Tag: Non-Fungible Tokens

Editorial: New Year, New Directions, Part II—How I Plan to Cover Blockchain Metaverse Platforms Going Forward

Photo by Pierre Borthiry – Peiobty on Unsplash

There is simply no better place to watch as the dominoes fall in the beleaguered world of cryptocurrencies, blockchain, and non-fungible tokens (NFTs) than the cryptosnark subreddit, r/Buttcoin (tagline: “ButtCoin. It’s a scam. At least we’re honest about it!”).

And it was there where I learned that the latest domino had fallen—Genesis Trading, a crypto lender forming part of Barry Silbert’s Digital Currency Group (DCG), filed for bankruptcy:

Crypto lender Genesis filed for Chapter 11 bankruptcy protection late Thursday night in Manhattan federal court, the latest casualty in the industry contagion caused by the collapse of FTX and a crippling blow to a business once at the heart of Barry Silbert’s Digital Currency Group.

The company listed over 100,000 creditors in a “mega” bankruptcy filing, with aggregate liabilities ranging from $1.2 billion to $11 billion dollars, according to bankruptcy documents.

A list of the 50 largest unsecured creditors was leaked, and it turns out that both of the co-founders and the current Chief Financial Officer of blockchain metaverse Decentraland are owed an eye-watering US$55 million. Crypto news website The Block reports:

Virtual world platform Decentraland has not one but three of its executives and founders listed among the 50 largest non-insider unsecured claims against Genesis Global, the crypto lender that filed for bankruptcy protection on Thursday.

Decentraland CFO Santiago Esponda drew attention after his Decentraland email address was listed in court filings as the contact for Heliva International, a Panama-based company owed $55 million by Genesis. But a closer look reveals that Decentraland’s two co-founders are also listed in the documents with non-Decentraland email addresses.

Esteban Ordano, a Decentraland co-founder who now acts as an adviser, is listed as the contact for an entity called Winah Securities. Genesis owes Winah, which is located on the same floor in the same building as Heliva, almost $27 million. Ordano told The Block that Winah has no relationship with Decentraland.

Gaming company Big Time Studios is owed $20 million. It’s run by Ari Meilich, Decentraland’s other co-founder. He started Big Time in 2020 but also remains a Decentraland adviser. Meilich declined to comment. 

Which brings me, in a roundabout way, to the point of this particular editorial: how I will be covering blockchain-based metaverse platforms going forward on this blog.

In a previous editorial, I explained that I was substantially cutting back on my coverage of Second Life, to refocus my blog on virtual reality in general, and social VR in particular. Likewise, I have also decided that I will no longer be writing about any blockchain-based metaverse platform unless it incorporates virtual reality. According to my comprehensive and reasonably up-to-date list of virtual worlds and social VR, the only platforms which incorporate blockchain technology (cryptocurrencies and/or NFTs) and support virtual reality are three:

  • NeosVR (a social VR platform with an associated cryptocurrency called NCR, which was planned to be the in-world currency but has not been incorporated; please note that Neos does not have NFT-based virtual real estate, or use NFTs at all)
  • Sensorium Galaxy (this ultra-high-end social VR platform uses the SENSO cryptocurrency to purchase avatars in their online store; as far as I am aware, Sensorium Galaxy does not use NFTs)
  • Somnium Space (a blockchain-based virtual world that supports VR, with a cryptocurrency and NFT-based real estate)

All the other blockchain metaverse platforms I have written about on this blog (including the one that first attracted my attention, Decentraland) are either flatscreen virtual worlds which do not support virtual reality, or they have not yet launched (and, in the current crypto nuclear winter, are increasingly unlikely to do so; the only exception being The Sandbox, which is still in extended alpha testing).

And (as illustrated by my initial anecdote about the Decentraland co-founders and executive entangled in the Celsius bankruptcy case), those platforms which had the great good fortune to launch well before the current crypto carnage, are possibly still entangled in the web of interconnected crypto companies lending and borrowing from each other, in highly speculative cryptocurrencies whose actual value is based only on what the next greater fool is willing to pay for them. In particular, those who purchased overpriced NFT-based real estate on such platforms as The Sandbox, Somnium Space, and yes, even pioneering Decentraland, are going to find it very difficult, if not impossible, to make any sort of profit off their investments.

And one only has to observe the travails which NeosVR has gone through, after a cyncial pump-and-dump instigated by cryptobros, to see how a social VR project with such technical promise can be hamstrung by attaching a cryptocurrency to it. There has, to my knowledge, been no active development on the platform in over a year, and it is unclear what 2023 holds for NeosVR. It breaks my heart and it angers me.

While I will continue to follow the current crypto winter shenanigans as an interested (and bemused) observer, I have decided that I will no longer be writing about any blockchain metaverse unless it has launched, and it supports virtual reality. In particular, I will no longer waste my time (and your patience) writing about all the blockchain metaverse projects which consist of little more than an .io website, a Telegram or Discord channel, and a white paper long on hand-waving, but short on actual technical details. Enough with the bafflegab and bullshit.

