Binance, the world’s leading crypto exchange by trading volume, will temporarily suspend bank transfers in U.S. dollars. The exchange stated in a tweet on Feb. 6 that no other trading methods would be affected. The announcement came with no explanation. However, exchange CEO Changpeng Zhao noted in a tweet that only 0.01% of the exchange’s total users will be affected by the suspension while assuring that they are looking to resolve the issue soon.
Recently, Binance encountered related financial issues in the U.S. On Jan. 21, its SWIFT transfer partner, Signature Bank, announced that, as of Feb. 1, it would only accept trades from clients with U.S. dollar bank accounts over $100,000. The bank had previously declared that it was severely restricting deposits from cryptocurrency consumers.
At the time, Binance stated that it was looking for a new SWIFT partner and that all SWIFT trades involving other currencies, as well as trading in U.S. dollars using credit or debit cards, will continue to be accepted.
Signature Bank’s most recent action comes after it disclosed plans to sell up to $10 billion in crypto deposits in December in an effort to reduce its exposure to the turbulent market changes. “We are not a cryptocurrency bank. We don’t want to be obligated to any particular sector or client,” Joe DePaolo, the bank’s CEO, said at the time.
A Binance spokesperson told Cointelegraph, “We are pausing USD bank transfers as we upgrade our services. We have contacted affected users directly and regret any inconvenience this causes,” adding:
“We are actively working to find an alternative solution for SWIFT bank transfers. We have since paused all USD bank transfers as we work to upgrade the service. 0.01% of our average monthly users use U.S. bank transfers.”
Nansen data shared with Cointelegraph shows that notable stablecoin movements include crypto trading group Jump withdrawing $160 million in stablecoins and Oapital, a digital asset investment firm, withdrawing $230 million.
Andrew Thurman, head of content at Nansen, told Cointelegraph, “Jump and Oapital are large players who routinely sling around large sums, however, and it’s difficult to fully attribute the movements to the banking announcement. I’d say the seven-day outflows might be a little high, but the 24-hour inflows show it’s nowhere close to panic.”
Turmoil in crypto market makes banks cautious
Banks are generally hesitant to deal with digital assets, especially without uniform regulations governing the nascent market. In many countries in the European Union, this turned into a total ban on a national regulatory level until the Markets in Crypto-Assets package, a pan-European regulatory set for digital assets, enters into force.
For banks, the most important thing is to remain part of the financial system, and if they feel that they could be cut off because they took too much risk, they will simply not take it to begin with.
Tony Petrov, chief legal officer at compliance-as-a-service provider Sumsub, told Cointelegraph that the ongoing bear market is another reason behind the bank’s recent action, stating, “When the crypto market was skyrocketing, some banks were simply pushed into the open arms of crypto exchanges: They had no bad reputation, their open faces inspired confidence, and the concern that most of the banks had little or no understanding of crypto industry could not beat the unprecedented figures of profits that one could make in crypto.” He continued:
“But the time to scatter stones may be replaced by the time to gather them. And now some banks that were actively involved in crypto may rethink their involvement and change their policies.”
He added that crypto businesses will make an effort to “reinstate their reputation, and for that, they will need more stringent compliance infrastructure. Ideally, some third parties guarantee the required levels of risk management, to harmonize the approaches of crypto exchanges and banks and to return mutual trust on both sides of global finance.”
Lars Seier Christensen, the founder of Saxo Bank, believes the developments around FTX and other crypto disasters, combined with the low volumes in the market, have hurt confidence in the industry. Banks believe the benefits associated with crypto trading activity are not proportional to the increasing regulatory and business risks.
Clearly, the more difficult the access, the fewer new clients and deposits will find their way onto exchanges, adding to the problems they are already having with low volume. Talking about how crypto exchanges can mitigate this hurdle, he explained:
“A number of credit card companies still support payments to companies that banks often place restrictions on, such as gambling, adult sites and others. But the best thing the industry can do as a whole is to embrace and welcome clear regulations and adhere strictly to them, as well as help shape them with their knowledge.”
Eddie Hui, chief operating officer at crypto exchange platform MetaComp, told Cointelegraph that it is not uncommon to see an increase in bank runs on exchanges where clients try to withdraw their cash at the same time.
Reducing exposure to crypto and trying to diversify the client base would mitigate such risk. Understandably, it is a sensible decision to make for banks and their shareholders, who may have been burnt by the crypto market in 2022.
