for storing
cryptocurrency or NFTs.
- Product: Crypto.com, a cryptocurrency exchange
- The ad with people texting and people flying.
- Product: eToro, a multi-asset brokerage
company with cryptocurrency exchange, which also offers a virtual
wallet for storing cryptocurrency.
- Product: eToro, a multi-asset brokerage
- The ad with a skeptical Larry David
throughout history.
- Product: FTX, a cryptocurrency exchange
platform and NFT marketplace, which also offers an FTX card powered
by Visa that can be used to spend crypto balances.
- Product: FTX, a cryptocurrency exchange
There’s a good chance, however, that you are not familiar
with products like Bud Light
N3XT or sites like Crypto.com. If so,
please read on!
Different Cryptocurrencies, Different Blockchains, Different
Goals
Cryptocurrencies typically use a blockchain for verifying
ownership and confirming transactions. A blockchain is a
decentralized, shared, public database that stores a history of
transactions.
The process to confirm transactions and add them to a blockchain
is called mining. Mining is a distributed consensus system, meaning
it allows multiple independent computers in any location to agree
on the status of any individual block chain. Appropriately, the
people who perform the service of mining are called miners, and
they receive payment for their services—a transaction
fee—in the form of the specific cryptocurrency powered by
relevant blockchain.
Cryptocurrencies can be obtained and traded on a cryptocurrency
exchange platform. Coinbase, currently
the largest cryptocurrency exchange platform, was founded in
2012. Crypto.com, eToro, and FTX also provide cryptocurrency
exchange platforms.
Coinbase currently lists prices for about 9,500 different crypto
assets. Within this large group, there are a number of distinct
cryptocurrencies, powered by distinct blockchains, that serve a
variety of goals.
Alternative to Traditional Money
Almost everyone is familiar with the OG (“original
gangster”) of cryptocurrency, Bitcoin (BTC), which launched in 2009
and is powered by the Bitcoin blockchain. Bitcoin is an example of
a cryptocurrency designed to be used like money, and Bitcoin
currently has a market cap of about $832 billion.
Dogecoin (DOGE) is another
well-known cryptocurrency, originally intended as a joke but also
useable as money, with a current market cap of about $19.5
billion.
Smart Contracts
Another type of cryptocurrency is one associated with a
blockchain designed to accept smart contract data. The best known
blockchain of this category is Ethereum, which powers the
cryptocurrency Ether (ETH). Ether’s current market cap is about
$367 billion. The unique feature conceived by the founders of
Ethereum allowed for smart contracts to be deployed on the
blockchain.
Smart contracts, which empowered the burgeoning trade in NFTs,
have a number of other utilities such as gaming, powering
decentralized finance applications, and improving data privacy in
confidential activities like clinical trials.
Simply put, a smart contract is a small chunk of code or
programming that defines a public agreement, and the smart contract
executes its terms automatically when called upon by someone on the
blockchain. For example, smart contracts can control sending and
receiving of fungible tokens (i.e., Ether on the Ethereum
blockchain), and they can also control sending and receiving of
NFTs.
A growing number of blockchain networks—at least 16 to
date—are specifically designed to run smart
contracts. Cardano, which powers the ADA
cryptocurrency named after Ada Lovelace, and Solana, which powers the SOL
cryptocurrency, are two better-known examples. Each has a market
cap of about $35 billion. Cardano and Solana are also examples of
blockchains attempting to provide technology that, compared to
their predecessors, is faster and more environmentally sustainable
(a massive topic unto itself).
Platform-Specific Crypto Tokens Powered by an Existing
Blockchain
Some crypto tokens developed for use in a specific setting are
now powered by one of the dominant blockchains. For example, MANA
is a crypto token powered by Ethereum for use in the Decentraland metaverse. RARI,
which is a crypto token powered by Ethereum, can be used in the NFT
marketplace Rarible.
Non-Fungible Tokens (NFTs)
In economic terms, a fungible asset has units identical to one
another, allowing the units to be exchanged without gaining or
losing value. Examples of fungible assets include a U.S. dollar, a
stock, a commodity such as gold, and a cryptocurrency token. A
non-fungible asset is unique, and cannot be readily valued or
exchanged for something of equal value. Examples include a diamond,
a baseball card, a pair of sneakers,
and an NFT.
An NFT can be created (or “minted”) by deploying an
NFT smart contract to a blockchain that supports smart contracts
(e.g., Ethereum). The NFT can be purchased using the
blockchain’s crypto tokens (e.g., Ether), and transfers of the
NFT are permanently recorded in the blockchain.
Just as the value of a T206 Honus Wagner
baseball card is substantially different from a common
card from a Topps 2021 series, the value of an NFT depends on what
the market is willing to pay to own it. Perceived value could be
due to the relative fame of the digital “art” behind the
NFT, such as with the Charlie-Bit-My-Finger
NFT, but value can be assessed in a manner similar to physical
art. In the latter case, Beeple’s The First
5000 Days was sold by Christie’s for over $69
million.
Some NFT projects generate interest and value by creating
communities where the NFT is much like a membership card. These
NFTs provide access to the perks available to the community of
holders. Bud Light
N3XT is an example of an NFT project with an associated
community having roles on the Bud Light Discord server. Discord is a favorite discussion
platform for NFT communities.
The shared interest of a community could include NFT collecting
and investing, with perks such as special access to new NFTs, as
with Board Ape Yacht Club.
But there are any number of shared interests on which an NFT
community can be built. For example, World of Women defines itself as
“a thriving community celebrating representation, inclusivity,
and equal opportunities for all.”
The shared interest of an NFT community could also have tangible
ties to the real world, such as Party Horses, which gives access to
special edition bourbon and tickets to parties during the Kentucky
Derby (minting in March 2022).
+ + +
For many, the rapidly-evolving world of cryptocurrency, NFTs,
and Web3 can be difficult to understand, both in terms of its
operation and its appeal. As the crypto industry expands, however,
its significant and growing economic impact is increasingly
difficult to ignore. Just wait until the next Super Bowl.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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