If you happen to actually launch a product which incorporates blockchain in some way (cryptocurrencies and/or NFTs), and it supports users in a VR headset, then I will gladly write about it. Otherwise, I’m no longer interested.

Stick a fork in it; it’s DONE. (Image by Pete Linforth from Pixabay)

UPDATE 4:43 p.m.: Well, well, well…another news nugget I gleaned from the r/Buttcoin subreddit: AsiaMarkets.com is reporting this evening that the mighty SWIFT global financial network will, as of Feburary 1st, 2023, no longer process fiat currency transfers from bank accounts to cryptocurrency exchanges, if they are worth less than US$100,000:

The SWIFT payments network has made an extraordinary decision that will have widespread implications on cryptocurrencies.

Asia Markets can reveal SWIFT will no longer process fiat currency transfers from bank accounts to cryptocurrency exchanges, with a value of less than US$100,000, effective from February 1, 2023.

The move will thwart cryptocurrency access to tens of millions of people worldwide.

One of the first crypto giants to notify users of the development this weekend, has been the world’s largest exchange, Binance.

“The banking partner that services your account has advised that they are no longer able to process SWIFT fiat (USD) transaction for individuals of less than $100,000 USD as of February 1, 2023. This is the case for all their crypto exchange clients,” said Binance.

“Please be advised that until we are able to find an alternative solution, you may not be able to use your bank account to buy and sell crypto with USD via SWIFT with a value of less than $100,000 USD.”

Time to go get more popcorn; this three-ring circus is just getting started!

UPDATE Jan. 25th, 2023: It turns out that my previous update is not as all-encompassing as it first was reported! Amy Castor and David Gerard write in David’s blog, Attack of the 50-Foot Blockchain, today:

Binance sent a notice to customers that starting February 1, their banking partner, Signature, would not be processing SWIFT transfers of less than $100,000.

Retail customers of Binance have until the end of the month to get their US dollars off the exchange. After that, their money is stuck.

Rumors are swirling around this — not helped by an early news report (rapidly corrected) claiming that the SWIFT system itself was cutting off all crypto exchanges. Here are the facts that we know so far:

  • Binance is cut off from Signature for transactions below $100,000.
  • Signature’s other exchange customers have not said they’re affected, and we haven’t seen their customers saying so either.
  • We haven’t heard of other banks putting such a condition on Binance or another exchange.

So it’s so far just Binance, via Signature.

Still, it is significant that Binance, the biggest cryptobroker still standing, is facing such a stringent sanction by one of its banks. (By the way, Attack of the 50-Foot Blockchain is well worth following, for its expert analysis of the ongoing crisis in crypto!)

EDITORIAL: How Big Tech Layoffs, the Deepening Crypto Winter, and Global Chaos Will Impact the Metaverse

So (like many of you), have been following the news media these past seven days, and between the U.S. midterm elections, the jaw-dropping layoffs at both Meta and Twitter, and the collapse of major cryptocurrency exchange FTX, it’s been quite a week!

As I write this, I am listening to a Sept. 22nd, 2022 report written by Adam Fisher for clients of the investment firm Sequoia, titled Sam Bankman-Fried Has a Savior Complex—And Maybe You Should Too.

UPDATE 3:08 p.m.: Sequoia has just removed Adam’s report from its website but, as always, the Internet Archive’s Wayback Machine has you covered! WARNING: I listened to all one-and-a-half hours of the audio version of this article, and I want that time back! The level of hubris and cringe in this article is off the charts!

Given what’s happened in the past 48 hours, this report has aged like milk—badly. I had bookmarked it yesterday, and when I went to revisit the page today, I noticed that it had been updated:

UPDATE: Nov 9, 2022: Since this article was published, a liquidity crunch has created solvency risk for FTX and its future is uncertain. Many have been affected by this unexpected turn of events. For Sequoia, our fiduciary responsibility is to our LPs. To that end, we shared this letter with them today regarding our investment in FTX. For FTX, we believe its fiduciary responsibility is first to its customers, and second to its shareholders. As such, FTX is exploring all opportunities to ensure its customers are able to recover their funds as quickly as possible.

Of course, the best front-row seat to the three-ring circus that is crypto is the r/Buttcoin cryptosnark community over at Reddit, and let me tell you, there has been no shortage of things to talk about. Many there predict that (much like the unraveling of the LUNA cryptocurrency “unraveling “stablecoin” on May 7th, 2022, which in turn led to the failures of cryptofirms like Celsius and Voyager) there will be a significant impact to the sudden FTX implosion (Sequoia announced that they have written down their investment in FTX to zero). Even in the crazy world of crypto, the speed with which Sam Bankman-Fried has fallen off his pedestal and destroyed his reputation and his companies (not to mention his investors’ money) is bonkers. But that’s not the only big news these past seven days.

