Dear Reader,
We’ve been exploring the concept of play-to-earn Web 3.0 games recently in The Bleeding Edge. These are games like Axie Infinity, Star Atlas, Aavegotchi, Gods Unchained, and others that have built-in monetary incentives to play.
Players can mint, purchase, rent, or borrow non-fungible tokens (NFTs) to participate in gameplay. Play-to-earn Web 3.0 games are built on blockchain technology and have their own native currency. Players earn currency as a reward for participation and for achieving milestones in the game.
While these may seem like frivolous ventures to some, we can be assured that they’re not.
Play-to-earn is a form of economic activity happening right now in the red-hot space of gaming. And the economic incentives are large enough that some have already quit their day jobs.
As players earn or find new NFTs during gameplay, these items have material value. The NFTs can be traded or exchanged for native tokens.
And these can ultimately be converted back to your choice of fiat currency. For that reason they have real monetary value.
And as the most popular games proliferate, the value of a gaming network appreciates along with its native token.
This is the blockchain equivalent of Metcalfe’s law. This law states that “the value of a communications network is proportional to the square of the number of its users.”
While Metcalfe’s law was developed in the context of a communications network, it’s just as relevant in the context of a social gaming network like Axie Infinity.
The “law” also relates directly to the success, or failure, of blockchain projects in general. Those projects that create value, momentum, and an increasing number of network participants will appreciate in value. The opposite will be true for those that don’t.
And this is why play-to-earn is such an exciting economic model for those projects that gain rapid adoption.
But what about “play-to-move?” It was inevitable that the economic incentives would cross that bridge between the digital world and the real world. It’s much the same way that NFTs are now being developed with a physical component as well (“digi-fizzy” NFTs).
A recent Solana-based move-to-earn project called STEPN just raised $5 million. This is a perfect example of what’s to come.
STEPN crosses the bridge by using our smartphones to connect to the real world. Users download the STEPN application, which also acts as a Solana wallet. We can then purchase an NFT sneaker, or even rent a sneaker if the price is too expensive.
The STEPN App
Source: STEPN
And here’s where it gets interesting. Those who have an NFT sneaker can literally get paid to walk, jog, or run each day in STEPN’s native cryptocurrency – GST.
It’s not just pocket change either. It’s possible to easily earn $20–30 just by walking or running for 10 minutes a day. And for those who are more committed and willing to be active for 60 minutes a day, you can earn $300–450 a day at current GST prices.
That’s the earnings potential for those who own their NFT sneakers. And for those who rent, the sneaker owner keeps 70%, and the renter takes 30%. Given the current model, it wouldn’t take long to earn enough GST to eventually mint or buy your own sneakers.
This is all enabled through the app on our smartphones. The app uses the hardware in our smartphones to both track and confirm the distance and time that we have walked/jogged/run. This information is used to award the correct amount of GST.
This is not only a fun model. It’s practically a common good because it incentivizes healthy behavior. For those skeptics out there, Pokémon GO is a great analogue. The creator of Pokémon GO was motivated by similar reasons. Produce a fun game that gets people moving.
The game has already generated more than $5 billion in its first five years. But here’s the problem… The $5 billion went to just two parties – Nintendo (IP owner) and Niantic (game developer).
In the world of Web 3.0, the model is inverted. The majority of the wealth created goes to the network participants. STEPN earns fees of 4% on marketplace transactions, 6% on sneaker minting, and 8% on sneaker rentals.
The network participants don’t just get paid for exercising. The value of their game-based assets and cryptocurrency will appreciate as more people get involved. There is a built-in incentive to evangelize, promote, and get friends and colleagues involved in the game.
Powerful. And we’re going to see a lot more where that comes from.
2022 is when we’ll see NFTs bridge the digital and physical/real worlds. They’ll empower us to engage in meaningful and fun economic activity that appreciates in value as the number of network participants grows.
For those who are interested in my top picks in this exciting space, you can watch a special presentation I put together right here.
A new privacy-focused messaging project just launched. It’s called XX Messenger. And legendary cryptographer David Chaum is heading up the project.
I suspect most people won’t recognize Chaum’s name. But he envisioned blockchain technology way back in the 1980s. In fact, he wrote his dissertation about the technology way back in 1982. This was decades before the Satoshi Nakamoto white paper on Bitcoin written in 2009.
What’s more, Chaum developed Ecash, an early form of cryptocurrency. Ecash did not catch on, but it was very much a precursor to Bitcoin.
So Chaum has been a visionary in this space for decades now. And he brings that same forward-looking mentality to this new project.
He created XX Messenger to proactively solve a problem that doesn’t exist yet. Long story short, quantum computing poses a threat to the top private messaging platforms today – namely, Signal and Telegram.
Both Signal and Telegram use end-to-end encryption to ensure that messages remain private on their platforms. However, a sufficiently powerful quantum computer could break that encryption, exposing all messages sent on Signal and Telegram.
Now, most people don’t think that quantum will be a serious security threat for many years to come. I’m not one of them.
In my 2022 prediction series, I predicted that we will see the world’s first 256-qubit quantum computer announced this year. And that caliber of quantum computer could theoretically crack our existing encryption protocols.
If I am correct about this, quantum computing is coming faster than most people think. And that’s why XX Messenger is so timely. Chaum isn’t so fussed about the timing. His point is that he knows it’s coming.
