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Blockchain enables enterprise business models in the Metaverse

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Blockchain enables enterprise business models in the Metaverse

Enterprise blockchain has come a long way since its inception in 2017. Blockchain for enterprise use initially began as a technology built on private, permissioned networks, primarily used for supply chain management. As blockchain matured overtime, enterprises began to leverage public, permissionless networks like Ethereum to conduct business. 

Fast forward to 2021 — enterprises are now applying decentralized concepts to create more efficient workflows in the Metaverse. William Herkelrath, head of business development at Chainlink Labs — a decentralized oracle network — told Cointelegraph that while the Metaverse is hard to define, he believes that it’s a collection of ecosystems that are growing naturally out of decentralized finance, or DeFi:

“Enterprises need to be interacting with the outside world and will therefore be forced to have ecosystems in the Metaverse. For example, consumers want to use loyalty programs outside of single platforms, so they will be more likely to choose brands that ensure rewards can be used within other ecosystems. The Metaverse allows for data, physical assets, commercial and financial assets to be set up in a layer outside of a centralized environment.”

The Metaverse for enterprises

While the concept may sound futuristic, a number of enterprises leveraging blockchain are beginning to embrace the Metaverse. This topic was discussed in-depth last Wednesday at the European Blockchain Convention’s virtual conference, during a panel entitled “Building the Enterprise Multiverse.”

David Palmer, blockchain lead at Vodafone Business, mentioned during the discussion that he views the Metaverse as much more than a virtual world where digital experiences via games or social media networks can take place. According to Palmer, the Metaverse is now being applied to financial concepts powered by blockchain technology, such as central bank digital currencies, nonfungible tokens, or NFTs, and DeFi.

Yet Palmer noted that the layer missing in the Metaverse is a way to transfer virtual transactions to the real world. Palmer noted that a mobile phone can bridge these two worlds together, acting as a middleware. He further told Cointelegraph that Vodafone Business is leveraging blockchain to create digital identities that can be applied in both the Metaverse and in real life:

“Digital identity will transcend the digital and physical worlds. For example, a digital wallet will contain a bank account, mortgage information, tokens, NFTs and more. But a decentralized identity will also have access to those credentials, allowing individuals to participate in the Metaverse and in the physical world.”

Palmer shared that Vodafone Business is working on building wallets within mobile devices to host virtual identities. The notion of self-sovereign identity in a multiverse was also mentioned in Greyscale Research’s recent report, titled “The Metaverse, Web 3.0 Virtual Cloud Economies.” The paper describes self-sovereign identity as being an “internet-native social reputation coin (creator coins),” noting that data from other platforms may be transferred into the Metaverse and used for identity or credit scoring.

Angel Garcia, head of global supply chain strategy and transformation at Telefonica, further explained during the panel that a digital supply chain for the Metaverse could help bring about efficiency for telcos. According to Garcia, Telefonica has taken the approach of creating a blockchain network to be used within a Metaverse ecosystem. He added that the company is currently in the process of gathering information to improve end-to-end processes. “The next step is automating those business processes and making them centralized for everyone,” he remarked.

Rowan Fenn, co-founder of Rise X — an enterprise solution for companies looking to build digital autonomous organizations — also mentioned that businesses can have a digital twin of their autonomous organization to govern, operate and control analog processes: “These organizations will be able to interact and transact with each other in real-time in a Multiverse. This will also allow the digital autonomous organizations to work together in an analog world.”

Fenn elaborated that companies with a digital twin in a Multiverse ecosystem will be able to produce more goods and services, while using less environmental resources. As such, he believes that this business model will allow the world to move away from a finite to an infinite economy.

Enterprises already use blockchain to operate in the Metaverse

While enterprises are still exploring early use cases for applying business models within the Metaverse, some sectors are already leveraging these environments. For example, Herkelrath mentioned that blockchain networks leveraged in the insurance industry demonstrates a Metaverse business model.

Specifically speaking, Herkelrath explained that hundreds of thousands of insurance contracts are being offered to farmers globally through virtual ecosystems. He added that smart contracts built on top of blockchain networks, along with decentralized oracles like Chainlink, have made it possible to solve challenges of transparency within the insurance industry. Moreover, this has streamlined the entire insurance process to make it globally accessible to disenfranchised customers.

Although it may appear that blockchain alone has enabled this, Herkelrath noted that smart contracts generated by insurance agencies require data that couldn’t have been gathered without the existence of a Metaverse:

“This is made possible because you have a metaverse of companies with data coming in that is verified by a broader network. The fact that this can happen in the Metaverse demonstrates that business-to-consumer transactions can become inexpensive and accessible to anyone in the world.”

How likely are enterprises to embrace the Metaverse?