First: The crypto crash is looking more and more like a sustained crypto nuclear winter. Blockchain is now tainted, perhaps irredeemably so, and blockchain-based metaverses are tainted by association. What this means is that the already-established, relatively stable platforms (Decentraland, Voxels, Somnium Space, and a handful of others) are going to have a very difficult time selling NFT-based land, avatar accessories, etc., as well as encouraging new users to come and set up shop. We’re rapidly reaching the point that the general, non-tech public will run the other way when crypto, blockchain, or NFTs are mentioned, given the unending litany of bad news.

People and companies who invested in these platforms at the height of the hype cycle may have to make some hard choices between holding on (perhaps forever) in hopes of seeing a profit, or being forced by circumstances to sell at a loss, because they desperately need to get out of the market. (Perhaps they worked at Meta or Twitter or some other company downsizing during this increasingly brutal recession?). In my opinion, this will keep prices for NFT properties at or near rock-bottom for the foreseeable future, and it will impact these metaverse firms and their future development plans.

But, as bad as that is, the news is even worse for those blockchain-based metaverse projects which have not yet launched. In my opinion, many of these projects are doomed to fail, taking their investors’ money along with it. Some were designed to be rugpulls from the very beginning, hoping to cash in on the ignorant, while others were just weirdly-hatched and poorly-executed but honest proposals (e.g. Cirque de Soleil’s Hanai World project, which I am told has now folded).

Second: Meta is wounded, having lost the public’s trust and investors’ confidence, and facing increasing blowback for its decision to heavily invest in the metaverse and virtual reality. Meta’s missteps are negatively affecting the general public’s impression of the “metaverse”.

Say the word “metaverse” to your average man (or woman) on the street and you probably would get one of the following two responses:

  1. The “metaverse” is Meta/Facebook’s Horizon Worlds and Horizon Workrooms only; or
  2. The “metaverse” consists of the blockchain/crypto/NFT-based platforms only, e.g. Decentraland, Voxels, Somnium Space, The Sandbox, etc.

I’ve already dealt with the blockchain-based metaverses above; now let’s turn to Meta. Mark Zuckerberg and his team at Meta have spent a fair deal of time and money to promote Meta’s visions of the “metaverse”. Mark doesn’t want you to spare a thought for the countless other metaverse platforms which have been in development for years, and in some cases like Second Life, decades. He wants you to focus on Meta. Meta, people! Pay no attention to those other people!!! (Yeah, I know; it’s going about as well as you can expect, given people’s lack of trust in Mark or his company.)

Things have not been going especially well for Meta at the moment, with numerous new media reporting on its financial turmoil, as Mark Zuckerberg invests billions of dollars into research and development to build his vision of the metaverse. Venture capitalist Nathan Benaich recently tweeted (please note that Meta Reality Labs is the R&D arm of Meta working on VR/AR/MR/XR projects.):

In fact, things have been going so badly for Meta lately that many metaverse pundits (myself included) have begun to worry that it is tainting the general public’s perception of the “metaverse”, perhaps unfairly so. Tony Vitillo (a.k.a. SkarredGhost), an Italian man whose blog, The Ghost Howls, covers the VR/AR/MR/XR industry and the metaverse, wrote a recent editorial which I think needs to be read. He echoes what I and other metaverse pundits have noticed for quite some time now: the general public’s mood on the metaverse has soured quickly.

Tony Vitello points out something that many of us writing about the metaverse have noticed for quite some time now: the concept of the metaverse is developing a bad reputation

In an article titled Meta bad, metaverse bad, Tony writes:

After my usual Sunday tour of Twitter and LinkedIn feeds to gather news for my weekly newsletter, I feel the need of writing a rant about a trend I’m seeing online after the Meta Connect about Meta and its involvement in the “metaverse” field.

Many journalists of important tech magazines (TechCrunch, Business Insider, etc…) are all playing a common sport now: targeting Meta and Mark Zuckerberg. They are all writing posts about how Meta has failed, the metaverse has failed, the Meta Quest Pro failed, and also Zuck has failed. Everything is a huge failure. I admit that this news has caught me by surprise, because I have many projects in XR that are doing pretty well, and actually this has been one of the best moments to be in the ecosystem for me. I’m sorry that I hadn’t received the memo that everything failed: I’ll stop doing what I’m doing now and immediately go looking for a job to make fries at McDonald’s.

Look, I get it. Bad news draws eyeballs and clicks, and most people don’t like or trust Mark Zuckerberg or his Meta/Facebook empire. So the negative press pile-on in the wake of the Meta Connect 2022 event was not unexpected. Here’s an example of the recent coverage, by Paul Tassi of Forbes:

Meta shocked the financial world this Thursday by posting a 52% profit decline, its second straight quarterly decline, and a revenue decline of 4% year-over-year. This decimated their stock so badly with a 24.5% drop that it caused financial analyst Jim Cramer to break down crying and apologize on air for having faith in the company.

