Cryptocurrency plunges as crypto “bank” Celsius suspends withdrawals

Cryptocurrency plunges as crypto “bank” Celsius suspends withdrawals

Enlarge (credit: Oliver Mallich)

Major cryptocurrencies suffered big losses on Monday. As I write this, bitcoin is down 14 percent over the last 24 hours, while ether is down 16 percent. Other major cryptocurrencies—including solana, dogecoin, and litecoin—are also down by double digits, according to CoinMarketCap.

The cryptocurrency crash is part of a broader market sell-off. The S&P 500 stock market index fell almost 4 percent on Monday amid fears of faster interest rate hikes from the Federal Reserve. High interest rates put downward pressure on all assets, including stocks and cryptocurrencies.

Another big factor that may have spooked cryptocurrency traders was the Monday announcement by crypto lender Celsius that it was suspending withdrawals. The company said this was the result of “extreme market conditions.”

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#bitcoin, #celsius, #cryptocurrency, #ether, #policy

Bitcoin plunges to lowest price since 2020 amid broader sell-off

Bitcoin plunges to lowest price since 2020 amid broader sell-off

Enlarge (credit: R.Tsubin / Getty)

The price of one Bitcoin briefly fell below $27,000 on Thursday morning, the lowest price for the cryptocurrency since 2020. The world’s leading virtual currency bounced back later in the day and now trades at $28,600. But that’s still 20 percent below the price one week ago and 57 percent below last November’s peak.

Bitcoin’s fall is part of a broader cryptocurrency sell-off. Ethereum is currently down 8 percent over the last 24 hours and 28 percent over the last week. Additionally, Cardano (39 percent), Dogecoin (36 percent), and Litecoin (32 percent) have all fallen during the past week.

Perhaps most alarming for the cryptocurrency world: The “stablecoin” Tether lost its peg to the US dollar early Thursday, briefly dipping to 96 cents. Tether is now trading at $1 once again.

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#bitcoin, #cryptocurrency, #meme-stocks, #policy

Wikipedia community votes to stop accepting cryptocurrency donations

Wikipedia community votes to stop accepting cryptocurrency donations

Enlarge (credit: iStock / Getty Images Plus)

More than 200 long-time Wikipedia editors have requested that the Wikimedia Foundation stop accepting cryptocurrency donations. The foundation received crypto donations worth about $130,000 in the most recent fiscal year—less than 0.1 percent of the foundation’s revenue, which topped $150 million last year.

Debate on the proposal has raged over the last three months.

“Cryptocurrencies are extremely risky investments that have only been gaining popularity among retail investors,” wrote Wikipedia user GorillaWarfare, the original author of the proposal, back in January. “I do not think we should be endorsing their use in this way.”

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#bitcoin, #cryptocurrency, #ethereum, #policy, #wikimedia

Russia can’t find enough buyers for its oil, considers selling in bitcoin

The sun sets beyond an oil pumping unit, also known as a pumping jack, at a drilling site operated by Tatneft OAO near Almetyevsk, Russia.

Enlarge / The sun sets beyond an oil pumping unit, also known as a pumping jack, at a drilling site operated by Tatneft OAO near Almetyevsk, Russia. (credit: Andrey Rudakov/Bloomberg)

Russia’s economy is in shambles, and the value of the ruble has plummeted as the country finds itself increasingly isolated from global trade in the wake of its war on Ukraine. The country is even having a hard time finding buyers for its oil, in part because the global oil market is dominated by the US dollar.

Russia’s difficulty in selling its oil might be why it is considering alternative payment methods, including bitcoin. Pavel Zavalny, chair of the State Duma’s committee on energy, floated the idea at a press conference this week, the BBC reported.

“We have been proposing to China for a long time to switch to settlements in national currencies for rubles and yuan. With Turkey, it will be lira and rubles,” Zavalny said. “You can also trade bitcoins.”

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#bitcoin, #cryptocurrency, #oil-and-gas, #policy, #russia, #russian-invasion-of-ukraine, #sanctions

Biden considers digital dollar—here’s how it could differ from regular money

Illustration of fiber Internet lines with dollar signs.

Enlarge (credit: Getty Images | MirageC)

President Joe Biden today issued an executive order that could lead to the US creating a digital currency.

“My Administration places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC [Central Bank Digital Currency],” the executive order said. “These efforts should include assessments of possible benefits and risks for consumers, investors, and businesses; financial stability and systemic risk; payment systems; national security; the ability to exercise human rights; financial inclusion and equity; and the actions required to launch a United States CBDC if doing so is deemed to be in the national interest.”

Biden’s order said a US-issued digital currency could be used to “support efficient and low-cost transactions, particularly for cross‑border funds transfers and payments, and to foster greater access to the financial system, with fewer of the risks posed by private sector-administered digital assets” such as bitcoin and other cryptocurrencies. But there are “potential risks and downsides to consider,” and Biden ordered federal agencies to prepare a report within six months analyzing the implications. Over 100 countries are already “exploring or piloting” CBDCs, the White House said.

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#biden, #bitcoin, #cryptocurrency, #digital-dollar, #policy

Don’t let Reese Witherspoon make you crazy

Actress Reese Witherspoon during an interview on Thursday, December 17, 2021.

Enlarge / Actress Reese Witherspoon during an interview on Thursday, December 17, 2021. (credit: NBC)

At 12:24 pm on January 11, the actor and entrepreneur Reese Witherspoon made a startling announcement to her 2.9 million Twitter followers. “In the (near) future, every person will have a parallel digital identity,” she wrote. “Avatars, crypto wallets, digital goods will be the norm. Are you planning for this?”

That final line struck a note of urgency. The metaverse is coming, was her message, and you haven’t packed your go bag yet?

Witherspoon’s tweet arrived amid a backlash against celebrities cheerleading the virtual world and pushing their fans into cyber currency. It was bad enough that for years we had been pummeled by crypto dudes for not diverting all of our cash reserves to bitcoin and HODLing no matter what. The Twitter history of “Bitcoin Billionaire” Tyler Winklevoss (who, with his twin bro, Cameron, has done very well since being punked by Mark Zuckerberg back at Harvard) is an endless barrage of FOMO pitches, delivered with the enigmatic faux-wisdom of a blockchain Buddha. “Because of bitcoin, the universe will never be the same,” he tweeted recently. Got that, God?

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#cryptocurrency, #cryptocurrency-bitcoin, #gaming-culture, #nft, #policy

$3.6 billion bitcoin seizure shows how hard it is to launder cryptocurrency

The IRS detailed the winding and tangled routes the couple allegedly took to launder a portion of the nearly 120,000 bitcoins stolen from the cryptocurrency exchange Bitfinex in 2016.

Enlarge / The IRS detailed the winding and tangled routes the couple allegedly took to launder a portion of the nearly 120,000 bitcoins stolen from the cryptocurrency exchange Bitfinex in 2016. (credit: William Whitehurst | Getty Images)

On Tuesday, Ilya Lichtenstein and Heather Morgan were arrested in New York and accused of laundering a record $4.5 billion worth of stolen cryptocurrency. In the 24 hours immediately afterward, the cybersecurity world ruthlessly mocked their operational security screwups: Lichtenstein allegedly stored many of the private keys controlling those funds in a cloud-storage wallet that made them easy to seize, and Morgan flaunted her “self-made” wealth in a series of cringe-inducing rap videos on YouTube and Forbes columns.

But those gaffes have obscured the remarkable number of multi-layered technical measures that prosecutors say the couple did use to try to dead-end the trail for anyone following their money. Even more remarkable, perhaps, is that federal agents, led by IRS Criminal Investigations, managed to defeat those alleged attempts at financial anonymity on the way to recouping $3.6 billion of stolen cryptocurrency. In doing so, they demonstrated just how advanced cryptocurrency tracing has become—potentially even for coins once believed to be practically untraceable.

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#bitcoin, #biz-it, #cryptocurrency, #doj, #money-laundering, #policy

The Legalized Gambling Free-For-All

We seem to have dropped any pretense of “responsible” wagering.

#cryptocurrency, #gambling, #gamestop-corporation, #internal-sub-only-nl, #legalization, #nonfungible-tokens-nfts, #parlays, #sports-betting

How $323M in crypto was stolen from a blockchain bridge called Wormhole

How $323M in crypto was stolen from a blockchain bridge called Wormhole

Enlarge (credit: Getty Images)

This is a story about how a simple software bug allowed the fourth-biggest cryptocurrency theft ever.

Hackers stole more than $323 million in cryptocurrency by exploiting a vulnerability in Wormhole, a Web-based service that allows inter-blockchain transactions. Wormhole lets people move digital coins tied to one blockchain over to a different blockchain; such blockchain bridges are particularly useful for decentralized finance (DeFi) services that operate on two or more chains, often with vastly different protocols, rules, and processes.

A guardian with no teeth

Bridges use wrapped tokens, which lock tokens in one blockchain into a smart contract. After a decentralized cross-chain oracle called a “guardian” certifies that the coins have been properly locked on one chain, the bridge mints or releases tokens of the same value on the other chain. Wormhole bridges the Solana blockchain with other blockchains, including those for Avalanche, Oasis, Binance Smart Chain, Ethereum, Polygon, and Terra.

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#biz-it, #bridges, #cryptocurrency, #defi, #hacking

Meta’s cryptocurrency ploy all but dead with Libra/Diem seeking to sell assets

With an image of Federal Reserve Bank Chairman Jerome Powell on a screen in the background, Facebook/Meta co-founder and CEO Mark Zuckerberg testifies before the House Financial Services Committee on October 23, 2019, in Washington, DC.

Enlarge / With an image of Federal Reserve Bank Chairman Jerome Powell on a screen in the background, Facebook/Meta co-founder and CEO Mark Zuckerberg testifies before the House Financial Services Committee on October 23, 2019, in Washington, DC. (credit: Chip Somodevilla/Getty Images)

After years of effort, Meta’s cryptocurrency initiative has collapsed under the weight of regulatory scrutiny.

The Diem Association, formerly known as the Libra Association, is considering selling its assets and returning money to investors, according to a Bloomberg report. There’s not much to sell, though. The company doesn’t have much in the way of physical assets—just some intellectual property. Perhaps the most valuable part of the association is its engineers. Diem is reportedly looking for a “new home” for them.

