You ever watch 100 Foot Wave on HBO, née HBO GO, née HBO Max, née Max?  You should.  The basic premise is the big wave legend Garrett McNamara becomes so obsessed with finding the perfect giant swell he moves to Portugal to try and do the unthinkable and surf Nazare. 

Won’t give anything away, but by Season 2 Garrett’s obsession has attracted a myriad of surfers from all over the world.  They flock to Nazare like a bat signal just went out, dropping whatever they are doing in Indonesia, Brazil, Hawaii, or whatever lat long they happen to be at. 

Nazare just has a magnetic pull to a group of people that Liam Neeson would say possess “a very particular set of skills”.   During Season 2 of the show Kai Lenny takes big wave surfing to a whole new level — this dude was casually pulling 360’s off absolute monsters.  Even when he is getting battered to what for mere mortals would be an almost certain death he zens out and survives by “doing it for the content.”

⌐◨-◨

Point is, and here comes the sweeping segue, if you are or have been a digital entrepreneur at any level over the past 20 years or more, your big wave has always been AI.  So much promise, never fulfilled, but oh so tantalizing.  That is why at the start of this year, when 100 million people logged into ChatGPT in one month, they couldn’t get enough.  Was Her finally coming?  Was this moment where application layer players could finally build on all this long promised intelligence?  Was this the infrastructure glue that was going to help connect digital property rights?  Or was the entire thing just a dialog box wrapped up around a bunch of old Reddit posts? Was it still all hat and no cattle, or was this Valahalla?

How do you discern if *this* AI wave, or any tech trend for that matter, is Nazare in October of 2020, or that fictional bridge to Hawaii in BoJack season 4?

A certain group of players will tell you to keep your head down, keep doing what you are doing, keep grinding and don’t get distracted by the squirrel.  And yes, you should stay laser focused on your company and stay in your lane — absolutely.

Focus is THE way to play the game at a certain stage.  However, as an investor, an entrepreneur, or a company, if you miss the big waves, you could sink your whole ship. 

Late to outfit your office with PCs in the 80s?  Late to digital publishing in the 90s?  Both might have spelled doom.  Some business person somewhere once said you have to cannibalize yourself, no matter the size of your project.  Bottom line is there is a difference between heads down focus and head in the sand willful ignorance.

Big waves, the real monsters, only come around once a decade. If your spidey-sense is telling you the big one is coming, you need to drop everything to learn as much as you can about it. Better to learn and be wrong than ignore and be right.  

At its core, this 2023 AI movement feels a lot like the rise of HTML back in the 90s.  Generative AI prompting is a language which plebes can use to summon the beast.  OpenAI & the like are giving the non-technical a chance to dabble with some of this computing power and when a wave gets to the point where many humans can truly create on it, you usually end up with some Kai Lenny style rides.

AI feels like Nazare.

⌐◨-◨

🎲 The Web3 Casino

So far in 2023 the Web3 space has felt lost.  We were promised property rights for the Internet and we got…this?

The inmates appear to have taken over the asylum, for the moment.  It feels like it has become MORE complex and potentially MORE dangerous to move digital assets around via wallets here in 2023. 

Crypto OGs with outwardly great OpSec have somehow been hacked, Ledger, the leader in self storage (not your keys, not your coins) movement, appeared to release (or almost release) software that allowed a way to peep your coins, rugs as performance art became the norm in NFT land, and even ye old stalwart Coinbase has been sued by the SEC.  Not a fun time to “build”, which is desperately needed. 

Despite all this, some of the most interesting Web 3 developments took place in the first half of 2023 as legacy brands, entrepreneurs and CEOs launched and are growing some very interesting projects, albeit distancing themselves from the now Dot Bomb sullied Web3 moniker.

• Starbucks launched “stamps” which are digital collectibles driving a new loyalty program.

• Shopify launched token gated e*commerce stores.

• The co-founder of Eater & Resy launched a new restaurant loyalty app built on BASE.

