September 13, 2022

Workplace moon landing, NFT TVs, and No refunds? Maybe?

Welcome to the Block & Mortar newsletter! Every week, we bring you the top stories and our analysis on where business meets web3: blockchain, cryptocurrencies, NFTs, and metaverse. Brought to you by Scott Robbin and Q McCallum.

This sure beats your typical water-cooler chat

A couple of weeks ago, we explored the different roles that metaverse properties will fulfill:

The world is still sorting out what counts as a "metaverse" and what it's good for, but metaverse properties are each starting to find their role and vibe.  [...]

Consider the big names in the metaverse properties. Roblox and Fortnite? People go here for events, like games or concerts. Horizon Worlds? This is where you pretend to pay attention to work meetings. The Sandbox? It's feeling pretty retail-focused thus far.

So, yes, we can look forward to more Corporate Workplace Metaverses. But they needn't be dull, digital replicas of your conference rooms.  This is an opportunity for companies to explore the new capabilities a metaverse property offers.  

Financial firm Daiwa Securities has done just that in building a moon-landing simulator:

In Daiwa’s metaverse, its more than 15,000 staff worldwide can manipulate avatars on the virtual moon. They can chat with colleagues at a bar over a digital beer, listen to Chief Executive Officer Seiji Nakata make a speech in a theater, and tour a replica of the firm’s old headquarters.

Daiwa Securities gets it.  Instead of saying "I dunno … do 3-D meetings?" they said "hey we can use this as a cool workplace bonding activity."  This is in line with our point that a metaverse is a place for digital escapism and shared experiences.  

Something to keep in mind as you stake out your company's metaverse property.  Why limit yourself to simple, VR equivalents of your existing office?

When a screen is more than just a screen

Longtime readers will notice that we talk a lot about NFTs with Benefits, where an entry etched into a blockchain serves as an access pass, loyalty card, or anything else that can only be held by one person at a time.  We've also covered putting NFTs to work, using a collection's IP rights for commercial advantage.  With all of that business activity, we forget that NFTs also exist as … art.  Y'know, things you can appreciate purely for their visual appeal.

What better place to show off your NFT collection than your TV?  That big screen is already the centerpiece of your living room.  It can serve as a dynamic picture frame when you're not watching a movie on one of your twelve Netflixes.  You and your guests can marvel at that piece of digital, generative art the same way you could take in a framed painting. 

Device manufacturer LG says that your TV should be more than a passive display, though.   It can do double duty as a portal to an NFT marketplace:

LG Art Lab is available in the US on televisions running webOS 5.0 [or] later, per the announcement. It includes a feature that offers profiles of artists and previews their upcoming work, as well as a countdown to upcoming NFT “drops.” The platform’s marketplace provides a venue for trading pieces.

This makes sense to us. Modern TVs are effectively computers with outsized monitors.  Why should you have to manage your collection on your computer, then push those images to your TV?

In the same way that a "phone" does so much more than phone calls (truth be told: some of these newsletters are tapped out on a small screen) it's interesting to witness the role of "TV" expand to new areas.  Doubly so when you consider that TV competes with other screens for our attention.  If we're going to watch videos on our computers, phones, and tablets, it's only fair that our TVs should become tools for interacting with online services.

No refunds, bro! (Maybe)

The crypto world of decentralized finance (DeFi) is similar to the foreign exchange (FX) trading you know and love from Wall Street: the various currencies all hold different values relative to one another, and you can make money when those instruments' values change.

That leads us to two key points:

  1. Financial markets are the penultimate real-time feedback loop.  There's a direct connection between your decision or action (placing a trade) and its outcome (gaining or losing money).  This makes it easier to quantify the impact of your decisions.
  2. Some areas of trading focus on arbitrage opportunities, which is an industry term for "capitalizing on temporary price anomalies."  

Both of those points were top of mind last week, when crypto exchange Coinbase encountered a "third-party technical issue" and temporarily listed the Georgian Lari (GEL) at the incorrect price.  