Mark Zuckerberg first announced the project in 2019, back when his company was named Facebook and the project was named Libra. He said the cryptocurrency would serve as the foundation for payments within Facebook Messenger and WhatsApp. Zuckerberg managed to convince dozens of companies to become founding members of the backing organization, including Visa, MasterCard, Uber, Lyft, eBay, Spotify, and Andreessen Horowitz.

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#blockchain, #calibra, #cryptocurrency, #diem, #facebook, #libra, #meta, #policy

Bitcoin drops to six-month low as investors dump speculative assets

Bitcoin drops to six-month low as investors dump speculative assets

Enlarge (credit: Chris Ratcliffe/Bloomberg via Getty Images)

Bitcoin dropped to a six-month low on Saturday, extending a steep fall recorded in the previous session as the cryptocurrency market was swept up in a powerful shift by investors out of speculative assets.

The price of the biggest digital token by market value fell 4.3 percent in the European morning on Saturday to $35,127, the lowest level since July 2021. Bitcoin has now lost almost a quarter of its value this year.

Other cryptocurrencies have also come under intense selling pressure, with an FT Wilshire index of the top five tokens excluding bitcoin down 30 percent in the first month of 2022.

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#bitcoin, #cryptocurrency, #policy

North Korean hackers stole nearly $400 million in crypto last year

North Korean hackers stole nearly $400 million in crypto last year

Enlarge

The past year saw a breathtaking rise in the value of cryptocurrencies like Bitcoin and Ethereum, with Bitcoin gaining 60 percent in value in 2021 and Ethereum spiking 80 percent. So perhaps it’s no surprise that the relentless North Korean hackers who feed off that booming crypto economy had a very good year as well.

North Korean hackers stole a total of $395 million worth of crypto coins last year across seven intrusions into cryptocurrency exchanges and investment firms, according to blockchain analysis firm Chainalysis. The nine-figure sum represents a nearly $100 million increase over the previous year’s thefts by North Korean hacker groups, and it brings their total haul over the past five years to $1.5 billion in cryptocurrency alone—not including the uncounted hundreds of millions more the country has stolen from the traditional financial system. That hoard of stolen cryptocurrency now contributes significantly to the coffers of Kim Jong-un’s totalitarian regime as it seeks to fund itself—and its weapons programs—despite the country’s heavily sanctioned, isolated, and ailing economy.

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#biz-it, #cryptocurrency, #hacking, #north-korea, #policy

Hackers drain $31 million from cryptocurrency service MonoX Finance

Close-up photo of hand operating touchscreen.

Enlarge (credit: Getty Images)

Blockchain startup MonoX Finance said on Wednesday that a hacker stole $31 million by exploiting a bug in software the service uses to draft smart contracts.

The company uses a decentralized finance protocol known as MonoX that lets users trade digital currency tokens without some of the requirements of traditional exchanges. “Project owners can list their tokens without the burden of capital requirements and focus on using funds for building the project instead of providing liquidity,” MonoX company representatives say here. “It works by grouping deposited tokens into a virtual pair with vCASH, to offer a single token pool design.”

An accounting error built into the company’s software let an attacker inflate the price of the MONO token and to then use it to cash out all the other deposited tokens, MonoX Finance revealed in a post. The haul amounted to $31 million worth of tokens on the Ethereum or Polygon blockchains, both of which are supported by the MonoX protocol.

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#biz-it, #cryptocurrency, #defi, #hacking

Lord of the Rings-themed cryptocurrency gets thrown into Mount Doom

A screenshot from jrrtoken.com. All similarities to <em>LOTR</em> were purely coincidental, apparently.

Enlarge / A screenshot from jrrtoken.com. All similarities to LOTR were purely coincidental, apparently.

The estate of J.R.R. Tolkien, the author of The Lord of the Rings, has successfully vanquished a cryptocurrency that styled itself as “The One Token That Rules Them All.”

The JRR Token cryptocurrency launched in August, with a website that featured rings, hobbit holes, and a wizard with an uncanny resemblance to Gandalf.

But the Tolkien estate, which handles the rights to J.R.R. Tolkien’s The Hobbit and The Lord of the Rings fantasy novels, quickly stepped in to lodge a complaint with the World Intellectual Property Organization (WIPO), the global forum for intellectual property policy.

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#biz-it, #copyright, #cryptocurrency, #lord-of-the-rings, #policy, #trademarks

More than 100,000 people have had their eyes scanned for free cryptocurrency

People in Chile with Worldcoin's "Orb" iris scanner.

Enlarge / People in Chile with Worldcoin’s “Orb” iris scanner. (credit: Worldcoin)

More than 100,000 people have had their eyes scanned in return for a cryptocurrency called Worldcoin, as a project to distribute digital money more widely around the world accelerates.

Worldcoin has distributed about 30 iris-scanning hardware devices, which they call “orbs,” to early users on four continents, who get rewards for signing up more people. Orbs take photos of a user’s eyeballs, creating a unique code that can be used to claim free digital tokens.

The project’s developers said on Thursday they planned to release hundreds of orbs in the coming months and eventually distribute 4,000 devices per month. The team plans to debut the cryptocurrency network early next year and begin giving away the tokens at that time. They have not said how much cryptocurrency users can expect to receive.

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#biometrics, #bitcoin, #biz-it, #cryptocurrency, #iris-scanning, #policy, #worldcoin

Ted Cruz says bitcoin will stabilize Texas electric grid—here’s why he’s wrong

A man in a open-collared shirt addresses a crowd with a mic.

Enlarge / Texas Sen. Ted Cruz. (credit: Gage Skidmore / Flickr)

Sen. Ted Cruz (R-Texas) thinks he has found a way to stabilize Texas’ electric grid in case another deep freeze hits the state. He wants to use the power of bitcoin.

“Because of the ability of bitcoin mining to turn on or off instantaneously, if you have a moment where you have a power shortage or a power crisis, whether it’s a freeze or some other natural disaster where power generation capacity goes down, that creates the capacity to instantaneously shift that energy to put it back on the grid,” Cruz told the Texas Blockchain Summit last week.

Now, there are a few reasons why what he said doesn’t add up. But let’s start with his assumptions. First, large bitcoin-mining operations use hundreds or thousands of powerful computers, which create a demand for power. If power plants can profitably mine bitcoin using the electricity they generate—and there are examples of that already—it stands to reason that bitcoin mining could create enough demand that investors would be enticed to build new power plants. Those plants could theoretically be tasked with providing power to the grid in cases of emergency.

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#bitcoin, #cryptocurrency, #electric-grid, #policy, #ted-cruz, #texas, #texas-power-outage

Sorare raises $680 million for its fantasy sports NFT game

French startup Sorare has announced that it has raised a significant funding round. SoftBank's Vision Fund 2 has led a $680 million Series B round, which values the company at $4.3 billion.

Sorare has built a fantasty football (soccer) platform based on NFTs, or non-fungible tokens. Each digital card is registered as a unique token on the Ethereum blockchain. Players can buy and sell cards from other players. Transactions are all recorded on the Ethereum blockchain.

What makes Sorare unique is that it has partnered with 180 football organizations, including some of the most famous clubs in Europe, such as Real Madrid, Liverpool and Juventus. It creates a barrier to entry for other companies in the space.

With today’s funding round, the company plans to expand to new sports, open an office in the U.S., hire more people and invest in marketing campaigns. You can expect more partnership announcements with professional sports organizations in the future.

In addition to SoftBank's Vision Fund team, Atomico, Bessemer Ventures, D1 Capital, Eurazeo, IVP and Liontree are also participating in the round. Some of the startup’s existing investors are also investing once again, such as Benchmark, Accel, Headline and various business angels.

Sorare generates revenue by issuing new cards on the platform. Players can then buy those new cards and add them to their collection. They can also manage a squad of players and earn points based on real-life performances.

Over time, the value of a card can go up or down. That’s why players often buy and sell cards from other players — there are even third-party websites that help you track auctions. $150 million worth of cards have been traded on the platform since January. Sorare doesn’t take a cut on player-to-player transactions right now.

While the volume of transaction is quite big, there is still a lot of potential for user growth. There are currently 600,000 registered users and 150,000 users who are buying a card or composing a team every month. Sales have grown by 51x between the second quarter of 2020 and the second quarter of 2021.

“We saw the immense potential that blockchain and NFTs brought to unlock a new way for football clubs, footballers, and their fans to experience a deeper connection with each other. We are thrilled by the success we have seen so far, but this is just the beginning. We believe this is a huge opportunity to create the next sports entertainment giant, bringing Sorare to more football fans and organisations, and to introduce the same proven model to other sports and sports fans worldwide,” Sorare co-founder and CEO Nicolas Julia said.

Sorare’s Series B is a huge funding round, especially for a French startup. Fantasy sports games are one of the best way to expose new people to the world of NFTs. That’s probably why NBA Top Shot is also incredibly popular for NBA fans.

And those platforms have become a great on-ramp to get started in cryptocurrencies. It’s going to be interesting to see whether it becomes more regulated in the future as more people start playing on Sorare.

#blockchain, #crypto, #cryptocurrency, #europe, #fundings-exits, #nft, #sorare

Following SEC lawsuit threat, Coinbase cancels launch of ‘Lend’ product

Coinbase efforts to play hardball with the Securities and Exchange Commission didn’t last too long. The cryptocurrency exchange had garnered the ire of the regulatory commission over its plans to launch a crypto lending product, with the SEC sending the company a Wells notice which indicated that the agency would sue Coinbase if they launched their crypto lending product called Lend.

Less than a couple weeks after publishing a defiant blog post titled “The SEC has told us it wants to sue us over Lend. We don’t know why.” the company quietly announced over the weekend that it will not be launching the Lend product after all.

On Friday, the company quietly added an update to its launch post for Lend, detailing in part:

As we continue our work to seek regulatory clarity for the crypto industry as a whole, we’ve made the difficult decision not to launch the USDC APY program announced below. We have also discontinued the waitlist for this program as we turn our work to what comes next.

Lend was far from an anomaly in the crypto exchange world; investors can find similar functionality in platforms like Gemini which allow users to lend their crypto holdings back to the exchange for the promise of earning interest rates that are much, much higher than traditional savings accounts offer. Coinbase planned to launch the Lend product with the functionality for users to stake the stablecoin USDC and earn (as a starting rate) 4% APY.