If these new technologies are going to emerge, and we are betting they will, these are the type of projects that are going to move the needle.

Our current rough thesis is, eventually, AI & Web 3 will converge, in some respect, kind of like Mohamed Fouda talks about here.  As usual, those who are focused on building now, while the crowds are away, will no doubt stand to reap the rewards as the infrastructure & UI gets better and more usable.  

If AI can create deep fake Tom Cruise and blockchain can help debunk deep fake Tom Cruise, it sure seems like the intersection of these two technologies could help lead us to the future.  First scammers & degens go parabolic, but then, great new applications that save us all time and money and provide us with ownership?

• How Blockchain Can Help Combat Disinformation

💰 Who ever heard of a SNOXXberry?

Where are you parking your cash?  Haven’t heard that question much since 2008, but it was back in full force here in the 2-0-2-3.

In late March, a couple banks went under (SVB), many lost an incredible amount of market cap, and, for many, including us, it was time to stop just blindly trusting banks and get our TradFi OpSec in order — this is where a bit of Web 3 training was helpful.

Bottom line is that each and every person should take the time to put a cash management plan together that they personally feel good about. 

Here is what we prioritized:

*Speed (can the funds move in 24-48 hours from our phone?)

*Liquidity (are there redemption gates?  is there a market to sell instantly?)

*Securities (is the money market a registered security with the SEC?)

*FDIC limits

*Systemically Important Banks

At the end of the day, we decided that we felt safest parking a high percentage of available cash in money market accounts that were as “close to the bone” as possible.  What is the bone?  The US Government.  In the history of the USA the government has never defaulted on its debt or failed to pay its obligations.  Sure, there is always a first time for everything, but this felt like one of those situations where “if that happens, we all have bigger problems.” 

That said, we started taking a look at money market funds like SNOXX, for example.  

Each money market fund has a page where you can see the expense ratio, the liquidity, yield, and a breakdown of what is in the portfolio (this can change often).

This is not an endorsement of ANY money market funds, banks or brokerage houses.  SNOXX is one of the funds we researched, and it happened to have a very funny name that reminded us of Charlie and the Chocolate Factory, so we used it to illustrate a point. Please do your own research and take your own risks.

⏲ Back in the 90s…

In the very late 90s, at some point, it became clear that as much promise as the Web and “DotCom” was ushering it, it was all going to crash.  The world had simply gotten ahead of itself.

As the century turned, midnight approached on Web 1.0, however, there was a savior in sight, Prince Broadband.  High speed internet was going to save us all and keep the party going, even though the only places that had broadband access were corporations and higher education institutions.

The rest of us were dabbling in DSL and many were still listening to this:

The Shannon limit of our phone lines appeared to be reached and we needed a bigger boat.

Broadband was so obviously the future, but by 2001, most people had tired of the promise of the Internet and were ready to move on, as the Web was deemed a “fad”, a home to snake oil salesman, charlatans, grifters, and worse by many.

Check out this story from Newsweek Magazine that ran in December 2001:

About 10 percent of U.S. homes get broadband, up from virtually none in 1998. 

The larger problem is that once you've got it, broadband isn't much use. Downloading is quicker, but most of those fabulous multimedia services and new Internet appliances essentially don't exist.

It is impossible to convey how prevalent this attitude was in late 2001.  Many, many people felt broadband Internet access was absolutely useless waste of time and money, especially after the Web 1.0 crash and subsequent bankruptcies of so many public and private companies built on what they felt was the empty promise of the Internet.

About 10 percent of U.S. homes had broadband by the end of 2001, up from virtually none in 1998. 

That number today?  A little of 20 years later?  90 % of US homes have broadband.

And that last 10%?  Politicians are fighting over bills to bring rural broadband to the final 10%.  While Elon Musk has a company for that, of course.

The author, went on writing for Newsweek & the Washington Post until the end of 2020, wonder if he ever became a Netflix subscriber.

