Devs Quit SQUID, Token Tanks

The biggest crypto news and ideas of the day

Nov. 1, 2021

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Today's must-reads

Top Shelf

IDENTITY THEFT: Hundreds of Salvadorans say hackers opened Chivo Wallets, the bitcoin wallet developed by El Salvador's government, with their ID numbers to claim the $30 BTC incentive that President Nayib Bukele's government offered to citizens when making the cryptocurrency legal tender in September. The identity thieves are reportedly exploiting a flaw in the wallet's setup process.

SQUID SQUISHED: The developers behind a crypto project inspired by Netflix's mega popular show "Squid Game" say they have left the project, as the price of its affiliated token crashed to nearly zero. Separately, signs point to an inside job on a recent $139 million hack of decentralized exchange Boy X Highspeed (BXH). Neo Wang, the project's CEO, says a hacker was likely able to break into the exchange's Binance Smart Chain address after getting hold of the administrator's private key.

NOT YOUR KEYS … Binance, the world's largest crypto exchange, temporarily disabled all crypto withdrawals for a time on Monday. In a tweet, the company blamed a large backlog. Meanwhile, Amazon Web Services (AWS) is looking to move into the crypto custody business with a job posting for a specialist to foster digital asset underwriting, transaction processing and custody in the cloud.

BUILDING OUT, CASHING IN: Blizzard, a venture capital and incubation fund, launched with an initial seed investment of $200 million to focus on building up the Avalanche blockchain. Polychain Capital, Three Arrows Capital, Dragonfly Capital and CMS Holdings participated in the round. Separately, Three Arrows backed a $10 million investment into Ardana, a DeFi project on the Cardano blockchain. Finally, Digital Currency Group (DCG), which owns asset manager Grayscale, crypto lender Genesis and independent news outlet CoinDesk, sold $700 million of stock in a private secondary sale led by a pair of SoftBank funds.

NATIONAL STAGE: Major Chinese tech giants Ant Group, Tencent and JD.com signed a "self-regulation" convention on NFTs with state organizations on Sunday, according to an Ant Group WeChat post and Chinese media. China's Big Tech appears to be facing increasing pressure over the companies' involvement with NFTs. Meanwhile, South African pension funds would be banned from investing in cryptocurrencies under new draft rules.

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Overheard on CoinDesk TV ...

Sound bites

"We're going to see NFTs attached to nearly every digital content that exists and … we're going to see a lot more of the entities that have commercial rights attached to them be leveraged in a substantial way."

–NFT42 CEO Jimmy Mcnelis, on CoinDesk TV's "First Mover."

What others are writing...

Off-Chain Signals

Anubis DAO Descends Into the Underworld After $60M Exploit (The Defiant)
FATF says 'stablecoin' is just a marketing gimmick in latest crypto guidance (Protos)
Bitcoin miners score their second-highest month of revenue ever with $1.72 billion in October (The Block)
Ethereum (Not USDC) Now The Primary Collateral for Decentralized Stablecoin DAI (Decrypt)

If you 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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Crypto is on the rise. Crypto knowledge, however, is stuck on the runway: It turns out that 96% of U.S. adults can't pass a test on crypto basics. Throughout November, Crypto Literacy Month aims to change that. Brush up on your crypto knowledge!

Putting the news in perspective

The Takeaway

The Metaverse Is Already Here

Hey, Will Gottsegen today. The big takeaway from Facebook's disturbing, somnambulant keynote last week is that the company is going all-in on the "metaverse" – a persistent digital layer sitting on top of the real world, accessible via virtual and augmented reality technologies.

The concept itself isn't new: Sci-fi authors have been prognosticating about this sort of thing for decades. Put on your headset and find yourself in an immersive digital world, a fantasy land where the coronavirus pandemic never happened, and where Facebook never admitted responsibility for facilitating ethnic cleansing in Myanmar.

Part of what's so uncanny about Facebook's take on the metaverse – and rebranding as "Meta" – is that it still feels like speculative fiction. Mark Zuckerberg envisions a world straight out of the film "Ready Player One," where logging on is a form of escape.

Though it was meant as an opening salvo for a new era of technological achievement, Zuckerberg's presentation was mostly just alienating. The backgrounds were fully green-screened; the speakers looked like they were being held at gunpoint and even after 80 minutes the applications for this tech remain unclear.

As my colleague David Morris pointed out last week, the blockchain industry has already been toying with metaverse tech. Virtual reality programs like Decentraland use non-fungible tokens (NFT) as a form of property rights – tokens are tied to 3D plots of land, which can be bought and sold on the secondary market. It's crypto as in-game currency, a gamified spin on investing.

Even this feels a little "out there." We spend our days online, but have yet to completely detach from the real world. Decentraland's native token, MANA, recently shot up in value thanks to a wave of Facebook-fueled speculation, but how many people would opt for a virtual chat in Decentraland over a face-to-face Zoom call at this point?

The reality is that some of this tech is already here, in ways that make more sense with the way we live our lives now. The metaverse as it exists today doesn't require an Oculus headset, and our devices reflect this. Apple started building a LIDAR scanner into some of its iPhones in 2020, which allows for laser-guided measurements in physical space. Face filters on Instagram and Snapchat can provide convincing digital makeup for video calls (TikTok is still at work on its own toolset). And some fashion retailers are betting on "virtual try-on" mechanisms for clothing purchased online, with an assist from augmented reality.

The metaverse envisioned by Facebook is a kind of all-encompassing iteration on these concepts. It wants us to be more engaged, more online, while the world around us degrades. To the extent that the metaverse is already here, it's an attempt to complement the systems we already use. It doesn't ask us to completely reorient how we interact with each other online.

In an essay for Gawker called "The Metaverse Is for Babies," the writer Hanson O'Haver suggested that "it's almost unimaginable that any adult (who doesn't run a Silicon Valley company) could be excited about [this] technology." The Atlantic recently ran a piece with a similarly blunt title – "The Metaverse Is Bad" – which likens the tech to a "black hole of consumption" (a little like the propagandistic billboards from the movie "They Live").

There's a history of consumers pushing back against overly ambitious ideas in tech (see: Google Glass). Meta's success or failure will depend on whether anyone is actually willing to go all-in.

–Will Gottsegen

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