A main culprit of Meta’s decline is the thing it was named after, Mark Zuckerberg’s relentless pursuit of the metaverse through the company’s Reality Labs division, which has lost $9.4 billion this year so far, and there are warnings that bigger and broader losses are to come in 2023.

And, of course, the news yesterday that Meta was laying off over 11,000 employees has not helped matters in the slightest. It’s not yet known how these massive layoffs will affect Meta’s work in virtual reality, augmented reality, and the metaverse, but I wouldn’t be surprised if a few projects in that area are trimmed. Many in the financial community are attacking Mark Zuckerberg and his desire to repivot Meta to be a metaverse company, and the negative blowback will also impact other companies working in this space. I’ve written more about this on my blog in this August 2022 editorial, How the Crypto Crash—and Meta’s Missteps—Are Souring the General Public on the Metaverse, so rather than repeat myself, I will direct you there if you want to learn more of my thoughts on the matter. On to the next point!

Third: Elon Musk is killing Twitter, and its death throes, plus Meta’s continued struggles, will lead to many people radically rethinking their use of social media, and leaving Twitter, Facebook, and Instagram.

Image source: r/EnoughMuskSPam subreddit on Reddit

If you haven’t got the memo yet, surveillance capitalism and algorithmically-driven echo chambers/walled gardens are about as popular as crypto nowadays. Despite daily reassurances from the Chief Twit himself, the MIT Technology Review reports that Twitter may have already lost one million users, many of whom have moved to Mastodon and other federated services, beyond the control of capricious billionaires. And, while not in dire straits like Twitter, Meta’s social media platforms are similarly bleeding users, as the younger generations abandon Facebook and Instagram for TikTok (which, of course, has its own user data privacy and surveillance capitalism issues, not to mention a parent company now marketing a standalone VR headset to compete with Meta, but that is an issue for a different editorial).

How will this affect the metaverse? Well, for starters, it’s going to be a lot harder for metaverse-building companies to get attention using traditional social media during this time of turmoil and upheaval, which is their primary form of advertising. For example, Mastodon is notoriously resistant to influencer culture and corporate shilling, even going so far as to ban entire instances/servers to avoid being tainted by the filthy lucre of capitalism. (For example, the overly-protective but proactive moderator of the well-established scholar.social Mastodon instance/server just banned the new journa.host instance, because of problems the latter has had in setting up their server, which means that journalists who set up accounts on journa.host are barred from seeing what is going on over at the scholar.social server. These people, many of whom were burned by older forms of social media, are not playing around!)

Another example of the impact: I have unfollowed all the people I used to follow on Twitter, deleted almost all of my tweets, and deactivated my account, in direct reaction to the callous, heartless way that Elon Musk handled his layoffs, gutting half the Twitter staff (I wrote about it in an update at the end of my previous blogpost). This means that I deliberately cut off one venue by which I leaned about news and events taking place in the VR/AR/MR/XR and the metaverse. However, I am still a member of almost 100 different Discord servers, including the 715-member RyanSchultz.com Discord, and my connections there keep me just as well-informed, without having to take part in Facebook or Twitter! I am also quite active on Reddit, although lately most of that time has been spent lollygagging in r/Buttcoin! 😜

Finally, we are entering a severe global recession, with both mass layoffs (see above) and staffing shortages, combined with skyrocketing inflation, which means that we are going to continue to see chaos, disorder, and upheaval all around the world. The war in Ukraine is still upending global supply chains, and China’s continuing strict COVID lockdowns are still impacting product manufacturing. Oh, and did I mention that we need to act now to put the brakes on global climate change before many parts of the world become inhospitable and even uninhabitable? If you’re not depressed, then you haven’t been paying attention!*

Fasten your seatbelts, kids; I have a feeling it’s going to be a bumpy ride, and not just one bumpy night! While chaos can be liberating for some people, it is anxiety-inducing for many others (including myself). We are also still operating under an ongoing pandemic that is absolutely NOT over (for example, my best friend’s 92-year-old mother passed away from COVID-19 in hospital a couple of weeks ago). I am, still, barely leaving my apartment, and my university still has an indoor facemask mandate in place. (Good thing my passionate hobby is virtual reality and the metaverse! Avatars can’t catch the virus. 😉 )

In summary, this global chaos (plus all the other points I made above) will impact the people and companies building the metaverse, as well as the people using it! There will be new challenges, but also new opportunities. Expect the unexpected!

* If you are struggling with your mental health, at the start of the pandemic I pulled together a list of helpful resources, which you can find here. It’s a little out-of-date, but most of the links should still work. Remember, help is out there if you need it!