He added that, in the case of Silvergate, the restriction they imposed was on transactions below $100,000. Some exchanges may decide to bundle withdrawals and to go “through scheduled withdrawals using a third-party payment company, but that may introduce additional costs, delays, operational burden and counterparty risk.”
Hui further commented: “The bottom line is that workarounds may exist, but it is unfortunate to see the gap between crypto and banks widen again, as the end client will be paying the price of those changes.”
The recent action of Binance’s USD banking partner raised many eyebrows in the crypto community, especially after a disastrous 2022 that saw many crypto goliaths fall from the top, confidence in the crypto ecosystem taking a hit. While regulatory bodies have said that crypto will be their priority, experts believe uniform regulations are a must to build that trust back. Until then, exchanges will have to mitigate the hurdles and risks on their own.
On Oct. 25, 2022 — about two weeks before the collapse of the world’s third-largest cryptocurrency exchange, FTX — prominent DeFi architect Andre Cronje published a foreboding article with a chilling warning on the state of centralized cryptocurrency exchanges:
“Remedies under the current regulatory regime are ineffective. Most investors sign away their rights to their crypto in voluminous terms and conditions of crypto-exchanges and many will (at best) rank as unsecured creditors should these exchange services be liquidated. Crypto exchange and crypto investment service providers are essentially operating as banks, but without the safeguards and regulation which banks are required to follow.”
What happened afterward is history. With the abrupt downfall of FTX, customers suddenly discovered that despite all previous guarantees, their assets had been locked as the defunct exchange filed for bankruptcy amid an $8 billion shortfall — the consequence of senior executives siphoning customer assets to trade in related hedge fund Alameda Research. Even though the new management claims they have recovered some customer assets, clients’ funds still remain frozen in bankruptcy proceedings, with no end in sight and heavy legal fees to follow.
In the aftermath, the crypto community has raised serious concerns regarding the state of CEXs. Demands such as proof of assets and liabilities, segregation of customer funds, and voluntary registration as broker-dealers have echoed in the industry. That said, haven’t CEXs come this far by making an effort to legitimize their operations? Here’s why the issue is more complicated than meets the eye.
Sam Bankman-Fried’s net worth took a nosedive after the collapse of FTX. (Bloomberg Billionaires Index)
Why not just get regulated?
Jack Graves, a teaching professor at Syracuse University, tells Magazine, “To my knowledge, there is nobody acting as an exchange of cryptocurrencies and digital assets in the U.S. that is registered with the SEC. Instead, they simply stated that they don’t trade securities. And that’s a critical difference.”
Graves explains that while exchanges such as Coinbase are licensed money transmitters, they are not broker-dealers. “As soon as you talk about broker-dealers of securities, that triggers a bunch of disclosure and custody requirements,” Graves states. “I happen to use Fidelity as my brokerage company, and if Fidelity goes bankrupt, I’m not an unsecured creditor in bankruptcy. So, I have a claim to my assets before all the unsecured creditors.”
At least in the U.S., crypto exchanges cannot become broker-dealers because the digital assets they facilitate are not classified as securities by the SEC. Yet, there is also ample confusion on the matter.
“Gary Gensler has essentially said that everything except Bitcoin and maybe Ether is probably a security,” Graves says. “So, the exchanges are taking the view that until the SEC says it’s a security, they are going to trade it. And as soon as the SEC says crypto assets are securities, they are going to quit.”
In a recent video SEC Chairman Gary Gensler used dad jokes to explain that certain staking services offered by CEXs are classified as securities (SEC)
The problem isn’t unique to the United States. Lennix Lai, managing director at Seychellois crypto exchange OKX, explains to Magazine that crypto exchanges cannot, as of now, be registered as broker-dealers due to a fundamental difference in their business model:
“By definition, a crypto exchange is actually a matching engine that matches orders from buyers and sellers. A broker-dealer license only governs the relationships that you, as the firm, have the capability to handle client orders and route them to a stock exchange. However, in the crypto world, most of the business models running are not the broker-dealer model but actually a ‘stock exchange’ model. So, that gives governments regulatory difficulty in that we don’t have an exchange license to apply for.”
Canada is one of the few jurisdictions that offer a clear regulatory pathway for exchanges to become registered broker-dealers — perhaps due to the sudden collapse of major Canadian crypto exchange QuadrigaCX in 2019.
In Canada, all prospective crypto exchanges must register with the Investment Industry Regulatory Organization of Canada and applicable provincial regulators to conduct business. On June 22, 2022, the Ontario Securities Commission announced it had issued an enforcement action against Bybit and KuCoin, alleging the two operated unregistered crypto asset trading platforms in the country.
