LUKSO’s Fabian Vogelsteller predicts NFT and ERC-20 uses will grow
The founder of LUKSO and former Ethereum developer offers his views on decentralization as a tool and the ERC-725 standard for blockchain-based identity.
Welcome to Forkast Forecasts 2021. In this series, leaders, innovators and other visionaries in crypto and blockchain-related fields tell Forkast.News what they see as the most noteworthy industry developments over the past 12 months and their predictions for the new year.
Fabian Vogelsteller is founder and chief blockchain architect at LUKSO, an Ethereum virtual machine and proof-of-stake blockchain network focused on mainstream applications for fashion, gaming, design and social media.
In 2020, the start-up launched reversible initial coin offerings (ICOs) — a way to tokenize and invest in real-world assets. In a reversible ICO, buyers reserve tokens and buy them over time with the option to return still-reserved tokens at any time and receive their associated ether (ETH) back.
Biggest developments in 2020
- Launch of the Ethereum 2.0 Beacon Chain: "It was really exciting to see this [stage of ethereum development] launch into the Beacon Chain launch. This is for sure the biggest technological innovation that happened in 2020 in the blockchain space, in my opinion."
See related article: What’s next for Ethereum 2.0 after the Beacon Chain?
- Decentralized finance (DeFi) taking off: "That is interesting to see because I created ERC-20 which created all of these tokens, and now seeing what comes out three years later — how this whole decentralized finance movement is actually moving to the next level, from just building simple tokens and doing something with them, we are now combining them in more complex protocols, and then making outcomes, something even more new and different, and that somehow relates to each other. It's really exciting to see this and the experimentation that happens."
See related article: DeFi explained: The guide to decentralized finance
- How increasing regulations may affect technology: "This can sometimes go really wrong. The direction it's taken in America is bad, I don't think you want to now put everything under a securities rule and make it super complicated for any new thing to happen."
See related article: Why blockchain and crypto regulations are ‘necessary evil’ for US and Europe
- Why reversible ICOs can combat stifling regulations: "The technology can do so much more, and trying to apply old school laws to that is simply stifling. It's not bringing it anywhere. I’d rather have the sandbox box model where you experiment, where things can happen and then we can see where it goes. And find solutions that actually regulate on-chain. For example, I created the reversible ICO, which is not just an ICO, but it's an ICOs where people reserve tokens and buy them over time so that they can return the still reserved ones if they would think that the project didn't work out, or they changed their mind and they need their ether back. So, that's the way I think you can regulate. You literally give people safe-by-design systems and then it's just safer than they could ever be. Any other paper regulation will only lead to year long processes and court laws and lawsuits that don't bring anyone, anywhere money in the end anyway. So, it's just a waste of time."
See related article: Is DeFi’s breathtaking rise just like the ICO bubble?
- On the ERC-725 standard for blockchain-based identity: "I'm proposing new standards. One is called ERC-725, which is a standard for on-chain accounts. If you have on-chain accounts then you can have a much better user experience, you can have an upgradable security, and you can do the same thing like any private key can do. This new way of interacting with the blockchain will allow these new people or this new audience to actually start to use it."
Predictions for 2021
- Decentralization as a tool: "My credo always is 'decentralization as a tool, not as a requirement,' because if we build things in the direction where they can decentralize — even if we put very centralized layers directly right in the middle — it will eventually go there once the technology's ready. But we are not stifling it by trying to make it overly centralized."
See related article: How DLT is fighting the information war in Syria and saving lives
- Non-fungible tokens (NFTs) and non-financial use cases will increase: "I think we see a new kind of user coming in and they will move very strongly towards non-fungible tokens (NFTs) and non-financial use cases. [Current blockchain use cases are] far too financial-focused. This is a very narrow and niche audience that you find here. It's mainly men, it's people that have money or somehow are willing to trade, while the ordinary user is probably not only men and also not always interested in spending US$100 or US$500 into a random tryout or game. So, it's a different kind of user [that will enter the space], but it brings in a new economy and I think it's essential. This digital NFT economy is essential for creating this 'Ready Player One' world that's going to happen and that needs certain infrastructure."
See related article: How blockchain is painting a brighter future for art in a Covid world
- Standards as the building blocks powering growth in the blockchain space: "In the end, it's all about standards [such as ERC-20 and ERC-725]. It's all about defining the basic pieces. So 2021, we will see the first big moves in this direction. 2022 it will be a very different audience in the blockchain space and it will be a very different size also. So we will probably see a lot of growth coming up."
- Governments and big players utilizing blockchain: "We are also seeing what you kind of could already see in the last year. We are seeing governments and the big players becoming more and more interested in blockchain and coming out with their own things. Like the Chinese government and the European government will have digital Euro and other governments and other big organizations will actually start to utilize blockchain.”
See related article: China’s 5 hottest blockchain developments in 2020