While some companies are beginning to develop and leverage business models in the Metaverse, understanding the technology could hamper fast adoption. Rodolfo Quijano, head of blockchain at Henkel — a German chemical and consumer goods company — mentioned during the panel discussion that the biggest challenge driving adoption now is understanding the value that the Metaverse can provide to enterprises:

“Technology isn’t an issue, but it will take more time getting people to wrap their heads around what blockchain does and how this can compare with old-fashioned enterprise resource planning systems. Finding evangelists can be a big challenge for adoption in terms of blockchain being applied in the Metaverse.”

Palmer added that scalability within a Metaverse enterprise environment is also an issue, along with getting companies to understand how to transition and engage with this new technology: “For a teleco, the biggest point to consider is how to connect people in the Metaverse. People will have two identities, one virtual and one physical, so the question is if we will have the bandwidth in terms of connectivity.”

Moreover, Palmer believes that companies will question the role blockchain plays when it comes to Metaverse business models. However, he believes the technology is crucial for these use cases. “Blockchain is the trust and exchange layer in a multiverse environment. It’s a massive opportunity, but it will be a challenge for companies to make the transition.”

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Wait, what? Former Bitcoin bull Raoul Pal only owns one Bitcoin?

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Wait, what? Former Bitcoin bull Raoul Pal only owns one Bitcoin?

Former Goldman Sachs hedge fund manager and cryptocurrency bull Raoul Pal claimed in a tweet that he now only owns a single Bitcoin.

As the claim was made in the heat of a Twitter fight with self-proclaimed “Bitcoin Strategist” Greg Foss it’s not entirely clear whether it’s an exaggeration or an accurate statement about his holdings. Pal is the founder and CEO of Real Vision and Global Macro while Foss is an executive director at Validus Power Corp.

The revelation of his apparently small holding certainly caused uproar and angst among Bitcoin true believers, who’ve looked at Pal askance ever since he started calling Ethereum “the greatest trade” and predicted that ETH and altcoins will eventually outperform BTC.

Fascinating to see that since inception ETH has outperformed BTC by 250%. It only fell below its initial price in BTC for the first 5 months of its existence in 2015.

Let that put rest to the idea that all other tokens trend towards zero in BTC terms. pic.twitter.com/ulCpsjG8up

— Raoul Pal (@RaoulGMI) April 7, 2021

Pal first purchased BTC in Nov 2013. He sold for a 10X profit in the so-called “fork-wars” of 2017 (missing out on an even bigger gain later that year) before adding to his collection in 2019 through 2020. In May 2021, he confirmed that he owned more ETH than BTC. At time of writing, Bitcoin (BTC) is worth $40,925.

The barney was instigated by Foss, who tweeted “Raoul is soft” followed by another intellectual tweet, “Raoul sucks and blows” shortly after. After some back and forth between Pal and the Bitcoin maxi, Pal posted that people like Foss and the Bitcoin community’s exclusionary ideology are why he only holds one Bitcoin.

And that is your issue. I don’t share your philosophy, so you attack me? Really? This is why I hold only one bitcoin, the community has lost sight of inclusion and you sir, are helping reduce the network effects by excluding people who dont share your view from the network.

— Raoul Pal (@RaoulGMI) January 20, 2022

This upset the Bitcoiner community, many who claimed he had let emotion cloud logic. “His feelings are hurting his future,” commented one user Emanuel in a reply to Bitcoin Meme Hub tweet. “I knew when he started to sip Vitalik’s coolaid he was a goner,” added another user, Jalan Foster.

The founder of Synaptic Ventures Marc van der Chijs complained that the fact Pal only owns one BTC based on the makeup of the community and not on the potential return “goes totally against the gospel he preaches on RealVision.”

However, some defended Pal, pointing to his impressive track record and reminding followers that he is in fact a trader, not a holder. Crypto analyst and founder of Crypto My Way “Coach T” wrote that he appreciates Pal’s “diverse views and intelligent thinking.”

Foss vs. Pal: a Twitter feud

It appears that the argument was in response to a disagreement on Pal’s stance on inflation and bonds as a trading vehicle. Foss explained that he didn’t support Pal promoting his trading strategy to others who don’t entirely understand how it works.

Pal disagreed, explaining that his views on bonds are “a trade, not a philosophy.” Despite this, in a following comment on the thread, Pal claimed that he doesn’t own any bonds.

Ok, lets do math. If Im right and bonds can rally 20% in 12 months (just use TLT) that is faster than the balance sheet expansion, thus its a net win to your purchasing power. If you hold bonds to maturity you lose. Issue?

