The case against crypto in the metaverse – POLITICO
This newsletter has already asked if crypto is going to be fundamental to the metaversebut it is a question worth revisiting.
The pro-crypto argument is that technology is the only way to secure digital property rights. Inasmuch as Andresen Horowitz’s memo on the “essential ingredients” of the metaverse puts it “True digital property rights were not possible before the advent of cryptography, blockchain technology and related innovations such as NFTs.” Consider the recent craze for metaverse real estate: The NFT is a certificate of authenticity that serves as a “title deed” to one’s “home”. This principle could then apply to anything from your avatar’s clothing to their virtual car to anything else used in a virtual world.
But Minecraft, one of the biggest metaverse-like spaces, just Prohibited NFTsdirectly accusing them of being vectors of financialization “inconsistent with the joy and long-term success of [their] players.” Does that make the game an outlier or a step up?
I spoke to Liron Shapira, an investor, entrepreneur, founder of the relationship coaching app “Relationship Hero” — and an outspoken crypto-skeptic and Twitter pugilist, asking him to weigh the relative merits of the Web3 boosters’ claims -metavers.
“It’s such a classic case of abstract reasoning that seems logical on an abstract level, but when you unpack it and get more specific, it dissolves,” Shapira said of the argument that blockchain is key. of interoperability and freedom from Big Technology’s stranglehold on our data. “It’s kind of nice to think, what if you didn’t have to trust [those companies]but in practice, that’s just not a big deal…their examples don’t make a compelling case.
A good example of Shapira’s argument came in his January debate with Balaji Srinivasan, a former partner at Andressen Horowitz (and former CTO of Coinbase) who argues that blockchain is a world-changing technology. Shapira asked Srinivasan why use blockchain for record keeping or fundraising, for example, when DocuSign and Kickstarter work great? Sophisticated payment rails for digital financial transactions already exist; why add another layer of obfuscation based on the “wallet”? (Srinivasan’s counter-argument: that the programmable nature of blockchains makes them particularly useful in facilitating the flow of money and increasing the number of possible transactions on them.)
But you don’t have to be a crypto evangelist like Srinivasan to see the technologies as potentially complementary. When I spoke with Matthew Ball at the release of his bookThe Metaverse– which outlines both the pros and cons of Web3/metaverse integration without taking sides – he said he saw the technology’s potential to make users less dependent on large corporations, but was sympathetic to gamers and other consumers who see it simply as a means of earning money on a scheme (the very case that the developers of “Minecraft” made when announcing their NFT ban).
And it’s not just players with whom crypto’s reputation is in decline right now, given the market crash and the growing likelihood of a regulatory crackdown. With this in mind, it is easy to imagine that the giant corporations retain a large place (especially given the own tortured history with crypto).
The best argument for the instrumentality of crypto for the metaverse would be demonstrated daily and ubiquitous use — but virtual real estate is more of a speculative trinket than an impactful app like Google Maps or, well, Facebook. Perhaps a new use will emerge, but as the two technologies develop, their relationship feels less like interdependence and more like old-fashioned overlap.
The Treasury Department today sanctioned Tornado Cash, one of the world’s largest crypto mixers, for its role in helping North Korean hackers (and others) launder stolen money.
What is a “crypto mixer”? A helpful Ars Technica Explainer describes them as “creating a disconnect between the funds a user deposits and the funds the user withdraws”, by pooling large amounts of users’ funds and then allowing users to withdraw the original amount amount they put, but not the same deposit. There are legitimate reasons why someone might want to protect their privacy, but it also presents an obvious opportunity for large-scale money laundering.
And Tornado Cash went big: Like POLITICO’s Eric Geller rated for Pro subscribers Today, the Treasury Department accuses North Korean hackers of laundering $455 million worth of Ethereum through the service that was stolen in a March heist. (And over $7 billion in total.) Nor is Tornado Cash the first mixer to get slapped for providing such a service, either. after Blender.io in May.
A senior Treasury official told Eric that the efforts were intended to “send a strong message” to crypto companies with overly lax information-gathering capabilities.
It’s time for a long-awaited update from the DFD’s “history of the future” department — this time from the literary world.
As part of a weekend down the Wikipedia rabbit hole, I came across an essay by Thomas Pynchon titled “Is it okay to be a luddite?”, in October 28, 1984 New York Times book review. The giant of postmodern literature addresses the role that anti-technologists have traditionally played in shaping our technological and scientific culture, providing catharsis for those who feel mystified or repressed by “progress” -think Frankenstein’s monster, doling out revenge for man’s hubristic attempt to play God.
The essay includes oddly optimistic speculations about the “computer age”, observing that there seemed “to be a growing consensus that knowledge really is power, that there is a fairly simple conversion between money and information, and that somehow, if the logistics can be worked out, maybe miracles are still possible”, including a final reconciliation between so-called Luddites and techno-optimists. (So much for that.)
Pynchon also hints at the possibility of a similar modern Prometheus moment in the essay’s conclusion, where he points out that “if our world survives, the next great challenge to watch will come – you heard it here first – when the research and development curves in artificial intelligence, molecular biology and robotics all converge.
Which sounds very “Blade Runner” (a movie that was only two years old when the essay was released). But those curves – in ongoing debates about how humans respond to AI, the ethics of genetic engineering, or the meaning of “work” in an automated world – have only bent further since the beginning. Pynchon’s writing, if they haven’t yet reached as explosive a convergence as he might have imagined. Not much has been heard of the reclusive author in recent years, but perhaps that’s not too much to hope for an exploration of the topics in another Twilight-era novel.
Keep in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Constantin Kakaes ([email protected]); and Heidi Vogt ([email protected]). Follow us on twitter @DigitalFuture.
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