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.

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#37 - Bitcoin grows up (sort of), being a pioneer, and starting the new year off right

Bitcoin grows up

Bitcoin has just passed its fourteenth birthday. Over the next few years it will become old enough to drive, vote, and take up drinking. It may even get a job someday …

The cryptocurrency token has had an interesting run. Consider some key events:

  • 2009: The first Bitcoin (the “genesis block”) is mined.
  • 2010: The first known Bitcoin transaction takes place. Technically, the merchant accepted fiat currency from one individual, who was repaid by someone else in Bitcoin. But I’m willing to count that as the Sneakernet of payment rails.
  • 2011: Bitcoin briefly reaches parity with the US dollar, sharing an achievement with both the Euro (2000, 2022) and the Pound (2022).
  • 2021: After just a decade, it climbs all the way to $68,000.
  • 2022: Just a year after this peak, Bitcoin plummets to $17,000. (Note that this is still well beyond the Euro and the Pound, but I digress….)

Those last two items get the most attention. To the skeptics, the precipitous price drop supports their view that Bitcoin – and by association, all of crypto – is a sham. Fans are equally quick to retort that, even having lost two thirds of its value, Bitcoin is hardly worse than most stocks. Check the recent tech fallout, for example. Or Carvana, which has shed almost 99% of its value in under 18 months.

(Such is the burden of being an actual company: a fan base’s hype and unwavering belief can only go so far in the face of accounting metrics and other market fundamentals…)

This is one of those cases in which both the fans and the skeptics are right. Did Bitcoin rise to $68k? Yes. Did it tumble to $17k? Also, yes. Is any of that relevant? No. Because when it comes to investments, only three numbers matter:

  1. The price at which you got in.
  2. The price at which you got out.
  3. How much you managed to sell as you made your escape.

The unrealized gains and losses in between are good for casual conversation, but little else.

Hats off to anyone who managed to follow the universal guidance for investing: buy low and sell high.


Crypto’s price swings and scams have tested its relationship with individuals, sure. Its relationship with the law has been even more tense. As I noted way back in newsletter #2 (in the very first Things Go Wrong™ segment, no less):

Crypto is in weird legal territory. There aren’t a lot of rules around it, and it hasn’t really been tested in court. As one of your Block & Mortar editors often points out: you never want to be a case law pioneer. You really, really want there to be historical precedent on which you can set your expectations, and on which a judge can base their ruling. Absent that, a lawsuit can be a real nail-biter. (And extremely expensive, even if you win.)

It’s hardly a surprise that this has come up again and again. New concepts test old laws. And there are plenty of scraped knees before society sorts out how to bring old and new into harmony.

That’s the risk/reward tradeoff of emerging tech: you don’t get a piece of those asymmetric gains by sitting on the sidelines, waiting for the dust to settle. If you want the big win, you have to take your chances on being a case law pioneer.

This Bloomberg Law write-up explores fifty lawsuits related to crypto hacks. That’s fifty plaintiff-defendant pairs, and each one is a case law pioneer. I think the whole article is worth a read. This excerpt includes some interesting stats:

Roughly a third of the 50 lawsuits stemming from cryptocurrency hacks remain active today, and all of the closed cases ended before producing substantive merits rulings.

About one-third of suits targeting companies, including T-Mobile and Coinbase, have been stymied by mandatory arbitration provisions in plaintiffs’ user agreements.


Other cases were dismissed voluntarily or on procedural grounds (14), and a handful of disputes ended in settlements (6).

A bold start to the new year

Video game publisher Square Enix started 2023 by releasing its new-year’s letter. One section of company president Yosuke Matsuda’s missive stands out:

Our Group has multiple blockchain games based on original IPs under development, some of which we announced last year, and we are undertaking preparations that will enable us to unveil even more titles this year. We are also engaged in global sourcing from an investment perspective and will continue to take stakes in promising businesses whether we find them in Japan or abroad. Blockchain has been an object of exhilaration and a source of turmoil, but with that in the rearview mirror, we hope that blockchain games will transition to a new stage of growth in 2023.

On the one hand, this sounds like Yet Another Company Exploring The Hot New Technology. And it makes sense for gaming companies, as I pointed out in newsletter #23:

Game developers saw this NFT use case early on: You’ve spent months playing our RPG, powering up that sword/helmet/whatever. Shouldn’t you truly “own” it, and be able to sell it to someone when you’re done? That topped-out item looks like a sword or hammer, but it’s really an expression of your time and effort. Someone who doesn’t want to grind through the leveling-up process will happily trade their money for your item.

(Underground markets for in-game items have existed for ages. Putting this on-chain is a chance for game publishers to formalize the secondary market and capture some of that revenue.)

On the other hand, many people who play video games are not so happy about blockchain technology. Frustrated gamers have published articles and YouTube videos to declare that NFTs-as-in-game-items are just another way for publishers to monetize the fun. Between loot boxes and pay-to-win mechanics, they already feel like their pastime has become a casino.

Is that a fair assessment? Frankly, it doesn’t matter. If that’s how they feel, that’s how they feel. And that’s why, as I read the Square Enix letter, I think back to the Dodgeball meme: “It’s a bold strategy Cotton. Let’s see if it pays off for them.”

Maybe it will? Game publishers have the opportunity to demonstrate how NFT items work to the gamers’ advantage (say, making money on the secondary market). They can also find ways to build on a blockchain ledger without involving NFTs.

Or, hell, they may find gamers who don’t care about the NFT connection. Consider the rise of “casual gaming” in the early 2000s. Hardcore gamers didn’t appreciate the simple, lightweight, often non-competitive experiences. But VentureBeat reported the casual gaming market was worth more than $2 billion by 2007. According to Statista that jumped to $17 billion in 2022, and is posed to reach $24 billion by 2026. If Square Enix plays its cards right, it could unlock a similar market for blockchain-based games.

Not all blank spaces are created equal

Related to the previous segment, one source of revenue in video games – especially casual games – is … advertising. Because of course it is. While you might call something “a blank surface,” some folks see “a space that doesn’t have an advert on it. Yet.”

Still, I admit that advertisers can be pretty choosy about those blank surfaces. According to this Digiday piece, companies that specialize in in-game advertising are pulling back from metaverse properties:

Part of the issue is indeed that marketers’ expectations about the metaverse often don’t line up with the reality on the ground. Hollywood films such as “Ready Player One” have sketched out a vision for a fully immersive and interoperable virtual world, and as the metaverse picked up steam in early 2022, in-game advertisers did not necessarily go to great lengths to clear up their association with this tantalizing concept.

“Advertisers and brands are a bit misled,” said Natalia Vasilyeva, evp of marketing and strategy for the in-game advertising company Anzu. “They’re intrigued, and they’re excited about the metaverse, but they don’t know where to get started — and there are companies that say, ‘yeah, we are in the metaverse. I’m part of the metaverse.’”

This is common in the tech space: everyone wants to ride the momentum of the Hot New Thing. And since the Hot New Thing is usually an amorphous, poorly-understood concept, there’s room for companies to stretch it and claim they fall under that umbrella. (Remember how every BI tool claimed it did “big data?”) That can lead to disappointment as reality settles in and we all understand what The Hot New Thing can really do.

Over time, we’ll all sort out what “metaverse” really means and what it’s good for. And at that point, the end-users will show up. Expect the advertisers to follow.

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.

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