UPDATED! Editorial: How the Crypto Crash—and Meta’s Missteps—Are Souring the General Public on the Metaverse

As somebody who writes about social VR and flatscreen virtual worlds on this blog, with a popular Discord server packed with metaverse fanatics and a front-row seat on pretty much everything that has been happening in this space, let me tell you, the past twelve months have been a wild ride. You can even see it in my blog statistics of the number of visitors and views the RyanSchultz.com blog has attracted over the past year:

See that surge from October through March? In October, Mark Zuckerberg announced in a Connect 2021 keynote that Facebook would rebrand as Meta, and would focus on realizing his vision of the metaverse. This also coincided with a crypto speculation boom, where people and companies were frantically bidding for artificially scarce NFT-based plots of land in various blockchain metaverse platforms.

Together, these events sparked a greater awareness among the general public of the metaverse (as indicated by a corresponding increase in traffic to my blog). However, it would appear that the ongoing crypto crash, combined with Meta’s recent woes and missteps, are causing people to sour on the concept. (And by “people”, I mean the general public, not the metaverse fanatics, content creators and world builders whom I tend to hang out with!)

As an illustration of this, I would like to focus on a recent announcement made by Mark Zuckerberg, about the expansion of their flagship consumer social VR platform, Horizon Worlds, from Canada, the U.S. and the U.K. into two new countries, France and Spain:

The first thing I think of when I look at this picture is: hoo boy, somebody working in Meta’s PR department is gonna get fired! You’re trying to sell people on Horizon Worlds with this unappealing, uninspiring, and frankly ugly image on Twitter?

The response to this on two different subreddit communities on Reddit, r/technology and r/Buttcoin, proves to be quite illuminating. (By the way, r/Buttcoin is the blockchain, crypto, and NFTs snark community, where we cryptoskeptics and critics love to discuss and dissect the latest shenanigans, antics, and scams in that world!)

Here are some of the better comments on the r/technology post, sparked by Paul Tessi’s biting August 17th, 2022 Fortune article, Does Mark Zuckerberg Not Understand How Bad His Metaverse Looks?

It looks like Mark Zuckerberg watched Ready Player One and thought he would be able to recreate that universe with MS Paint.

“Looking forward to seeing people explore and build immersive worlds!” :: “Work in my content mill, peasants.”

The more money they dump into this dumpster fire, the better chance Facebook finally collapses into the abyss. So keep doing it Zuck.

One much-upvoted comment reads as follows:

No one is building a $1500-2500 PC with [a] dedicated GPU to add a Facebook $600 VR headset to attend work meetings in a virtual space that looks like a kids CGI series from 2004 at a mass adoption level, where the majority of the public would use it daily for 8 hours at work then again for another 4-6 hours “for fun” at home, as the Meta dystopian dream suggests.

Meta has already been subsidizing the costs of their currently meh headset, which they just increased the prices of, as they were losing too much money.

For this to work, the hardware has to be good enough for grandma to be able to buy it on a pension, put it on out of the box and it just works, and it does not make her sick to her stomach in 5-20 minutes due to the low frame rates and quality.

That’s the barrier of entry to the space you need to be able to target… if that old guy at your office struggles with getting their mic to work on MS Teams for a video call every day, as the manager he is not going to order $100,000 worth of gear for your department that is hard to setup and use to meet in the metaverse.

This thing is dead on arrival, but Facebook is also dying/dead in it’s current form, so this Hail Mary [pass] is all they have.

In the August 17th Fortune article which spawned these responses, reporter Paul Tassi writes:

The thing is, this happens all the time with Zuckerberg and his metaverse because Horizon Worlds has looked terrible since its inception and has barely gotten any better over the years, where its avatars still look like Miis from 2012 and they still don’t have legs.

Granted, I understand that showing 2D screenshots of VR is difficult, and that VR generally lags behind traditional console and PC gaming in terms of graphics. And yet that doesn’t change the fact that even within VR, Horizon Worlds is one of the worst-looking offerings I have seen, and that Meta has spent something like $10 billion chasing its Horizon, VR-centric version of the metaverse, even embarrassingly changing their company name to reflect that. And…this is the result.

Meanwhile, here are some of the opinions of the cryptosnarkers over on r/Buttcoin:

If I was a Meta stockholder I would be selling the minute I saw that screenshot.

He (and many others) are hoping that nobody remembers Second Life ever existed, let alone that it still does. It has a dedicated audience of somewhere between half to one million users and that’s kinda it. I suspect the future for “the metaverse” is similar.

One r/Buttcoin member posted the following detailed comment:

This is the part I don’t understand. Any “meta” style environment will be incredibly limited in terms of graphics and gameplay due to the need to have a high number of players at once. So who is the target audience?