🎵 Music To Set The Mood

🎵 Feel like I'm looking for my soul

Like a poor man looking for gold

There're thieves in the temple tonight…🎵

Link, help me!

Instead of a long, wordy explanation about what happened when 46,000+ “community backers” helped fund Zach Braff’s movie Wish I Was Here in 2013, here it is condensed, in our best attempt at a classic BoJack tongue twister.

⌐◨-◨

We all got daft with Zach Braff.  Gave him cash to hire a staff and get to the top of his craft.  Turns out that was only half the cash.  Braff took gap, sold fast, for half cash, but did his staff throw backers a life raft?  Ha!  No, they laughed, said the whole thing was a gaffe and Braff didn’t have to pay anyone back because Kickstarter doesn’t work like that.  In the end, I never even got a poster with that promised autograph, turns out the whole thing was well orchestrated, or completely unintentional, graft.

⌐◨-◨

Never saw the movie out of spite and have to think others did the same, as the film grossed somewhere between $6-7 million in total revenues and reportedly cost upwards of $6 million to make.  Comparatively, Braff’s first movie, Garden State grossed over $36MM.  

The above data points to the potential conclusion that someone who builds an audience, and has community ready to financially support their projects, should probably take servicing that community somewhat seriously. Maybe Wish I Was Here was a a really bad movie. Or, perhaps, those 46,000+ people that felt they got rugged by Braff, justified or not, and were not rushing to see the movie post Kickstarter fallout.

For the curious, here is a story that sums up the 2014 entire saga.

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Thankfully, we are past all that right? It is 2022 and we have NFTs stuffed with smart contracts to make sure incentives are aligned for all parties, right?

Um no. What do you expect from an industry that spent the last 20+ years calling people that engaged, contributed, and gave attention to their services a bunch of “users”.  

Thing is, we now have all the tools to start attempting to solve this problem.

⌐◨-◨

🔐 What Are NFT Buyers?

Are we consumers? Collectors? Investors? Holders?

Let’s take them one by one.

Consumers

We are consumers, sure, but when we purchase an NFT the implicit agreement is that we are more than just consumers, maybe that is a terrible assumption to make, however, it is made by both sides. Projects want you to participate in the community, engage, network, champion the project on social media, perhaps build something, and, maybe even vote on proposals or future directions of how the project spends its treasury cash.

In most cases, both project creators and project buyers would agree those that own an NFT are more than just consumers — this isn’t like buying a refrigerator.

Collectors

Ah, collectors. Many NFT buyers consider themselves collectoors. Some say it harkens back to when they use to collect Beanie Babies or baseball cards, while others, consider themselves more sophisticated art collectors blazing the path for a new digital art renaissance that will someday be recognized by the entire world. If you own an XCOPY, a Beeple, or certain generative art tokens, you are definitely a collector.

The great thing about collector NFTs is, for the most part, is there is very little ambiguity here. Digital artists creates art, collectors buy it — transaction over. 🤝

Investors

Traditionally, private investors needed to be accredited investors, and whether they were investing in priced equity in private companies, real estate, or other financial deals, written contracts were involved.

Each industry has a starter template that has evolved over time. For instance, in 2013 Paul Graham authored a SAFE document to replace the traditional Convertible Note Agreement. The SAFE catered to tech startups that were raising seed funding to find product market fit before they went to professional VCs to complete a more traditional round.

Nothing is different in NFT land. When A16Z or other professional investors fund projects in this space they fund the company that creates the NFTs.

Digital asset projects have started to reshape these contracts to assuage investors. The SAFT, basically a SAFE with some revisions, is a good example of this. Investors actually love SAFTs even more than SAFE agreements because tokens are much easier to sell on secondary markets than shares of a startup that hasn’t found product market fit.

However, NFT holders almost always sit below investors in the financial waterfall, which means financial incentives can quickly get misaligned.