After registration, crypto exchanges in Canada become broker-dealers just like their stock-trading counterparts, even though regulators ruled that the assets facilitated by the exchanges are not securities. As Katrina Prokopy, chief legal officer at Canadian exchange Coinsquare, explains to Magazine:
“Coinsquare is the first crypto asset trading platform that proceeded to get registration as an investment dealer and an IIROC [Investment Industry Regulatory Organization of Canada] member. That took two years of working intensively with the regulators. Investors can take comfort knowing that IIROC dealers must keep sufficient regulatory capital and must have operational controls, financial controls, compliance, proficiency requirements, risk management, insurance requirements, and custodial requirements in using counterparties that are acceptable to IIROC and can have a certain amount of capital. Absent fraud, blatant fraud, it would be very difficult for the same situation as FTX to happen with an IIROC-regulated platform.”
In addition, offshore CEXs can select governing jurisdictions far away from users’ domicile residences, making it difficult to resolve disputes. As an example, according to Binance’s terms of use, the Hong Kong International Arbitration Centre has the discretion to regulate disputes between the exchange and its clients. Although Binance has agreed to hear disputes raised in the said court of law in the past, users have complained that the process is quite expensive. Meanwhile, Prokopy explains that Coinsquare’s governing jurisdiction is in Ontario, Canada. Thus, users do not need to travel abroad or hire foreign international law attorneys to resolve a dispute between themselves and the exchange:
“Customers have access to our regulators, they have access to our legal and compliance department to help resolve matters, and they have ultimate recourse to the Canadian judicial system if that’s what they want to pursue. And you know, as a corporation registered in Ontario, we have a registered address for service.”
Graves summarizes the regulations under which offshore cryptocurrency exchanges operate: It’s like saying, “Look, we’re in good shape; but if we go bankrupt, you’re an insecure general creditor.”
According to Graves, unsecured creditors typically recover 10 cents on the dollar in the United States. “I think we’ve got a lot of work to do with an alternative that is meaningful, other than just breach of contract,” Graves states. “And breach of contract isn’t worth much when you end up in bankruptcy.”
“Assuming everybody’s doing the best, they try to make money, and it just doesn’t work, and the exchange goes bankrupt, you still don’t have any protection as the customer.”
For example, Coinbase’s terms of use state that the firm carries crime insurance that protects digital assets from theft and cybersecurity breaches. However, the policy does not cover “unauthorized access” to Coinbase accounts due to a breach of credentials. In addition, while U.S. customers’ fiat deposits are covered up to $250,000 by the Federal Deposit Insurance Corporation in the event of a default in the custodial bank, the same protection does not extend to their digital asset holdings.
Like many exchanges, Coinbase’s user insurance policies generally only applies to fiat cash balances (Coinbase)
Another exchange, OKX, explicitly states in its terms of service that “Digital assets of users are not protected by deposit protection or deposit insurance scheme. In the case of an irreconcilable shortfall, you may not receive some or any of your deposited assets or funds.”
OKX’s Lai explains that this is because the insurance industry does not have the full capability to underwrite risks within the cryptocurrency realm:
“Most of the insurance policies right now only cover a relatively restricted amount because they want to cap their appetite for risk, and also, they will cover a specific area of risk — for example, insider jobs.”
Coinsquare’s Prokopy confirms the limitations of insurance policies covering crypto firms. Coinsquare clients currently have insurance policies covering $1 million of their fiat Canadian dollar deposits, but Prokopy says the coverage does not extend to digital assets. She elaborates that the firm has been advocating for an expansion of coverage, as it is currently paying the same fees as other IIROC members for asset insurance:
“There is the Canadian Investor Protection Fund, which is the insurance coverage that IIROC member firms have for customer assets in the crypto space. It is available for the cash component in the trading accounts. But the CIPF is not at this point covering crypto. So, in the event that the IIROC dealer went bankrupt, there would be insurance protection to the cash component, not the crypto component.”
Are proof of reserves legitimate?
As told by Lai, one way customers can receive assurance that their funds are secure is through a proof-of-reserves audit.
“The proof of reserves we publish encompasses proof of liability,” says Lai. “For every OKX customer that owns their deposit, OKX records a liability to them.”
The executive explains that by allowing users to self-verify the exchange’s disclosures using open-source methods, OKX demonstrates to its customers that its asset coverage to liability “is greater than one-to-one.” The exchange updates its proof of reserves monthly.