— Raoul Pal (@RaoulGMI) January 20, 2022

Three hours after posting the original tweet attacking Pal, the argument eventually culminated in Foss tweeting an apology saying that he “regrets his actions,” adding that he “made a rookie error” and that he has “bigger battles to fight.”

Related: Raoul Pal says ‘reasonable chance’ crypto market cap could 100x by 2030

Just weeks ago, Pal said that he believes there is a “reasonable chance” that the crypto market capitalization will increase 100 times by the end of this decade. Hoping he’s right about that is perhaps something on which we can all agree.

Cointelegraph reached out to Raoul Pal via Real Vision and will update the story with any response.

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Multichain hacker returns 322 ETH, keeps hefty finders fee

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Multichain hacker returns 322 ETH, keeps hefty finders fee

Owing to a security vulnerability in six tokens, Multichain users lost more than $3M over the week. A white hat hacker returned 322 ETH, but in excess of 527 ETH is still exploited.

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Multichain hacker returns 322 ETH, keeps hefty finders fee

In a dramatic twist, one of this week’s Multichain hackers has returned 322 ETH ($974,000 at the time of writing) to the cross-chain router protocol and one of the affected users.

However the hacker kept 62 ETH ($187,000) as a “bug bounty”, and a total of 528 ETH (worth $1.6M) remains outstanding after the exploits.

Earlier this week, news emerged of a security vulnerability with Multichain relating to the tokens WETH, PERI, OMT, WBNB, MATIC, and AVAX, and $1.43 million was stolen. Multichain announced on Jan. 17 the critical vulnerability had been “reported and fixed.”

However, publicity about the vulnerability reportedly encouraged a number of different attackers to swoop in, and more than $3 million in funds were stolen. The critical vulnerability in the six tokens still exists, but Multichain has drained around $44.5m of funds from multiple chain bridges to protect them.

Yeah, bridge contract need pause function. https://t.co/lPjLsE5EtR

— Zhaojun (@zhaojun_sh) January 20, 2022

One of the hackers, calling himself a “white hat” has been in communication with both Multichain and a user who lost $960,000 in the past day or so, to negotiate returning 80% of the money in return for a hefty finders fee.

According to a Jan. 20 tweet from ZenGo wallet co-founder Tal Be’ery, the hacker claimed they hadbeen “saving the rest” of the Multichain users who were being targeted by bots, in an act of defensive hacking.

The funds were returned across four transactions. On Jan. 20 the hacker returned 269 ETH ($813,000) in two transactions directly to the user he stole it from and kept a bug bounty of 50 ETH ($150,000).

The relieved user responded to the hacker:

“Well received, thank you for your honesty.”

Overnight, the hacker also returned 50 ETH ($150,000) across two transactions to the official Multichain address, and kept a bug bounty of 12 ETH ($36,000).

Related: Multichain asks users to revoke approvals amid ‘critical vulnerability’

Multichain (formerly Anyswap) aims to be the “ultimate router for Web3.” The platform supports 30 chains at the moment, including Bitcoin (BTC), Ethereum (ETH), Avalanche (AVAX), Litecoin (LTC), Terra (LUNA), and Fantom (FTM).

In a tweet on Jan. 20, the Co-Founder and CEO of Multichain Zhaojun conceded that Multichain bridge contracts need a pause function to deal with similar incidents in future..

Cointelegraph has contacted the project for comment.

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Australia’s plan to create a crypto competitive edge in 12 steps

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Australia’s plan to create a crypto competitive edge in 12 steps

In October 2021, the Senate Committee for Australia as a Technology and Financial Centre released its much-awaited recommendations for how cryptocurrency should be regulated. The 168-page final report boils down to 12 recommendations aimed at striking the right balance between creating legitimacy without stifling innovation. 

This is a landmark report that demonstrates Australia’s clear efforts to put itself at the forefront of crypto investment globally. The chair of the committee, Senator Andrew Bragg, believes that “Australia can be a leader in digital assets” and is confident that it can particularly “be competitive with Singapore, the UK and the US.”

Four key recommendations

First, the introduction of a range of new crypto-specific licenses and regulations. For too long, regulators around the world have been trying to put square pegs (cryptocurrency) into round holes (traditional financial regulation). This approach underestimates the fundamental differences that exist as well as the potential that digital assets have to transform the world. This report acknowledges crypto’s potential and calls for a range of bespoke cryptocurrency licenses in Australia. It recommends a specific market licensing regime for digital exchanges as well as a bespoke custody regime for digital assets. Details will still need to be fleshed out but if we get these frameworks right, then this will create the legitimacy that the sector needs to take off into the mainstream.

