Applications on The Blockchain (Part 2) – Blockchain & Music Entertainment

Because we are in a transitional period between one era to another, tools on the blockchain technology can simply be previewed, made use of, and improved upon in the Web 2.0 space considering that there may still be limitations to platforming a decentralized P2P network. Regarding the application we’ll be discussing in Part 2 of our ‘Applications on the Blockchain’ series, it goes by the name of Audius and may be accessed through this link: audius.co.

The essential premise of Audius is to create a decentralized avenue for musical artists under one or various genres, that allows them to post their music and receive compensation for it from other individuals through the use of cryptocurrencies. As this may sound incredibly similar to SoundCloud, it holds a very distinct systemic approach to how music is shared and distributed, without control of a major record label set in place. Data on Audius is distributed through an extension on the website called AudSP, which is responsible for making use of an IPFS (InterPlanetary File System) which stands as a P2P protocol that creates ease-of-access for uploaded audio files that users want to listen to.

The IPFS has been mentioned in prior articles, such as our first ‘Applications on the Blockchain’ column covering the technical functionality behind the metaverse as well as non-fungible tokens. As the IPFS is meant to help sustain decentralized governance over a particular market in the music industry that strives to interconnect artists more than ever before, factors such as high engagement as well as on-chain metrics define the success of being able to receive compensation under certain disadvantages that copyrighted content can go unnoticed.

Because copyright protection in a decentralized platform is hard to pin down, especially with other tools such as non-fungible tokens which is limited to being verified by controlled ‘minting’ so to speak, the advantageous factors that the platform posseses is involved in taking the hashed nodes on a blockchain network and like digital assets, spreading work across various blocks that will not only establish high engagement in music listening when possible, but also contribute to nurturing a community that helps all artists remain interconnected on an ongoing basis.

More than ever, the commodity of having a digital asset does not have to remain limited to cryptocurrency, but instead a branch of resources that contribute to multiple industries simultaneously without central control. Next to the cryptocurrencies that can be exchanged through the IPFS-based storage solution that Audius is built on for distributing music files across various peers on the network, it can also grant users cryptocurrency created by Audius itself called AUDIO. In case you do not remember, when it comes to building a financial in the world of digital asset management, it is possible to receive free cryptocurrency through something such as airdrops, which is what AUDIO serves to be.

When there is an increasing level of community engagement on your profile, receiving or purchasing AUDIO may grant one to control their own node within the network, meaning that you may connect the distribution of your music files to a crypto-based \ block connected to a hash number, that will act as a way for you to exchange your cryptocurrencies when linking together compensation for a particular track you’ve released. This not only stabilizes network security since you are in full control of a part of a network, but also makes sure that there is incentivization towards acquiring access to elements that an avid user who doesn’t own AUDIO may not have, simply because they do not have governing rights through the control of node to maintain governance of the platform.

Now, as we’ve mentioned disadvantages of this platform from before, adding onto the fact that detection of copyright infringement is highly limited and difficult to sustain. The reason for this strict limitation is simply because the content distributed in the network of AUDIUS does not have a specific ID system linked to it, which means that potential infringements especially over promotional materials that an average company may be unable to take down, will simply go unnoticed and remain visible to users of the platform. A solution for this problem is to be on the way for this procedural error, according to the developers of Audius, but as of right now, a decentralized platform may lead to a file infringement system that simply holds no restrictions.

Other disadvantages in this particular instance is that not all music may be original for the user, which may lead to some artists discovering a track of theirs being made use of by someone else, which can possibly create significantly damaging consequences for the music industry. Professor Kevin Casini who studies entertainment law at the Quinnipac School of Law in Conneticut, states that being able to deplatform someone from posting music onto the site is highly unlikely, leading to the creation of an open space that will enable those uploading different sorts of work not to face different sorts of scrutiny of immediate evaluation.

Altogether, this is the first core application similar to the metaverse or the non-fungible tokens we’ve gone over, that is simply able to ease the process of distributing an artists rights of personal work across a network that can be based on governance by the individual instead of the organization, leading to a certain extent of simplicity that by the hands of cryptocurrencies such as AUDIO, can simultaenously connect various artists together who can exchange compensation as a reward for their hardwork.

