In addition to writing about to breaking free from the “default life plan”, I also like sharing what I’m thinking, learning, and working on…
Last week I sent my latest long-form essay on What’s Worth Owning. It’s an open-ended piece; I left off talking about blockchains and NFTs.
This week there’s been some heated debate on twitter about the value of NFTs, and whether they even constitute “ownership” at all.
I couldn’t resist weighing in myself here, here, and here:
Ultimately, I think most people are over-focused on NFT art projects and missing the bigger picture (and opportunity).
The internet is evolving.
Allow me to explain…
(the following is excerpted from proposal I wrote last week for a client strategy project)
Over the last fifteen years, the web has evolved from the basic websites I started working on in the 90’s (mostly static HTML), to the much more dynamic, social media and user generated content-infused web we know today (“Web 2.0”).
In that time, a handful of companies (like Amazon, Facebook, and Google) have emerged as the dominant players. These companies use cookies and other methods to track user behavior across the web. They collect massive amounts of user data, which they then use to target ads, generate revenue, and maintain their dominance.
All of this data is “siloed” and centrally controlled. We users create it, but it’s not ours.
Lawmakers have attempted to curb this activity through privacy-focused legislation (CCPA, GDPR, etc), but their efforts have done little to change the overall landscape.
New startups face a massive disadvantage, and generally have no choice but to purchase data, advertising, and cloud computing services from the big players.
In the meantime, blockchain technology has emerged and provides an alternative path forward. The same blockchains that power cryptocurrencies like Ethereum and Solana now make it possible to create and deploy decentralized, distributed applications (“dApps”).
Web3
In this new paradigm, often referred to as “Web 3”, applications are no longer confined to running on a single server, and their associated data is not stored in a single database or hosted by a single cloud provider.
Instead, dApps run on blockchains, with code and data interacting via smart contracts that live on decentralized networks of many nodes. Networks that are not controlled by any one person, company, government, or other authority.
Most of the attention focused on blockchains so far has been on the underlying cryptocurrencies. But it’s not just the prices of cryptocurrencies that are going up:
From Q2-2020 to Q2-2021, Coinbase’s “Monthly Transacting Users” grew nearly 6x, from 1.5 million to 8.8 million.
At the same time, interest in decentralized finance (DeFi) protocols and applications has seen phenomenal growth. The Total Value Locked (TVL) in DeFi smart contracts on Ethereum is estimated to be over $71 billion (more than triple what it was a year ago).
Over the past summer, Solana (a layer 1 blockchain that emphasizes performance) emerged as a viable alternative to Ethereum. In just a few months, the TVL of DeFi projects on Solana has reached $8.8 billion.
Another area that has seen skyrocketing growth is non-fungible tokens (NFTs). Sales of NFTs topped $2.5 billion in the first half of the year, from “drops” on OpenSea and Rarible to auctions at the esteemed houses Christie’s and Sotheby’s.
All of this interest in DeFi and NFTs has spurred another important shift:
Millions of people now have blockchain wallets installed in their web browsers. Having a browser wallet is a prerequisite for using dApps — like what installing Netscape was for Web 1.0.
The makers of the MetaMask wallet browser extension reported last month that they now have over 10 million monthly active users (1900% growth year-over-year). And Phantom, a browser wallet for the Solana blockchain, reached 400,000 users in less than six months.
Web3 and dApps are the new frontier. Startups and investors know this.
According to CNBC, “crypto and blockchain start-ups have received about $19 billion in venture funding so far this year.” DapperLabs (the team behind NBA Top Shot) just raised $250 million at a $7.6 billion valuation. Sorare (a sports NFT market/game) raised $680 million at a $4.3 billion valuation.
Taken all together, these developments represent a massive opportunity!
wagmi
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