14-Year-Old Sells NFTs to Benefit (Literal) Whales ~ CEOM Coin

The biggest crypto news and ideas of the day

Oct. 29, 2021

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–Daniel Kuhn

Today's must-reads

Top Shelf

ENFORCERS WANTED: The U.S. Department of Justice (DOJ) is looking for someone to head its newly announced National Cryptocurrency Enforcement team. The DOJ posted a job opening for the director's role on USAJobs, the federal government's jobs website, which states the director will lead "a team of experienced prosecutors investigating and prosecuting cryptocurrency cases as a central part of a nationwide enforcement effort to combat the use of cryptocurrency as an illicit tool."

BACK AND FORTH: The Indian government is likely to regulate cryptocurrencies in its upcoming budget in February, rather than imposing an outright ban. India has one of the most active crypto markets, worth mentioning because the asset class was until recently effectively banned in the country by tight central bank imposed rules. Meanwhile, U.S. President Joe Biden's hoped-for spending bill – the Build Back Better Act – contains new language meant to close tax loopholes for crypto investors … similar to what appeared in the Senate's infrastructure bill (also in the offing).

BIG BAGS: MicroStrategy (Nasdaq: MSTR) added almost 9,000 bitcoins to its holdings in Q3, bringing its reserves to 114,042 BTC. The business-intelligence software company's entire market capitalization is roughly $7.4 billion, while its bitcoin holdings are worth just over $7 billion, making the company something of a proxy investment vehicle of BTC.

UNREAL? The price of squid, a play-to-earn crypto token, has shot up 35,000% since Oct. 26. The token buys entry to an online game inspired by – but unaffiliated with – hit Korean Netflix show Squid Game. (Beware: CoinMarketCap reported complaints of users unable to sell the token on PancakeSwap, the only exchange it trades on.) Meanwhile, Facebook – renamed Meta's – metaverse project will support non-fungible tokens (NFT). Separately, on-chain data suggests that the recent sale of a CryptoPunk NFT for half a billion dollars was an elaborate publicity stunt. Lastly, a 14-year-old used Solana NFTs to raise $100,000 for (literal) whale conservation.

NEW VENTURES: Venture capital firm CMCC Global is targeting $300 million for its latest crypto fund backed by billionaire Richard Li and Gemini co-founders, the Winklevoss twins. Also, Elementus, a blockchain data analytics firm with ties to Peter Thiel's creepy surveillance company Palantir, has raised $12 million in a Series A. Finally, Rally is continuing its push to decentralize its social token infrastructure with a new venture studio called SuperLayer Labs. It'll be run by the Rally's co-founders and funded in part by RLY token's early venture capital supporters, including Marc Andreessen and Chris Dixon.

Happy Halloween, folks. Remember to check your candies for XRPs.

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Overheard on CoinDesk TV ...

Sound bites

"We see a big opportunity to create a decentralized internet that will give individuals greater control over their digital identity, greater control over their information, greater control over their assets."

–Tomicah Tillemann, global head of policy for crypto at a16z, discusses the venture capital firm's push to put Web 3 on politicians' radar, on CoinDesk TV's "First Mover."

What others are writing...

Off-Chain Signals

Happy Halloween. Spooky NFTs to Collect in Time for Halloween (NFT Now)
Does Matt Damon's Face Make You Want to Buy Crypto? (Gizmodo)
How Lobster NFTs and a DAO Helped Give Crypto a Voice in Washington (PubDAO via Decrypt, speaking of, here's this "crypto newswire's" founding and mission statements)
First Uniswap ETP Goes Live as Institutional DeFi Products Proliferate (The Defiant)
Sam Reynolds of Blockworks makes the case that Singapore wants to be a stablecoin hub, but "legacy policy might get in the way of a progressive, sound crypto framework, leaving the market to seek stablecoins that approximate a dollar-proxy." I didn't fully understand this one, but it seemed notable.
The Altair upgrade to Ethereum is being framed as a success, though developers are keeping watch to make sure no issues arise (Decrypt)

If you all ever see an interesting piece out there, please send it my way. (You can respond to this email or write to daniel@coindesk.com.