Second, the introduction of a decentralized autonomous organization (DAO) entity type into Australian corporate law. This recommendation is a very big deal, as it shows that the Australian government is open to decentralized finance (DeFi) as well as crypto innovation. Wyoming is the only region I have heard of that has something like this in place, so this could put Australia on the front foot. If approved, DAOs could provide a unique utility that may bring the Australian economy a decade ahead into a decentralized future. However, this will also be the hardest thing for the Committee to get approved, as changes to the Corporations Act are infamously rare in Australia. If anyone can do it, it’s Senator Bragg though.

Third, improved tax rules for crypto-to-crypto transactions. Recent Finder research shows that over 17% of Australians own cryptocurrency — the third-highest rate of adoption in the world. However, this growing group has had to grapple with tax rules that are confusing at best. Historically, crypto-to-crypto transfers have been considered a capital gain by the Australian Tax Office. The new recommendation calls for tax only when there has been “a clearly definable capital gain or loss.” Again, the devil will be in the detail on this one but active Australian crypto users could be the real winners.

Fourth, new tax incentives to encourage green crypto mining. The Committee recommends a 10% company tax discount for crypto mining businesses that use renewable energy. This looks like a smart move to support two high-growth Australian industries: renewable energy and cryptocurrency. This will be especially important as the Committee tries to get these recommendations signed off against a backdrop of COP26 and rising concerns about climate change.

Related: Crypto staking rewards and their unfair taxation in the US

Three tough issues

  • Timelines for turning recommendations into law. Right now, these are all just recommendations, and are worth as much as the political will that exists to enact them. As with other countries, politics in Australia moves slowly and this will be no different. Senator Andrew Bragg is bullish that he can get all the recommendations passed in 12 months and I back him to get it done. His cause could also be supported by a growing view that crypto innovation could be a vote-winner with young Australians in a looming federal election, as nearly a third of Generation Z already own cryptocurrency.
  • Implications for crypto businesses during the pre-reform period. If it takes a year to introduce new laws then there are still questions about what crypto businesses can do in the meantime. Many submissions called for a “safe harbor” against regulation until rules had been finalized but this was not explicitly recommended by the Committee. However, the direction of travel has been set and there is clear support for crypto innovation and an acknowledgment that new rules and licenses are needed. I would be surprised if we saw much in the way of regulatory action until then.
  • Specifics for the licensing and tax proposals. Many of these recommendations were light on detail and it looks like the Australian Treasury will now lead on these matters. The industry will be very interested to know what the requirements for being a custodian or digital exchange will be, particularly when it comes to capital requirements. If there’s too much regulatory burden, then businesses will move offshore. Likewise, consumers will need more clarity on what a “clearly definable capital gain or loss” is for tax purposes. In many ways, the work starts now.

Related: Crypto makes history in 2021: Five instances of governments embracing digital assets

Learnings for governments around the world

The crypto industry is ready to talk policy. It’s fair to say that this Select Committee was inundated with engagement from crypto businesses, academics, peak bodies and regulators. More than 100 written submissions contributed and there were three full days of public hearings. It’s not often that an industry is asking for more regulation but that is what is happening here. The crypto industry around the world wants clarity and is ready to have a conversation about policy.

Broad reviews are more effective than siloed approaches. One key reason that this consultation had so much engagement was that it looked at the digital asset industry holistically rather than from one angle only. A problem we’re seeing around the world is regulators interested in looking at crypto assets from their specific regulatory view, but broad innovation shouldn’t be assessed through such a narrow lens. This consultation managed to look at the industry holistically while still getting into the specific issues. I welcome more reviews like it around the world.

Bespoke digital asset policy approaches will be needed. Digital assets have hit critical velocity and the revolution can no longer be ignored. Piecemeal changes to legacy financial services policy will not work. We need policymakers around the world to work together to create bespoke policies that are fit-for-purpose. Coinbase captures this well in pillar one of its Digital Asset Policy Proposal (DAPP). The DAPP calls for “a new framework for how we regulate digital assets” that “will ensure that innovation can occur in ways that are not hampered by the difficulty of transitioning from our legacy market structure.” These recommendations in Australia are an attempt at doing exactly that which many can learn from.

What is clear is that the world is changing. This Senate Committee in Australia should be applauded for taking a holistic approach and recommending bespoke policy instruments. It’s time for policymakers around the world to follow suit and take a broad look at their approach to digital assets.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Fred Schebesta is an Australian-born entrepreneur and early-stage investor, founder of global fintech Finder, now worth over half a billion dollars. Fred recently launched blockchain investment fund Hive Empire Capital and co-founded Balthazar, a DAO platform for NFT gaming. With 22 years of experience in building businesses, Fred just released a Number One Amazon Best Selling book, Go Live! 10 Principles to Launch a Global Empire.

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