Like many new technologies that came before them, the fear of crypto & Web3 is very real. How can we change the narrative to move minds and mass markets?
Below is an article penned by Rebecca Barkin for this year’s Crypto Finance Conference, the first in her new role as Chief Executive Officer of Lamina1.
Read on to find out more about her vision for Web3, blockchain, and what she hopes it can accomplish in the future Open Metaverse. To read the accompanying announcement about Barkin’s new role as CEO, see here.
“Electricity is the new Jezebel, seducing our young men into the arms of immorality.”
A little over 120 years ago, this was the powerful last line of a concerned journalist’s warning to the citizens of Seacoast, New Hampshire. Electricity was going mainstream, powering up public spaces, then homes, then a new global telephone system, which skyrocketed in use from 600,000 to 5.8 million Americans from 1900 to 1910 alone¹. For decades, the public would continue to exercise caution around the new technology: warning of the temptation of complacency and new social vices, plugging up unused electrical sockets to avoid “leaking vapors,” not talking on the telephone during a thunderstorm for fear of fatal shock. It seems silly in retrospect, but new innovations in the way we live, communicate and interact have historically been feared by both blue-collar workers and their bosses, be it for real concerns of physical risk or the social, moral, political, or economic upheaval that often follow.
Web3 is no different. More than a cultural movement, it’s a leap forward in the evolution of the internet that puts many new technologies to work. And much like the anxiety-inducing innovations that came before it, it threatens to disrupt the world as we know it, challenging centralized power structures and the market domination they enjoy.
Web3 principles, when applied to the Metaverse — a place where interoperable, rich and immersive, always-on social experiences are served up via the internet — posits that both creators and consumers should enjoy greater agency, ownership, and data privacy as they move through the digital world. We call this the Open Metaverse, a concept that imagines a new era of online life where we freely traverse, experience, and transact in digital worlds free from the control and exploitation of megacorporations.
But for all its promise, we’re yet to find a use case for Web3 that connects emotionally or practically enough to inspire widespread adoption, allowing us to relegate that roster of complex new terms to a dusty glossary. Outside of the roller coaster ride of DeFi and trading, most people have no idea that blockchain, NFTs, and smart contracts — foundational technologies of the Open Metaverse — provide utility beyond the gamble of crypto.
So, it’s no great wonder that when the news of FTX unfolded, many chose a more familiar word to define this new and complex phenomenon of a blockchain-powered Internet: fraud. After making great strides in recent years to bring the promise of blockchain to a broader audience, we now face the troublesome task of winning back trust that we never fully had in the first place. So, how do we do it?
We focus time, attention, and investment on two key areas. First, we must tell better and different stories around the potential of blockchain — championing use cases that move developers to build and people to experience. Second, we must invest in infrastructure, maturing the product and its usability to serve a more diverse user base of creators and consumers alike.
Tell Better (and Different) Stories
For the whole of my career, since my start at EMI-Capitol Records, I’ve been working with artists to embrace new technology and technology companies to invest in artists. Entertaining, moving content is key to selling new technology — from hardware to software, chips to connectivity. Yet many people working on the leading edge of innovation in the Metaverse and Web3 still have little understanding, patience, or appreciation for what it takes to create something sticky.
Thirty years ago, Neal Stephenson, our Co-Founder at Lamina1, undoubtedly created something sticky. A world-renowned science fiction writer and the originator of the term “Metaverse,” Neal imagined an alt world so vividly in his epic 1992 novel Snow Crash, that countless creative technologists have been trying to manifest it ever since. In a recent interview on the a16z podcast, Neal addressed the notion that sci-fi writers can play a critical role in shaping the direction of new technology; “A science fiction novel can serve as a kind of template or roadmap…that’s more effective than a typical corp strategy.”²
Why is that? Because in a story, the needs and desires of a human always come first. The scene in which a story unfolds and the technology within it exists to support a person in pursuit of something. And that person in their pursuit is generally motivated by the same handful of universal themes that have reflected, since the dawn of humanity, what motivates a person to dream and act.
What’s more, in the earliest stages of product development — be that for a virtual world, a piece of software, or the hardware that serves it up — success means alignment from many teams, each managing disparate parts and pieces of the whole. An aspirational vision helps unify engineering and creative teams in making a product or experience that hits the mark. For this reason, writing, concept art, and prototyping are often critical first steps to realizing a game, an immersive experience, a brand campaign, or any creative project that aims to create the kind of emotional resonance that excites, converts, and endures.