The SEC, which has long complained about the limited resources at its disposal, has pursued a limited set of cases against crypto products but doesn’t seem to have been quite comfortable with the fact that users were essentially forfeiting custody of their coins to Coinbase and its partners, They has also indicated to Coinbase that the Lend product did indeed involve a security. Coinbase, which has made the fact that it coordinates closely with regulatory bodies part of its brand, had been trying to take things slowly while sticking to their belief that the product wasn’t security-related.

“The SEC told us they consider Lend to involve a security, but wouldn’t say why or how they’d reached that conclusion. Rather than get discouraged, we chose to continue taking things slowly. In June, we announced our Lend program publicly and opened a waitlist but did not set a public launch date. But once again, we got no explanation from the SEC. Instead, they opened a formal investigation,” a recent Coinbase company blog post read.

The big question is what this means for the other crypto exchanges and whether this act signals the start of a more aggressive streak for SEC chief Gary Gensler’s commission in the crypto world, especially in regards to DeFi mechanics.

Coinbase stock was dropping in intraday trading Monday, alongside a significant pullback in the price of bitcoin and other top cryptocurrencies.

#blockchain, #cryptocurrency, #tc

Andreessen Horowitz’s crypto boss Katie Haun is coming to Disrupt

The crypto space has matured so much in so little time, but even amid a blockbuster year, it’s still facing down the existential risk of aggressive regulation from U.S. agencies.

All the while, venture capital firm Andreessen Horowitz has been tirelessly building out a major crypto arm dedicated to ensuring that the firm will be an institutional powerhouse in the world of cryptocurrencies, decentralized finance and broader “Web3” technologies for years to come. Its early network of investments power much of the crypto world’s earliest success stories, but the firm has bigger ambitions yet. The firm’s efforts here are co-led by General Partner Katie Haun — who was once a federal prosecutor tackling fraud and cyber crime alongside top government agencies.

We’re excited to have Haun join us at TechCrunch Disrupt this year (September 21-23), where we’ll be asking her about all things crypto regulation and what the firm hopes to accomplish with its new, massive $2.2 billion crypto fund. Beyond the firm’s aggressive fund sizes and rapid deal-making in the crypto space, the firm’s partners — including Haun — have been among the most vocal about the potentially transformative nature of the blockchain and cryptocurrencies.

This has gotten more attention in 2021 when currencies have surged, fallen and surged again, minting more and more crypto millionaires while sucking in retail investors clamoring to get a piece of the hot space. It’s also been a year where the crypto space’s diversity has emerged with decentralized autonomous organizations (DAOs) gaining attention, non-fungible tokens (NFTs) catching global attention and decentralized finance (DeFi) threatening to upend financial institutions.

Haun serves on the boards of Coinbase and OpenSea. Coinbase went public this year and delivered one of the firm’s biggest payouts ever, while OpenSea is the dominant platform in the ever-shifting and ever-surging world of NFTs. Both companies are facing controversies on their quest toward crypto greatness. This month, Coinbase detailed that the SEC plans to sue it over the company’s upcoming lending feature. Meanwhile, OpenSea is grappling with the resignation of a highly visible executive who was discovered to be abusing company information to trade NFTs.

It’s a controversial space with plenty of money to be had, and Andreesen Horowitz has made a lot of it.

We look forward to chatting with Haun, alongside a whole host of amazing speakers at Disrupt, including Canva CEO Melanie Perkins, actor-entrepreneur Ryan Reynolds and U.S. Transportation Secretary Pete Buttigieg.

The show is coming up fast. Get your ticket now for less than $100 before the price increases tonight — and we’ll see you soon.

#andreessen-horowitz, #crypto-economy, #cryptocurrency, #events, #katie-haun, #tc, #tc-disrupt-2021

OpenSea released an app — but it’s for browsing, not buying and selling

It’s a big day for the Amazon of the decentralized internet — OpenSea now has an app for iOS and Android. For most companies, having a mobile app is a milestone you’d reach before hitting a $1.5 billion valuation. But like any store — whether you’re selling NFT art or not — there’s a hefty price to pay for app store transactions, whether you’re on Android or iOS. That’s possibly why OpenSea’s shiny, new app is only for browsing NFTs, not for buying or selling them. For context, OpenSea saw $3.4 billion in trading volume across two million transactions in August. With Apple and Google taking 30% of in-app transactions, if that volume had been traded on the new app… What’s 30% of $3.4 billion?

Perhaps more of a roadblock, there’s still no way to make in-app payments with crypto. If OpenSea wanted to support buying and selling, it would have to build out its infrastructure for USD payments and push more users towards it. But part of the appeal of OpenSea is that it’s a crypto native platform, largely reliant on the Ethereum blockchain which gives people easier access to information about when an NFT was minted, who minted it, how it’s been traded, etc. It could upset the existing ecosystem of users if the startup pushed the platform towards being more dollar-friendly.

On the OpenSea app, users can connect their profile, browse NFTs, favorite NFTs, search and filter NFTs, and view collection and item stats. When you view an NFT in the app, a button appears that lets you share the NFT outside of the app. Rarible, another NFT marketplace, released a mobile app about a month ago. Like OpenSea’s app, on the Rarible app, you can only browse NFTs, not buy, sell, or trade them.

Image Credits: OpenSea

OpenSea hasn’t yet responded to questions from TechCrunch about the company’s plans for the app, including whether or not users might one day be able to buy and sell NFTs in the app. It wouldn’t be the first time that crypto was exchanged on an app, as even PayPal now lets you pay with crypto. Instead, perhaps the app can offer a way to help new users onboard into the NFT space, giving them an easy, user-friendly way to browse NFT art without knowing anything about wallets or blockchains or apes.

This app was unveiled just days after an OpenSea executive was accused of trading NFTs on insider information. The company announced on its blog Wednesday that the employee has since resigned.

#apps, #cryptocurrency, #nfts, #opensea

Cryptocurrency launchpad hit by $3 million supply chain attack

Cryptocurrency launchpad hit by $3 million supply chain attack

Enlarge (credit: Austin Distel)

SushiSwap’s chief technology officer says the company’s MISO platform has been hit by a software supply chain attack. SushiSwap is a community-driven decentralized finance (DeFi) platform that lets users swap, earn, lend, borrow, and leverage cryptocurrency assets all from one place. Launched earlier this year, Sushi’s newest offering, Minimal Initial SushiSwap Offering (MISO), is a token launchpad that lets projects launch their own tokens on the Sushi network.

Unlike cryptocurrency coins that need a native blockchain and substantive groundwork, DeFi tokens are an easier alternative to implement, as they can function on an existing blockchain. For example, anybody can create their own “digital tokens” on top of the Ethereum blockchain without having to recreate a new cryptocurrency altogether.

Attacker steals $3 million in Ethereum via one GitHub commit

In a Twitter thread today, SushiSwap CTO Joseph Delong announced that an auction on MISO launchpad had been hijacked via a supply chain attack. An “anonymous contractor” with the GitHub handle AristoK3 and access to the project’s code repository had pushed a malicious code commit that was distributed on the platform’s front-end.

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#biz-it, #cryptocurrency, #defi, #github, #miso, #open-source, #supply-chain-attack, #sushi, #tech

For the love of the loot: Blockchain, the metaverse and gaming’s blind spot

The speed at which gaming has proliferated is matched only by the pace of new buzzwords inundating the ecosystem. Marketers and decision makers, already suffering from FOMO about opportunities within gaming, have latched onto buzzy trends like the applications of blockchain in gaming and the “metaverse” in an effort to get ahead of the trend rather than constantly play catch-up.

The allure is obvious, as the relationship between the blockchain, metaverse, and gaming makes sense. Gaming has always been on the forefront of digital ownership (one can credit gaming platform Steam for normalizing the concept for games, and arguably other media such as movies), and most agreed upon visions of the metaverse rely upon virtual environments common in games with decentralized digital ownership.

Whatever your opinion of either, I believe they both have an interrelated future in gaming. However, the success or relevance of either of these buzzy topics is dependent upon a crucial step that is being skipped at this point.

Let’s start with the example of blockchain and, more specifically, NFTs. Collecting items of varying rarities and often random distribution form some of the core “loops” in many games (i.e. kill monster, get better weapon, kill tougher monster, get even better weapon, etc.), and collecting “skins” (e.g. different outfits/permutation of game character) is one of the most embraced paradigms of micro-transactions in games.

The way NFTs are currently being discussed in relation to gaming are very much in danger of falling into this very trap: Killing the core gameplay loop via a financial fast track.

Now, NFTs are positioned to be a natural fit with various rare items having permanent, trackable, and open value. Recent releases such as “Loot (for Adventurers)” have introduced a novel approach wherein the NFTs are simply descriptions of fantasy-inspired gear and offered in a way that other creators can use them as tools to build worlds around. It’s not hard to imagine a game built around NFT items, à la Loot.

But that’s been done before… kind of. Developers of games with a “loot loop” like the one described above have long had a problem with “farmers”, who acquire game currencies and items to sell to players for real money, against the terms of service of the game. The solution was to implement in-game “auction houses” where players could instead use real money to purchase items from one another.

Unfortunately, this had an unwanted side-effect. As noted by renowned game psychologist Jamie Madigan, our brains are evolved to pay special attention to rewards that are both unexpected and beneficial. When much of the joy in some games comes from an unexpected or randomized reward, being able to easily acquire a known reward with real money robbed the game of what made it fun.

The way NFTs are currently being discussed in relation to gaming are very much in danger of falling into this very trap: Killing the core gameplay loop via a financial fast track. The most extreme examples of this phenomena commit the biggest cardinal sin in gaming — a game that is “pay to win,” where a player with a big bankroll can acquire a material advantage in a competitive game.

Blockchain games such as Axie Infinity have rapidly increased enthusiasm around the concept of “play to earn,” where players can potentially earn money by selling tokenized resources or characters earned within a blockchain game environment. If this sounds like a scenario that can come dangerously close to “pay to win,” that’s because it is.

What is less clear is whether it matters in this context. Does anyone care enough about the core game itself rather than the potential market value of NFTs or earning potential through playing? More fundamentally, if real-world earnings are the point, is it truly a game or just a gamified micro-economy, where “farming” as described above is not an illicit activity, but rather the core game mechanic?

The technology culture around blockchain has elevated solving for very hard problems that very few people care about. The solution (like many problems in tech) involves reevaluation from a more humanist approach. In the case of gaming, there are some fundamental gameplay and game psychology issues to be tackled before these technologies can gain mainstream traction.