Holders

Ok so if NFT holders aren’t investors, what are they? They are stakeholders, which is a vague term that doesn’t really mean much more than being a Braff backer at the moment. Stakeholders don’t currently get traditional shareholder rights, they don’t get a promise of future equity in the project entity, nor do they get any sort of financial transparency guarantee. So they are currently bag holders.

It doesn’t have to be this way, and it shouldn’t be. Digital asset projects that are obviously more than just art or collectibles can and should consider taking the time to align incentives between the project builders, investors, and the community holders. Some projects are starting to do just that, albeit slowly.

How? The tools are available.

*Accredited investors can be KYC’d and offered equity for their community holdings.

*Non accredited investors can be offered equity for their community holdings via Reg CF (up to $5 million)

*Smart contracts can be programmed to follow the rules project builders have set up and a distributed ledger can keep track of everything so all constituents can have access to all information.

Oh, and really, should any NFT project be raising more than $5MM from a mint?  $5MM is 10x more than yCombinator companies get, and probably 100x more than most bootstrapped companies start with?

$5MM fells like more than enough to try and find protocol market fit.

With so few projects taking the time to align constituent incentives prior to launching, it shouldn’t surprise anyone that speculation has taken over the game. It is the only way those on the lowest end of the financial waterfall can attempt to control the outcome of their investment and achieve an ROI. Most stakeholders currently don’t have the luxury of waiting around to see if the project builders and their investors throw them some scraps.

It feels like in the future, the most successful NFT projects will be the ones that take the time to align incentives between project builders, investors, and community stakeholders. In certain projects, you can already see that starting to happen.

Looking forward to the coming stakeholders rights wave!

💸 Getting Rugged Since 1610

Over four hundred years ago angry Dutch East India Company pushed for more rights and accused directors of self dealing. This led to what eventually became modern corporate structure.

Years later, economy god Adam Smith said:

The directors of such [joint-stock] companies, however, being the managers rather of other people's money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.... Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company.

Non of this stopped Sir Isaac Newton, Mark Twain, Winston Churchill, Kevin Bacon & Kyria Sedgwick, or Mark Cuban from getting rugged in their day.

⏲ Back in the 90s…

Craig Newmark developed craigslist out of his condo in San Franciscos Cole Valley 1995.  He tried to convince his employer, Charles Schwab, that the Internet was going to be a thing, instead they laid him off (RIF’d him in 2022 speak), and he used his severance money to develop his simple events newsletter into a website.  He never imagined it would grow up to take out publishings classifieds cash cow, but that is exactly what happened over the next 20+ years.  While craigslist is definitely a for profit corporation, revenues topped $1 billion in 2017 and were still a healthy $600 million+ last year, Craig (42% owner), and his partner Jim (29%) hold the lion’s share of the company (according to “the Internet”).  

In 2004 Ebay tried what sounds like some forerunner of a vampire attack, some sort of hostile takeover, or maybe just a way to mess with a competitor, when they purchased ~28% of craiglist from a former employee.

Over the past decade, Craig himself, and his company have funneled that money back into public goods and supporting political causes.

Basically, as Craig has said, craigslist has just tried to be a good Internet citizen.

Hmm, craigslist is Lindy, monetized early then never really changed course or innovated, has network effects, is THE brand of classified ads nearly 30 years later, and appears to have used most of its funds to try and support public goods that are important to Craig, like journalism and certain species of birds (c’mon, you can’t be surprised).  

While in this case there appear to be two people making all the decisions, instead of a group of NFT owners, you have to wonder if there are some Web3 analogs in here, specifically for a project like Nouns DAO.

🎵 Music To Set The Mood

🎵 Hook me up a new revolution
Cause this one is a lie
We sat around laughin' and watched the last one die…🎵

Send us your GMs won’t ya?

Feels like every other day NFT collectors in some discord are experiencing a red wedding, and those days are getting bloodier.