In other words, as purveyors of new technologies, we often must fully imagine a scene, an outcome, or a pivotal interaction and then ask: How do we get there?
As a real-world example, in developing augmented reality applications for enterprise clients at my former company Magic Leap, we’d often imagine the entire scene with all the key players, and work through a storyboard to support the right features, integrations, and UX required to solve a problem. Still, one of the most powerful proof points of AR I can recall was a high-stakes surgical simulation to separate nine-month-old conjoined twins. The photo of that mother holding her babies in the OR still gets me (and my mother) choked up. What a triumphant story of technology serving humanity — whether you buy into AR today or in 10 years, it’s hard to argue against the value of that innovation.
But what is that story for Web3 that will similarly move minds and mass markets? And how do we get there by addressing a pivotal need, interaction, or outcome in people’s everyday lives?
As I step into a new role at the forefront of an emerging Web3 economy, one thing is clear: DeFi isn’t enough, at least not for mainstream adoption. For most, the subject of money is often a source of tremendous stress and avoidance; less than half of U.S. households are able to cover an unexpected $1,000 expense, like a car repair or medical bill³. People simply don’t have the money to gamble on crypto, even if it could one day lead to better financial outcomes. Factor in the distrust of new technology, and you’ve combined two of the most anxiety-inducing necessities of modern life. Now wrap that up in the notoriously poor design of crypto wallets, plus 10 years of hacks, scams, and other illegal activity, and the challenge ahead of us is clear.
Gaming offers one of the most compelling early use cases outside of DeFi, with in-game economies presenting a unique opportunity for blockchain to make its way into the minds and experiences of the masses. As such, for the past two years, Play-to-Earn has been on the tongue of nearly every Web3 advocate and investor, collecting $4.49 billion from global financiers and accounting for 62.5% of the total amount invested in Web3 in 2022 alone⁴.
On the surface, P2E seems a sure bet; marry the value of gamers (an LTV estimated at ~$58,000⁵) with the crypto community’s love of collecting and trading digital assets, and you’ve theoretically got an engine of continuous economic activity. But a recent Global Web3 Gamer study from Coda Labs found that only 15% of respondents were interested in playing a Web3 game, and only 6% of mainstream gamers had ever used a blockchain wallet or bought an NFT. Even more (or less) surprisingly, the study found that the top motivation for those that do play Web3 games today is still simply: earning crypto⁶.
Turns out, this genre of gaming has a lot to learn from its Web2 predecessors.
Compelling game design is an artful combination of origin story and mission, satisfying core mechanics, meaningful feedback and rewards, social play, and just-elusive-enough mastery — all in the service of an overarching narrative. Note that Activision’s blockbuster franchise Call of Duty employed, among a team of thousands, a highly-esteemed screenwriter. A great game, like any great story, is not manufactured from a predetermined financial outcome. Gamers are a passionate and valuable community but don’t underestimate what it takes to get and keep their attention.
To know why that last insight matters so much, consider another 2022 report that captures not just who plays games, but why people play them. The Essential Facts about the Video Game Industry Report found that the most popular reasons people game are Joy (93%), mental stimulation (91%), and stress relief (89%). When you look at it from that angle, it’s no wonder the competitive nature of the crypto community is a turn-off to your average gamer.
We move closer to the “story” when we think about the real-world problems Web3 might solve for creators. Beyond gaming, music and film present another interesting opportunity for compelling use cases. Artists in both fields have a lot to gain from the Web3 movement and its enabling technologies, not to mention an immeasurable impact on culture and consumption.
In the early 2000s, record labels and film studios — sponsors of some of the most powerful storytelling in the world — saw their business model completely upended by a period of fairly reckless digital innovation. Piracy was rampant, and the value of a carefully-crafted album or episode was completely reset by the unending pressure of streaming singles and binge-worthy hits. Of course, businesses eventually adjusted to benefit from the international, always-on access of smartphones and the internet. When album sales slumped, record labels initiated the 360 deal, granting the labels additional revenue from endorsements, concerts, merchandise, and tv appearances. Meanwhile, artist equity and ownership got even worse.
A 2018 report from CitiGroup exposed the severity of unfair profit distribution in the music industry. Despite registering revenue approaching $43 billion, artists received just 12% of the profits, ceding much of the returns to intermediaries⁷. Most artist revenue comes from touring, but as of this year, with inflation skyrocketing, popular indie artists began canceling tours citing impossible economics and mental exhaustion. Creators and their fans suffered the consequences.
