Welcome to the Block & Mortar newsletter! Every week, I bring you the top stories and my analysis on where business meets web3: blockchain, cryptocurrencies, NFTs, and metaverse. Brought to you by Q McCallum.
Reading online? Subscribe to get this in your inbox on Tuesdays.
Twin forces driving crypto adoption
A common thread in emerging technology is that The New Thing is immensely useful … but a pain to use. Early adopters don’t mind the hard road, though. They see a reward that far outweighs their sacrifice.
Moving adoption beyond that early crowd requires two forces to act in concert:
Increased Ease of Use – reducing barriers to entry, so people spend more time deriving benefit from The New Thing
Improved Appeal and Utility – identifying attractive use cases to encourage people to overcome barriers to entry
Remember the carrot and stick of early-day Amazon Web Services (AWS)? Your carrot was “instant access to storage and virtual servers, rented by the hour.” The stick was “oh yeh you’ll need to use commandline tools and maybe even write code to make any use of this.” For those of us staring down the barrel of capacity planning exercises and slow hardware vendors, that hassle was well worth it. But not everyone faced those challenges, so they held off.
AWS drove mainstream appeal in two stages. To increase Ease of Use, it implemented a web-based control panel to give point-and-click access to its services. To improve Appeal and Utility, it cut prices and layered preconfigured services on top of its barebone storage and servers. Remember the first time you fired up a ten-node Hadoop cluster with just a couple of mouse clicks? For about five bucks an hour?
These days we see similar moves in the crypto space. Consider new crypto payment rails, NFT-based loyalty programs that hide the crypto backend, and NFT marketplaces that accept credit cards. These all contribute to Ease of Use. This list may seem scattershot, but crypto’s decentralized nature means that a variety of vendors can and will dive in to focus on a problem they think is worth solving.
Mastercard has recently added itself to that list, again. Last week it announced that:
[… it will] help financial institutions offer cryptocurrency trading, the company told CNBC. Mastercard will act as a “bridge” between Paxos, a crypto trading platform already used by PayPal to offer a similar service, and banks, according to the company. Mastercard and Paxos will handle regulatory compliance and security — two core reasons banks cite for avoiding the asset class.
The die-hard cryptocurrency practitioners will no doubt bristle at the idea – “Buying tokens through your bank? So much for decentralization, amirite??” – but this move should appeal to the wider public. Most people will trust their bank, backed by Mastercard’s fraud detection, more than Some Random Crypto Exchange. They’ve already provided their bank the necessary know-your-customer (KYC) details; handing those to a stranger will likely be a hurdle.
Further, we anticipate that banks will add regulatory and compliance services on top of any crypto offerings. Imagine at some point you’ll get a tax-ready form that details all of your holdings right alongside your annual mortgage interest statement. Given the last couple of years’ confusion over how your crypto investments affect your tax liability, it will be a relief to have someone else sort that out for you.
Then, there’s the Improving Appeal and Utility column. The general theme has been to build experiences that consumers will want so badly, they’ll gladly figure out how to manage a wallet. NFTs made the first step by providing digital ownership. Suddenly “crypto” was so much more than just “moving money-like objects around.” It became a tool for art collectors and fashion enthusiasts. We also see a growing number of NFT collections tied to franchises that consumers know and love. (Mind you, it hasn’t been perfect. One such NFT project was described as a “gussied-up, browser-based DVD selection menu masquerading as a collectible item.”)
Providers are giving people reasons to visit metaverse properties. By hosting concerts, Roblox and Fortnite pull in attendees who aren’t hardcore gamers. Brands setting up in The Sandbox will no doubt drive commerce. And people have also found the fun in just going to a metaverse to hang out.
What these all have in common is entertainment. And according to Lindsey McInerney, CEO of web3 entertainment company Sixth Wall, entertainment is the key to consumer adoption:
_Now if you think about Web3, if you think about the metaverse, the first experiences aren’t going to be, like, ways to show up and do your taxes. That would be horrible. And I’m sorry if someone’s building that, and I’m sure somebody is.
My belief is that entertainment will bring the first 100 million, 500 million people to Web3, to the metaverse, to the blockchain or whatever we wanna call it._ Entertainment is always the first reason people show up. As humans, we’re inherent storytellers, we’re culture creators. It makes us who we are.
We agree with that statement. If you plan to address the Appeal and Utility force of web3 adoption, you’d do well to plaster “Entertainment is always the first reason people show up” all over your office.
Overall, if your goal is to bring more people into web3, ask yourself how you can increase Ease of Use and improve Appeal and Utility. And if you manage to do both, you may even start a chain reaction.
When the NFT is a real fixer-upper
One of your Block & Mortar editors has observed something about emerging technology: the highly-technical stuff gets all the attention up-front … but the non-technical matters – law, insurance, policy – dominate in the long run.
The reason is pretty simple: it’s hard to just throw the small-but-growing New And Shiny into the vast Old And Long-Standing. (Consider the insurance companies sorting out what it means to write coverage for an autonomous vehicle…) It takes a little extra ingenuity to wrap the New inside the framework of the Old, so they can coexist.
Crypto is no exception. Consider this case of real estate company Roofstock selling a house as an NFT. That’s the eye-catching headline, sure. But the details are more interesting:
Each rental property sold on its platform via NFT is owned by an individual single-purpose Limited Liability Company (LLC) registered in Wyoming and the NFT sold is associated with the sole ownership of the LLC, the company told The Block.
“The sale of the NFT results in a change in the ownership of the LLC, and thus the underlying property,” a company spokesperson said.
This is a useful blend of new-world web3 tech and existing real estate law concepts. We can’t wait to see future refinements of this process, as well as applications beyond real estate.
We’ll just leave this here. No reason.
Given … ahem … recent events, we figure it’s time to revisit a segment we ran on Kingship, the Universal Music Group band built on four Bored Ape Yacht Club (BAYC) NFT characters:
When a label backs a band, or when a film studio backs an actor, they’re investing in high-profile people with real lives and real personalities. It’s entirely possible that there will be some messy story in the press. The scandalous love affair. The shocking drug habit. The old, racist tweet rant that somehow slipped through the nonexistent due-diligence exercise.
So, back to Kingship. Those BAYC characters? They only have the life and personality that they are given. They only “exist” when and where the company wants them to. They can’t get into trouble. […] These BAYC band members are the perfect, low-risk celebrities – wrapped up tight like a movie script.
If you’re suddenly feeling nervous about your company’s celebrity partnerships, maybe a band made of highly-scripted NFT apes is looking like a safer alternative.
“Well worth a listen: the Bloomberg Crypto podcast”
Do you like learning on the go? Bloomberg Crypto will keep you up-to-date on web3, in plain language, in just fifteen minutes a day.
We first mentioned this podcast in newsletter #9, shortly after its launch, and the show has just passed its hundred-episode milestone.
If you go back a couple of days to episode 99 – “You’ll Still Hate Your Manager in The Metaverse,” host stacy-marie ishmael (yes, she lowercases her name) and guest Matthew Boyle explore the idea of corporate metaverse properties and employee participation therein. If your company is thinking of setting up a metaverse, or you’re already running one, take a listen. You’ll thank us later.
This was an issue of Block & Mortar.
Who’s behind Block & Mortar? I'm Q McCallum. I've spent the past two decades in the emerging-tech space. And I'm very interested in web3 use cases.
Credit where it's due. Big thanks to Shane Glynn for reviewing early drafts. Any mistakes that remain are mine.
Reading this online? Or as a forward? Why not sign up? Get Block & Mortar news in your inbox, every week.
Privacy statement: I don’t share/rent/sell your personal info. Seriously.