I was a little late to the blockchain party — it wasn’t until early-mid 2020 that I had started to grasp the concept of decentralization and the underlying value of Web3.

To give some context, I began building Tokn Music in early 2021; we’ve created a music investment platform for streaming royalties.

My goal here is not to shine a negative light on blockchain, rather highlight the flaws that many people seems to ignore and simple solutions can create a safer and more inclusive industry for everybody.

Hacks & Scams

This should be the most glaring red flag for everybody in web3, however, many who participant in Web3 turn a blind eye.

Just a couple weeks ago, $625M was hacked from Ronin wallet’s users, and most people haven’t heard a thing. In Q1 of 2022 alone, there was a loss of $1.23B.

I know the crypto community feels like “infrastructure is still in its early stages” — “it’s not like Web2 was born in a day either” — “Web3 offers a more efficient system if used properly”.

I understand; the dotcom bubble lost trillions as well — web3 is still a developing technology and these roadblocks are bound to happen. However you can’t have your cake and eat it to →

Anti-Regulation

Many in web3 are against government regulation and integrating web2 components within web3. I understand the sentiment, but there is no way for this industry to gain mass adoption without regulation and web2 integration.

Billions has been stolen or lost and this trend is continuing.

I can see why some projects will argue that regulation takes away from decentralization, but if a project's main (or only) selling point is the fact that it’s decentralized, it might not be worth investing your money.

On a positive note, we can see KYC processes becoming normalized. This is not just beneficial for the safety of the users, but for the growth of web3 as a whole.

If Web3 reaches its intended future, governments will crack down hard.

I’m not asking for immediately strict regulations, Web3 still needs room to grow and innovate. Right now, we should start imposing systems that help ensure the security of users.

Everybody has their own dead-set opinion on how blockchain should be utilized since the beginning.

The community has decided the trajectory of this industry, but sometimes trajectories have to adapt over time. There was never an intended ‘vision’ of web3, just an open interpretation →

Due Diligence

The amount of money being dumped into web3 is stupid and the problem is two sided:

1. Companies build without a real purpose and end up exploiting their users, rug-pulling, or building lack-luster products that act more like a ponzi scheme than a solution to a problem.
2. People eat it up. Too many people see Web3 as a piggy bank that makes money go up without ever doing in-depth research into the projects, founders, solutions, technology, etc.

As an early contributor to Web3, it’s important to do research. Since there’s not much regulation, independent research is crucial.

I know it’s a pain, but if you’re actively investing, there is a higher than average likelihood that you’ll be scammed.

Do your due diligence and stay safe out there.

Final Note

Although I’ve spent a majority of this article disputing web3, there is still a bright future.

The technology behind the hype is groundbreaking —we can create value in industries that desperately need it, remove third parties, increase the safety & efficiency of transactions, give power back to the consumers, and the list goes on.

In the end, I firmly believe that web3 is here to stay — but it will look drastically different in 10 years.

We are in the wild west right now, and we should create a sustainable ecosystem with better regulation and education.

Valid Skepticisms to Web3 — the evolution of technology was originally published in Tokn Music on Medium, where people are continuing the conversation by highlighting and responding to this story.

We’re thrilled to update everyone on the current project trajectory and the features to expect when purchasing your first tokens.

Tokn Music is currently in the process of developing two versions of our beta applications to be released throughout the period Q2 2022-Q2–2023.

Beta 1.0

Beta 1.0 is a music investment platform for streaming royalties that connects to Opensea for trading and is a precursor to Beta 2.0.

Getting to launch and ensuring the security of our platform are top priorities.

Features:

1. Buy and sell royalty tokens
2. Investors own royalty percentage (royalties will not send until Beta 2.0)
3. Opensea Integration

Launch Date:

We will announce the launch date to our Newsletter Subscribers and Medium early next week so make sure to keep up to date!

Beta 1.0 will soft launch with 3 artists and expand until Beta 2.0. Expect artists to be added regularly and updates to be consistent.