With regard to piracy, also consider that digital video piracy is costing the US economy between $29.2 and $71 billion each year. An estimated 70,000 jobs a year are lost in the United States due to music piracy. Illegal downloading of copyrighted materials takes up 24% of the global bandwidth⁸.
In both music and film, blockchain has the potential to not only reduce piracy, but to connect creators directly with their avid fanbases to sell concert tickets, and create custom merchandise and loyalty programs. Beyond fan engagement, an artist can gain greater visibility into streaming, manage IP ownership and royalties, attribution and direct payment distribution, and share in the success of a thriving creative community on the whole. All of these advantages, particularly if the artist owns their own rights, ultimately enable new business models that improve artist economics and leverage in negotiation.
In 2022, Coachella experimented with lifetime passes delivered via NFTs. The collection, comprised of Sights and Sounds, Desert Reflections, and Coachella Keys sold for 1.5M. Many who participated purchased NFTs for the very first time for the opportunity to experience the music they love up close and personal (that potent marketing mix of scarcity and status didn’t hurt). An incredible step forward for mainstream Web3, until several months later, the passes got tangled up in FTX.
Across entertainment, there are many powerful and provocative stories waiting to be told — stories that represent more than the monetization or exchange of a digital asset, but the empowerment of storytellers and the humanity they serve. These stories might just move the masses.
Build A Better Product
It’s also often the case that platforms struggle to deliver on “sticky” as they sort performance and usability challenges inherent to creating in a new medium. Rather than sitting out the market entirely, Web3 innovators need to invest in infrastructure and teams that build and design great products.
After all, architecting the Open Metaverse requires many complex technologies to be woven together seamlessly and presented in a manner that accelerates development and reduces cost — advantages that can and should be passed on to consumers.
Over the next few years, the establishment of standards and better creator tools will support interoperability across a wide range of devices, platforms, and technologies. Blockchain will mature and provide the economic rails to enable speed, efficiency, and transparency in global transactions at high volume. Network infrastructure will scale to support millions of users and the vast amounts of data transmitted between them. Compute will support spatial simulations and interactive experiences, and secure storage solutions will house and serve 3D models, textures, audio files, and more with zero latency. Sustainability will be a given.
In order to realize the full potential of the multi-trillion dollar potential of the metaverse, we need to reach a Web2 level of sophistication in our tools: smooth interfaces, seamless integrations, and low-code creator tools. Developers will continue to leverage game engines to create sophisticated universes with depth, story, and fidelity, but enabling brands and individual content creators to thrive and create within the spatial, 3D, open internet of the future will 100x the potential. Right now, there are only a few Open Metaverse worlds to build within — expect this space to become more competitive.
Of course, quality UX is also key to mainstream adoption, and today’s crypto user experience comes up terribly short. Perhaps that’s because hardcore believers don’t mind the high pain threshold required but when it comes to mainstream, confidence and convenience reign supreme.
In a 2019 study of 15 “crypto-curious” participants, UX researchers at Chockablock tested five desktop wallets to better understand usability issues facing first-time users. They found that participants nearly unanimously struggled with securing a wallet application appropriately.
“…New users, who are familiar with the security paradigm of user-generated, single-string passwords — which are stored mentally and are retrievable via the centralized system if forgotten, are completely thrown off by the presentation of system-generated, multi-word pass/seed/recovery phrases which must be stored physically or digitally and cannot be retrieved via the decentralized system if lost. Simply put, they do not understand what to do, much less the ramification of not doing it properly.⁹”
A major hurdle to improving wallet UX lies in security, user authentication, and identity management. The cost of poor UX is not only delayed adoption, but (at its worst), distrust. Crypto natives might argue that consumers must take a more active interest, and increase their financial literacy to enjoy the fruits of the future, but this is a privileged position that lacks empathy for the decision fatigue and lack of education and exposure that many suffer in day to day life. It must get easier. Design drives accessibility, accountability, and user understanding, which, in turn, drives adoption.
As a foundational technology in the Web3 movement, blockchain has the potential to be transformative in serving global experiences, communities, and direct transactions without compromising the rights of creators and consumers. But the current positioning of blockchain is not unlike the Jezebel at the start of this piece — understood by few and feared by many. To realize the potential of the Open Metaverse we deserve, one that values our privacy, freedom, and humanity, we must invest in the teams, stories, and use cases that shine a positive light on what is surely one of the most revolutionary innovations of our time.
Join our Lamina1 community on Discord and start building the Open Metaverse we deserve — for creators, by creators at https://discord.gg/lamina1