⌐◨-◨

In the nineties, and even beyond, the plot of most hacker movies pitted the rebel hackers against some sort of evil corporate overlords.

Today, hackers have mostly turned heel and are going after customer info to sell, as well as degens doing their best to make it in the world of digital assets.

Hopefully, these hackers will return to their nineties era roots and target mostly evil corporations, but until then, we the people behind the hexadecimal ETH address strings, will have to do our best to protect our assets.

⌐◨-◨

It is important to note that hacks happen no matter where your data and assets are stored.  Recently, it was reported that Okta, a centralized authentication company used by thousands of organizations including Peleton, T*Mobile and the FCC, was hacked. 

Before Okta it was Microsoft, and long before that it was Equifax, so don’t think just because you stay in the cozy confines of centralized corporations you are safe — nope.  

That said, once you realized that on the blockchain the hackers get to look inside the safe before attempting to break in, you realize it is time to take personalized digital asset security seriously.

⌐◨-◨

However, when you see pro-crypto investors like Arthur_0x getting hacked it is hard to think the rest of us even stand a chance.

Throw in the fact that every NFT community constantly asks you to connect your wallet in order to access token gated opportunities and it all starts to feel like we are days away from our own NFT red wedding day.  

Eventually, better wallets & communication platforms, with better protections will be the norm, hopefully, but it is best to always verify, then trust.

⌐◨-◨

🔐 Safety First Approach

Ok, before we go into an example wallet set up, let’s get this out of the way, the safest way to operate in Web 3 is:

1. Don’t Be First

2. Don’t Click Links

3. Don’t Trust Anyone, Verify First

4. Turn off DMs in Discord

5. Don’t Wallet From Mobile, PC only.

That said, most of us are looking for a way to experiment in Web 3 and most of us are starting out with seed phrase wallets.  With that in mind….

The following is an example wallet set up — it is not meant to be the be all, end all, and it is definitely not OpsSec advice, or any other type of advice.  

Always do only what you are comfortable doing.

SET UP THREE WALLETS: Hot, Warm, and Cold

*Set up 3 different wallets on three different browsers (Chrome, Firefox, & Brave).

*Make sure each wallet is a brand new install.

*If you have multiple machines, spread out the wallet set ups across different machines as well.

*One will be your hot wallet for minting and trading, one will be your warm wallet, for exchanges and defi, and the third will be your vault (ideally your vault will never be connected to any sites, or execute anything other than receiving and sending NFTs.

CREATE TWO HARDWARE WALLETS

*Buy 2 Ledgers or 2 Trezors, or a Trezor and a Ledger and make two of the wallets hardware wallets (your middle wallet and your cold storage vault wallet).

*Attach one hardware wallet to your warm wallet, and one to your cold storage vault wallet.  

*If you can, do this on two separate machines.

*Do this on two different browsers.

TRANSFER NFTS BETWEEN WALLETS

*Have a Han Solo NFT, meaning, one you can test send to your cold storage wallet to make sure once you freeze your NFTs you can also unfreeze them, by sending them back to the wallets that interact with exchanges or mint sites and sign transactions.

*Once you are sure your test transfer goes through, then you can transfer your prized NFTs from your hot wallet to your warm wallet &/or your cold storage wallet.

PLAY THE SHELL GAME

*Don’t keep your NFTs all in one place, keep some of them in the warm wallet and some in the vault, move them around a bit once you get comfortable with it — yes, this will be costly, so don’t do it that often.  Wallets, however, are free, don’t hesitate to create a new wallet if you are feeling particularly paranoid that day.  That way, if you make a mistake, and get hacked, hopefully you have increased your blast radius enough that the hacker doesn’t get your entire collection.

⬆️ This is the face of a website we are suppose to “trust”? Can devs do something?

UTILITY STRUGGLES

There is a decent chance you are familiar with some form of the above wallet set up, thing is, in order to get any utility out of your NFT you are currently going to be asked to verify your ownership via token gating.