Although various benefits of this token have been mentioned, it is important to note that, the word ‘stable’ in ‘stablecoins’ doesn’t always mean that there can’t be slight declines, as the American economy is made up of its volatile counterparts. Such an example could be found in June 2022, when USDC had experienced a decline in market capitalization, at which it had average to about 56 billion $ until it declined to an estimate of 34 billion$ until August 2023. Although this can happen, the reasons for it aren’t exactly what you might think, as we can’t forget that this is a stablecoin. Meaning, there are parts of the USDC that are branched out into various investments, that can be divided between the following which are: 60% of total payments are invested through third-party dApps, 15% towards direct payments in transactions, and the remaining 15% of the token being deposited through money transfers and correspondoing currency conversions via the euro, pounds,and of course dollars.

The decline here is that, sometimes the supply of the token due its reliance on the Ethereum blockchain, can significantly go down to the large weight on traffic and earlier mentioned conversions with other currencies. But, on a bigger scope of things, their is always the golden ratio of USDC, which is that since it’s a near replica of the American dollar, it keeps up a positive elastic ratio of 1:1, meaning that measuring by volatility, almost 80% of the time there is going to be a balanced flow between how the value of USD corrsponds with USDC, which ultimately makes the investments people plan to make with it just about risk-free or stable.

With all this discussion around how something becomes risk-free, the logistical background of this plausability comes from the notion that the pricing between USD and USDC should always come to about 1$. Notice that, unlike BTC, it is kept at this rate to strongly correlate with its fiat currency, hence making it combat against market volatility and negative price elasticities. Mentioning once again how declines are possible, just tpo pain the picture of the coins stability, we can mention that between June 2022 and August 2023, the coins value had only fallen down to 0.9998$. This decline was made possible despite other heavy investments revolved around the currency, which can be treasury bonds for example.

Speaking of price increases and decreases, it cannot be forgotten that volume is a big part of why these actions take place. For example, with Circle, the app that primarily secures USDC, they own an equivalent amount of cash in USD as they do in short-term treasury bonds, which maintains overall balance and protection against market volatility. If we were to put two tokens side by side, one being an altcoin such as Bitcoin for example, and the other being USDC of course, the measure of statistics would yield that the initial currency that creates the blockchain has a yearly return of -35%, which has a signifiantly higher ATL (All-Time-Low) than would apply to USDC.

Of course, since exchanges are the ultimate platforms that facilitate tokens such as USDC into the community all at once, it is important to mention that Coinbase is not the only exchange that holds this stablecoin at large, as so does the same apply to other exchanges such as Binance, Poloniex and so on. On these other exchanges, the tokens that people incentivized to convert to USDC are usually USDT, BTC (Bitcoin), ETH (Ethereum), ZEC (Zcash Network), BAT (Basic Attention), and LET (Liberia token). These trades are all made under their appropriate networks, as mentioned before, due to the ongoing improvements in the transferral of tokens with parallel blockchains.

In certain countries, access to this level of financial freedom is usually limited, due to government restrictions, hence why USDC thanks to cross-chain technology is more or less another way to make fast transfers without the additional costs or limitations. For example, when you’re making a bank transfer, it could take anywhere from 48 hours to a week as the verification relies on one central institution, whereas USDC is more or less beneficial to someone with a cryptocurrency wallet such as Trezor, which we’ve revealed and reviewed in another article. High fees, slower times, are usually bypassed thanks to this technology, and the allowance of government regulated tokens, making public trading on exchanges far more efficient than it ever was before.

Returning back to concept of Bitcoin, it is important to mention that, actions are being taken to help secure the fund as it is being popularly converted to USDC. Due to its hikes and major drops in prices, it has been mentioned that the government is looking to benefit stakeholders in BTC using a Bitcoin futures exchange-traded fund (ETF), which allows Bitcoin to be applied to the buying and selling of shares, stocks, bonds, and much more. The concept has been passed ever since 2021, which makes its valued correspondance with USDC a lot more efficient, though it does come with its own risks which can be mentioned in future workshops.