We can turn to the metaverse for a related example. Even if you aren’t particularly interested in gaming, you’ve almost certainly heard of the concept after Mark Zuckerberg staked the future of Facebook upon it. For all the excitement, the fundamental issue is that it simply doesn’t exist, and the closest analogs are massive digital game spaces (such as Fortnite) or sandboxes (such as Roblox). Yet, many brands and marketers who haven’t really done the work to understand gaming are trying to fast-track to an opportunity that isn’t likely to materialize for a long time.

Gaming can be seen as the training wheels for the metaverse — the ways we communicate within, navigate, and think about virtual spaces are all based upon mechanics and systems with foundations in gaming. I’d go so far as to predict the first adopters of any “metaverse” will indeed be gamers who have honed these skills and find themselves comfortable within virtual environments.

By now, you might be seeing a pattern: We’re far more interested in the “future” applications of gaming without having much of a perspective on the “now” of gaming. Game scholarship has proliferated since the early aughts due to a recognition of how games were influencing thought in fields ranging from sociology to medicine, and yet the business world hasn’t paid it much attention until recently.

The result is that marketers and decision makers are doing what they do best (chasing the next big thing) without the usual history of why said thing should be big, or what to do with it when they get there. The growth of gaming has yielded an immense opportunity, but the sophistication of the conversations around these possibilities remains stunted, due in part to our misdirected attention.

There is no “pay to win” fast track out of this blind spot. We have to put in the work to win.

#blockchain, #column, #cryptocurrencies, #cryptocurrency, #facebook, #gaming, #loot, #mark-zuckerberg, #metaverse, #nfts, #opinion, #roblox, #startups, #virtual-reality

Crypto’s networked collaboration will drive Web 3.0

Web 1.0 was the static web, and Web 2.0 is the social web, but Web 3.0 will be the decentralized web. It will move us from a world in which communities contribute but don’t own or profit, to one where they can through collaboration.

By breaking away from traditional business models centered around benefiting large corporations, Web3 brings the possibility of community-centered economies of scale. This collaborative spirit and its associated incentive mechanisms are attracting some of the most talented and ambitious developers today, unlocking projects that were previously not possible.

Web3 might not be the final answer, but it’s the current iteration, and innovation isn’t always obvious in the beginning.

Web3, as Ki Chong Tran once said, is “The next major iteration of the internet, which promises to wrest control from the centralized corporations that today dominate the web.” Web3-enabled collaboration is made possible by decentralized networks that no single entity controls.

In closed-source business models, users trust a business to manage funds and execute services. With open-source projects, users trust the technology to perform these tasks. In Web2, the bigger network wins. In Web3, whoever builds the biggest network together wins.

In a decentralized world, not only is participation open to all, the incentive structure is designed so that greater the number of participants, the more everybody succeeds.

Learning from Linux

Linux, which is behind a majority of Web2’s websites, changed the paradigm for how the internet was developed and provides a clear example of how collaborative processes can drive the future of technology. Linux wasn’t developed by an incumbent tech giant, but by a group of volunteer programmers who used networked collaboration, which is when people freely share information without central control.

In The Cathedral & The Bazaar, author Eric S. Raymond shares his observations of the Linux kernel development process and his experiences managing open source projects. Raymond depicts a time when the popular mindset was to develop complex operating systems carefully coordinated by a small, exclusionary group of people — “cathedrals,” which are corporations and financial institutions.

Linux evolved in a completely different way. Raymond explains, “Quality was maintained not by rigid standards or autocracy, but by the naively simple strategy of releasing every week and getting feedback from hundreds of users within days, creating a sort of Darwinian selection on the mutations introduced by developers. To the amazement of almost everyone, this worked quite well.” This Linux development model, or “bazaar” model as Raymond puts it, assumes that “bugs are generally shallow phenomena” when exposed to an army of hackers without significant coordination.

#blockchain, #column, #cryptocurrency, #decentralization, #ec-column, #linux, #operating-systems, #proof-of-stake, #web3

Avalanche raises $230 million from private sale of AVAX tokens

Avalanche, a relatively new blockchain with a focus on speed and low transactions costs, has completed a $230 million private sale of AVAX tokens to some well known crypto funds. Polychain and Three Arrows Capital are leading the investment.

The Avalanche Foundation completed the private sale back in June 2021 and is disclosing it today. Other participants in the private sale include R/Crypto Fund, Dragonfly, CMS Holdings, Collab+Currency and Lvna Capital.

Proceeds from the private sale will be used to support the Avalanche ecosystem, which is relatively nascent when you compare it to the Ethereum blockchain for instance. Among other things, the foundation plans to support DeFi (decentralized finance) projects as well as enterprise applications through grants, token purchases and other forms of investments.

Like Solana and other newer blockchains, Avalanche wants to solve the scalability issues that older blockchains face. For instance, if you’ve recently tried to buy an NFT on the Ethereum blockchain, you probably paid $50 or $100 in transaction fees, or gas fees.

The Avalanche Foundation positions its blockchain as a solid alternative to Ethereum. You can run Dapps (decentralized apps) for a fraction of the costs with a much faster time-to-finality. Avalanche supports smart contracts, which is a key feature to enable DeFi projects.

Here’s what Avalanche’s official website says about its blockchain performance:

Image Credits: Avalanche

Having better performance is just part of the problem when you’re competing with Ethereum and other blockchains. Avalanche also needs to attract developers and build a strong developer community so that it becomes the infrastructure of other crypto projects.

That’s why Avalanche wants to make it as easy as possible to port your Ethereum Dapp to Avalanche. Avalanche’s smart contract chain executes Ethereum Virtual Machine contracts, which means that you can reuse part of your codebase if you’re already active on the Ethereum blockchain.

Similarly, applications that query the Ethereum network can be adapted to support Avalanche by changing API endpoints and adding support for a new network. The Avalanche team has also been working on a bridge to transfer Ethereum assets to the Avalanche blockchain. The equivalent of $1.3 billion in crypto assets have been transferred using this bridge.

Those are technical incentives. As for financial incentives, private sales and grants could help bootstrap developer interest. The Avalanche Foundation says that 225 projects currently support the platform, including popular crypto projects that already run on other blockchains, such as Tether, SushiSwap, Chainlink, Circle and The Graph. Topps, an NFT-based game with partnerships with the MLB and Bundesliga, is also using Avalanche.

Avalanche and its underlying token AVAX is currently the 14th cryptocurrency by total market capitalization according to CoinMarketCap. With a current market cap of $13 billion, Avalanche is ahead of Algorand or Polygon, but behind Polkadot and Solana. Solana also suffered from a major outage earlier this week, raising questions about Solana’s ability to scale. It’s going to be interesting to see whether one of these blockchains can catch up with Ethereum or even surpass Ethereum in usage and value.

#avalanche, #avax, #blockchain, #cryptocurrency, #developer, #fundings-exits, #tc

OpenSea admits incident as top exec is accused of trading NFTs on insider information

The “eBay of NFTs” is running into a scandal as it admits one of its employees traded the crypto digital assets using insider information from the platform.

Yesterday, a top executive at NFT platform OpenSea was accused of front-running sales on the platform, purchasing pieces from NFT collections before they were featured on the homepage of the platform. According to Twitter user @ZuwuTV, the startup’s Head of Product was using secret crypto wallets to buy drops before they listed on the main page of OpenSea, selling them shortly after they were highlighted publicly by OpenSea, and funneling the profits back to his main account. Users linked to a handful of transactions from accounts linked back to the executive on the public blockchain including an NFT drop that was, at the time, actively listed on the front page of the platform.

Today, OpenSea seemed to acknowledge the incident, saying in a blog post that it had “learned that one of our employees purchased items that they knew were set to display on our front page before they appeared there publicly.” The company did not identify the employee but said that they were conducting an “immediate” review of the incident. The startup, which was recently valued at $1.5 billion after raising a $100 million Series B from Andreessen Horowitz, added in the unsigned blog post that this incident was “incredibly disappointing.”

“We’re conducting a thorough review of yesterday’s incident and are committed to doing the right thing for OpenSea users,” OpenSea CEO Devin Finzer said in a tweet.

OpenSea, which did a record $3.4 billion in transaction volume last month, appears not to have had any rules in places preventing employees from using confidential information to buy or sell NFTs on its own platform to its own users. The company detailed that it was now implementing a policy that team members could not buy or sell “from collections or creators while we are featuring or promoting them,” and that they are “prohibited from using confidential information to purchase or sell any NFTs, whether available on the OpenSea platform or not.”

Most NFTs are not generally assumed to be securities, despite little official guidance from the SEC on the crypto asset class. Some in the space have questioned whether different mechanics around buying and selling, alongside ongoing rewards structures may be pushing some NFT sales further into securities territory.

“Many have been enticed by dramatic jumps in the value of new digital assets,” Senate Banking Committee Chairman Sherrod Brown said in a hearing yesterday — as transcribed by The Block — where the relationship between crypto markets and SEC enforcement was discussed. “Some professional investors and celebrities make earning millions look easy. But, as we are reminded time and again, it’s never that simple – and too often, someone’s quick profit comes at the expense of workers and entire communities.”

We’ve reached out to OpenSea for further comment.

#andreessen-horowitz, #blockchains, #ceo, #chairman, #cryptocurrencies, #cryptocurrency, #cryptography, #distributed-computing, #ebay, #ethereum, #executive, #head, #opensea, #tc, #u-s-securities-and-exchange-commission

SEC wants to regulate Coinbase’s crypto yield product, Coinbase disagrees

Coinbase CEO Brian Armstrong has reacted strongly to the company’s current relationship with the U.S. Securities and Exchange Commission. According to him, the SEC is threatening to sue the cryptocurrency exchange if it launches its yield-generating product called Coinbase Lend.

With this new product, Coinbase wants to compete with popular decentralized finance (DeFi) products, such as Compound and Aave. The company wants to operate a lending pool focused on USD Coin (USDC), a stablecoin that is pegged to USD.

If the company manages to launch Coinbase Lend, users will be able to contribute to the lending pool by sending crypto assets to Coinbase Lend. Eventually, the company plans to lend out those crypto assets. What Coinbase users get in exchange to contributing to the lending pool is high interests. Coinbase promises 4% APY on its preview page.

According to Brian Armstrong, the company reached out to the SEC before releasing it. “They responded by telling us this lend feature is a security,” he said on Twitter.