Regulation:

We will not be allocating royalties to investors until 2.0 releases. This is to follow SEC and IRS regulation as we continue to pioneer regulation in Web3 Regulation.

We are ensuring proper recording of royalty payments for artists and investors by holding royalties until 2.0.

We have simplified the login process while ensuring all investors their royalty payouts under a regulated system.

User Security:

Tokn Music is distributing music directly and collecting royalties on behalf of investors. The songs that are listed on Tokn Music will show public contributions on all streaming platforms.

We are transparent with financial records and guarantee security for the royalties of all investor’s.

Additionally, contracts are set between Tokn Music, artists, and investors that ensure everyone’s safety.

Beta 2.0

Beta 2.0 is our full application that includes Order Matching Engines, Debit/Credit payments, Launchpad, Spotify Integration, and all other functionalities.

Transition:

The transition from Beta 1.0 to 2.0 is simple. In 1.0, tokens are purchased on Opensea, and in 2.0, those investors get early access to 2.0 and the platform will soon open to the public.

In 2.0, investors won’t even need to have a wallet as we create one for them. The login process is seamless, secure, and still keeps the value of Web3.

Features:

1. Buy/Sell tokens through Tokn Music Marketplace
2. Order Matching Engines
3. Library/Profile Page
4. Royalty Allocation component
5. Advanced Analytics
6. Wallet not required for Sign In
7. Same features as 1.0
8. Open to public but closed for artists

Key Differentiators:

Tokn Music has no crypto confusion and makes NFT technology easy to use for everyone. We have built a completely unique Web3 experience that is just as easy to use as Web2 — No gas fees, long waits, or rug pulls.

Investors of tokens also own and collect the royalties of their favorite songs and artist directly from streaming services.

Public

When we announce a public release, Tokn Music’s distribution will be public for all artists.

Additional features and functionalities will be announced throughout the year.

Conclusion

The future is bright and we will continue to update everybody on our progress. Our first podcast will be linked below and follow us on all social medias.

Our next episode discussing Web3 in the Music Industry will release tomorrow!

BETA UPDATES: Royalty Allocation — When? How? Why? was originally published in Tokn Music on Medium, where people are continuing the conversation by highlighting and responding to this story.

The market plummeted for a not so surprising reason.

People have been predicting this to happen for a while so let’s quickly break down what happened and the effects it has on web3.

So… Why?

Coffeezilla dives in depth to explain how and why this crash is happening. If you want an easier to follow explanation read below.

This crash happened because of Algorithmic Stablecoins. A Stablecoin is a cryptocurrency that is pegged to the price of a currency — all of the stablecoins that we will be referring to are tied to the US Dollar.

Stablecoins are meant to keep at a stable price and act as a tradable currency without any volatility.

For each Stablecoin, there is an equal amount of dollars stored in reserves. This ensures that if anybody holds a stablecoin, they can do so with the security that there is always an equal amount of dollars ready to withdraw.

Algorithmic Stablecoins are built with the same intended goal of eliminating volatility and price fluctuation, but remove any need of a reserve.

Algorithmic Stablecoins function by tying their value to another cryptocurrency rather than a dollar.

It would take a full deconstruction to understand the complexities of how Algorithmic Stablecoins work so we’ve linked a comprehensive video below.

In comes UST and LUNA. UST is an Algorithmic Stablecoin that has its price tied to the cryptocurrency LUNA — both created by Terraform Labs.

It’s noteworthy that Algorithmic Stablecoins have NEVER worked and likely never will. However, this didn’t stop LUNA’s market cap from reaching a whopping $18 Billion.

On May 11th, 2022 UST — the stablecoin that is supposed to stay exactly at $1.00, fell as low as $0.13.

All we know is that there was a sell off of over $100M UST that lead to this crash.

No surprise, panic ensued and the market crashed.

There are additional reasons to why this heavily affected BTC and there is no exact culprit for who caused the crash.

Web3 will Survive

So what does this mean for web3. There is a distrust of everything within a 10 mile radius of cryptocurrencies and rightfully so.

