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 whenever it's published.
(Image credit: the “Yo dawg heard you…” template from imgflip)
It’s wallets all the way down
Do you remember the MTV show Pimp My Ride? In each episode, host Xzibit upgraded drivers’ vehicles to match their interests. His catchphrase – “yo dawg, I heard you like [XYZ] so we put [XYZ] in your car” – has been memed many times over. Sometimes in ridiculously recursive fashion.
Thanks to Ethereum Request for Comment (ERC) 6551, I can now offer: yo dawg, I heard you like NFTs in your wallet. So we put wallets in your NFTs.
Aside from a meme reference, what does this give you? Why would you want your NFT to be able to hold … other NFTs? In short: composability. Consider what it means when one token can reflect its relationship to another, or when you can show that a particular grouping of NFTs is indeed a set. This is one consideration of the Sapienz NFT collection:
With Sapienz, each item of clothing owned by an avatar is a separate token, meaning that each piece of clothing is its own separate NFT that can exist in its own token-bound account.
“If your NFT owns those tokens, it will have the right to equip and unequip them onto the artwork, that changes the artwork of the NFT everywhere you can see the NFT,” [ERC-6551 co-author Jayden] Windle explained. “We’re using the mechanics [of ERC-6551] in a limited capacity, but you can see the potential for gaming applications and character based applications where an NFT can have its own identity.”
Until now, NFTs have been standalone players in the ecosystem. The ability for NFTs to hold other tokens moves them closer to being first-class blockchain actors.
The Sapienz visual approach just scratches the surface of how composability could apply. Consider the concept of video game item power-ups, applied to NFT-based loyalty cards. “Slot this magic gem into your sword so it deals 50 points’ more damage” is the same deal as “slot these tokens into your NFT’s wallet so you get 50 bonus points on each hotel stay.”
You already kind-of get this when you allow a service to see what NFTs are in your wallet. But it’s one thing to say “I own all of these NFTs”; quite another to say “I’ve decided to assign these tokens to this particular NFT in order to get this merchant’s bonus.”
I expect ERC-6551 will play an interesting role in NFT-based loyalty programs.
Being somewhere else, while still being here
I called it.
Back September, I pointed out the key draw of metaverse technology:
The point of being in a metaverse is digital escapism. Doing so allows you to be someone else, somewhere else. To play a role. To don a costume and parade around a virtual world with your old friends, and maybe make some new ones.
At the risk of getting too philosophical on a Tuesday morning, this is about redefining “reality.” Similar to the way the introduction of the telephone redefined “communication,” a concept that e-mail, online chat, and video calls have all redefined in turn. With each step we’re still communicating – exchanging information – but the technological advances open new opportunities.
Escapism has long been part of human culture and it looms large in our entertainment. Sometimes you need something to overpower reality. Reviewing the arc from plays, to movies, to video rental, to streaming services (also known as “Netflixes”), you’ll notice a shift: we’ve gone from “someone else’s choice of content, on someone else’s schedule, in someone else’s shared space” to “what I want, when I want, wherever I am.” We have reached Escapism On-Demand.
(Well, Visual Escapism On-Demand. Books also fit the bill. But I digress…)
That shiny new Apple Vision Pro headset is the latest entrant in Escape Hatches From Reality That You Wear On Your Face. Funny that the announcement landed at the same time that Canadian forest fires had blotted out the sun in America’s northeast:
Last week was, in other words, an especially weird one to unveil a future in which people with enough disposable income can retreat from the physical world into the gated-face community of a 360-degree iPhone screen. It’s easy to reflexively overanalyze the peculiar aesthetic of Apple’s presentation or the dystopia-adjacent features of the Vision Pro headset, which include an outward projection of your eyes so that people in your vicinity know when you’re gazing at them and not playing seven-dimensional Angry Birds. And it may be uncharitable to connect a marketing video to climate-disaster avoidance. Still, I struggled to watch the world’s biggest technology company lay out its vision for the future of computing and not find it cynical, even a bit apocalyptic.
This reminds me of the “bring class to the masses” approach described in Blue Ocean Strategy: sell people something to help them feel like they’re living a fancier life. Cinemas gave everyday folks an alternative to expensive stage plays. Today’s headset offers an alternative to expensive jet-set lifestyles. All for the cost of one month’s rent in a modest New York City apartment.
The Vision Pro is out of reach of the aforementioned “everyday folks,” yes, but well within the grasp of the slightly-less-everyday crowd. The ones who can burn some cash on a gadget, yet don’t have the means to escape the darkened sky of a Philip K Dick story on a whim. In part because they still need to ask for time off from work.