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Putting the news in perspective

The Takeaway

Facebook Steals Another Crypto Idea for Its Desperate, Nonsensical Rebrand

Hey, David Morris here. Facebook steals another crypto idea and renames the company after it.

There is so much, too much, to be said about Facebook's announcement yesterday that it is changing its corporate name to "Meta" as part of a refocus on what is, essentially, online virtual reality. Most of what is to be said is really not good for Facebook. This is a desperation move made in the face of a PR nightmare that has a slim chance of panning out as a market proposition, and basically zero chance of reversing the company's declining political and market fortunes in the U.S. and Europe.

So, given the target-rich environment, let's start close to home: "metaverse" is the second buzzy concept that Facebook has misappropriated from the blockchain industry. It is likely to be just as poorly executed as Zuck's first craven magpie act, the would-be stablecoin Libra, now known as Novi, maybe, I'm not really sure, because Facebook screwed up that launch so badly it had to rename the product like three times. (Sensing a theme?) Libra or Novi or whatever was an attempt to steal some vague crypto halo while actually creating a powerful stream of new data for Facebook, in direct contravention of the principles behind the entire model being appropriated.

Similarly, "the metaverse" is a blockchain concept, but you can already tell Facebook's metaverse will be as big a perversion of it as Libra was of Bitcoin. The core idea of the blockchain metaverse is wide interoperability of assets stored on a neutral and verifiable ledger. The same blockchain tech that makes NFT tokens usable across, say, virtual galleries and (soon) Twitter would be used to create tokens that represent VR assets usable across a variety of immersive experiences, from Decentraland to (let's say, in theory) Second Life to Minecraft.

Though Facebook's online VR will have some form of NFT integration, the broader vision is not what Zuck is rolling out. Much of yesterday's presentation focused on his frustration with Apple's App Store and Facebook's plan to build a competitive, parallel walled garden focused on online VR experiences. They'll be collecting fees on creators who, say, design a virtual sweater. Zuck yesterday even warned that fees on the platform would be high for a while.

Zuck justified those high fees by explaining that Facebook (no, I'm not going to call it "Meta," because see above) will be building up its online VR business at a loss for a while, including by subsidizing devices. This speaks to one of the other huge warning signs for Facebook's pivot, which is that it's already pretty clear very few people actually want to use VR, online or off, enough to make it a good walled-garden content store business.

The Oculus VR devices at the center of Facebook's plans have been pretty good technology for at least three or four years now, but sales have been unimpressive. Other VR and AR companies, such as the infamous Magic Leap, have burned money without finding product-market fit. Spending boatloads of cash to drive adoption is the only hope Facebook seems to have of making mass-market VR work.

And even then, it doesn't make sense, because the price of hardware like a VR headset isn't actually the limiting factor in adoption Zuck would like you to think it is. In technology, there's this thing called an "adoption curve" where early tech enthusiasts spend a lot of money on weird things, then more people buy them as they get cheaper. The first part of that adoption curve still hasn't really happened for VR, even during a pandemic when everyone was trapped at home. Making the headsets cheaper can't solve for this clear lack of interest among the very hyper-engaged audience that's not supposed to care about price in the first place.

The desperation of the move becomes clearer when you realize that Facebook as a company has probably already seen its best days. User numbers in the U.S. are declining, particularly among young people, across both Facebook itself and, crucially, Instagram, which had extended the company's relevance a few extra years. Facebooks's growth potential, unfortunately, probably lies in second- and third-tier economies with even weaker governments and poorer citizens.

That will leave Facebook freer to follow its worst impulses. On the metaverse front, ironically, it may mean they wind up with something closer to the deepest origins of the term in dystopian cyberpunk science fiction of the 1980s, specifically Neal Stephenson's "Snow Crash." Stephenson's metaverse is a corporatized ghetto where the global poor play out a digital semblance of lives they can't afford, while back in reality their emaciated bodies wither in cramped apartments.

The metaverse Facebook is building, in short, is a digital version of hell. Hard to think of a more appropriate Charon to take us there than Mark Zuckerberg, who has already unleashed so many demons on the waking world.

–David Z. Morris

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