“They refuse to tell us why they think it’s a security, and instead subpoena a bunch of records from us (we comply), demand testimony from our employees (we comply), and then tell us they will be suing us if we proceed to launch, with zero explanation as to why,” he added.

Coinbase’s Chief Legal Officer Paul Grewal also wrote about the events on the company’s blog. It appears that the company decided to move forward and pre-announce the new feature despite the SEC saying that Coinbase’s Lend program is a security.

“The SEC told us they consider Lend to involve a security, but wouldn’t say why or how they’d reached that conclusion. Rather than get discouraged, we chose to continue taking things slowly. In June, we announced our Lend program publicly and opened a waitlist but did not set a public launch date,” Paul Grewal wrote.

Here’s a pro tip for entrepreneurs reading this post. If the SEC tells you that you can’t launch something, don’t put up a waitlist with the words ‘coming soon’.

To no one’s surprise, Coinbase says that the SEC decided to open a formal investigation after that. One employee also had to spend a day with the SEC to answer questions.

“They asked for documents and written responses, and we willingly provided them. They also asked for us to provide a corporate witness to give sworn testimony about the program. As a result, one of our employees spent a full day in August providing complete and transparent testimony about Lend,” Grewal wrote.

As a result, Coinbase is now mad and has chosen to launch a PR campaign against the SEC. Brian Armstrong’s main argument is that other companies have been offering lending pools already, so there’s no reason why some companies can offer such a product and not Coinbase.

“Meanwhile, plenty of other crypto companies continue to offer a lend feature, but Coinbase is somehow not allowed to,” he tweeted.

This is a risky strategy as Coinbase could end up alienating the crypto ecosystem at large. There could be increased scrutiny on DeFi and industry-wide enforcement of stricter rules, as Sar Haribhakti pointed out.

“Ostensibly the SEC’s goal is to protect investors and create fair markets. So who are they protecting here and where is the harm? People seem pretty happy to be earning yield on these various products, across lots of other crypto companies,” Brian Armstrong said.

If you read the fine print, Coinbase doesn’t protect investors with its Lend program. Here’s what it says at the bottom of the Coinbase Lend page: “Lend is not a high-yield USD savings account, and Coinbase is not a bank. Your loaned crypto is not protected by FDIC or SIPC insurance.”

That’s not very reassuring for investors. At some point, Coinbase and the SEC will have to sit at the same table to discuss crypto lending products because a tweetstorm won’t solve the issue.

#blockchain, #coinbase, #cryptocurrency, #defi, #government, #lending-pool, #sec

SEC threatens to sue Coinbase over lending product

SEC threatens to sue Coinbase over lending product

Enlarge (credit: Chesnot / Getty Images)

The US Securities and Exchange Commission has warned that it will sue Coinbase if it launches a new digital asset lending product, and also issued subpoenas to the cryptocurrency trading platform to provide it with more information, according to executives.

Paul Grewal, Coinbase’s chief legal officer, said in a blog post that the company, which in April became the first major US cryptocurrency exchange to list publicly, had received a Wells notice from the regulator saying it would pursue legal action if Coinbase introduced a yield product called Lend.

Lend is designed to allow users to earn interest on certain digital assets on the platform.

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#bitcoin, #coinbase, #cryptocurrency, #ecoin, #policy, #sec

Indian crypto exchange CoinSwitch Kuber in talks to raise funds at unicorn valuation

Indian crypto exchange CoinSwitch Kuber is in advanced stages of talks to raise a new financing round at up to $2 billion in valuation, several sources familiar with the matter told TechCrunch.

If the talks materialize in a deal, CoinSwitch Kuber will become the second crypto startup in the world’s second largest internet market to attain the unicorn status.

The four-year-old startup, which counts Tiger Global, Sequoia Capital India, and Ribbit Capital among its existing investors, was valued at over $500 million valuation in its Series B financing round in April this year.

It’s unclear who is positioning to lead the round. The firm has engaged closely with Andreessen Horowitz and Coinbase in recent weeks, several people aware of those discussions told TechCrunch.

A deal may finalize within this month, sources said. The size of the deal, according to one source, is over $100 million.

The startup declined to comment. Coinbase and A16z, which has yet to back any Indian startup, did not respond to a request for comment Monday. Tiger Global and Sequoia Capital India did not respond to a request for comment last week.

The investment talks come at a time when CoinSwitch Kuber has almost doubled its userbase in recent months — even as local authorities push back against crypto assets. Its eponymous app had over 7 million monthly active users in India last month, up from about 4 million in April this year, according to mobile insight platform App Annie (data of which an industry exec shared with TechCrunch).

B Capital backed CoinSwitch Kuber’s rival CoinDCX last month in a $90 million round that valued the Indian startup at about $1.1 billion.

Policymakers in India have been debating on the status of digital currencies in the South Asian market for several years. India’s central bank, Reserve Bank of India, has expressed concerns about private virtual currencies though it is planning to run trial programs of its first digital currency as soon as December.

More than two dozen Indian startups have become a unicorn this year, up from 11 last year, as several high-profile investors, including Tiger Global, SoftBank and Falcon Edge, have increased the pace of their investments in the South Asian market. TechCrunch reported last week that Tiger Global is engaging with Apna to fund a new round that values the 21-month-old Indian firm at over $1 billion.

#a16z, #andreessen-horowitz, #asia, #coinbase, #coinswitch-kuber, #cryptocurrency, #funding, #india, #sequoia-capital, #tc, #tiger-global

The Loot project flips the script on NFTs

Editor’s note: Kyle Russell is the founder of Playbyte, a startup building an app that lets people make games on their phones.

Last Friday, Dom Hofmann tweeted the launch of Loot, one of his new projects looking at games and game creation through the lens of NFTs:

If “NFTs,” “gas” and “minting” sound unintelligible, the short version is that this project lets you spend some money to create a unique list of items that you could keep in the same wallet (an app like Rainbow) where you’d keep cryptocurrencies or other digital collectibles, typically art (or, as skeptics gleefully note, JPEGs).

I repeat: a unique list of items. No artwork, stats to compare quality or even game rules that could inform such stats.

People spent money to get those unique lists. Thousands. And as happens in NFTs, a market quickly formed around these unique lists of items. The “floor,” or minimum price to buy into a Loot “bag,” shot to thousands of dollars worth of Ethereum. Certain kinds of items in these lists sounded cool and were found to be rare upon analysis of the entire set, and so bags containing them rose in value to extreme heights:

And people began to fill in those missing elements like art — not fundamentally changing the underlying lists, but creating new works that explicitly reference the items in particular lists:

And like the lists themselves, people began taking an algorithmic approach to generating that art:

By August 31st, there was a legible community of people…

  • investing in bags containing certain kinds of items;
  • creating tools for visualizing Loot items and monitoring price fluctuations in this niche market;
  • working on new derivative projects, like creating Realms for a theoretical adventurer with the gear in a Loot bag to explore:

Except, there’s still no game rules for these items — including what it would even mean to have a character equipping them!

Hey, what’s that? ? Oh right, people could make or generate stats too!

This tweet really nails the overall phenomenon:

In less than a week, a community has gone from lists of text to infinitely many illustrations of those items to worlds for those items to reside in and characters to wield them. All from taking simple primitives and generating context around them that gives them value.

It’s pretty magical stuff. But even if there’s some speculative angle to the creation happening, how many people get to participate if these bags cost tens of thousands of dollars at a minimum? On the one hand: If you just think the game of making up a game is fun, because all of these bags and items live on the Ethereum network, then you can still make things that incorporate them at no cost (short of the painful fees currently associated with using Ethereum).

And if it really matters to you to have those unique objects in a wallet of your own so you can really participate, people are thinking of interesting paths there, as well:

If that’s all too jargon-y, I’ll again summarize: There are feasible paths to making it free to “have” these items for the purpose of playing with the growing set of inter-compatible apps or games that might incorporate Loot — you just won’t have a Legit Bag with rare items that could sell for lots of money.

Oh, and what if you like some of the items in a Loot bag, but wish your adventurer could mix-and-match with other items from the broader set that just dropped?

Less than a week and already getting disrupted by unbundling!

I’m sorry, why is this interesting?

The Marvel Cinematic Universe started with Marvel Comics taking out a billion-dollar loan to finance the first four movies based on its iconic superhero characters. The seeds of awareness of these characters had been planted in the minds of the masses through decades of appearances in comics and TV leading up to their first appearances in blockbuster films. Decades of perhaps hundreds of writers and artists were getting paid to create fantastical stories for those characters that people would want to read and that would get them hooked to come back for the next issue. People came to closely associate themselves with characters with kind of funny origins (bit by a radioactive spider!).

This all happened in a top-down, corporate, mass-production context. A few creatives at Marvel did high-leverage work on a freelance or in-house basis, printers made a ton of copies and a supply chain got those issues to comics shops and dime stores across the country. Like dominoes, Stan Lee thinks of some new superhero (pitch: this guy’s not a hippy, he’s a weapons manufacturer industrialist!) to five decades later, Avengers: Endgame and Black Panther warp the definition of blockbuster forever.

But what if someone wanted to create an MCU competitor as a community, instead of going head-to-head with Disney?

Extrapolating from the last week of Loot…

You’d release a contract to generate sets of superhero names and associated powers. People would mint those heroes and they would begin to trade on the open market. People would build tools that determine which powers are more rare, especially around ones that sound cool (“flight” is a gimme).

They’d imagine their hero, illustrate them themselves and commission artists who could make them look cool. Eventually more technical folks in the community would do the heavy lifting to piece together tools that could generate art for characters in a common style, or be customizable by some key parameters.

Eventually, people would commission crossover art, and then you’re only a step away from shared storylines (increase the value of multiple characters with a single commissioned piece!).

DAOs, or decentralized groups who come together to create new projects in the crypto space or even “just” invest together, might buy up more popular characters and commission more elaborate visual stories with the aim of boosting the value of that underlying item containing a hero name + powers and any popular artworks that they inspired.

And assuming the project’s originators went with the direction of the Loot zeitgeist, all of this would be IP that could be re-used and remixed by anyone. That might sound crazy — isn’t the point to own it, and the point of owning it is to control how it’s used?

