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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#89 - A different view of the layer cake: 2023 year in review

description: The 'Army Clown' meme, with web3 terms as the labels.  'Crypto' is the label for the clown.

That header image hails from a familiar meme, though I point to a recent rip on the British Pound as my inspiration. (Don’t read FT Alphaville? You’re missing out. It’s the wing of The Financial Times that best employs grade-A snark and meme-jobbery.)

A few weeks back I revisited my “layer cake” analogy of web3, noting that disturbances in any one layer – blockchain, cryptocurrency trading (DeFi), NFTs – shouldn’t impact the others.

Problems within each layer are another story. As I reflect on web3 happenings from 2023 – from the last few years, even – well … the image above has more staying power than I’d care to admit. That’s why companies using NFTs and blockchain, fearing guilt by association, are obscuring their use of the technology.

But yes, I looked back on the last twelve months of Block & Mortar to assemble this recap. The only thing more fun than re-reading the newsletter archive was spotting all of the typos, missing words, and formatting errors …

Fashion led the charge

Fashion is a mix of art and business. Art, because you’re creating something new. Business, because you then have to sell it. The combination encourages experimentation, which explains why fashion continues to lead the charge in web3 use cases.

In 2023 Ralph Lauren, Gucci, Louis Vuitton, and Dior all either launched or continued to build. Burberry even added a celebrity stylist to its team as a guide to pixelated garments. Chicago Bulls star Scottie Pippen joined the roster of sneaker-theme NFT projects with his “SP33” NFT collection.

Some groups blended the physical and digital worlds. Prada tested blockchain technology to certify a bag’s provenance. Other luxury brands experimented with NFTs as anchors in a loyalty program, periodically issuing perks and physical merch to holders to keep them engaged over the long haul. CULT&RAIN went as far as to embed an NFC chip into hoodies, connecting each item to an NFT. This made the clothing itself the loyalty card.

Coach gave New York’s Prince Street a new toy in the form of an AR-enabled mirror. Besides the publicity boost from the foot traffic, the mirror points to the future trying on goods: you can see how the item looks on you in just seconds. No changing booth required.

Bringing the physical into the digital, model Eva Herzigová created a digital copy of herself that she can send on photo shoots. (Once again, no changing booth required.) Spanish modeling agency The Clueless took this idea to the next step by creating a virtual influencer.

I’ll close out the fashion section with a special tip of the hat to L’Oreal. Their GORJS DAO is testing new ways of allocating a treasury to artists.

Physical goods

Fashion wasn’t the only group to bridge atoms and pixels.

Web3 realtor Roofstock sold a home using blockchain technology. (Technically, the blockchain was indirectly involved, but still.) The founder of Centrifuge explained the idea of real-world assets (RWAs), or tokenizing off-chain assets into on-chain entities for fractional ownership. The Pudgy Penguins NFT collection branched out into selling plush toys through retailers. The CEO was kind enough to share the lessons he learned along the way.

Then there were the Girl Scouts. No, they didn’t have any connection to web3. But their annual cookie sale experienced some very crypto-like price movements. Who knows? Maybe they’ll adopt a blockchain solution next year.

Metaverse

Publisher Hachette and clothier Gucci (there we go with the fashion vertical again) set up shop in metaverse properties. As did New York’s Metropolitan Museum and Pussy Riot’s Nadya Tolokonnikova. The idea of workplace metaverse grew to include law firms and VR-based job training. For one-off events, Taco Bell hosted a wedding (no, seriously) and McDonald’s went all-out for Lunar New Year.

It wasn’t all upside, though. Disney closed down its “Next-Gen Storytelling” initiative – a metaverse play, even if they didn’t outright call it that – and Metaverse Fashion Week was meh at best. (No, I will not make the obvious “meh-taverse” pun.)

The year closed out with that one very-not-at-all-newsworthy Fortnite mishap. But it was so small that it’s hardly worth a mention. At least, I’m sure that’s how Fortnite and Lego would like you to see it.

Oh yes, and there’s still no Otherside. This metaverse property-to-be was in the first segment of the very first Block & Mortar, in May 2022. At this rate Yuga Labs may as well rename it “Godot.”

The Bitcoin ETF

“Will the Bitcoin ETF happen?” was a recurring segment in crypto news. Usually of the form “OK it didn’t happen last week, but next week it’ll definitely happen…”

The Bitcoin ETF did not happen.

That didn’t stop one crypto news outlet from telling everyone this dream had come true, though. Shortly before engaging in a vigorous backpedaling.

(I wonder how often the Bitcoin ETF comes up at Pubkey, New York’s Bitcoin bar?)

NFTs

NFTs saw less news coverage in 2023, in part due to Crypto Winter™’s impact on prices and interest. Still, camera company Canon unveiled their NFT marketplace, as did auction house Sotheby’s. Bitcoin got some kind-of-NFTs through the Ordinals project. Goblintown offered a single-finger salute, a sentiment which was topped only by pet rock NFTs going for obscene prices.

Scanning eyeballs

2023 was most certainly the Year Of Scanning Eyeballs.

The topic came up so many times – see issues 57, 66, 67, 68, 69, 70, 71, 77 – that I briefly toyed with renaming the newsletter “The Worldcoin Gazette” or some similar.

I didn’t.

But I thought about it.

It wouldn’t be a year in web3 without some legal issues, now, would it?

We’ll start with the Plain Old Lawsuit section of the legal woes. The top of that list was the Hermes/Metabirkins case, which came to a swift end in favor of Hermes.

Moving on to regulatory matters, Coinbase’s troubled relationship with the SEC made plenty of headlines. Coinbase seems to have gotten in trouble for … being open and up-front with the SEC about who they were and what they were up to? At least that’s how it sounds to me. Stories like this drive crypto companies to look for friendlier climes. And also inspire a note of apology from one frustrated podcast host.

Next up we have crime. Crypto crime. There was so much of it last year, I even dedicated an entire issue to the topic. In no particular order:

Then, there was the big one: SBF got his day in court. The trial’s play-by-play events – including the circus of courtroom hopefuls – dominated crypto news, leaving me little to write about that first week. “I’ll wait until it’s over,” I said.

I didn’t have to wait long. The gavel dropped some weeks later. Jurors reached a verdict so quickly that, in retrospect, I should have titled that issue “Five-Hour Energy.” Live and learn.

Looking back across all of the crypto madness – not “web3,” just “crypto” – Steve Punt and Hugh Dennis said it better than I ever could:

There have been a number of high-profile court cases recently where it’s turned out that all those super-sleek investment funds and venture capital companies, who are always telling us how many Harvard graduates they employ and how sophisticated their algorithms are, have put billions of dollars into things they clearly didn’t understand.

So last week Sam Bankman-Fried, owner of a cryptocurrency exchange called FTX, was found guilty of fraud after scamming hundreds of sophisticated investors out of billions of dollars. Simply because none of them dared ask: “How’s this work, then?”

The Now Show (BBC Radio 4), 17 November

Well put.

We’ll see whether I reuse that bit in the 2024 recap.

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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