The word "incorrect" is doing some heavy lifting there, since the price was off by a couple of decimal points.

Traders noticed this and went into action:

_In late August, prices for cryptos denominated in Georgia’s national currency had been rated at GEL 290 instead of GEL 2.90. The missed decimal point had been due to a ‘third-party technical issue,'” a Coinbase spokesperson told Blockworks.

Some trades, which should’ve netted around $150, were executed on Coinbase for $15,000, with proceeds withdrawn to personal bank accounts, users told Blockworks._

And before you tell us that fifteen grand isn't that much money, please consider:

The average salary in Georgia is around $4,200 per year, meaning certain Coinbase users profited more than three times their national average.

(Some of you may still tell us that having an extra three years' cash in the bank is no big deal to you.  Fair enough.  We will happily re-home any surplus money you have lying around…)

Coinbase, no surprise, wants the money back.  And some of the traders' banks have frozen their accounts – not on Coinbase's behalf, but because those abnormally large deposits triggered fraud alerts.  So the money is in limbo.  Sort of.

This may remind you that crypto exchange Crypto.com recently sent several million dollars to the wrong wallet address.  These are two different issues – Crypto.com sent someone money by mistake, whereas Coinbase mispriced an instrument and left itself open to arbitrage – but both touch on the core tenet of crypto that your mistakes belong to you and you alone. This is part of why, among the hardcore crypto traders, getting scammed is just part of the game and you're supposed to roll with it.

This raises the question of just how far the "your transactions are your responsibility" mantra goes.  Does it cover technical glitches that have nothing to do with wallet address typos and phishing scams? We can turn to traditional finance (TradFi) for ideas:

On the one hand, TradFi exchanges certainly encounter problem trades.  Consider the automated systems that snap up shares for pennies during a flash crash (a sudden, sharp drop in share prices).  Exchanges typically "bust" – undo – those trades because they were clearly not made in good faith.  No, XYZ Corp shares did not really fall from $100 to $1 in two seconds. That was a technical glitch, not a genuine arbitrage opportunity.  And because the exchange serves as the clearinghouse for trades, it can make sure the money never actually changes hands.  So there's nothing to claw back.

On the other hand, exchanges will sometimes uphold trades that were made due to participant error.  Consider Knight Capital's 2012 meltdown, in which a software problem led the market-maker to a $440 million loss due to overly aggressive buying and selling.  The exchange chose to honor those trades because Knight's actions – selling low and buying high – represented very attractive deals to their counterparties, but the prices were still within reason.

It's not clear what action Coinbase will take to reclaim the money, nor how that will turn out.  What we expect, though, is that we'll see more of this culture clash – Your Mistake Is Your Problem versus Honest Mistakes Should Get A Do-Over – as the crypto space grows.   So maybe we'll run a regular segment called No Refunds, Bro™ …? 

(Oh, and for those who asked: compared to the stock market, the ultimate real-time feedback loop is stand-up comedy.  Don't believe us?  Hit the stage on an open-mic night and report back.  We'll wait.)

We have just one question

Ticketmaster, the ubiquitous live-events middleman, has entered the NFT space:

Event organizers that sell live events tickets on Ticketmaster can now issue NFTs before, during and after live events through a new offering in conjunction with Dapper Labs' Flow blockchain. The goal is to unlock unique integrations throughout the fan journey.

This is hardly a surprise. Companies are using NFTs as tickets, and Ticketmaster is in the tickets business.  They've clearly thought through the memorabilia aspect of show tickets, as well: 

[ …] Ticketmaster has integrated a wallet feature and digital marketplace into its website, facilitating collectors' efforts to share, trade and view the NFTs they earn.

Our only remaining question, then: will they issue separate tokens named "handling charge" and "convenience fee?" Or will those show up as attributes of the NFTs?

If you work at Ticketmaster and would like to let us know, please reach out.

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Note: We’d like to thank Shane Glynn for reviewing early newsletter drafts. Any mistakes that remain are ours.