A lot of people lost a lot of money and it is because there is little regulation in this space.

This should have been avoided with Stablecoin regulations and LUNA should never have gotten that big .

The dumpster fire permeating crypto will have a couple side-effects:

The Fire

LUNA and UST are likely dead. Terraform Labs has lost all trust in the mainstream and will likely never recover.

The Skepticism

The general public will be extremely weary of web3 and crypto until there’s an opportunity for sustainable mainstream adoption.

Utility is coming

Crypto is just a sliver of Web3. This crash has not stopped anybody from building. There are some amazing web3 projects in the works that don’t even use cryptocurrencies!

Innovation is bred by shedding layers and until we reach core utility.

What this means for Tokn Music?

Nothing. This market crash has had 0 effect on our mission, trajectory, and value proposition.

Building in the web3 landscape may seem scary as an outsider, but volatility is expected. This is a developing industry that already has billions of dollars pouring in regularly.

This was bound to happen eventually and we’re glad it’s out of the way. People SHOULD be skeptical of web3. There are a lot of unknowns and everybody should be doing research before investing.

Tokn Music is continuing to prioritize user security, legal compliance, and the execution of our value proposition to ensure an easy to understand user-experience.

Will the Market Crash affect Web3? was originally published in Tokn Music on Medium, where people are continuing the conversation by highlighting and responding to this story.

The Evolution:

Technology has completely shifted the landscape of music. Music consumers have gone from buying vinyls in a record shop — to digital albums on their ipod — to streaming music at a moments notice for 9.99 a month. Technology has consistently been improving for the consumer. Music has gotten cheaper, faster, more accessible than ever. What people seem to forget is that as the cost of music becomes cheaper for the consumer, the price of being an artist steadily rises. Artist’s today are only earning around $0.003 per stream on Spotify while only 13,400 out of the over 3 million artists on Spotify are earning a livable wage of $50,000 per year or more. Artists aren’t making money and this problem is only getting worse.

For the past 50+ years, the music industry has been evolving to line the pockets of executives, however, things are beginning to change. Many interject and claim that the music industry is “broken”; blame the institutions that encourage this type of behavior — but admit it — your life is better with Spotify. So to clarify, the music industry isn’t broken, it’s evolving. In recent years, a light has been shined on the starving artists and this evolution is starting to cater from the consumer to the artist.

A New Era

In the past, record labels have been the only feasible solution for artists to attain the money needed to survive. Labels won’t cut it anymore. Artists are tired of getting bled dry and many are opting out to stay independent. Forging their own path through new marketing tools like Tiktok which help promote their music on streaming services. Although still earning pennies on the dollar, independent artists are able to own 100% of their masters and work for themselves.

As groundbreaking music technology begins to break into the mainstream, new opportunities are presenting themselves. Technologies are emerging that provide the capability for artists to generate substantial capital which has been the biggest struggle for independent artists everywhere.

Explaining Tokens

Have you ever heard of tokens or NFTs? Right now, digital artists are using tokens as a way to sell their art to investors. Tokens are one of a kind digital assets that work similarly to stocks; they rise in fall in price depending on how much demand is backing them.

Skeptics believe that the rise and fall in price correlates to hype and the belief of crypto, while supporters believe that rise and fall is correlated to the supply and demand of the art itself. Neither are wrong. Tokens now are practically pointless. Right now, they are just ones and zeros that compile a tradable, customizable, digital asset which generally contains a JPG or GIF file that fans and investors can purchase into.

No matter how hard token adopters try to fight, there is one argument they can’t run away from:

“Tokens have no intrinsic value. The only value that tokens carry at the moment is the price appreciation which is only determined by crypto fanatics and hardcore believers.”

It is true that tokens hold no intrinsic value, but that’s about to change.

The Value of Tokens

‘So let me get this clear: tokens have value, but not right now?’

Exactly. The technology behind tokens are brilliant yet severely underutilized. Smart contracts are the code behind tokens and encode the building blocks of its future. Without going too much into the nitty gritty, smart contracts allow for digital assets to trigger an action. Let me explain:

The best way to picture smart contracts is as a vending machine. When I input 5A, the vending machine has an action to go to slot 5A and drop a bag of Cheetos.

