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.

Have you ever tried to explain all of the crypto drama to someone who’s not in this space? It’s like the Tom Segura routine about kids telling stories. Just a mess. A series of run-on sentences and loose ends, tossed about in an attempt to explain a jumble of overlapping storylines.

Well, someone sent me a picture that is worth a thousand mixed-up words:

(If you don’t see an image here, your mail client may have disabled remote images for privacy reasons.)

Now, does this image also describe my other job, in AI? Hmmm. My legal team has reminded me that I have no comment.

The terrible, rotten, no-good trip that was definitely not a flight from justice

You know the drill: you’re heading to your private jet, with your fake passport, and suddenly the cops swoop in and cart you away in handcuffs. The nerve.

At least, I guess that’s what Do Kwon was thinking when he was apprehended in Montenegro.

You remember this guy, right? Co-founder of Terraform Labs, the company behind the TerraUSD/Luna coin pair. The algorithmic stablecoin that torched $40 billion in value when it collapsed in a most spectacular fashion last year.

Kwon went on a tear on social media. He then went on a trip. Just a little time away to clear his head. Again, you know the drill: You stop going into the office. Vehemently refuse to share your location. Travel on falsified documents. Repeatedly claim that your crypto coin was not a security, therefore, you haven’t broken any laws. That kind of thing.

And the whole time, Kwon made sure to remind us that he was most certainly Not On The Run. Just like his TerraUSD stablecoin was most certainly “stable.” Yes. That.

Let’s take a moment to recap:

• Sam Bankman-Fried, FTX: arrested.

• Do Kwon, Terraform Labs: arrested.

• Kyle Davies and Su Zhu, 3AC: hanging out “somewhere.”

So … who’s next?

And do you think that Arthur Hayes laughing at the whole affair?

NFTs have grown up

Most of us were introduced to NFTs as Overpriced JPEGs On A Blockchain. Nowadays we see them as Overpriced JPEGs On A Blockchain That Have Coincidentally Stumbled Into Surprisingly Fitting Business Use Cases. It’s sort of like a teenage miscreant who grew up and became a successful banker or politician or something, but is also a middle-aged miscreant.

It makes sense that loyalty programs have become fertile ground for NFT use cases. An NFT is something that can only be held by one person at a time, so it can serve as an identifier. And it can track activity, just like a membership card. No wonder why Starbucks built its Odyssey program on NFTs Journey Stamps™.

Other companies will certainly want to borrow the Starbucks idea. And Salesforce is here to help:

Businesses can mint and sell NFTs, monitor blockchain activity, and view real-time customer data on Salesforce Web3, which launched today with subscription tiers. The roll out comes after a pilot program of 257,000 transactions with Salesforce clients such as whisky brand Crown Royal, clothing brand Scotch & Soda, and Mattel, the toy company behind Barbie and Hot Wheels.

As the article points out, loyalty programs allow businesses to develop first-party data. This has become increasingly important in an age where new regulations, privacy-conscious consumers, and Apple’s iOS changes take a bite out of marketers wheeling and dealing in personal data.

My question: is Salesforce actually bullish on the use case of NFT-based loyalty programs? Or just bullish on other companies asking for the use case? That remains to be seen. But for now, they’ll make it easier for businesses to try this approach.

I doubt they’ll be the only ones. Expect a rash of Enterprise NFT Loyalty Program Infrastructure As A Service providers within a few months.

Wear-to-earn

Speaking of loyalty programs …

Web3 shifts the definition of a “membership card” from a physical object to a digital one, in the form of an NFT. Clothier CULT&RAIN is building a bridge back to the physical world by blending that NFT with an NFC-chipped hoodie:

“One-to-one communication. All you have to do is scan your hoodie. And the most important thing, which we’re really stoked about, is collector rewards. So imagine you’re wearing a hoodie, you’re going around town, and we’re like: ‘check your hoodie today, because you’re gonna receive a free air drop.’ Or we can say, ‘today if you scan the hoodie, you can claim our 25% off discount on e-commerce.’”

Welcome to the phygital membership card. One that you can wear.

This could get interesting. Doubly so, if other clothing manufacturers get in on it. Loyalty programs are already built on a gamification element, right? “Buy N items by date D and get some kind of bonus.” It’s a way for companies to influence members’ purchasing patterns and (if a promotion is tied to a specific store) their location.

With NFT+NFC phygital clothing, they could extend this gamification to a member’s choice of outfit. Want a bunch of people wearing your brand, like a flash mob, for an in-store photo shoot? Maybe you’re filming a promo video for your airline and need groups of passengers in matching colors? Or you just want to ensure brand loyalty, so that people don’t pair your jacket with a competitor’s pants? Offer them a perk in exchange for that clothing choice. Certified by the embedded NFC chip. And dropped right into their crypto wallet.

(I was about to coin the term “wear-to-earn” – a twist on play-to-earn crypto games – but, no surprise, I’m a couple years too late to that party.)

Before you ask: yes, this could also turn into some dystopian hellscape. One where people eke out a living as human billboards, wearing whatever major brands tell them. But let’s ponder the more whimsical use cases before that happens, OK?

No more mouse in the metaverse

Moving on from fashion …

Layoffs are the fashionable business move these days. These are ostensibly cost-cutting measures in the wake of a tech downturn. You know, cutting back on the boss’s pet project or caving to your board after blowing a few billion dollars on metaverse fun. That kind of thing.

With so many layoffs happening, it’s also easier to bury that embarrassing failure of a project under the halo of “saving money.”

Point being: Disney is shutting down its “next-generation storytelling” metaverse efforts.

Is this just about cutting the company’s burn rate? Or is this another chapter in the Drama of the Bobs? Bob Iger briefly ceded his throne to Bob Chapek before abruptly reclaiming it late last year. Perhaps killing next-generation storytelling – a Chapek project – is a way for Iger to erase his successor-predecessor’s work?

Bringing a little fun back to crypto

Crypto is in this interesting spot where it provides some business utility but it also has a sullied reputation with consumers. Scams, environmental impact, high-profile losses of money, and then arrests … It’s enough to drive companies to hide that they’re using it.

That’s all well and good if your business wants to build on blockchain-based infrastructure behind the scenes. But what about actually making consumers interested again?

The Insert Token project is giving it a try:

Our first community creation!

Insert Token is a phygital NFT drop and game. Limited edition of 50.

NFT owners get physical LEGO artworks by the incredible @AndyBauch

with puzzles hidden inside. Solve them to share up to $32,000 in USDC. Leggggoooooo!

The official website sheds more light on how it works. It’s a mix of a collaborative game, competition, and community-building effort:

A puzzle has been encoded into the artworks, and the only way to solve it is by working together. If you do that before time runs out, you get the chance to share a prize of up to $32,000 in USDC.

The NFT is your proof of ownership and grants access to a private Discord channel, where you can collaborate with other artwork owners to solve the puzzle and get the prize. We will attach more community membership benefits to the NFT in the future.

Playing with Legos, making new friends, and maybe scoring some cash. Sounds like a winning combination.

And the Insert Coin crew is kind enough to give you a starting point: “By the way, you’ll need this: 10/12/2020.”

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.