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29.12.2022

WIK Research Brief "Trends in the Crypto-Economy - Non-Fungible Tokens and Decentralized Autonomous Organizations"

Since the release of Bitcoin in January 2009 by one (or more) developers under the pseudonym "Satoshi Nakamoto", a large number of other cryptocurrencies and applications have been released. In certain blockchains (e.g. Ethereum), however, complete financial instruments and even organizations can be implemented by means of so-called "smart contracts". As a result, so-called "Non-fungible Tokens" (NFTs) and "Decentralized Autonomous Organization" (DAO) have gained a lot of popularity in the crypto economy. NFTs are unique digital proofs of ownership, which are stored in a blockchain. In this context, NFTs have gained a lot of importance in recent years, especially due to creative application scenarios (e.g., art). In a DAO, the rules and goals of an organization are stored in the blockchain in the form of smart contracts. Changes to this set of rules can only be made by voting of the members of a DAO. The voting right of the members of a DAO is usually proportional to the number of tokens a member holds. In this short study, we will first provide an overview of the development and regulation of the crypto economy and then go into more detail about the two phenomena of NFT and DAO.

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