That’s the Disney status quo. In a world of projects like Loot, you want to reinforce the value of the NFT you own — and that value reflects that NFT’s renown and reputation. Echoing the phrase “all press is good press”: Any remix is a good remix. To be referenced is to still be culturally relevant. So if you own an NFT describing Arachnid Person, you want to contribute to an environment where as many people want to include Arachnid Person in their works as possible so that Arachnid Man No. 1 becomes something worth owning.

I’m really just expanding on Dylan Field:

And John Palmer rightly emphasizes something special: The lack of anybody who can say “no,” as people try to figure out how to make Loot cool:

#crypto-economy, #cryptocurrency, #loot-project, #nfts, #tc

Crypto platforms need regulation to survive, says SEC boss

Crypto platforms need regulation to survive, says SEC boss

Enlarge (credit: Chip Somodevilla/Getty Images)

The chair of the US Securities and Exchange Commission is warning that cryptocurrency trading platforms are putting their own survival at risk unless they heed his call to work within the nation’s regulatory framework.

Gary Gensler told the Financial Times that while he remained “technology neutral,” crypto assets were no different than any others when it came to such public policy imperatives as investor protection, guarding against illicit activity and maintaining financial stability.

“At about $2 trillion of value worldwide, it’s at the level and the nature that if it’s going to have any relevance five and 10 years from now, it’s going to be within a public policy framework,” he said. “History just tells you, it doesn’t last long outside. Finance is about trust, ultimately.”

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#cryptocurrency, #policy, #regulation, #sec

Offchain Labs raises $120 million to hide Ethereum’s shortcomings with its Arbitrum product

As the broader crypto world enjoys a late summer surge in enthusiasm, more and more blockchain developers who have taken the plunge are bumping into the blaring scaling issues faced by decentralized apps on the Ethereum blockchain. The popular network has seen its popularity explode in the past year but its transaction volume has stayed frustratingly stable as the network continues to operate near its limits, leading to slower transaction speeds and hefty fees on the crowded chain.

Ethereum’s core developers have been planning out significant upgrades to the blockchain to rectify these issues, but even in the crypto world’s early stages, transitioning the network is a daunting, lengthy task. That’s why developers are looking to so-called Layer 2 rollup scaling solutions, which sit on top of the Ethereum network and handle transactions separately in a cheaper, faster way, while still recording the transactions to the Ethereum blockchain, albeit in batches.

The Layer 2 landscape is early, but crucial to the continued scalability of Ethereum. As a result, there’s been quite a bit of passionate chatter among blockchain developers regarding the early players in the space. Offchain Labs has been developing one particularly hyped rollup network called Arbitrum One, which has built up notable support and momentum since it beta-launched to developers in May, with about 350 teams signing up for access, the company says.

They’ve attracted some high-profile partnerships including Uniswap and Chainlink who have promised early support for the solution. The company has also quickly piqued investor interest. The startup tells TechCrunch it raised a $20 million Series A in April of this year, quickly followed up by a $100 million Series B led by Lightspeed Venture Partners which closed this month and valued the company at $1.2 billion. Other new investors include Polychain Capital, Ribbit Capital, Redpoint Ventures, Pantera Capital, Alameda Research and Mark Cuban.

Offchain Labs co-founders Felton, Goldfeder and Kalodner

It’s been a fairly lengthy ride for the Arbitrum technology to public access. The tech was first developed at Princeton — you can find a YouTube video where the tech is first discussed in earnest back in early 2015.  Longtime Professor Ed Felton and his co-founders CEO Steven Goldfeder and CTO Harry Kalodner detailed a deeper underlying vision in a 2018 research paper before licensing the tech from Princeton and building out the company. Felton previously served as the deputy U.S. chief technology officer in the Obama White House, and — alongside Goldfeder — authored a top textbook on cryptocurrencies.

After a lengthy period under wraps and a few months of limited access, the startup is ready to launch the Arbitrum One mainnet publicly, they tell TechCrunch.

This team’s scaling solution has few direct competitors — a16z-backed Optimism is its most notable rival — but Arbitrum’s biggest advantage is likely the smooth compatibility it boasts with decentralized applications designed to run on Ethereum, compared with competitors that may require more heavy-lifting on the developer’s part to be full compatibility with their rollup solution. That selling point could be a big one as Arbitrum looks to court support across the Ethereum network and crypto exchanges for its product, though most Ethereum developers are well aware of what’s at stake broadly.

“There’s just so much more demand than there is supply on Ethereum,” Goldfeder tells TechCrunch. “Rollups give you the security derived from Ethereum but a much better experience in terms of costs.”

#arbitrum, #articles, #blockchain, #blockchains, #cardano, #chief-technology-officer, #cryptocurrencies, #cryptocurrency, #cto, #decentralization, #ethereum, #joseph-lubin, #lightspeed-venture-partners, #offchain-labs, #pantera-capital, #polychain-capital, #redpoint-ventures, #ribbit-capital, #tc, #technology, #uniswap, #united-states, #white-house

Coinbase erroneously reported 2FA changes to 125,000 customers

On Friday afternoon, Coinbase sent email and SMS text messages to 125,000 customers, erroneously telling them that their 2FA settings had been changed.

Enlarge / On Friday afternoon, Coinbase sent email and SMS text messages to 125,000 customers, erroneously telling them that their 2FA settings had been changed. (credit: SOPA Images)

Cryptocurrency exchange Coinbase sent an automated message to a large number of its customers on Friday, saying “your 2-step verification settings have been changed.” Unfortunately, the message was sent in error—by Coinbase’s count, 125,000 of those messages were sent (via email and SMS text) to customers whose 2FA settings had not changed.

According to Coinbase’s own acknowledgment Saturday, its system began sending the erroneous messages at 1:45PM Pacific time on Friday, and kept sending them until the error was mitigated at 3:07PM.

In that Twitter thread, Coinbase acknowledges the mistaken 2FA messages’ potential for confusion—confusion which retiree Don Pirtle told CNBC led him to panic-sell more than $60,000 of cryptocurrency. Pirtle was holding this large wallet as an investment for his grandson, so the panicked sale may have been as much blessing as curse—he now questions whether cryptocurrency was a safe investment in the first place.

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#2fa, #bitcoin, #biz-it, #coinbase, #crypto, #crypto-exchange, #cryptocurrency

CryptoPunks blasts past $1 billion in lifetime sales as NFT speculation surges

Hello friends, and welcome back to Week in Review! Last week we dove into Bezos’s Blue Origin suing NASA. This week, I’m writing about the unlikely and triumphant resurgence of the NFT market.

If you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny.


The big thing

If I could, I would probably write about NFTs in this newsletter every week. I generally stop myself from actually doing so because I try my best to make this newsletter a snapshot of what’s important to the entire consumer tech sector, not just my niche interests. That said, I’m giving myself free rein this week.

The NFT market is just so hilariously bizarre and the culture surrounding the NFT world is so web-native, I can’t read about it enough. But in the past several days, the market for digital art on the blockchain has completely defied reason.

Back in April, I wrote about a platform called CryptoPunks that — at that point — had banked more than $200 million in lifetime sales since 2017. The little pop art pixel portraits have taken on a life of their own since then. It was pretty much unthinkable back then but in the past 24 hours alone, the platform did $141 million in sales, a new record. By the time you read this, the NFT platform will have likely passed a mind-boggling $1.1 billion in transaction volume according to crypto tracker CryptoSlam. With 10,000 of these digital characters, to buy a single one will cost you at least $450,000 worth of the Ethereum cryptocurrency. (When I sent out this newsletter yesterday that number was $300k)

It’s not just CryptoPunks either; the entire NFT world has exploded in the past week, with several billions of dollars flowing into projects with drawings of monkeys, penguins, dinosaurs and generative art this month alone. After the NFT rally earlier this year — culminating in Beeple’s $69 million Christie’s sale — began to taper off, many wrote off the NFT explosion as a bizarre accident. What triggered this recent frenzy?

Part of it has been a resurgence of cryptocurrency prices toward all-time-highs and a desire among the crypto rich to diversify their stratospheric assets without converting their wealth to fiat currencies. Dumping hundreds of millions of dollars into an NFT project with fewer stakeholders than the currencies that underlie them can make a lot of sense to those whose wealth is already over-indexed in crypto. But a lot of this money is likely FOMO dollars from investors who are dumping real cash into NFTs, bolstered by moves like Visa’s purchase this week of their own CryptoPunk.

I think it’s pretty fair to say that this growth is unsustainable, but how much further along this market growth gets before the pace of investment slows or collapses is completely unknown. There are no signs of slowing down for now, something that can be awfully exciting — and dangerous — for investors looking for something wild to drop their money into… and wild this market truly is.

Here’s some advice from Figma CEO Dylan Field who sold his alien CryptoPunk earlier this year for 4,200 Eth (worth $13.6 million today).


Image Credits: Kanye West

Other things

Here are the TechCrunch news stories that especially caught my eye this week:

OnlyFans suspends its porn ban
In a stunning about-face, OnlyFans declared this week that they won’t be banning “sexually explicit content” from their platform after all, saying in a statement that they had “secured assurances necessary to support our diverse creator community and have suspended the planned October 1 policy change.”

Kanye gets into the hardware business
Ahead of the drop of his next album, which will definitely be released at some point, rapper Kanye West has shown off a mobile music hardware device called the Stem Player. The $200 pocket-sized device allows users to mix and alter music that has been loaded onto the device. It was developed in partnership with hardware maker Kano.

Apple settles developer lawsuit
Apple has taken some PR hits in recent years following big and small developers alike complaining about the take-it-or-leave-it terms of the company’s App Store. This week, Apple shared a proposed settlement (which still is pending a judge’s approval) that starts with a $100 million payout and gets more interesting with adjustments to App Store bylines, including the ability of developers to advertise paying for subscriptions directly rather than through the app only.

Twitter starts rolling out ticketed Spaces
Twitter has made a convincing sell for its Clubhouse competitor Spaces, but they’ve also managed to build on the model in recent months, turning its copycat feature into a product that succeeds on its own merits. Its latest effort to allow creators to sell tickets to events is just starting to roll out, the company shared this week.

CA judge strikes down controversial gig economy proposition
Companies like Uber and DoorDash dumped tens of millions of dollars into Prop 22, a law which clawed back a California law that pushed gig economy startups to classify workers as full employees. This week a judge declared the proposition unconstitutional, and though the decision has been stayed on appeal, any adjustment would have major ramifications for those companies’ business in California.


Image of a dollar sign representing the future value of cybersecurity.