This can happen to enter “owners only” discord channels, to enter mint raffles, to vote in a DAO, or for other reasons.  Thing is, it shouldn’t.  This action compromises whatever NFTs are in the wallet you are signing with, and would you trust a site with a .land domain that looks like this with access to thousands of dollars?  Nope.

This is the most frustrating part of Web 3 right now.

The best way to protect yourself is — don’t connect the wallet with your prized NFTs in it to sign any transactions, not even Collab.Land. Thing is, even with a hardware wallet you are blind signing most of the time, and that, even when you triple check the url and contract, can become a perilous situation.

Obviously, that isn’t any fun and it is impossible to get any utility out of your NFTs if you cold vault them all. You have to look at every wallet signature and do a risk/reward assessment. Is it really worth any risk to vote on most proposals that come through an NFT project, probably not.  In our opinion, security is an area blue chip NFT groups (whether CC0 or corporate controlled) could help us all out by changing their protocols (stop relying on wallet signatures) and funding quality applications that help us utilize our NFTs with protections. Until that time, we are all going to have to be constantly vigilant, and even then, we could get unlucky or have a moment of weakness.

One thing that does help, have a trusted community to go to when a big NFT hack seems to be happening. Check in with that community, see how they are handling it, or just check in to get some moral support from your crew.

What we really need, according to Vitalik, are social recovery wallets like Argent to become more popular. Now that OpenSea and other exchanges are beginning to support them we might all be using these wallets in the not so distant future.  However, today most common folk in Web3 use seed phrase wallets.

Stay safe out there frens.

⏲ Back in the 90s…

The movie Hackers, which is a great homage to the nineties (underground roller blading anyone?), introduced many of us to technology theft scenarios like salami slicing (later the movie Office Space also featured this technique), computer viruses that could topple oil tankers, and suits that used impossible to guess passwords like “love” and “password”.

While there are some things these 90s tech movies didn’t get right — like the prevalence and importance of payphone in the future — what they did get right was how basic social engineering techniques were going to be enough to let future ne’er-do-wells gain access to networks, accounts, and plenty of valuable digital assets.  

🎵 Music To Set The Mood

Send us your GMs won’t ya?

Does the metaverse exist? Is it a technology utopia, a critical utopia, or a full blown dystopia?  Whatever you decide, there is no denying the Winklvoss twins are playing a prominent roll in digital Gotham.

⌐◨-◨

In Ben Mezrich’s book Bitcoin Billionaires the Winklevii, scorned by Zuckerberg, find out about Bitcoin while in Ibiza, buy a bunch of it with their Facebook settlement money and become orange coin whales.  

⌐◨-◨

However, what really stuck out about their story was the lengths in which the Winklevii go to protect their BTC. These twins are OpSec masters.  As we remember it, they use offline laptops in windowless rooms creating secret recovery phrases, which they scatter across three different time zones in America, inside safety deposit boxes at three completely separate banks to keep their private keys safe.

⌐◨-◨

At the time, it was exhausting just reading about the paranoid extremes the twins deployed to protect their magic internet beans, but now we get it.  Escalating daily social engineering scams like the most recent Open Sea hack, and BAYC owners tweeting about having their apes stolen, the way Canada handled the Freedom Convoy, and the seeing the long lines at Russian ATM machines, and the daily barrage of CBDCs launches dominating our feed these days, all make 2022 seem like a good time to chat about self-sovereignty, going bankless, storing digital assets.

⌐◨-◨

What we really need is a modern day Batman on these digital streets taking out the scammers, fraudsters, and corruption on a nightly basis, but until then, the best we can all do is read, learn, and participate in the digital asset ecosystem at whatever level you are currently comfortable with.

💰+ 🔑 Not Your Keys, Not Your Coins

Traditionally, unless you kept cash under your mattress, or hoarded gold bars in your house, we all trusted a third party with our valuables, usually a bank.  