OKX’s self-published proof of reserves. Source: OKX
Other stakeholders, such as former Kraken CEO Jesse Powell, disagree. For Powell, a proof of reserves featuring Merkle tree verification is “hand wavey bullshit” and cannot be used in lieu of a full traditional account. “The statement of assets is pointless without liabilities,” he tweeted in November 2022.
I’m sorry but no. This is not PoR. This is either ignorance or intentional misrepresentation.
The merkle tree is just hand wavey bullshit without an auditor to make sure you didn’t include accounts with negative balances. The statement of assets is pointless without liabilities. https://t.co/b5KSr2XKLB
Graves also noted the difficulty of finding auditors to work in the first place. “The problem right now, as I understand it, is the auditors don’t know how to audit,” he says.
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“They have no idea how to deal with this stuff. You can audit how many assets a crypto exchange has on-chain, but how much of it is pledged as collateral? That’s a lot harder to figure out unless you have access to their financial services, books, and records. […] We saw this with FTX. Yeah, FTX has some money, but a whole lot of it was transferred to Alameda, and Alameda is investing in leveraged swaps. And so just looking at assets on-chain, you can verify that, but it really tells you nothing in terms of liabilities and leverage.”
Currently, Coinbase is one of the few crypto exchanges to have an auditor — Deloitte — though much of it can be attributed to the fact that it’s a publicly traded company. Previously, South African auditor Mazars claimed that Binance users’ Bitcoin was “fully collateralized” on the platform but then removed its proof-of-reserve verification for Binance, along with other crypto exchanges, from its website approximately one week later. Binance says it has reached out to multiple large auditing firms, but they are “currently unwilling to conduct a PoR for a private crypto company.”
Can we still trust CEXs?
While crypto users have largely agreed on the need for CEXs to become regulated in the aftermath of FTX’s collapse, it may not be currently possible due to the lack of regulatory pathways. Coinsquare’s Prokopy certainly illustrated the trust brought to CEXs when there is a clear pathway forward. However, both Lai and Graves raised the issue of chaotic regulatory frameworks in the U.S. and other parts of the world, making obtaining a broker-dealer license impossible.
That said, regulators have been ramping up efforts in this new field. In a White House briefing on Jan. 27, lawmakers stated that they were working on “safeguards” to supplement the development of new digital asset technologies and unveil priorities for blockchain research. For now, CEXs face an uphill battle to demonstrate legitimacy to their users. But as Graves puts it, some essential corporate safeguards remain in place aside from the contractual obligation to customers.
“I don’t think the current structure with offshore exchanges is an issue. If exchanges like Binance.US and Binance International don’t keep them independent, the U.S. regulators will go after Binance International and say we have jurisdiction because you’re acting through the U.S. entity. If they were commingling funds, local creditors could also go after Binance International to pay off all those debts.”
Zhiyuan sun is a journalist at Cointelegraph focusing on technology-related news. He has several years of experience writing for major financial media outlets such as The Motley Fool, Nasdaq.com and Seeking Alpha.
NFT ticketing is revolutionizing event ticketing by providing a secure, transparent and efficient way of issuing and managing tickets. Nonfungible tokens (NFTs) are significantly harder to forge or duplicate than conventional tickets since they are stored on a blockchain. This lowers the risk of fraud and fake tickets by allowing event organizers to determine that only authentic tickets are used to enter an event.
NFT ticketing also enables greater customization and adaptability in terms of ticketing. For instance, event planners may issue NFTs for various event sections, such as VIP or general admission tickets. They can also provide details like seat numbers or access to premium content. This can streamline the ticketing process and save time and resources.
This article will discuss the concept of NFT ticketing, how NFT events work, the benefits and risks of NFT ticketing and how it is different from traditional ticketing.
What is an NFT ticket?
A unique digital asset that cannot be replaced by another asset of the same value is called a nonfungible token. NFTs represent digital valuables like virtual trading cards, in-game objects and virtual real estate.
NFT tickets are used to signify ownership of a certain experience or event, such as an entrance to a theme park, a sporting event, or a concert. They can be used to enter the event and prove its ownership and credibility.
NFT tickets have several advantages over conventional paper or digital tickets. NFTs ensure that the ticket is valid and cannot be counterfeited because they are unchangeable and impossible to reproduce.
Furthermore, the adoption of blockchain technology enables transparency and traceability, making it simpler to trace the ownership and origin of the ticket. NFT tickets can also be sold or exchanged on online exchanges, with their value depending on how much interest there is in the event.
Although NFT tickets are still a relatively new idea and are not yet widely used in the ticketing industry, they have the potential to gain popularity as a means of managing and representing event tickets in the future. They can provide a more secure, transparent and adaptable method of handling ticket sales and distribution.
