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#68 – Two changes in direction, stable payments, and a delayed release

Photograph of a U-turn road sign, with trees and a road in the background.  Photo by Jim Wilson on Unsplash.

(Photo by Jim Wilson on Unsplash)

Writing Block & Mortar gives me an excuse to follow web3 news. The catch? Relying on the news also means that, week after week, I have no idea what I’ll write about until a couple days before release.

Point being: I was hoping for a short, easygoing newsletter since last week’s issue was a long slog through crypto crime. But then News Happened, and my plan changed. A bit. The “short” part still holds true. “Easygoing” will depend on your definition.

Change in direction, part 1: Worldcoin

This story was originally destined for last week’s newsletter – it was going to be the one non-crime story, hence the title “The ‘Mostly Crime’ issue” – but then a different Worldcoin story landed on my desk. So I ran with that one.

I guess I’m glad I waited? As things have … developed.

As a refresher: let Worldcoin scan your iris, and they’ll let you prove that you are neither a bot nor an impersonator. I’ve never wanted that badly to prove that I’m human. CAPTCHAs aren’t so annoying that I’m willing to hand biometric data over to some random group. But what do I know?

Worldcoin was off to an auspicious start. Their closed beta included more than 1.6 million users. Yet, right as they graduated out of that beta status, Worldcoin attracted some government attention.

Wait, no, that doesn’t look right. Let me try again:

Their closed beta had reached 1.6 million users, most of whom were in developing nations in Africa and Latin America. Yet, right as they graduated out of that beta status and started scanning eyeballs in wealthy western nations, Worldcoin attracted some government attention.

(Using poor countries as a testbed? Isn’t that a page straight out of Big Pharma’s playbook?)

As of this writing, regulators in Germany, France, Kenya, the UK, and Argentina have all asked Worldcoin for a little chat. This excerpt is from the Guardian piece on Kenya, but it pretty much holds for all four countries:

Kenya’s interior ministry said the venture must stop collecting user data after raising a number of issues including: concerns over the secure storage of data that includes scans of a user’s iris; that offering crypto in exchange for data “borders on inducement”; inadequate information on cybersecurity safeguards; and placing large amounts of private data in the hands of a private business.

Kenya went as far as to seize some Worldcoin machines during a raid.

I expect more countries to weigh in over the coming months. While I doubt this unwanted attention will outright halt Worldcoin’s expansion, it may very well slow it down or limit its reach.

PayPal gets stable

Consumer-payments behemoth PayPal is introducing its own cryptocurrency token. Specifically, PYUSD will be a stablecoin – a token that matches the value of (“is pegged to”) a unit of fiat currency.

This could be a great way to onboard people to crypto. PayPal is a stable, recognizable name with a large user base so I imagine that will help people overcome their mistrust of crypto.

For now PYUSD will only be available to US-based customers. But I can imagine the company might eventually open it up to users in other countries. Hell, it may even pair that with stablecoins pegged to other currencies, like the Euro or the Yen. That could turn PayPal into an interesting case of consumer-level foreign-exchange management. (Granted, getting the necessary regulatory approvals may be precisely what’s holding PayPal back on this. But give it time. I have a hunch.)

That said,some industry players feel that PYUSD may be too “centralized” of a blockchain currency. I see their point. But I also think that centralizing this through a well-known, centralized is one path forward for widespread, consumer-grade cryptocurrency. Most people aren’t as interested in – perhaps, not even aware of – the idea of cryptocurrency providing freedom from financial censorship and other potential government overreach. They just want to buy things. (And, given the fallout from the 2022 Super Bowl advertisements, they don’t want any kind of crypto scams.) If “click the PayPal button to set up a crypto payment” is the only thing standing between the person and their purchase, they’re going to click.

I wonder when other payments companies will offer their own stablecoins? (For now, Stripe supports payments through USDC but does not offer its own coin.)

Timing is everything

I’m not a fan of the term “phygital.” It’s right up there with “thought leader” as far as I’m concerned. (Hats off to the Financial Times for quoting the Urban Dictionary definition in a recent article.)

I still dig the concept behind phygital, though. People like to express themselves through how they dress, and that carries over into the online realm. Picking up on the physical-digital connection – offering the same clothes or accessories in both atoms and bits – is one of many ways the fashion industry has demonstrated how much they understand both web3 and human nature.

Ralph Lauren’s latest entry is the limited-edition Polo P-Wing Boot. One could argue whether it’s a truly phygital product, though, since the digital version landed a year ago. Perhaps the company missed an opportunity in splitting the release?

Without including commerce opportunities directly inside the [Fortnite] game, “phygital” releases like Ralph Lauren’s are arguably more of a future-facing marketing move than a genuine opportunity for brands to carve out a new commerce channel.

“If you want to meet your consumer everywhere they are, you should be offering the same items, both virtually and physically, and have them connected — and it is actually not that hard to do that,” said Justin Hochberg, CEO and founder of Virtual Brands Group, the company behind Forever 21’s Roblox presence. “If you want to use it as a marketing funnel that actually connects with your consumer, that’s what you need to do. Other than that, it’s just another way of creating a billboard.”

Change in direction, part 2: a quick update on That Guy™

Remember That Guy™? You know, the one who (allegedly) stole a few billion dollars of customer funds, did a publicity tour, then got arrested?

I think we’re all kind of tired of hearing about him. But I’d be remiss in my duties if I were to skip over a recent change in his, um, status:

A federal judge revoked FTX founder Sam Bankman-Fried’s bail

[…]

U.S. District Judge Lewis Kaplan said at a hearing in New York that Bankman-Fried pushed the limits of his bail conditions repeatedly and possibly committed a federal crime.

After being accused of a serious crime, after somehow wangling his way to house arrest, after continuing to test the very tenuous limits of his freedom … SBF has finally crossed into the “FO” phase of “FAFO.”

That change, by the by, leads to another:

Thus ends the reign of “Declaration Of John J. Ray III In Support Of Chapter 11 Petitions And First Day Pleadings” as my favorite crypto diss track. It has been dethroned by “US v. Bankman-Fried hearing on possible remand of SBF to jail for intimidating witnesses (feat. Hon. Lewis A. Kaplan and Assistant US Attorney Danielle Sassoon).” It’s an absolute banger.

Though I can barely hear it over what I’d swear is Arthur Hayes’s laughter …

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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