Trying again for a head start.
If that last segment has convinced you to grab a Vision Pro, I’m sorry to say that it’s not due out till early 2024.
Perhaps you’d like to grab a Facebook Meta headset, instead? They’ve lowered the minimum age for the Quest devices. From 13 years old to 10. So now it’s fun for (almost) the whole family.
Hmmm.
Meta blames iOS privacy features for blocking several billion dollars’ ad revenue. Worse still, after Meta burned tens of billions of dollars trying to make “the metaverse” happen, Apple gets all the oohs and ahs for releasing their own VR headset. I bet Apple’s one-two punch has put Meta on notice and so the change in age limit – announced just days after Vision Pro was unveiled – feels like a defensive move. Perhaps they want to snag a few extra would-be Vision Pro customers in the coming months.
How soon till we see Meta pushing Quest goggles for the pre-K set?
Friendly territory
Venture capital firm Andreessen Horowitz (a16z) is setting up their crypto office in London.
The company made a name for itself through investments in high-profile companies like Skype and Twitter. They’ve also established a multi-billion-dollar web3 fund and done the legwork to create NFT-specific licenses. So why would US-based a16z, loaded up with all this street cred, need to head overseas to establish a crypto office?
Reflecting on Crypto Regulation Week and its sequel, it’s all about going where it’s safe to operate. US regulators have been rather frosty towards crypto and defi, whereas the UK welcomes it with open arms. Open arms and clearly-defined rules:
[a16z head of crypto investments Chris] Dixon said the UK’s “thoughtful approach” to crypto contrasted with the legal uncertainty in the US, although the firm reaffirmed its commitments to US crypto companies. “Our assessment is the UK is ahead of the curve and instituting [crypto] policies that will eventually becoming a global standard,” he added.
The UK government has already made noise about creating a more hospitable climate for web3 compared to the US, keen as it is to reestablish London as a fintech centre after the loss of so much EU-based finance business.
Adding to this is a16z’s head of policy for crypto:
[Brian] Quintenz said the UK’s approach to regulating the technology was more advanced than America’s. “We’ve approached this with all political parties in the UK, with policymakers across both chambers of parliament and we’ve heard an openness to the technology and its promise in all those conversations. When we think about that balance between customer protection and innovation, frankly I don’t see the administration in the US doing either.”
Quintenz is also a former CFTC Commissioner, so I’d say these statements carry a certain weight.
The grumble in the crypto space is that America’s regulation-by-surprise-attack will drive American crypto power overseas. a16z’s new London office is one notable example. Who will be next?
All part of the plan
The FTX saga continues. Heaven forbid that all of web3 should someday go up in smoke, I wager The FTX Files™ will provide material for Block & Mortar for some years thereafter. That’s a comforting thought. Sort of.
SBF’s legal team tried to get some charges dropped about a month ago. This may have seemed like an odd move to a layperson, but at the time I noted:
The whole point of legal defense is to Keep Clients Out Of Prison. So it’s rarely a good opening tactic to declare “my client’s guilty as hell, but …” Instead you start with “my client is innocent!” and then you make the other side do a ton of work to prove otherwise.
SBF and Kwon’s attorneys are, therefore, doing precisely what they are supposed to do. […] Chipping away at the opposition before the trial begins – and in doing so, hopefully avoiding the trial altogether – is standard fare.
Even if the judges dismiss only a portion of the charges, that still amounts to less work for the defense team to do during a trial. And a smaller chance of their client facing penalties. You know, the whole Keep Clients Out Of Prison bit.
It worked! Sort of. Prosecutors have agreed to drop a few of the charges:
In a court filing, the prosecutors said they would proceed to a trial in October without pursuing five of the 13 charges against Mr. Bankman-Fried — a set of accusations that the government added to the crypto mogul’s indictment in the months after he was extradited from the Bahamas in December. Among those charges was a bank fraud count, as well as an allegation that Mr. Bankman-Fried bribed a foreign government.
This week, Mr. Bankman-Fried won a ruling in the Bahamas, where FTX was based, granting him the ability to argue in court there that the Bahamian government should not consent to the additional charges. That legal dispute could take months to unfold.
I emphasize “sort of,” since prosecutors agreed to drop those charges just for this trial. He may face those charges in a different trial, at some later date.
All of this is to say: for anyone trying to make “the” definitive SBF documentary, this may take a while.
The wrap-up
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, whenever it's published.
Privacy statement: I don’t share/rent/sell your personal info. Seriously.