How does NFT ticketing work?
In addition to providing a more secure, transparent and flexible way to handle ticket sales and distribution, NFT tickets also offer a secondary market and a way for fans to own a piece of the experience. NFT ticketing is an innovative approach to representing and managing event tickets. The process typically involves the following steps:
Creation: Using blockchain technology, an event organizer or ticketing service creates an NFT ticket. Since the ticket is one of a kind, no other item with equal value may be used to replace it.
Sale: The public can purchase NFT tickets via the event organizer or digital marketplace.
Authentication: When a consumer wishes to attend the event, their ticket is scanned. The scanner uses blockchain technology to verify the ticket’s authenticity.
Access: Access is given to the customer after the ticket’s validity has been established.
Resale and trading: NFT tickets may also be resold or traded on online exchanges, and their worth may change depending on how much interest there is in the event.
Transparency and traceability: By utilizing blockchain technology, it is possible to track a ticket’s provenance and owner, making it more difficult to forge or duplicate.
An example of an NFT ticketing system would be a concert or music festival that uses NFTs to issue and manage tickets for the event. Each ticket would have a special nonfungible token that the event organizer would create and store on a blockchain. Each NFT would include details of the event, the ticket holder’s name and their assigned seat. The nonfungible tokens would then be sold via an online store or marketplace where customers can pay with cryptocurrency.
The ticket holder would show the NFT to enter the event once it starts. The NFT can quickly be checked to ensure the ticket is genuine by scanning a QR code or via the blockchain.
The organizer can also use the nonfungible tokens to give holders exclusive benefits or experiences, such as backstage passes, meet and greets with performers, or unique goods.
NFT ticketing vs. traditional ticketing
NFT ticketing and traditional ticketing are two different methods for managing and selling event tickets. Paper or digital tickets provided by an event organizer or ticketing provider are the norm for traditional ticketing. The typical distribution routes for these tickets include box offices, ticketing websites and authorized resellers. The ticket can only be used once and provides entrance to the event once purchased.
On the other hand, NFT ticketing employs blockchain technology to produce one-of-a-kind, nonfungible tokens that signify ownership of a specific event or experience. Digital marketplaces are used to sell NFT tickets, which can be resold, transferred, or collected after being acquired. To gain entrance to the event when the holder wants to attend, the NFT must be submitted for scanning and verification utilizing blockchain technology.
Some of the key differences between NFT ticketing and traditional ticketing include:
While traditional ticketing is still widely used, NFT ticketing is an innovative way to represent and manage event tickets. It offers a more transparent, secure and flexible way to handle sales and distribution of e-tickets and fan engagement.
Benefits of NFT ticketing
NFT ticketing offers several benefits over traditional paper or digital tickets. These benefits include:
Authenticity and immutability: Blockchain technology is used to construct NFTs, making them immutable and ensuring that the ticket is genuine and cannot be copied.
Transparency and traceability: By utilizing blockchain technology, it is possible to track a ticket’s provenance and owner, making it more difficult to forge or duplicate.
Flexibility and resale: NFT tickets are tradable or resold on online marketplaces, with their value fluctuating according to interest in the event. This enables fans to resell or trade their tickets on a secondary market, giving them more influence over the ticket’s worth.
Efficient management: Using NFTs enables efficient management of tickets, reducing the need for physical tickets and minimizing the risk of ticket fraud.
Fan engagement: NFT technology allows fans to own, collect and exchange nonfungible token tickets, giving them a chance to take part in the digital experience to a greater degree.
Enhanced security: Using blockchain and smart contracts can help prevent fraud and guarantee that only the event’s legitimate owner can access it.
Increased income: Because NFTs can be resold, they give event planners and ticket dealers more chances to earn significant revenue.
Increased accessibility: NFT tickets are simple to transfer, making it possible for supporters to watch events even if they are not in attendance.
Risks associated with NFT ticketing
While NFT ticketing offers many benefits, there are also some risks associated with using NFTs for event ticketing. Some of these risks include:
Volatility: Depending on market demand, the value of nonfungible tokens may be unstable and subject to quick changes. This implies that an NFT ticket’s value could dramatically decline before the event.
Lack of infrastructure: Nonfungible tokens are a relatively new concept and the industry hasn’t yet embraced the technology widely. The process can be difficult for some users because there is still a lack of infrastructure to enable NFT ticketing.
Scams: Since NFTs are digital assets, scammers can produce fraudulent NFT tickets and sell them to unwary customers.
