In this chapter, structures that generate yield in cryptofinance will be analysed and related to leverage. While the majority of crypto-assets do not have intrinsic yields in and of themselves, similar to cash holdings of fiat currency, revolutionary innovation based on smart contracts, which enable decentralised finance, does generate return. Examples include lending or providing liquidity to an automated market maker on a decentralised exchange, as well as performing block formation in a proof of stake blockchain. On centralised exchanges, perpetual and finite duration futures can trade at a premium or discount to the spot market for extended periods with one side of the transaction earning a yield. Disparities in yield exist between products and venues as a result of market segmentation and risk profile differences. Cryptofinance was initially shunned by legacy finance and developed independently. This led to curious and imaginative adaptions, reminiscent of Darwin’s finches, including stable coins for dollar transfers, perpetuals for leverage, and a new class of exchanges for trading and investment.

DLT and cryptoassets are a digital solution to the perennial issue of how to establish a single source of truth. Because digital data entries can easily be altered or copied, we have relied on trusted third parties to keep a master copy of any digital asset registry – until DLT enabled digital equivalents to physical cash and bearer instruments. Instead of a trusted record keeper, DLT relies on a distributed network of nodes that each hold a copy of the ledger. The data are typically stored in a time-stamped sequence of blocks, i.e., a blockchain. Different types of consensus mechanisms exist to keep each copy of the ledger synchronised and to prevent malicious actors from altering the registered information. This technology is democratising the privilege of running a trusted asset registry, thus facilitating new business models in so-called decentralised finance (DeFi) which emulate conventional financial processes with software replacing middlemen, such as banks, depositories, and exchanges. This has resulted in so-called token offerings and more than 10,000 different cryptoassets worth more than USD 1 trillion in aggregate.

For better or worse, non-fungible tokens (NFTs) are the most peculiar and least expected art market innovations of the early twenty-first century. This chapter provides a brief history of NFTs and the NFT market, beginning with the invention of blockchain technology, through the creation of the Bitcoin, Namecoin, and Ethereum blockchains, and the NFT phenomenon. It describes a selection of NFT projects and artists and provides a theoretical account of both the art market and the NFT market.

Fueled in part by the wealth created from digital currencies, major art dealers such as Christie’s and Sotheby’s have embraced the sale of non-fungible tokens (NFTs) attached to unique digital works of art. NFTs, how they are related to the blockchain, and the evolution of the market for digital art is the subject of this chapter. Despite recent decreases in value, it appears that digital art can be added to the growing list of uses for blockchain technology, which is now becoming a part of modern life. This chapter proceeds in five sections. First, the overview of the evolutionary progression of blockchain technology in the form of NFTs. Second, a description of the emergence of the market for digital art. Third, an explanation and historical account of digital art and related recent issues. Fourth, a coverage of the abrupt decline in the market price for many NFTs. And last, a conclusion, which focuses on how the dramatic extension of blockchain and other digital technology to the world of art represents a new and exciting platform for creative expression. This chapter offers a valuable addition to the literature by providing a readable introduction and overview of what is now known about the likely impact of blockchain technology and NFTs to art. Additionally, this important development should have a significant impact on the future of innovation and property law.

In this chapter, the author explores how the blockchain is being used in the world. Beginning with an account of a famous hack involving the virtual currency Ethereum, the chapter goes on to explore the rise and fall of bitcoin, the spread of initial coin offerings, and the development of business-oriented blockchains.