Web3 Is The Future of Entertainment
Web3 will establish a more equitable and empowering ecosystem for artists to flourish by improving incentives, ownership structures, and monetization channels.
New lucrative incentive structures may be created for already famous performers by NFTs. Audience members may be rewarded for betting on the long-term potential of content they believe is undervalued or will appreciate in value over time when they buy NFTs.
Changing incentive structures, in many ways, enable new ownership forms. Audiences are more inclined to promote high-quality content when they stand to gain financially if it succeeds, allowing creators to capitalize on audience members’ willingness to pay more — ultimately enabling them to maintain control of their work right away. This ownership persists throughout first, second, and higher-order distribution. When a fan purchases an entertainer’s NFT and later re-sells it, the entertainer may profit from royalties and other sources with each subsequent sale.
New Web3 monetization channels may assist performers to get more fairly compensated for their efforts. Entertainers are able to keep a larger portion of sales by using NFTs. In addition, new Web3 platforms provide creators with the ability to directly monetize their work and reputation without the use of intermediaries.
The entertainers and entertainment platforms that embrace Web3 will flourish in the future. Many are optimistic that Web3 might provide a more fair and empowering ecosystem for performers to thrive, allowing them to achieve transformative change in incentives, ownership structures, and monetization channels.
Yellen Is Calling for ‘Tech Neutral’ Crypto Regulation Focused on Potential Risks
Financial and investment risks should be the focus of crypto regulations, not technology. Consumers, investors, and businesses should be protected from fraud and incorrect claims whether assets are kept on a balance sheet or distributed ledger.
The Securities and Exchange Commission is actively working on steps to clarify the legal treatment of crypto assets. The firms that keep customer assets should be held to a higher standard of protection and ensure those assets aren’t lost, stolen, or misused without authorization. taxpayers should be able to access the same level of tax reporting information for crypto transactions as they do for stocks and bonds in order to properly report their income to the IRS.
Digital assets may be relatively new, but many of the concerns they raise are not. If digital assets develop unchecked, as happened with the financial crisis of 2008, they might lead to comparable devastation to the economy and financial system. To address this, we must be prepared for any modifications in the financial market structure that could be caused by distributed ledger technology.
NFTs: Taxation And Enforcement Are Around The Corner
Will NFTs be treated as virtual currency and taxed under the same capital gains/loss framework?
Despite the IRS’s attempts to grasp the taxation of cryptocurrencies, Bitcoin, Ethereum, and other virtual currencies aren’t the only digital assets that create tax difficulties. The increasing popularity of non-fungible tokens has prompted concerns about how they will be taxed and whether the IRS would take enforcement actions against taxpayers who fail to accurately report NFT transactions.
The IRS requires investors who purchase or trade virtual currencies to value the currency in U.S. dollars as of the date of payment or receipt. When cryptocurrency is sold or exchanged for a profit or loss, the taxpayer is taxed on the same basis as other investment portfolios. If a taxpayer held a cryptocurrency for more than a year, any profit on the sale is taxed at the long-term capital gain rate, while a cryptocurrency that was held for less than a year would be subject to short-term capital gain treatment and taxed as ordinary income. Any sales losses incurred with virtual currency may be used to offset taxpayer’s capital gains and up to $3,000 of ordinary income.
The popularity and investment in these digital assets are sure to attract the attention of civil auditors and criminal investigators, no matter how the IRS decides to tax them.
Goldman Sachs Just Flagged the Crypto Curse of the First Quarter
Goldman Sachs analysts predict a 38% chance of a recession over the next two years.
If this is the case, companies with blockchain and cryptocurrency exposure will be in a tenuous situation because of their link to Bitcoin. Bitcoin, rather than serving as a store of value similar to gold, is still utilized as a proxy for risk rather than a shield.
According to Goldman’s logic, because investors typically risk less in economic downturns, more investors might sell the cryptocurrency in favor of less risky assets during a recession. Bitcoin prices could fall as a result of this. If blockchain-based stocks continue to be so linked to Bitcoin, they may eventually follow suit.
Even though blockchain-exposed stocks have underperformed relative to the S&P 500 since the start of the year, they have outperformed it since Bitcoin prices skyrocketed after their “crypto winter” lows in late January.
Porter Finance Has a New Idea to Help DAOs Grow: ‘DeFi Bonds’
DAO with a treasury full of tokens will be able to utilize ‘DeFi Bonds’ to raise money for operations.
There has not been a DAO-friendly solution for borrowing, until now. DAOs will be able to borrow stablecoins at fixed rates and use their project’s tokens as collateral, with no liquidation risk, thanks to ‘DeFi Bonds.’ This is effectively a zero-coupon bond offered to investors seeking a fixed income. The platform will enable DAOs to deposit collateral from their treasury, create a “DeFi bond” offering at a discount to investors, and then allow them to repay the loan at maturity with interest determined by the market.
Several distinctions separate DAO-issued bonds from traditional bonds, the most significant of which being their risk profile. Unlike traditional bonds, which are senior in the capital structure and can be enforced in bankruptcy, DAOs do not have these advantages. Instead, they utilize smart contracts as collateral security. Lenders assume directional price risk on the underlying collateral asset in exchange for an option premium determined by the market at the time of the offering.
The system allows the DAO borrower to finance working capital while avoiding putting downward pressure on their treasury token price, losing governance rights, or risking liquidation in a money-market fund.
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