• Someone looking to play a game is going to go with something like Grand Theft Auto V (and continue to move on to the next biggest thing when they come out).
• The live concerts! aspect of the website seems equally absurd given the graphical limitations and that this would be less entertaining than watching a concert on TV.
• Your casual Farmville-style person isn’t shelling out hundreds of dollars for a VR headset.
• For their “practical” concepts like virtual stores, it seems to invalidate the concept of buying metaverse land as either the system will allow for fast travel style movement (making “premium” land a joke), or not allow for this travelling and completely turn off their customer base for this.

I just don’t see where the interest comes from.

And I chuckled at this wag’s opinion:

Second Life managed to survive because it fostered a community of weirdo people who fetishized the environment. I think the only person who fetishizes Facebook’s metaverse is Zuckerberg.

Absolutely SAVAGE! I live. Somebody else posted this gem to the r/Buttcoin subreddit:

Even worse, the cryptobros are starting to dunk on the metaverse, notably Shark Tank billionaire investor Mark Cuban. According to an August 8th, 2022 report in Fortune:

Mark Cuban, the billionaire Dallas Mavericks owner and avid crypto enthusiast, is not sold on the metaverse.

“The worst part is that people are buying real estate in these places. That’s just the dumbest shit ever,” he told the crypto-themed YouTube channel Altcoin Daily this past weekend.

I’m quite sure that the various blockchain-based metaverses like Voxels (formerly known as Cryptovoxels), Decentraland, Somnium Space, and The Sandbox, all of whom have seen the value and the trading volume of their NFT-based real estate decline during this crypto winter, were not expecting the ridicule and disdain of crypto influencers themselves! After all, the crypto crowd are main target audience of these platforms, not your average non-crypto user. You know things are getting weird when the cryptobros start to turn on each other!

So, what does all this mean? Well, it looks as though the concept of the metaverse, at least among the general public, is going to sustain some reputational damage, at least in the short term (12 to 24 months). Perhaps it was inevitable that there would be such a swing from irrational metaverse exuberance to equally irrational metaverse distaste, even disgust.

I am reminded of the Gartner technology consulting group’s well-known Hype Cycle, where we appear to be rapidly moving from the peak of inflated expectations, to the trough of disillusionment:

The five steps of the Gartner Hype Cycle (source: Wikipedia)

Also, this “trough of disillusionment” means that it’s going to be harder to sell consumers and businesses on the metaverse. This will apply both to behemoth corporations like Meta, Apple, and Alphabet (the parent company of Google), as well as to much smaller metaverse-building companies. As I have said before, not all platforms currently being worked on will survive this rough period.

It is possible, perhaps even likely, that only a handful will achieve dominance in this ever-evolving market, leaving the other firms to fight over the leftover scraps. Of course, some companies will be savvy enough to focus on a profitable niche market, such as the surgical training platform FundamentalVR, which recently received another venture capital infusion of US$20 million.

So, as Bette Davis once memorably said in the movie All About Eve: “Fasten your seatbelts…it’s going to be a bumpy night!”

UPDATE August 19th, 2022: As further evidence of the antipathy towards Mark Zuckerberg’s latest announcement, Zack Zwiezen wrote this scathing report for Kotaku, titled Mark Zuckerberg’s Soulless Metaverse Avatar Has Me Worried About Our Digital Future:

Earlier this week, the alien-wearing-a-human-skin-suit known to us as Mark Zuckerberg posted a VR selfie from inside his company’s metaverse project, Horizon Worlds. The selfie showed off the Eiffel Tower and was meant to announce that his metaverse is expanding to more countries. Instead, however, people immediately began dunking on the terrible picture, the ugly avatar, and how it all looked like it fell out of a 2005 edutainment game…

And that brings us to 2022, where Zuckerberg’s avatar is a legless knock-off of a Nintendo Mii with some really weird buttons and the eyes of a corpse. And this isn’t just how Zuckerberg looks, this is the way all avatars appear in Horizon Worlds. I’ve played enough Horizon Worlds to tell you that the missing legs quickly cease to matter. But the lack of style and the cold, dead aesthetic never goes away.

Sure, part of the reason these avatars and worlds look simple and ugly compared to modern video games comes down to the limited VR hardware in Quest 2 and Facebook’s desire to make VR content that can run on as many devices as possible.

On the other hand, I can find Nintendo DS and Sony PS Vita games with better, nicer-looking art and models than what we’ve been shown so far in Facebook’s metaverse. I also don’t think you can blame the people making this stuff, as I assume they are more than capable of doing better and more vibrant things. But more and more, it seems that isn’t what Meta and Zucklehead want. Instead, they are focused on making a product that can be consumed by the masses and which lacks any defining characteristics in an attempt to get more people to dive in.

This is the exact opposite approach we see in more community-driven VR metaverses like VR Chat, which looks better and feels warmer and more inviting. In comparison, Horizon Worlds looks like an animated video I’d walk by in some fancy hospital while I look for the bathroom.

