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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We promise, there’s no coverage of loyalty programs this time around. (But it’ll probably be back next week.)

It’s all just a game (in the textbook sense of the word)

Let’s talk about three closely-related terms:

• A game is an activity built on rules and goals.  And maybe progression, too.

• Gamification structures everyday tasks in a game-like fashion.  Despite the name, it doesn’t necessarily involve leisurely distraction. 

• Gaming the system means that you derive benefit by playing a different game than the one intended.  (Often by exploiting loopholes or inconsistencies in the game’s design.) 

Done well, gamification can improve task completion rates, even if participants are only “playing against” their past selves.  Progress bars and animations can be strong motivators. No wonder it’s been a core of language-learning tools, habit-trackers, and fitness apps.

Gamification also has its flaws.  Devious players will no doubt find ways to game the system, which can annoy the honest participants.  Devious app builders can construct handheld casinos subtle traps  in order to exploit players.  And then there’s the ultimate sin of poor game design, which leads people – honest and otherwise – to lose interest.

By this point you’re probably asking: how is any of this relevant to Block & Mortar’s usual topic of “web3 use cases?"  And the answer is: play-to-earn (P2E).

P2E is a web3 flavor of gamification in which people are rewarded in cryptocurrency tokens. It sometimes gets a bad rap just because of its general association with crypto.  (Feel free to skim our archives for the “Things Go Wrong™” topic if you haven’t seen much on crypto’s dark side.) P2E also suffers from the way games – the kind that can translate to real-money payouts – can quickly devolve into a mix of work and speculative ventures that teeter on collapse. 

But everything has its place. In the same way language-learning apps have honed their gamification, P2E mechanics can help with civic involvement. Consider a little something happening in Japan, as noted on Twitter by @wrathofgnon:

Japanese NGO makes a game of citizen collected infrastructure damage reports: “Guardians of Steel and Concrete”. The first task was called “Manhole Crusade”. By locating and taking photos of manholes players earn tokens. These tokens will eventually be redeemable in real life.

Gamers are asked to rate the manhole cover by quality and the reports are sent to city engineers for maintenance. When tested in the Tokyo ward Shibuya the 10,500 manholes were documented in 3 days. It would have taken many years for city engineers to complete the same task.

The NGO, called Whole Earth Foundation, offers more details on their website.

From what we see, Manhole Crusade strikes the right balance between “find work that is reasonable for people to do,” “structure it as a simple task,” and “compensate people for their effort.” 

(If you squint just right, P2E sounds very much like a loyalty program. Both reward people for completing specific tasks in a certain way.  And while neither one requires building on blockchain technology, doing so simplifies some of the underlying marketplace mechanics.  But we promised that we’re taking a break from loyalty programs this week so we’ll leave it at that.)

We expect P2E to become a common app design pattern, right up there with “swipe left or right to express a view.”  How will you use it for your projects and customer interactions?  Do you have lightweight tasks that you can farm out through a mobile app, and reward participants with crypto tokens?  And when the time comes to convert those tokens into real-world items or fiat currency, how will you stay within your (and your participants’) local laws?

All of those questions roll up into one meta-question, which is: at what point will you need to involve an economist and a game designer in your web3 efforts?

And the answer is: pretty early.

Just trust us on this one.

Depends what you mean by “place”

A few weeks back we shared our view on visiting metaverse properties:

The point of being in a metaverse is digital escapism. Doing so allows you to be someone else, somewhere else. To play a role. To don a costume and parade around a virtual world with your old friends, and maybe make some new ones. 

At the risk of getting too philosophical on a Tuesday morning, this is about redefining “reality.”

What we said about escapism still stands. (We’ll come back to that in a moment.)  We’d now like to extend our statement on redefining “reality.”  The more we think about it, there’s a good question in there about the definition of “place.”

If you’re of a certain age – like, say, a couple of guys with two decades’ experience in the tech sector – you’ve probably (mis)spent time in group chat systems like IRC, or BBSs, or something similar.  You may have even held deep discussions on async communications systems like Usenet.  And maybe, as a result, you easily see the appeal of spending time in a metaverse property.  (Even if none of the current implementations strike your fancy.)  You notice the shift from typing to speaking, and from witty usernames to static images to fully-animated avatars, but the core element is the same: people are interacting, people are sharing an experience. And the sense of “place” is defined not so much by geography, but by who is present and when.

The shared experience can take the form of participating in events, as in Roblox or Fortnite.  Or interacting with brands shopping, in The Sandbox.  It can also be an extension of a corporate workplace, either for training (great use case here) or for recreating the in-office environment  (because 2D video calls apparently weren’t good enough).  