This arrangement appeared to work well for a long time.  However, in September 2008 we remember frantically calling our brokerage firm to find out if they had “broken the buck”.   It turns out our “money” which by 2008 was mostly digits on a screen, that was kept in presumably ultra safe money market accounts, was at risk.  Some brokerage firms reported in 2008 their customers only had .97 cents for every $1 they had the day before.  Chilling right?  

This served as a wake up call for everyone.  Over the coming months and years runs on banks happened in places like Iceland, Greece, and other countries.  Basically, the world’s financial system was exposed for not keeping our assets safe.

As scary as 2008 was, it did inspire Satoshi and others who seriously commited to building potential solutions, which in turn has birthed the digital asset world we now starting to at least partially live in.

Things is, like most technological advances, we are so early the user interfaces and experiences aren’t exactly Jony Ive-esque.

Furthermore, because most of us have spent the last decade plus tapping away at beautifully designed apps and aimlessly scrolling, we have little patience for non-intuitive designs and functionality — we all just want to push-button-get-thing.

Simultaneously, the world is in the early innings of a centralized vs. decentralized tug of war.  Of course, the hope is that we end up with the best of both worlds, however, it is probably best to take the time to learn about how to buy, sell and store digital assets yourself.  That way, as products and services start to blur the lines between centralization and decentralization through amazing user experiences each one of us can do our own risk reward analysis. 

This rabbit hole goes deep, but here are a few quick onboarding paths to DYOR on.

As always, non of this is financial or security advice. Just information.

There are three pillars to interacting with Web 3 and taking control of your digital assets: Exchanges, Wallets, and Communities.

Centralized Exchanges

Coinbase, Gemini, Kraken

Without a doubt the most popular onramp to digital assets is the centralized exchange.  Maybe you saw the bouncing QR code during the Super Bowl, or Matt Damon convinced you it was time to dabble in the crypto world, either way, you probably ended up signing up for a centralized digital exchange.

Central exchanges are organized similarly to brokerage or bank accounts.  Once the account is open you can fund your account via EFT bank transfers, or, to a limited extent, your credit card.

Decentralized Exchanges

Uniswap, SushiSwap, etc

This is where the magic starts. Decentralized exchanges mean you are going peer-to-peer with only software in between.

Automated market makers (AMMs) offer one type of exchange, that allows you to exchange one token for another.

It works a lot like those currency kiosks at the airport — while it is quick and convenient, you probably aren’t going to get the best exchange rate, and sometimes that is perfectly fine.

Digital Wallets

Hot Wallet: (seed phrase based) MetaMask, Rainbow, etc.

Social Recovery Wallet: Argent, etc.

Cold Wallet: Ledger, Trezor.

These are your hub, and to hackers, this is their attack vector. There are hot wallets, cold wallets, and multi-sig wallets — they all store your private keys so you can transact.

With each wallet you are given a public key, in the case of an ETH wallet it is 64 random hex characters. This public key you can freely give away without worry, it is how someone can pay you. The private key that comes with the wallet however, should never be given to anyone.

Wallets protect your private key in different ways, Metamask uses a seed phrase set up, where Argent uses a social recovery system.

Cold wallets, like a Ledger, store your private keys offline, instead of in a browser extension, and this is the most secure way to store your keys.

Since wallets are a top vulnerability, it makes sense to set up multiple wallets as you get more active with digital assets.

At minimum, a hot wallet/cold wallet set up is a good start. One for minting and defi exploration, the other is your storage vault that mainly stays disconnected.

There are higher levels of security here, like setting a up a multi-sig safe, or going full blown Winklevoss.

For a good start on digital wallet security, especially focused on the NFT space, Giancarlo Buys Tokens has what we think is the best basic security setup video out there.

NFT Exchanges

OpenSea, LooksRare, Nifty Gateway, etc.