And if this bland and ugly metaverse is the future Mark Zuckerberg wants and is investing billions of dollars into, I’m worried that it could end up winning out over other, better alternatives simply because he has the money and resources to squash or buy up competitors. Well, if it does win out, at least I’ll be able to skip it and not buy a new VR headset.

Yee-OUCH!!!

Also, as further evidence of the distress in the entire cryptosphere, Bloomberg reports that ad spending by the crypto firms has absolutely cratered:

Spending by major crypto firms, including the trading platforms Crypto.com, Coinbase Global Inc. and FTX, fell to $36,000 in July in the US, according to ISpot. That’s the lowest monthly total since January 2021 and is down from a high of $84.5 million in February, when the industry flooded the airwaves around the Super Bowl.

Again, Yeee-OUCH!!! And it looks like things are not going to get better anytime soon, as inflation roars and recession looms. People have more important things to worry about (like keeping food on the table and a roof over their heads) than buying virtual real estate on the blockchain!

In December 2021, Republic Realm spent approximately US$4.3 million worth of land in The Sandbox, setting a record for the most expensive land sale in the metaverse (more about Republic Realm here). It would appear to be highly unlikely that Republic Realm, or any of the other investors who bought NFT-based plots of virtual land at the height of the boom market, are going to be able to earn a profit anytime soon.

Has the bottom fallen out of the NFT-based metaverse market? And what does this mean for the concept of the metaverse in general? Stay tuned!

UPDATED! EDITORIAL: Minecraft Bans NFT Servers and In-Game Items, Catching NFT Worlds Off Guard

In the wake of the ongoing cryptocrash, and the falling dominoes of crypto firms, I have been spending a bit of time lately learning more about the blockchain space, hanging out in various Reddit communities where such matters are discussed. As I commented on one post:

Crypto culture is kinda fascinating in a train wreck kind of way.

Yesterday, Mojang Studios (the makers of the phenomenally successful voxel-based building game/metaverse Minecraft, which is owned by Microsoft), posted the following announcement on their official blog:

Hello everyone! Recently, we’ve received some feedback from members of the community asking for clarification and transparency regarding Mojang Studios and Minecraft’s position on NFTs (non-fungible tokens) and blockchain. 

While we are in the process of updating our Minecraft Usage Guidelines to offer more precise guidance on new technologies, we wanted to take the opportunity to share our view that integrations of NFTs with Minecraft are generally not something we will support or allow.

This news appears to have come as a most unwelcome surprise to the blockchain gaming company NFT Worlds, which posted the following message to their Discord announcements channel* and to Twitter:

First and foremost – this out-of-nowhere announcement by Microsoft/Minecraft to outright ban all possible uses of NFTs & blockchain tech within Minecraft feels like a step backwards in innovation, and may even have painful downstream effects for them in the long run—we’ll see how that plays out.

Regardless, we’re working through this internally and have all hands on deck brainstorming solutions around the Minecraft EULA changes, as well as outright pivots for the NFT Worlds ecosystem and team if necessary.

Our order of operations in figuring this out is as follows.

We’re working to get in contact with the right decision makers within the Minecraft policy enforcement team as well as the general Minecraft studio to understand the details of this policy change, what the true internal motivators may have been, and how if at all we can find an alternative outcome that’s beneficial to the Minecraft player base as well as Microsoft’s vested interest in Blockchain / NFT technology and GameFi.

In the event after the above conversations we come to the conclusion we can continue to operate, the show goes on as it’s been.

However, if we’re truly banned because of the risk of C&D/DMCA/Lawsuit by Minecraft/Microsoft from innovating on top of the Minecraft ecosystem, we move forward, we pivot.

The first option from here is we transition into our own Minecraft-like game engine & games platform. There’s been dozens of minecraft-like game engines developed over the last decade by various 3rd party teams – These were people wanting to innovate beyond the idea of Minecraft and add their own spin on it. This option means acquiring one of these engines & development teams to join us, and developing on top of it to bring the same vision for NFT Worlds to fruition but with Minecraft & Microsoft entirely out of the picture with no ability to stop us.

The second option is a pivot to a GameFi platform as a service for any game developer or games studio to effortlessly implement the same proven, patent pending, friction removing tech for GameFi we’ve developed over the last year and have intentionally generalized the last 9 months in the event we decided to or needed to branch out into a GameFi platform. All the systems that we’ve already built would be extremely quick and easy for us to pivot to an implementation for anyone to use. The other interesting piece here is as soon as the Minecraft news was announced, we’ve had multiple other metaverse / gamefi projects immediately reaching out to us wanting to use this tech we’ve already proven, strongly kickstarting possible adoption of such a platform. If we go this route, existing NFT Worlds, $WRLD and Genesis Avatar holders would have an equivalent stake via token and/or NFT(s) related to this platform based on their NFT Worlds related holdings once launched.