All of this means that “plain old hanging out” is also on the menu.  And now Facebook’s Meta’s Facebook’s Horizon Worlds (HW) – despite its very corporate-themed debut, which led us to describe it as “where you pretend to pay attention to work meetings” – is showing off more of its social-hang-out side.  Maybe?  That’s the vibe we’re getting from this recent exploration, in which New York Times journalist Kashmir Hill donned her VR goggles to experience all HW had to offer. We’re glad she did it, because now we won’t have to.

(It’s a great piece and we encourage you to read it all the way through.  Just note that she’s chosen here to define “the metaverse” as “Horizon, Meta’s virtual platform for events, business meetings and user-constructed spaces.”  The general consensus is that there are multiple metaverse properties, each with their own flavor and underlying implementation.  So there’s more to this than Facebook and VR.  Something to keep in mind.)

Most of the metaverse coverage we’ve seen thus far has shown a clear divide between Corporate Entities providing some kind of service, and Everyday People consuming the service.  What caught our eye about Hill’s piece was the number of ways HW lets Everyday People build their own spot (“world”) for others to congregate.  Some of the comedy clubs Hill describes, for example, were created by … people who just wanted to run a comedy club.  The sort of thing that has a much higher barrier to entry in the real world.

HW requires avatars to resemble people – as opposed to the elves or robots seen in other metaverse properties – which may further explain why some experiences are such strong analogs of everyday neighborhood life.  HW has its share of games and adventure, yes; but going back to our point about digital escapism, some people don’t even need a far-off world full of fantasy creatures.  They just want to be Somewhere Else:

“Oh, that’s me. I sleep in my headset,” said Sam […]. “Imagine waking up in the most amazing place in the universe.”

I thought she was kidding, but she insisted that she was serious. “What does your bedroom look like? Is it where you want to live the rest of your life?” she asked.

I told her I liked my bedroom. She persisted: “That’s where you want to die?”

Granted, people’s desire to be Somewhere Else got a strong boost from the Covid-19 pandemic.  Early 2020 saw a sudden, steep drop in opportunities for casual, in-person socializing.  So the idea of spending time “together” in a digital environment was probably more appealing than it would have been otherwise. Maybe that was the on-ramp to this digital Soma that has people sleeping in their VR goggles?

And now that people are more comfortable meeting up in the real world (we will not, however, refer to this as “reopening” or “returning to normal”) what will that mean for metaverse adoption going forward?  How much will the ability to instantly be Somewhere Else outpace the perks and drawbacks of, as the cool kids call it, meatspace?

John Hanke’s Niantic aims to make that experience more exciting.  Instead of sitting in bed, curled up with goggles that are plugged into a wall, his company is building a “real-world metaverse” based on augmented reality: 

“That was part of the inspiration for starting Niantic: trying to turn the world into a game board; trying to take some of those qualities of games that are so really enthralling, maybe I won’t use the word addictive, but certainly captivating kids. [We] take some of that, and marry it up with an activity that’s about being out in the world and being active, to try and get the best of both.”

So will we prefer more VR, AR, or something else entirely?

One thing is certain: our definitions of “reality” and “place” have changed yet again.

Though, depending on your perspective, the core elements haven’t changed at all.

Make it invisible by making it omnipresent

Just a quick note before we close out:

Last week we briefly touched on “web3’s disappearing act,” the idea that companies would increase their use of the technology while also shielding end-users from the fiddly details.  Lowering the barrier to entry, so the plan goes, should improve adoption.

It’s one thing for a company to do this, even if it’s a large company like Starbucks or Chipotle.  Quite another when a whole city does it:

A memorandum of understanding was signed earlier this year between Lugano [in Switzerland] and Tether to integrate existing payment services with bitcoin and vetted stablecoins, Tether Chief Technology Officer Paolo Ardoino said in a statement.

[…]

Apart from onboarding merchants, the initiative wants to extend crypto payments to later include parking tickets, public services and student tuition. Residents of Lugano will also be allowed to pay taxes using cryptocurrencies.

(Don’t let the article’s headline fool you.  This is about so much more than McDonald’s.)

We see this project, known in Lugano as Plan ₿, as simultaneously ambitious and necessary.  Ambitious, because it’s an attempt at widespread adoption of cryptocurrency for everyday purposes.  (And that hasn’t always gone smoothly.)  Necessary, because the best way to identify all of the wrinkles in such a system is to use it, at scale, across a variety of business entities. 

And hence, the twist on “making web3 invisible”: Lugano’s Plan ₿ will make sure that cryptocurrency is both everywhere and well-supported, so that people don’t have to think about it.

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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