Image Credits: guirong hao (opens in a new window) / Getty Images

Extra things

Some of my favorite reads from our Extra Crunch subscription service this week:

Future tech exits have a lot to live up to
“Inflation may or may not prove transitory when it comes to consumer prices, but startup valuations are definitely rising — and noticeably so — in recent quarters. That’s the obvious takeaway from a recent PitchBook report digging into valuation data from a host of startup funding events in the United States…”

OpenSea UX teardown
“…is the experience of creating and selling an NFT on OpenSea actually any good? That’s what UX analyst Peter Ramsey has been trying to answer by creating and selling NFTs on OpenSea for the last few weeks. And the short answer is: It could be much better...

Are B2B SaaS marketers getting it wrong?
“‘Solutions,’ ‘cutting-edge,’ ‘scalable’ and ‘innovative’ are just a sample of the overused jargon lurking around every corner of the techverse, with SaaS marketers the world over seemingly singing from the same hymn book. Sadly for them, new research has proven that such jargon-heavy copy — along with unclear features and benefits — is deterring customers and cutting down conversions…”


Thanks for reading! And again, if you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny.

Lucas Matney

#analyst, #app-store, #apple, #bezos, #blockchain, #blockchains, #blue-origin, #california, #ceo, #cryptocurrencies, #cryptocurrency, #cryptography, #distributed-computing, #doordash, #dylan-field, #ethereum, #extra-crunch, #figma, #judge, #kano, #kanye-west, #lucas-matney, #onlyfans, #peter-ramsey, #uber, #united-states

Founders Fund backs Royal, a music marketplace planning to sell song rights as NFTs

Founders Fund and Paradigm are leading an investment in a platform that’s aiming to wed music rights with NFTs, allowing user to buy shares of songs through the company’s marketplace, earning royalties as the music they’ve invested in gains popularity.

The venture, called Royal, is led by Justin Blau, an EDM artist who performs under the name 3LAU, and JD Ross, a co-founder of home-buying startup Opendoor. Blau has been one of the more active and visible figures in the NFT community, launching a number of upstart efforts aimed at exploring how musicians can monetize their work through crypto markets. Blau says that as Covid cut off his ability to tour, he dug into NFTs full-time, aiming to find a way to flip the power dynamics on “platforms that were extracting all the value from creators.

Back in March, weeks before many would first hear about NFTs following the $69 million Beeple sale at Christies, Blau set his own record, selling a batch of custom songs and custom artwork for a collective $11.7 million worth of cryptocurrency.

Royal’s investment announcement comes just as a broader bull run for the NFT market seems to reach a fever pitch with investors dumping hundreds of million of dollars worth of cryptocurrencies into community NFT projects like CryptoPunks and Bored Apes. While visual artists interested in putting their digital works on the blockchain have seen a number of platforms spring up and mature in recent months to simplify the process of monetizing their art, there have been fewer efforts focused on musicians.

Paradigm and Founders Fund are leading a $16 million seed round in Royal, with participation from Atomic — where Ross was recently a General Partner. Ross’s fellow Opendoor co-founder Keith Rabois led the deal for Founders Fund.

The company isn’t sharing an awful lot about their launch or product plans, including when the platform will actually begin selling fractionalized assets, but it seems pretty clear the company will be heavily leveraging Blau’s music and position inside the music industry to bring early fans/investors to the platform. Users can sign-up for early access on the site currently.

As NFT startups chase more complex ownership splits that aim to help creators share their success with fans, there’s plenty of speculation taking off around how regulators will eventually treat them. While the ICO boom of 2017 led to plenty of founders receiving SEC letters alleging securities fraud, entrepreneurs in this wave seem to be working a little harder to avoid that outcome. Blau says that the startup’s team is working closely with legal counsel to ensure the startup is staying fully compliant.

The company’s bigger challenge may be ensuring that democratizing access to buying up music rights actually benefits the fans of those artists or creates new fans for them, given the wide landscape of crypto speculators looking to diversify. That said, Blau notes there’s plenty of room for improvement among the current ownership spread of music royalties, largely spread among labels, private equity groups and hedge funds.

“A true fan might want to own something way earlier than a speculator would even get wind of it,”Blau says. “Democratizing access to asset classes is a huge part of crypto’s future.”

#blockchain, #business, #co-founder, #companies, #cryptocurrency, #cryptopunks, #founders-fund, #keith-rabois, #musicians, #opendoor, #paradigm, #startup-company, #tc, #u-s-securities-and-exchange-commission

Paxos renames its stablecoin from PAX to USDP

Paxos, the company behind the Paxos Standard stablecoin (PAX), has announced that it is changing the name of its cryptoasset. Paxos Standard is now Pax Dollar, and you’ll soon be able to identify it on your favorite cryptocurrency exchange, wallet or explorer under the USDP ticker.

Other than the name, USDP remains fundamentally identical to PAX. Like other stablecoins, USDP has been invented so that its value doesn’t fluctuate over time when you compare it to fiat currencies. The value of USDP is indexed to USD. At any point in time, one USDP is worth one USD.

Stablecoins provide many advantages. Sending money is as easy as moving crypto assets from one wallet to another. You don’t have to enter intermediary bank information, worry about local regulation, etc. Many people around the world don’t have bank accounts — stablecoins and cryptocurrency wallets could potentially become an alternative to traditional bank accounts.

You can also use stablecoins to take advantage of DeFi projects (decentralized finance). For instance, you can contribute to lending pools and earn interests from your stablecoin holdings.

In addition to USDP, other popular stablecoins include USD Coin (USDC) and Tether (USDT). As you can see, a naming convention has emerged over time. And Paxos says that it is changing the name of its stablecoin for this reason in particular.

Whenever Paxos issues new tokens, it stores some USD and USD equivalent in a bank account. Right now, Paxos uses US Treasury Bills with short maturities as USD equivalent. Auditing firms regularly check the company’s claims.

Paxos tries to position itself as a company that is deeply committed to regulation. It has recently written a report highlighting the differences between USDP, USDC and USDT. According to the company, USDC and USDT shouldn’t be considered as regulated assets because of their reserves. Paxos wants to emerge as the most legitimate player in the space so that big corporate clients choose Paxos as their preferred partners.

A couple of days ago, Circle announced that USDC would switch to cash and cash equivalent for USDC reserves. I’m sure we’ll hear more from cryptocurrency companies and their stablecoin reserve strategies in the future.

#blockchain, #cryptocurrency, #paxos, #stablecoin, #usdp

OnlyFans’ explicit content ban should spark a conversation about a creators’ bill of rights

OnlyFans’ decision to ban sexually explicit content is reigniting an important and overlooked conversation around tech companies, content guidelines and sex work. However, the implications of this discussion go beyond just one platform and one marginalized group.

It’s indicative of a broken ecosystem for content creators where platforms have outsized control over the ways in which creators are allowed to share content and engage with their followers and fans. In response, creators are decentralizing, broadening their reach to multiple platforms and taking their audiences with them.

In doing so, creators also have the opportunity to define what rights they want to be built into these platforms.

History repeats itself

Creators being shut out of the individual platforms is nothing new. Many are comparing OnlyFans’ policy change to Tumblr’s move to ban adult content in 2018. This has been an ongoing issue for YouTube as well — several communities, including a group of LGBTQ YouTubers, have accused the platform of targeting them with their demonetization algorithm.

Many of these platforms, including OnlyFans, point to their payment partners’ policies as a barrier to allowing certain forms of content. One of the earliest major controversies we saw in this arena was when PayPal banned WikiLeaks in 2010.

While each of these events have drawn the ire of creators and their followers, it’s indicative of an ecosystemwide problem, not necessarily an indictment of the platforms themselves.

After all, these platforms have provided the opportunity for creators to build an audience and engage with their fans. But these platforms have also had to put policies in place to shield themselves from regulatory and reputational risk.

The core of the issue is that creators are beholden to individual platforms, always vulnerable to changing policies and forced to navigate the painful migration of their audiences and monetization from platform to platform.

That doesn’t mean that that all guidelines and policies are bad — they play a role to foster and govern a positive and safe community with thoughtful guidelines — but it should not come at the cost of harming and de-platforming the creators who fuel these platforms with content and engagement. The core of the issue is that creators are beholden to individual platforms, always vulnerable to changing policies and forced to navigate the painful migration of their audiences and monetization from platform to platform.

And, at the end of the day, it takes away from their ability to create meaningful content, engage with their communities and earn a reliable living.

As creators have lost more and more control to platforms over time, some have begun exploring alternative options that allow independent and direct monetization from their audience in a distributed way.

Decentralizing, monetizing

The direct-to-fan monetization model is already displacing the traditional ad-based, platform-dictated model that creators relied on for years. During my time at Patreon, I saw how putting control and ownership in the hands of creators builds a more sustainable, fair and vibrant creator economy. Substack has given writers a similarly powerful financial tool, and over the past few years, there has been an ever-growing number of companies that serve creators.

The challenge is that many of these companies rely on the existing systems that hamstrung the platforms of the past, and have business models that require take rates and revenue shares. In many ways, the creator economy needs new infrastructure and business models to build the next phase of creator and fan interaction.

With the right application, crypto can help rewrite the playbook of how creators monetize, engage with their fans and partner with platforms. Its peer-to-peer structure reflects the direct-to-fan relationship and allows creators to own the financial relationship with their audience instead of relying on tech giants or payment partners as middlemen. Beyond that, crypto allows creators to maintain ownership and control over their brands and intellectual property.

Additionally, many crypto projects allow participants to have a voice in the value proposition, strategic direction, operational functions and economic structures of the project via DAOs or governance tokens. In this way, creators can join projects and set the direction in a way that aligns with how they want to engage with their communities.

Creators are especially positioned to benefit from community-governed projects given their ability to motivate and engage their own communities. We are in the early phases of crypto adoption, and creators have a huge opportunity to shape the future of this paradigm shift. With social tokens, creators can mint their own cryptocurrencies that allow for a shared economy that creators and fans can grow together and use to transact directly across different platforms.

NFTs are another category that have exploded in popularity this year, but the industry is just scratching the surface of the utility that they will have. Creators and crypto projects are figuring out ways to make NFTs go beyond collectibles; NFTs provide an engaging and functional digital tool for creators to give their fans their time (through video calls or AMAs) or access to other exclusive benefits.