Lack of regulation: There is a dearth of consumer protection and monitoring when it comes to the usage of NFTs for event ticketing.
Technical issues: Because NFTs are based on blockchain technology, problems with the blockchain may delay or even prevent the transaction from taking place.
Complexity: Some users may find buying, selling, or handling NFT tickets problematic since NFTs can be complicated and challenging to grasp.
The users need to be aware of the risks and take steps to mitigate them. This includes researching the event organizer, the platform and the NFT ticket before making a purchase. Users should also be aware of market trends and potential technical issues.
The future of NFT ticketing
The success of NFT ticketing will depend on several factors, including player enthusiasm, technology developments and competition from other ticketing strategies. NFT ticketing will most likely keep gaining popularity because it has significant advantages over conventional ticketing techniques.
Blockchain technological developments might make NFT ticketing even safer and more transparent. For instance, implementing smart contracts can automate the ticketing process, eliminate fraud and guarantee that only the event’s legal owner can get entry. Decentralized marketplaces may also provide greater adaptability and openness in the distribution and sale of tickets.
NFTs can also represent other types of access, like memberships, subscriptions and coupons. As a result, more sectors will be able to manage access in a more effective and user-friendly manner, expanding the use cases for NFTs.
Overall, the future of NFT ticketing is expected to be promising, but it is important to keep an eye on the market trends and emerging technologies. NFT ticketing is likely to keep developing and adapting to meet the demands of event planners and patrons.
Control: Who oversee activities in the metaverse, and what rules and regulations will be implemented to guarantee fair use and equal treatment for all participants?
These are crucial issues to think about as the metaverse expands and is utilized more frequently, and they will probably have a big impact on how this new digital frontier develops in the future. For the metaverse to be a secure and equitable space for everyone, these ethical issues must be addressed.
Privacy problems in the metaverse
The growth of the metaverse has brought about numerous privacy concerns that need to be addressed. Some of the most pressing issues include:
Data gathering and use: Businesses operating within the metaverse may gather a lot of user-provided personal data, which raises concerns about how that information will be used and who will have access to it.
Lack of control over personal information: Users’ ability to manage their personal data within the metaverse may be limited, raising worries about possible abuse of that data.
Tracking and monitoring: There might not be enough information available regarding how user activity in the metaverse is kept track of and who has access to that data.
Data security: The metaverse could be subject to cyberattacks that lead to the loss or theft of sensitive personal data.
Privacy vs. pseudonymity: While many users may prefer to use pseudonyms within the metaverse, this can also create privacy concerns if their real-world identities can be linked to their virtual ones.
Ownership issues in the metaverse refer to questions and challenges related to the control and usage rights of digital assets and property within these digital environments. Some of the key ownership issues in the metaverse include:
Intellectual property rights: The metaverse involves the creation and distribution of a vast amount of digital content, such as virtual clothing, accessories and digital art. This has raised questions about who owns the rights to this content and how it can be protected.
Virtual property rights: Individuals in virtual worlds have the right to own virtual property, including buildings, land and enterprises. The extent to which virtual property can be purchased, sold and controlled is a topic of continuous discussion.
Jurisdiction: In cases involving virtual property and intellectual property rights, it can be difficult to decide what laws should be applied because the metaverse is spread out across many different nations and territories.
Contractual issues: The metaverse also raises concerns about the enforceability of agreements signed between people for the sale and transfer of goods.
In the metaverse, control issues refer to questions and challenges related to the regulation, governance and administration of virtual environments and their interactions with the physical world. Some of the key control-related issues in the metaverse include:
Content control: People can create, distribute and consume a variety of digital content in virtual worlds, including user-generated content. There are continuing discussions about how much regulation should be placed on virtual worlds and what kinds of information should be permitted or outlawed.
Economic control: Digital currencies and online marketplaces are only a couple of the complex and quickly changing economic systems found in the metaverse. Concerns exist over the reliability and fairness of these systems, as well as the roles played by the public and private sectors in their regulation and administration.
Political control: Virtual environments are increasingly being used as platforms for political expression, activism and organizing. This has raised questions about the extent to which virtual environments should be subject to political regulation and control, as well as the implications of such regulation for freedom of speech and democracy.
How to protect yourself in the metaverse
To protect yourself in the metaverse, it’s important to be aware of the risks and challenges that come with virtual environments. Some steps you can take include being cautious about the information you share online, using strong passwords and two-factor authentication, being mindful of phishing scams and malicious software, and regularly reviewing the privacy settings on your virtual accounts. Additionally, it’s important to be aware of the terms of service and community guidelines for each virtual environment you use and to follow them closely.
