AN OVERVIEW ON NFTS AND THE IMPACT ON ENTREPRENEURS

IWC Wealth Notes - Aug 2021

Blockchain

Blockchain technology (BT) is a system of recording information in a way that makes it difficult or impossible to change, hack or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.

1. Blockchain technology is the technology behind cryptocurrency, although it has may other use case scenarios.

2. Why get excited about blockchain? Blockchain is a global ledger that records all transactions. It’s a peer-to-peer network, which enables a decentralized system (no single entity in charge!) that creates distributed trust.

3. Blockchain technology allows the creation of smart contracts and NFTs (non-fungible tokens). These can be leveraged as a defensive and offensive strategy to secure your intellectual property.

4. Right now, the average global patent costs over $1 million. The average U.S. patent takes two to six years and costs over $55,000. Blockchain is faster, cheaper, and global.

5. Blockchain technology enables validation and proof of authenticity through unique time stamping of your intellectual property. This process verifies your IP.

6. What is an NFT? An NFT is a non-fungible token. It is a unit of data stored on the blockchain. Because it’s truly unique (non-fungible), it certifies a digital asset. NFTs are like fingerprints in that there is no exact copy. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files.

7. What is Ethereum? It’s a cryptocurrency that uses blockchain technology and supports smart contracts.

8. What are Smart contracts? They are programs stored on a blockchain and run when predetermined conditions are met. They’re used to automate the execution of an agreement so all participants can be immediately certain of the outcome.

9. Smart contracts cannot be removed, but information can be added later.

10. Smart contracts are now recognized as legal entities in over 17 states, with the number constantly growing.

11. What are on-chain transactions? This refers to cryptocurrency transactions that occur on the blockchain and remain dependent on the state of the blockchain for their validity.

12. What are off-chain transactions? This refers to those transactions occurring on a cryptocurrency network that move the value outside of the blockchain.

13. Known brands already on blockchain: Nike (tokenizing shoe ownership), Lebron James, Linkedln (verifying certificates and identity management).

14. You can write in your smart contract a reward for misuse to protect against thieves finding legal ways to bypass the process.

15. NFTs work really well for entrepreneurs and persons that already have a broad audience that want to buy into their brand, meaning NFTs can extend branding. Put your wisdom (processes) in a smart contract and put your brand on an NFT.

16. Hash algorithms are designed to be collision-resistant, meaning your data is encrypted and will always produce the same exact cryptographic hash (also impossible to reverse – great for proof of ownership without having to expose your IP).

17. Helpful resource: New York Times article, “Are We in the Metaverse Yet?” (https://www.nytimes.com/2021/07/10/style/metaverse-virtual-worlds.html)

Material in this document is for education purposes only. It is distributed with the understanding that neither the authors nor the publisher are rendering legal, accounting, tax, investment, or other professional services by publishing this document. This document is not a substitute for the advice of your financial advisor, or any of your other advisors, personal or professional.