And he knows there will be a need for the product in the near future.
XX Messenger is available to download from both Apple and Google’s app stores today. But it’s not like a traditional app that runs on centralized servers.
Instead, XX Messenger utilizes a decentralized network of nodes to run its network.
These nodes are simply individual computers running the network software. Anyone is free to set up their own XX Messenger node, and they will receive the project’s native cryptocurrency XX Coin as a reward for doing so.
XX Network’s Current Global Node Network
Source: XX Network
Right now, 324 nodes are running the network. And XX Messenger expects this number to jump to 550 this year. That’s important because network resiliency increases with the addition of new nodes.
As for the “how,” XX Messenger works by taking the messages sent on its network and scrambling them together so that all the information is mixed up. That makes it impossible for a quantum computer to reassemble the information.
So I see this as an exciting project. The industry needs to get serious about upgrading our existing encryption protocols to make them quantum-resistant. And Chaum’s leading the charge here with XX Messenger.
Neuralink just posted a new job opening. It seems the company is now actively recruiting for the position of a clinical trial director.
And that can only mean one thing… Neuralink is gearing up for the U.S. Food and Drug Administration’s (FDA) clinical trial process.
As a reminder, Neuralink is Elon Musk’s brain-computer interface (BCI) company.
The company made a splash about 16 months ago when it demonstrated how its BCI could monitor a pig’s brain activity in real time. And in February of last year, Neuralink showed how its BCI enabled a monkey to play an old video game using just its mind.
So the company has been making tremendous progress.
The next step is to go through the clinical trial process and gain FDA approval to use the BCI for general medical use. Musk envisions this technology will be a game changer for patients with neurological problems and paralysis.
I expect that Neuralink will be able to begin clinical trials before the year is out. And that will headline what will be a very exciting year for BCIs, with Neuralink as the front-runner.
Neuralink’s Implantable Device
Source: Neuralink
There are a number of companies out there working on their own BCI. But Neuralink is the only one taking a “full-stack” approach. That is to say, Neuralink is developing both the hardware and the software.
The hardware consists of both the BCI device itself and the robotic surgery system designed to safely insert the BCI into the brain. Neuralink also developed a wireless charger that users can place on their heads to recharge the BCI.
As for the software, Neuralink’s BCI can wirelessly connect to a computer and an iPhone. The software then allows users to control those devices using just their thoughts. It’s absolutely an incredible system.
I suspect that once again the Musk skeptics will get it wrong. Neuralink is likely on the verge of a breakthrough in BCI technology.
And ultimately, this technology will not only be used by those with a medical need, but by those who wish to become even more productive in how they interface with computing systems.
That may be an uncomfortable thought for some of us. The thought of inserting a device in our brain that connects us to computing systems can be disconcerting. But I assure you that it’s real. And it’s coming faster than we think.
Google just revealed that it doesn’t plan to ship its first augmented reality (AR) headset until 2024. This comes as a bit of a surprise…
A team of about 300 people has been working on Google’s AR headset in relative secrecy for many years. It’s called Project Iris.
The industry widely believed that Google would release a consumer-facing AR product this year to compete with the other majors in the space – namely, Apple, Meta, and Snap.
After all, like Meta (Facebook), the majority of Alphabet’s (Google’s) revenues come from data surveillance, which results in advertising revenue. AR eyewear is an absolute goldmine for behavioral data collection.
So, it turns out that Google is a few years behind the ball. This comes as a surprise because Google was one of the earliest players in this space with its original Google Glass, which was released almost a decade ago.
Original Google Glass Circa 2013
Source: Marketwatch
That said, Google just hired Paul Greco, the former chief technology officer of Magic Leap, to right the ship. Greco has the task of getting Project Iris back on track.
I think this is a smart move. As longtime readers know, Magic Leap’s AR prototype impressed me very much. In fact, I thought Magic Leap was just one generation away from having a solid consumer product ready for launch.
But Magic Leap then shifted its focus to the enterprise market, indicating that its consumer launch may never come.
I suspect that’s why Greco was willing to make the jump to Google.
He believes, as I do, that AR headsets will be a mass-market consumer item. They’ll be a major revenue driver for the companies that can get it right.
And Google certainly has the technology and the capital to build the product, whereas Magic Leap has struggled.
We know Google is making its own semiconductors for the AR headset, and it appears the tech giant is making an operating system as well. This suggests that Google is going to employ the same strategy it uses in the mobile phone space.
If we remember, Google’s goal is to get other mobile phone manufacturers to design their phones around its Android operating system.
Google does make its own Pixel line of phones, but they are meant simply to serve as a reference design upon which other consumer electronics manufacturers can build their own smartphones. Pixel devices are not a major revenue driver for Google.
So we very well may see the same strategy around Google’s AR operating system.
Still, the real excitement this year in the AR space will center on Apple, Meta, and Snap. We expect each company to launch a consumer product within the next two quarters. I can’t wait to see how it shakes out.
And to learn more about my top investment recommendations in this space, simply right here for more details.
Regards,
Jeff Brown
Editor, The Bleeding Edge
P.S. For those who missed it, a replay of last week’s The NFT Moment event is still available for a short time longer. For readers interested in the burgeoning NFT trend and how to play it, you can check out the replay right here.
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