Finally, it is vital to be mindful of your interactions with others in virtual environments and to be aware of the potential for online harassment and cyberbullying. By being proactive and taking steps to protect one’s privacy and security, one can enjoy the many benefits of the metaverse while minimizing exposure to potential risks.
The NFT team of Red Bull Racing is now in the driver’s seat for the last race of the season.
Red Bull Racing will continue the trend of cryptocurrency and blockchain technology companies playing a significant role in Formula 1 by imprinting a nonfungible token (NFT) on the team’s vehicles during the last race of the 2022 season.
After taking Red Bull Racing to the top of the constructors’ standings in Formula One (F1) during the 2018 season, Max Verstappen finished first in the drivers’ standings for the second consecutive year, capturing the championship for the second time in his career. This victory also afforded him the chance to win the title for a second time in his career. On November 20, 2022, the last race scheduled for 2022 will be held in Abu Dhabi. This will signify the end of the season. It is thought that this will be the first time in Formula One history that a team will feature an NFT on the vehicle’s livery. The race will be the last competition scheduled for the year 2022.
Red Bull Racing announced in February 2022 that the cryptocurrency exchange Bybit would be the team’s primary sponsor. Bybit is one of just a handful of organisations that trade in cryptocurrency that sponsor Formula One teams. The artwork created by the NFT and the anime-inspired Azuki collection character Lei the Lightning will be displayed in the same space as the exchange’s official emblem.
The collection has a total of 10,000 NFTs, one of which being the very first Lei Azuki NFT. At the time this article was published, the #8494 was worth around 9 Wrapped Ether (wETH), which is equivalent to nearly $11,100 USD. This is the price it is presently advertised at on OpenSea.
Lei the Lightning Azuki will drive a special edition version of the vehicle with the number 8494 for Red Bull Racing. It will initially be minted on the Tezos blockchain before being available for purchase on the NFT market on Bybit’s platform.
Christian Horner, the leader of the Red Bulls Racing team, was cited in an organization-issued statement. In his remark, he addressed the partnership’s facilitation of the ongoing research of Web3 use cases in the sports industry.
The author is reported as stating, “In many respects, it has opened our eyes to the tremendous opportunities Web3 has to offer.” [Bibliography required] One of the racing drivers said, “This one-of-a-kind endeavour exemplifies what it is to be creative, imaginative, and enthusiastic, all of which are essential to how we conduct ourselves on the racetrack.”
Formula One, the top open-wheel racing sport in the world, has significantly boosted the Bitcoin industry’s finances. In June 2021, Crypto.com was declared the official partner for cryptocurrencies and NFTs after successfully negotiating a lucrative sponsorship agreement. A substantial amount of money was involved in the contract transaction. In addition, during the course of the previous two years, Chiliz has partnered with other Formula One teams to establish ties.
McLaren was the first team to successfully accomplish a “livery takeover” in 2022. This meant that the team’s principal sponsor, OKX, was responsible for a comprehensive redesign of the outfits and livery. In October of 2022, Token2049 is expected to take place in Singapore. Cointelegraph was given permission to do an exclusive interview with Australian race car driver Daniel Ricciardo on the partnership that will occur at the event.
The fact that Formula 1 also made an application for a number of trademarks in October 2022 lends credence to the notion that the organisation seeks exclusive control over all intellectual property in the bitcoin industry. Formula 1 filed a number of trademark applications with its entries in October 2022.
After slipping to lows of $15.5K amid FTX’s liquidity crunch, Bitcoin (BTC) gained momentum due to better-than-expected consumer price index (CPI) numbers released by the U.S. Bureau of Labor Statistics.
Crypto and market education platform IncomeSharks tweeted:
“Bitcoin has an easy path back to $20k as Stocks pushing up and positive CPI numbers.”
Bitcoin was up by 3.78% in the last 24 hours to hit $17,281 during intraday trading, according to CoinMarketCap.
The CPI surge was lower than expected because it rose by 0.4% in October, the lowest since January 2022. The U.S. Bureau of Labor Statistics pointed out:
“The all items index increased 7.7 percent for the 12 months ending October, this was the smallest 12-month increase since the period ending January 2022. The all items less food and energy index rose 6.3 percent over the last 12 months … all of these increases were smaller than for the period ending September.”
The lower CPI numbers triggered a bullish reaction in the BTC market because this might mean that the Federal Reserve (Fed) will ease interest rate hikes, which have been detrimental to the crypto ecosystem.
