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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#51 - Optimistic outlooks, a trashy phoenix, and a utopian metaverse

The NFT.NYC conference just wrapped a couple of days ago, and AI Fashion Week kicks off this Friday. Since next week’s newsletter will be Block & Mortar’s monthly media roundup, I’ll cover these events in early May. (Barring any Sudden Crypto Meltdowns, that is. Not that those ever happen.)

In the meantime, do let me know of any web3 podcast episodes, video clips, or documentaries I should check out.

Some light reading material

I’ve been skimming VC firm Andressen Horowitz’s (a16z) 2023 State of Crypto Report and Citi’s “Money, Tokens, and Games.” At a combined 220 pages, the documents describe the wider state of web3 and where the two groups think it’s headed.

Both are fairly optimistic. For the a16z report, I remind myself that an investor stands to make it rich if their portfolio takes off. So they have plenty of reasons to be bullish even when things aren’t looking so hot. On the other hand, they only make it rich by putting in money in the first place… so they have to have some real faith in the sector. Hmm.

Citi, on the other hand, doesn’t have as much skin in the game as a VC firm. But their report still included contributions from industry players, who themselves have a vested interest in the Everything Is Fine attitude.

Still, even with those considerations, I didn’t see anything completely outlandish. And both documents serve as a good refresher on the various web3 use cases. I’d recommend you take a look.

Avoiding a Blockbuster moment

Everett Rogers’s The Diffusion of Innovations and Clayton Christensen’s The Innovator’s Dilemma will tell you a lot about the path of an emerging technology. The former explains the S-shaped adoption curve of any Hot New Thing. The latter describes the way large organizations ignore that Hot New Thing until it’s too late. Blockbuster-missing-streaming-video and Kodak-missing-digital-photography are contemporary(ish) examples of Christensen-style disruption.

Now, we can and should poke fun at the tech-bro-founder set for turning “innovation” and “disruption” into meaningless pitch deck vernacular. But let’s not forget large companies’ equally clumsy reactions to these books: strong FOMO vibes that cause them to bend and stretch in order to claim that they, too, are doing The Hot New Thing.

When it works, it works. (See: early-day internet and mobile apps on e-commerce.) And when it doesn’t, it’s very much a “How do you do, fellow kids?” moment. (See: the clumsy adoption of digital transformation and AI.)

So what should we make of Canon, the camera company, getting in on the NFT game with their upcoming Cadabra NFT marketplace? Is this an old dog learning web3 tricks to generate some PR fodder? Or is this truly an innovative play, where they’ve managed to find synergy (another pitch-deck term) with blockchain-based digital goods?

It’s too early to tell. Their Cadabra announcement at NFT.NYC was appropriately vague, like they were building interest in advance of the full release. (Starbucks played this card with Odyssey, though some may question whether that backfired?) Right now the official website is little more than a signup form. But from the shreds of information that others have picked up, I think this could be their We’re Not Blockbuster Or Kodak moment.

NFTs – of the “collectible digital art” variety, maybe not so much the “with benefits” variety – are a natural fit for a photography company. And what little we know about Cadabra thus far sounds like Canon has found a sweet spot.

Cadabra will apparently provide a way to print the NFTs, so a photo would therefore go from atoms to bits and back to atoms. This could get interesting. Especially if a photographer is able to “burn” the NFT when the image gets printed.

The phoenix, rising out of the dumpster fire?

After the collapse, the messy split, the launch of bankruptcy proceedings, and the interim report from the new leadership … FTX is back. Sort of.

Having recovered several billion dollars of the stolen “lost” money, the FTX restructuring team is starting to shift its focus from the company’s past to its future. Attorney Andy Dietderich has (“boldly?”) declared that “the situation has stabilized, and the dumpster fire is out.”

In response, I offer a key risk management maxim: Never assume there was only one fire.

No word on whether FTX, Redux will try to reclaim naming rights on sports arenas.

A punk rock Utopia

In the past I’ve posited that the major metaverse properties would eventually find their niche, paving the way for smaller, specialized properties to arise.

While we don’t have a trashy dive bar just yet (please, no jokes about Horizon Worlds) we do have a “feminist, queer, diverse and radical” metaverse with a punk rock theme. I’m talking about Utopia, created by Nadya Tolokonnikova of Russian group Pussy Riot:

Sticking with the symbolism of what catapulted Pussy Riot into international notoriety, the centerpiece of Utopia will be the Pink Church of Feminism. It will be a building clad in Pussy Riot’s colors of pink, white and black. Participants will be able to use their avatars to engage with one another and roleplay their own punk music performances.

For one, congrats to Tolokonnikova on the launch. I’m all for it.

Two, to the folks at Yuga Labs: where’s Otherside? How many more metaverse properties will land before you follow up on that March 2022 teaser reel and the land rush several weeks later? What niche will be left for you to fill?

Shanghai: the other side of The Merge

You’ve probably seen headlines about the Ethereum blockchain’s “Shanghai” update. What’s that all about? Here’s the quick version:

Remember “The Merge” from last September? That’s when Ethereum switched from a proof-of-work consensus mechanism to the much more eco-friendly proof-of-stake. The “stake” was that validators had to pony up cash and leave it tied up inside the Ethereum ecosystem, as a form of commitment.

The Shanghai update is the other end of The Merge. Validators can now withdraw that stake. That’s the gist of it.

The Ethereum team pulled off Shanghai without any issues. And, contrary to some expectations, validators did not grab their staked cash in a mad dash for the exit. So instead of Ethereum degrading into a hobbled mess, the network is fine and the Ether cryptocurrency has moved up to roughly $2,060 as of this writing. (That’s up from about $1,800 just a couple of weeks ago.)

Point being: in a world of crypto crime and meltdowns, it’s nice to see that a major change has proven to be an appropriately dull affair.

Very clear messaging

Block & Mortar first covered the Goblintown project way back in issue #6. Amid the sound effects and cryptic messaging, the NFT project’s announcement promised “No roadmap. No Discord. No utility.”

Fair enough.

More recently, Goblintown has been a lot more … direct in its messaging:

Truth Labs, the creator of the Goblintown Ethereum NFT collection […] has been accused of “rugging” holders this week by changing all of the project’s artwork into animated GIFs of a middle finger holding up three additional middle fingers.

"[F***] royalties. [F***] supporting building and creatives. Flipping is the heart of what makes Web3 special. Honor the flipper, [f***] the community. Long live the slow rug," all 10,000 of the animated NFTs now read.

Well, now.

A middle finger that shows more middle fingers. Do they offer those as greeting cards? I may or may not need a few.

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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