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#99 – Odyssey's change in direction, SBF's future, and Bitcoin gives gold a run

description: A coffee cup, with latte art of a butterfly.  Photo by Waranya Mooldee on Unsplash.

Odyssey’s change in direction

Starbucks Odyssey is leaving beta!

You may recall that the blockchain-based loyalty program was announced in September 2022 and launched that December. It would be cliche for me to say that it launched “to much fanfare,” since Starbucks itself provided the marketing buzz. But it was genuinely a Big Deal™ because this was a Very Big, Established Industry Name getting into web3.

They weren’t just dipping their toes in it, either. Nor were they doing a splashy, one-off project just to get some media attention. Starbucks was wiring blockchain into their Rewards loyalty program, a cash cow. That was our sign that the coffee roaster had found a way to connect web3 to long-term, recurring revenue streams. To top it off, Adam Brotman – the very person who created the Rewards program – was leading the charge.

So yes, Odyssey is graduating out of beta in order to … shut down later this month.

On the one hand, sure, one interpretation of the “beta” label is We Can Change Things Or Even Pull The Plug On Short Notice. (See: Google.) (Who am I kidding? Google can also pull the plug on products that have graduated out of beta.)

On the other hand, a product’s beta period is the time to sort out bugs before the big go-live. Entering beta is a big sign to the world of Hey We’re Almost There. So while the possibility of an unceremonious shutdown was always in the cards, the Odyssey news feels different. And it doesn’t help that Starbucks is being so coy on what’s next. According to the Odyssey FAQ:

The Starbucks Odyssey Beta must come to an end to prepare for what comes next as we continue to evolve the program.

That is … vague. And not the least bit reassuring.

I see three and a half paths for Starbucks from here:

1/ Restart from scratch. Perhaps the beta testing uncovered some nasty loophole. One that Starbucks would not have been able to reverse if exploited, given blockchain’s “no take-backs” nature. In that case, yes, it makes sense to start fresh.

1.5/ Do this on a self-managed blockchain. If Starbucks runs its own systems, then their customers’ loyalty points will never be at the mercy of a third-party blockchain staying afloat.

2/ Restart from scratch, and partner with an experienced blockchain company to handle infrastructure and security. Starbucks gets to focus on running the loyalty program while leaving the plumbing to an expert. If they want to use blockchain but not become a blockchain company then this is the best path forward.

3/ Quietly scrap the whole thing. Perhaps Starbucks has determined that blockchain won’t really move the needle on its business. Hanging a mysterious We’ll Be Back … Someday sign and letting Odyssey fade is one way to move on.

Whatever the case, know that Starbucks will set the pace for other big-corporate blockchain efforts:

If Odyssey returns, others will use it as a template. As well they should! I wouldn’t advise anyone to copy Starbucks verbatim (see: all of the companies that wanted to copy Google’s or Facebook’s ML/AI efforts) but there’s a lot to be said for letting a deep-pocketed company sort out what works and what doesn’t.

If Odyssey shuts down altogether (and doesn’t get caught in a PR scandal), this will be the all-clear sign to other other companies sitting on blockchain projects. Double points to the execs who will use this as a convenient excuse to kill such a project just because they don’t like it.

It’s not over yet

SBF was convicted of fraud back in November. His sentencing date is coming up next week and prosecutors are pushing for about 50 years. (If you’re playing along at home, that’d be one year for each $20M that FTX, um “misplaced.”) His defense team is pushing for a tenth of that.

What will the judge’s decision be?

Dear reader: I don’t have a law degree. While many people out there would take that lack of experience as license to spout ill-informed hot takes in exchange for clicks (see: the armchair legal experts who Definitely Know For A Fact How The OpenAI Lawsuits Will Turn Out), that’s not my style. I’m happy to say “hell if I know.”

Still, you may wonder why the prosecution and defense have such different ideas on SBF’s time behind bars. I’ll point you to something I wrote last May, after his arrest but before the trial had kicked off:

The whole point of legal defense is to Keep Clients Out Of Prison. So it’s rarely a good opening tactic to declare “my client’s guilty as hell, but …” Instead you start with “my client is innocent!” and then you make the other side do a ton of work to prove otherwise.

SFB’s attorneys are, therefore, doing precisely what they are supposed to do. […] Chipping away at the opposition before the trial begins – and in doing so, hopefully avoiding the trial altogether – is standard fare.

Even if the judges dismiss only a portion of the charges, that still amounts to less work for the defense team to do during a trial. And a smaller chance of their client facing penalties. You know, the whole Keep Clients Out Of Prison bit.

What we see here is the next step along that path. OK, we tried to keep him out of prison, but that didn’t work. We’re still gonna try to get as short a sentence as possible.

I’m not saying it’ll work! But I am saying that it makes perfect sense for them to try.

And given that, we can also expect them to appeal. This story is far from over.

Giving gold a run for its money

A report from behemoth bank JP Morgan Chase (rap name: JPMC) notes that investors are loading up on Bitcoin. So much so, that they now hold more Bitcoin than gold.

(One popular misinterpretation of the JPMC report is that investors were ditching gold for Bitcoin. That’s not the case.)

I don’t have a ton to say here. I’ll just point back to something I’ve mentioned a few times before – most recently, last week – about Bitcoin entering the mainstream investment space:

Financial journalists acknowledged that the last crypto winter was real. But they also compared crypto tokens to the toxic assets of the Great Financial Crisis (the 2008 mortgage meltdown). Despite the wall-to-wall press coverage, they noted, relatively few people were feeling the crypto burn. The digital money-like thing was isolated from the mainstream investment space.

Thanks to the Bitcoin ETFs, that is no longer the case.

Future Bitcoin price swings are going to be … interesting. Especially when we hear about some fund that took on leverage (borrowed money) to buy the cryptocurrency token.

In other news…

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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