Topic 5: OpenSea, web & e-commerce Your mission: You are an Executive at OpenSea and the company leadership has been discussing how the platform can build upon its successes. Your challenge is to develop a FinTech strategic plan of action to advance OpenSea’s mass adoption, profitability and future success. After the invention of database technologies in 1960, commercial activity and financial data documentation rapidly shifted from paper to purely digital entries. Despite the improvements that this software provides, data stored in this way is exposed to potential misuse by a variety of actors, including the operator of the system, its personnel, and other external actors. The Web’s “original sin” Ad-based business models have been called the “original sin” of the World Wide Web, leading to today’s widespread calls to rein in excess of personal data collected by Web 1.0 internet companies. While regulatory efforts, such as the European Data Protection Regulation and California’s Consumer Privacy Act, provide legal remedies for already recorded data, Web 3.0 solutions can provide users with nuanced control over personally identifiable data prior to its exposure to third parties. Web 1.0 era e-commerce companies, such as eBay, and early FinTech companies, such as PayPal, rely on public internet infrastructure but interface with databases maintained by these companies. These walled gardens are accessible only to users that agree to the rules (i.e., terms and conditions) of the platform provider. Conversely, Web 3.0 solutions enable permissionless peer-to-peer value transfer, with rules
automatically enforced through smart contracts. Smart contracts are a collection of software programs that are executed autonomously on a distributed network of computers and maintained by independent operators. Immutable record-keeping and digital ownership High-speed internet and Web 2.0 solutions shifted the distribution of software, music, and movies from physical media to purely digital delivery. However, while buyers of CDs and DVDs could sell the old albums or movies on secondary marketplaces, this is not possible with Web 2.0 media, which is rented or licensed to users in a purely digital form. Digital rights management solutions restrict buyers to use the media inside of the environments provided by the seller or licensee – as is the case with Amazon’s media platform and Apple’s iTunes. The internet introduced new protocols for audio and video formatting that disrupted legacy media distribution technologies while simultaneously impacting ownership models that relied on physical products. Early blockchains, such as bitcoin, enabled the creation of digital bearer instruments, which allow ownership rights to be reliably transferred from one person to another without the sender keeping a copy of the virtual asset. While digital products are generally fungible – one bitcoin can be replaced by any other bitcoin without impacting its value or function – newer blockchain-based standards can allow for the creation of digitally unique, non-fungible, and semi-fungible virtual items. Digital economies Purely digital economies started to emerge in multi-massive online role-playing games in the late nineties. Today these online worlds generate multibillion-dollar revenues from the sale of in-game items (According to a 2022 market report published by Grand View Research , the global video game market reached revenues of $195.6 billion in 2021). However, buyers of these goods only receive limited rights to their online persona and its virtual possessions. With the introduction of Web 3.0 technologies, publishers can permanently transfer digital assets to the user. E-commerce solutions built on Web 3.0 technologies also allow the transfer of digital assets directly from one user to another (peer-to-peer). One of the first solutions built in this way is OpenSea – buyers and sellers are not required to create accounts on the marketplace but connect to the service using a digital wallet under the user’s control. OpenSea collects a fee for transactions and is interoperable with other decentralized applications (dApps). Even though the goods sold on the marketplace are still mostly limited to digital art, digital collectibles, and Web 3.0 domains (as of May 2022), the company’s revenue already exceeds one million dollars a week. Visit OpenSea’s website to learn more about this Web 3.0 marketplace and consider the following: • What are the advantages for OpenSea and its users in building on Web 3.0 technologies? How might other industry players assess Web 3.0’s advantages? • How can Web 3.0 technologies link with other digital assets and ecosystems, such as personal data, e-commerce, gaming, cryptocurrencies, lending, and the metaverse? : How cother dienalad non dioml products aould Opensea da to its marketplace? How could OpenSea benefit from interoperability with other Web 3.0 applications?
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