With tokens in music, these same principles can be applied. Artists can tie a percentage of their royalties to the tokens they sell. Investors won’t just be purchasing into a JPG file, but a real percentage of the money these artists make from Spotify, Apple Music, etc.

Now, instead of a piece of art embedded in the token, it is a line of code executing that whoever owns each token earns a percentage of the revenue made from Spotify. And the best part: smart contracts allow for complete automation of these royalties. As an investor, you don’t need to trust a third party to send you the royalties, it can be completely automated from Spotify to you.

With intrinsic value, skepticists have no room to complain. Each token is now a real dividend bearing asset.

The Future — Tokn Music

Tokn Music is providing a marketplace for artists to unlock the potential of tokens. Artists convert one stream of revenue into four by selling shares of their royalties to fans and investors.

Artists keep complete control in regards to the amount of royalties they sell, how many tokens they sell, without the constraint of recording contracts.

Tokn achieves security for investors and artists by managing the distribution to Spotify, Apple Music, Tiktok, and over 60 other digital service providers and publishers. When money comes in from these services, Tokn immediately sends the according percentage to each investor via Smart Contract.

New Evolution of Music Technology was originally published in Tokn Music on Medium, where people are continuing the conversation by highlighting and responding to this story.

The blockchain is a fascinating landscape. When people are bullish the markets are happy and when people become bearish all hell breaks loose. To be fair, every type of investment has a price that is determined by emotion. However, blockchain assets are particularly more volatile — why? — one reason is that there is no security backing these tokens. NFTs today are used by artists to sell their digital works through a shell of code that can be easily transferred between parties. As we expressed in our previous article, NFTs carry no intrinsic value and aren’t backed by anything. That doesn’t mean NFTs are worthless, it just means the prices are driven purely by speculation and emotion. NFTs can carry just as much value as a rare pokemon card or action figure — human desire entirely drives the prices

Non Fungible vs Fungible

The differences in fungibility between Non-Fungible and Fungible tokens boil down to how they are interchanged and transferred between parties. Each Non Fungible Token has a unique price regardless of whether the artwork is the same or not. One NFT in a collection can be sold for $1 while another sells for $1000 in the same day. While this isn’t an inherently bad quality, if you have thousands of tokens all selling at seperate prices, buyers and sellers easily become frustrated by the limitations of the NFT trading framework. While each NFT is unique in price, Fungible Tokens are all identical and tied to a price dictated by supply and demand.

If there are thousands of identical tokens circulating in a market, it becomes inefficient to use a Non-Fungible infrastructure.

Fungible Tokens vs FSTs

Fungible Tokens and FSTs on the blockchain have a few major differences:

1. FSTs are backed by real-world assets, in Tokn’s case, this is a percentage of song royalties
2. FSTs have an executed Order Matching Engine written in the smart contracts
3. FSTs are ERC-1155 while most Fungible Tokens are ERC-20

The Framework of FSTs

Fungible Security Tokens simplify the trading process by effectively matching buyers and sellers at a desired price. This price is determined by the executed prices from the buyers placing buy limit orders and sellers placing sell limit orders. The displayed price of each token is not a set price but a reflection of the value of the asset. If buyers are snatching up tokens at higher prices, the price will reflect a higher number.

FSTs use the skeleton code of NFTS while incorporating trading functionalities and algorithms used in existing online global marketplaces such as Nasdaq and Dow Jones. The existing framework of NFTs isn’t nearly as effective for investors, but FSTs maximize their potential.

Tokn Music is pioneering the adoption of mainstream tokenized assets and FSTs are the first step. With the metaverse becoming a reality in the near future, tokenized assets seem like the solution moving forward and FSTs utilize these assets to their greatest potential.

FST — The First NFT Backed by Real Value was originally published in Tokn Music on Medium, where people are continuing the conversation by highlighting and responding to this story.