Creators are just beginning to discover the power that crypto provides. As the user experience of crypto-based platforms continues to become more intuitive, crypto will become ubiquitous. Before that point, creators should think about what rights they need (and can demand) from the decentralized services they use.

A creators’ bill of rights

Be it within crypto or not, creators finally have the leverage to determine their rights. While I believe that creators should be the ones leading this conversation, here are a few jumping off points:

  • Ability to move freely across platforms: Reliance on individual platforms is at the heart of many of the issues that creators face. By allowing creators to take their fans with them wherever they go, many of the problems we’ve seen even with direct-to-fan monetization can be solved.
  • Direct financial relationships between creators and fans: At the heart of the OnlyFans matter is creators’ inability to own their financial relationships with fans. Even if direct financial relationships aren’t feasible on every platform, creators should have options to own those relationships and dictate their own terms.
  • Creator-led decision-making: Historically, platforms have given creators minimal control over platformwide decisions and policies. Creators should have direct input and even be able to vote on various platformwide measures.
  • Quality over quantity: Platforms and their algorithms are structured to reward quantity and force creators down a path of burnout and hyperspeed content creation. Both creators and fans are looking for a more deep and engaging interaction and incentivizing this behavior will ensure a more vibrant and sustainable creator ecosystem.
  • Low (or zero) take rates: Big tech platforms take nearly 100% of revenue from creators. Creators (and their fans) should be earning the majority of platform revenue.
  • Equity access or revenue sharing: Big tech platforms have built empires on the labor of creators. Instead of dictating ad revenue payout to creators, decentralized platforms should allow creators to have true “skin in the game” by being able to own a piece of the pie outright or benefit from the overall growth of the ecosystem. This alignment of interests will be a major shift from the capital-labor split we see today.
  • Transparency and consultation: Creators should have full view into what they can or can’t do and a seat at the table as policies are being created and adapted. Platforms’ content moderation decisions and the algorithms behind demonetization are often opaque, broadly applied and decided without consulting the creators they will impact. They should also have visibility into the size of the overall revenue pie and their share.
  • Ability for reform and rehabilitation: We are all human, and there might be moments that a creator knowingly or unknowingly goes outside of the guidelines set by a platform. Creating a space for creators to rehabilitate their content will create a more trusting and collaborative relationship between creators and platforms.

We’ll leave it to creators to dictate their terms — they’ve been cut out of this conversation for far too long. That said, I’m confident that Rally and many other key participants in the Web 3.0 ecosystem would be open to supporting this effort to create an environment that works for creators and their fans.

#column, #cryptocurrency, #e-commerce, #media, #online-advertising, #onlyfans, #opinion, #patreon, #payments, #paypal, #peer-to-peer, #substack, #tumblr, #video-hosting, #websites, #world-wide-web, #youtube

OnlyFans’ porn ban is crypto’s opportunity of a lifetime

Today, OnlyFans dropped the massive bombshell that it will be banning “sexually explicit content” from the app later this year. This is obviously a wildly seismic shift for OnlyFans, which completely disrupted the adult content industry and gave performers a path towards greater independence by allowing them to connect directly with their fans via subscriptions. This shutdown is also the opportunity of a lifetime for the crypto industry which could capitalize on the shutdown and a recent wave of increasingly consumer-friendly crypto payments infrastructure products to create a platform that won’t crumble under the influence of payment providers.

OnlyFans, which has been trying to raise at a unicorn valuation and running into plenty of trouble doing so despite huge revenues, didn’t mince words on the reasoning for today’s fundamental change. “These changes are to comply with the requests of our banking partners and payout providers,” a statement on the news from OnlyFans partially read.

Despite popular culture’s ongoing destigmatization of sex work and adult content, banking institutions are still fundamentally conservative and wary to handle money flowing through these platforms. Most of the operators of these platform are forced to deal with constant uneasiness of knowing their platforms might one day lose favor among these providers and instantly lose everything. All the while, “vice clauses” present in plenty of venture capital firms’ underpinnings keep them from operating in these spaces as well and prevent these platforms from accessing growth capital. It’s clear that adult content platforms are probably never going to have a friendly relationship with these financial institutions and it’s likely time for the platforms — and the creators using them — to move on.

In a lot of ways, OnlyFans dumping porn seems like an outright betrayal of their creator network and one those creators will be sure to remember when embracing whatever copycats spring up in their wake. They are likely going to look at new platforms with renewed skepticism in how they’ll handle payment provider standoffs, but there likely isn’t going to be a different outcome for ambitious platforms looking to grow. That would likely be a different situation for crypto native platforms, but given the tiny adoption, it’s still a substantial risk for creators to embrace a platform their fans might not know how to pay for content on.

The porn industry has been embracing crypto payments, albeit slowly. In 2018, Pornhub first announced that they would begin accepting cryptocurrency payments, fast forward to 2020 when Visa and MasterCard dumped the platform, now crypto payments and ACH bank transfers are the only ways to pay for its premium subscription service. There are already a few crypto platform players in this space like CumRocket and SpankChain catering to niche audiences (and probably in need of rebranding), but with the OnlyFans juggernaut out of the way, there might actually be a space for an existing or upstart player to innovate and capture this market.

The real challenge is in making it simple to onboard new users to both a new platform and potentially their first crypto wallet — while staying compliant with regulatory guidelines — at a time when more conventional web payment structures have gotten so streamlined and free adult content is just as prolific as ever. Know your customer (KYC) guidelines that push users to upload their passport or driver’s license to verify crypto purchases probably aren’t the easiest onboarding ask for a new crypto porn site, but as the market matures a bit and the challenges of a user setting up their first wallet are decoupled from the onboarding process for the platform, there are plenty of benefits to be realized.

Porn has always been a launchpad of sorts for new technologies. While the popularity of crypto has surged in recent months and nearly eclipsed $2 trillion in total assets, crypto penetration among the apps that people are actually using remains extremely low. As new solutions and startups pop up aiming to demystify buying and sending crypto, it feels like there’s a chance the industry could be in the perfect place to fill the void left by OnlyFans’ exit and build a more innovative platform in its image that goes all-in on crypto.

#articles, #banking, #blockchain, #cryptocurrency, #marketing, #onlyfans, #sex-work, #venture-capital-firms, #video-hosting

MobileCoin closes on $66 million in equity in Series B round

MobileCoin, a cryptocurrency business that counts founder Moxie Marlinspike of the encrypting messaging app Signal as its earliest technical advisor, has raised $66 million in Series B funding from a long list of investors, including Alameda Research, Berggruen Holdings, BlockTower Capital, Coinbase Ventures, Marc Benioff’s TIME Ventures, Vy Capital, and earlier backers General Catalyst and Future Ventures.

The all-equity round brings the four-year-old, San Francisco-based company’s total funding to $107 million altogether, including a $30 million round led by Binance Labs back in 2018. According to founder and CEO Joshua Goldbard, the newest round values the outfit at $1.066 billion.

As we reported earlier this year, MobileCoin is focused on enabling privacy-protecting payments made through “near instantaneous transactions” over one’s phone. Indeed, a month after we published that piece, Signal rolled out support for MobileCoin as a payment feature that its users (only in the UK for now) can use to pay for a service or product while enjoying greater privacy than might be possible otherwise.

Marlinspike told Wired back in April that because MobileCoin is a so-called privacy coin designed to protect users’ identities and the details of their payments on a blockchain, that it’s an ideal fit for Signal. “There’s a palpable difference in the feeling of what it’s like to communicate over Signal, knowing you’re not being watched or listened to, versus other communication platforms. I would like to get to a world where not only can you feel that when you talk to your therapist over Signal, but also when you pay your therapist for the session over Signal.”

According to Goldbard, MobileCoin is also being used to transact by users of Mixin Messenger, is a China-based open-source private messenger based on Signal Protocol that enables individuals to send cryptocurrencies to their phone contacts.

MobileCoin’s actual digital coins have fluctuated wildly in value since they began trading in December of last year on the cryptocurrency exchange, FTX, run by entrepreneur Sam Bankman-Fried, who also founded the quantitative crypto trading firm Alameda Research (which just invested in MobileCoin).

It is also available to buy and sell on the non-U.S. crypto trading platforms Bitfinex, BigOne, and HotBit. Goldbard says there’s no reason that U.S. exchanges couldn’t also list the coin for trade, though that’s not the case currently.

“It’s entirely up to [them] when they list assets, and no one knows ahead of time when your asset will be listed,” Goldbard offers, dismissing questions about U.S. regulators who’ve cracked down on similar efforts and pointing instead to MobileCoin’s relatively newness as its biggest challenge right now. “Most coins take a long time to list, to be honest.”

As for whether Goldbard or his early team members have sold some of company’s coins — they spiked in price this past spring — he says that “management has not sold any coins.” Asked whether the same is true of Marlinspike, Goldbard says that he “can’t speak for Moxie.” (Marlinspike told Wired in April that neither he nor Signal owned any MobileCoins at the time. We’ve since asked the company whether Marlinspike has ever owned any MobileCoins and also whether he owns or previously owned shares in MobileCoin as an early advisor to the company and have yet to hear back.)

Even assuming that MobileCoin is more secure than other options, it is still not foolproof. Among the risks involved in storing cryptocurrency on a phone are potentially losing it if the phone is left unlocked or the radio on the phone is hacked or if, say, iOS itself is hacked. 

It does offer another advantage, though, argues Goldbard. He says MobileCoin is more environmentally friendly than  cryptocurrencies like Bitcoin that rely on ‘proof of work,’ where individuals on a network compete with computing power to solve cryptographic puzzles and consume large amounts of electricity along the way.

MobileCoin instead relies on a mechanism called a “federated byzantine agreement,” wherein different validators —  people who agree to store data, process transactions, and add new blocks to the blockchain to earn more cryptocurrency — decide which other validators they trust, and when enough circles of trusted validators overlap, consensus is reached. The algorithm requires fewer people and less energy while remaining decentralized, says Goldbard.

MobileCoin currently has 40 employees and is “hiring as fast as possible,” says Goldbard. Tragically, the company’s head of engineering, Toby Segaran, who was previously an engineer with both Google and Reddit, passed away unexpectedly last week. Meanwhile, MobileCoin brought aboard is first head of compliance, David Ackerman, last month.

#coinbase-ventures, #cryptocurrency, #ftx, #general-catalyst, #joshua-goldbard, #messaging-apps, #mobilecoin, #recent-funding, #signal, #startups, #tc, #venture-capital