Like always, we’d love to hear our community’s opinion on everything presented above.

Bottom line, we’re not leaving. We have the community, we have the war chest, and we know we can build.

Here’s more details on that “war chest” they’re talking about (this article is dated February 24th, 2022, well before the crypto crash):

Clearly, people are into it — NFT Worlds has already generated $90 million in trading [on Opensea], even though it gave the 10,000 worlds away for free and only makes money from “royalties and secondary sales.” Worlds are currently going for a minimum of $45,000.

Yes, that’s right—NFT Worlds created 10,000 “fully decentralized, fully customizable, community-driven, play-to-earn” Minecraft worlds, which people have been buying and selling on the NFT marketplace Opensea. Gee, I wonder what those US$45,000-apiece worlds are worth right now, because without Minecraft’s cooperation, they’re pretty much worthless.

Needless to say, over on the blockchain/crypto/NFT snark subReddit community called r/Buttcoin†, people are having an absolute field day discussing this! Honestly, you need to go over there and read through the discussion, it’s quite entertaining. One commenter, after reading NFT Worlds’ announcement above, summarized it hilariously:

TL;DR: We want Microsoft to know they are wrong, and we are innovators. If they don’t allow the project, we will make our own, better Minecraft with blackjack and hookers.

Another Redditor responded:

Wow, imagine running a business totally dependent on someone else, yet being caught unaware on major business decision of this entity on whom you completely dependent upon.

Sounds like just the way people in crypto do business…with zero awareness of whats going on around them.

Seriously…how on earth do you build a company whose business model goes out the window with a single decision by the corporation who RUNS THE PLATFORM THEY’RE DEPENDENT UPON?!?? This is a prime example of a harebrained, half-baked cryptoscheme that somebody hatched up and was able to earn a tidy profit from, selling highly volatile, speculative blockchain-based assets to ignorant customers, who perhaps thought that they would be able to sell them for a profit to the next fool who comes along. It’s maddening.

Minecraft goes on to explain its decision:

In our Minecraft Usage Guidelines, we outline how a server owner can charge for access, and that all players should have access to the same functionality. We have these rules to ensure that Minecraft remains a community where everyone has access to the same content. NFTs, however, can create models of scarcity and exclusion that conflict with our Guidelines and the spirit of Minecraft.

To ensure that Minecraft players have a safe and inclusive experience, blockchain technologies are not permitted to be integrated inside our client and server applications, nor may Minecraft in-game content such as worlds, skins, persona items, or other mods, be utilized by blockchain technology to create a scarce digital asset. Our reasons follow.

Some companies have recently launched NFT implementations that are associated with Minecraft world files and skin packs. Other examples of how NFTs and blockchain could be utilized with Minecraft include creating Minecraft collectible NFTs, allowing players to earn NFTs through activities performed on a server, or earning Minecraft NFT rewards for activities outside the game. 

Each of these uses of NFTs and other blockchain technologies creates digital ownership based on scarcity and exclusion, which does not align with Minecraft values of creative inclusion and playing together. NFTs are not inclusive of all our community and create a scenario of the haves and the have-nots. The speculative pricing and investment mentality around NFTs takes the focus away from playing the game and encourages profiteering, which we think is inconsistent with the long-term joy and success of our players.

Amen. 100%! CRYPTO ADDS NOTHING TO MINECRAFT! (I can’t believe I am cheering for Microsoft here…)

It is honestly refreshing to see yet another major corporation draw a line in the sand, and explain so clearly why they are drawing that line! Minecraft is a game, and games are supposed to be fun, people. (By the way, it would appear that Axie Infinity and all the other “play-to-earn” NFT games are bleeding users during this cryptocrash, as they can no longer earn enough to make it profitable. And it’s not just play-to-earm, it’s all the X-to-earn NFT schemes, like the NFT-based running app StepN, whose payouts to users have cratered in just two months.)

As I have editorialized before, a harsh, long, bitter crypto winter is going to shake out a lot of sketchy companies with poorly-thought-out plans, like NFT Worlds.

I suspect that NFT Worlds is going to go through a rough patch…

*To see this message, you will have to join the NFT Worlds Discord, which requires you to jump through a few hoops to verify that you’re a human being. I joined just to get a copy of the announcement, but I might stick around as a lurker, just to see how the company and its users attempt to spin this disaster 😉

†Seriously, if you haven’t checked out r/Buttcoin yet, please do so, along with Molly White excellent website, Web3 Is Going Just Great (the title is meant to be sarcastic), which outlines the latest crises, hoaxes, scams, and fiascoes in the blockchain space, keeping a running total of money lost to date in a ticker in the bottom right-hand corner.

UPDATE July 27th, 2022: Ars Technica has an update on the saga here. Apparently, the NFT Worlds token’s value has plummeted over 60 percent in a week following Mojang’s announcement.