The Fed has been increasing interest rates to the tune of 75 basis points (bps), and this is one of the primary factors hindering a significant leg up for cryptocurrencies.
Despite the positive CPI numbers, the crypto market is still not out of the woods yet as bears continue to bite. Market insight provider Material Indicators explained:
“CPI was lower, Jobless Claims were higher. FireCharts shows the crypto market’s initial reaction to a beat on the forecasted economic numbers. Bear Market Rally is still alive BTC.”
Source: MaterialIndicators
The collapse of FTX, one of the leading crypto exchanges, has also made the digital asset space shaky.
Reportedly, the liquidity issue facing FTX might have emanated from the exchange’s CEO, Sam Bankman-Fried, secretly transferring at least $4 billion to boost its trading arm Alameda Research, with part of the funds being customer deposits.
Lionel Messi, a football star who has bagged seven Ballon d’Or Awards, has joined hands with Sorare to be its brand ambassador and investor.
Sorare is an Ethereum-based fantasy soccer game platform that leverages non-fungible tokens (NFTs). Therefore, Messi will be instrumental in how fans connect with players and clubs.
Nicolas Julia, the co-founder and CEO of Sorare, pointed out:
“We believe Messi will help us set new standards in how we do this, and we look forward to sharing what new content and fan experiences we’ve been collaborating on soon.”
He added that the partnership was a “huge milestone” for the platform.
Messi, who currently plays for the French club Paris Saint-Germain (PSG), said:
“Fans have always looked for ways to express their passion and get closer to the players and teams that they love and Sorare’s combination of a fantasy game with digital collectibles gives fans new ways to do that, wherever they are in the world.”
Sorare users usually have the chance to create their preferred teams and trade NFT-based football player cards.
Comprising at least 2 million users spread across 185 countries, Sorare was previously valued at $4.3 billion. The Paris-based startup has also partnered with more than 300 sports teams and major leagues, such as Germany’s Bundesliga and Spain’s La Liga.
Sorare has expanded its scope beyond football to include other sports like baseball and basketball.
For instance, the National Basketball Association (NBA) recently inked a deal with the platform to enhance the fan experience and render more interaction, Blockchain.News reported.
The NBA acknowledged that the fantasy basketball game would allow fans to develop a lineup of NFT-powered digital collectables based on their favourite teams and players.
Sorare seeks to boost digital assets and blockchain adoption in daily life by creating unique digital tokens on its fantasy platform.
“There has been a lot of hype around different football projects using non-fungible technology up to now, but the ones that stick around will be those that offer real underlying utility and see non-fungible technology as the means to achieving their goals, not the ends,” Julia stated.
NFT marketplace, OpenSea has revealed its plan to create a tool to help creators on its platform enforce creator fee payments.
It is probably not a new thing whether enforcing or not royalties which have been argued topics in the industry ever since it was introduced. While some platforms have already concluded their side of the argument, platforms such as OpenSea were yet to reveal their opinions.
OpenSea finally disclosed its thoughts and plans on enforcing royalties on-chain on Sunday. By kicking off with its plans, the platform stated, “With many marketplaces choosing to stop enforcing creator fees, to put it bluntly, the last few months haven’t felt WAGMI.”
Stating that It’s clear many creators want the ability to enforce fees on-chain, the platform believes that royalty enforcement should be the creators’ choice and not the decision marketplaces have to make for them.
“So we’re building tools we hope will balance the scales by putting more power in creators’ hands to control their business model,” OpenSea noted on Twitter. The platform would be launching a tool for the enforcement of royalties on-chain for new collections that would be launching on its platform.
According to OpenSea, the on-chain tool is a simple code piece that creators can add to their NFT contracts, as well as their existing upgradeable contracts. The code restricts NFT sales to marketplaces that impose creator fees.
Starting on Tuesday, November 8, OpenSea will enforce creator fees only for new collections that use the on-chain enforcement tool. In the coming months, the platform will also introduce additional tools serving a similar purpose and solicit community feedback on the developments.
As for collections already existing on the platform, OpenSea stated it won’t make any changes until December 8.
Overall, the platform is looking to consider different approaches to this topic, which include the proceedings of enforcing off-chain fees for some subsets of collections, permitting optional creator fees, or partnering on other on-chain enforcement options for creators.
Notably, this news comes amid the controversy of royalties enforcement in the industry. Speaking of which, NFT marketplace Magic Eden recently settled to opt for an optional royalties method for its users, giving buyers the power to either choose to pay royalties or not when purchasing NFTs on its platform.