If you want to explore the wold of NFTs you might decide to sign up for an OpenSea account.  OpenSea works with multiple digital asset wallet, but at the moment the most popular wallet is MetaMask.  This means you use your MetaMask wallet to log into OpenSea, and sign their terms and services.  In the case of OpenSea, this means they have now taken a sort of escrow position of any assets you buy or sell via their service.  OpenSea has their own set of smart contracts, which unless you are a Solidity expert, means you are going to trust the OpenSea contract as you buy, sell and move NFTs, much like you trust E*Bay to connect buyers and sellers.  

The thing OpenSea users need to keep in mind is that much like early E*Bay there aren’t many options if a seller stiffs you, or if you are compromised in some way on their platform. It isn’t like when you can call American Express and have them reverse a transaction. It is caveat emptor all the way.

⚠️ Fear Index

Connecting your wallet to…anything 😱

Let’s face it, even just simple typing your password into anything is a risk. However, as long as you are certain you are connecting to sites you know and trust, you are somewhat mitigating your risk. Who to trust? That is the big question, and it is up to you. One fallback, if you think you have connected to a Dapp you don’t trust any longer, you can go to Revoke.Cash or Etherscan and revoke token approvals.

Doing DeFi Transactions 😱 😱

As with most things, the big risk here is you. Are you on the correct website? Is the smart contract safe? Do you know the token you are trading for? Does it exist, have you triple checked?

If you stick with Uniswap, or SushiSwap, to exchange and stake your tokens you are far more likely to be hit with things like impermanent loss than outright theft of funds, however, anything is possible and it is best to approach every transaction from a place of caution and suspicion.

Participating in the NFT ecosystem 😱 😱 😱 😱

The majority of hacks and thefts here are definitely via social engineering, however, the attacks are getting far more sophisticated that just asking for your seed phrase on Discord.

So many digital signatures are required in this space — minting NFTs from project websites, buying & selling NFTs on OpenSea and other marketplaces, getting access to token gated discords, entering raffles and giveaways — and the software we use does not always communicate what the smart contract says in a user readable way.

Besides, you could do everything right from a security perspective and still get slow rugged by a team that doesn’t fulfill their pre-mint promises, or worse, convinces you to give them funds for something that will never exist. One easy tell? Did key team members immediately purchase new NFT assets from OpenSea right after their project minted out? If so, best to just write that one off as a sunk cost.

This isn’t to say to avoid the NFT ecosystem — participating and learning how to navigate this world can be extremely rewarding — it simply means this goes beyond buyer beware, so remember that going in, this digital Mos Eisley.

🗝️ Every Subculture Spews An Argot

AMM

Automated market maker. Examples are Uniswap and SushiSwap. In Web 3 AMMs are usually Dapps that you attach your wallet to and exchange one token for another, peer-to-peer.

Dapp

Decentralized Application. Applications that are running peer-to-peer blockchain instead of through a centralized database. Basically, any website that has a “connect your wallet” link is a Dapp.

Seed Phrase

A series of words generated by your digital assets wallet to create, or recreate your private key.

Private Key

A long string of letters and numbers used to create digital signatures that allow you to manage your digital assets.

⏲ Back in the 90s…

Ok fine it was 2001.  Anyway, right around the turn of the century two things happened: computer viruses where everywhere and Anna Kournikova became famous.

Some enterprising evil genius combined the two unleashing AnnaKournikova.jpg.vbs.

Purportedly, you got an email from someone in your Microsoft Outlook address book urging you to check out an image of the star tennis player.

When you clicked on the attachment you unleashed a virus on your office email server, and since IT could easily trace the file back to the person who opened it, you also probably had a very embarrassing conversation with your boss.

Here is a clip of Jon Stewart and Stephen Colbert explaining the incident in 2001.

Fast forward to 2022 & you realize everything has changed, but nothing has changed.

⏲ Back in the 90s…(for real this time)

In 1997 the world’s economy hit a rough patch when Asian markets collapsed. After years of Western “hot money”, aka “investment dollars” flooding into Asian countries while those same countries kept their rates artificially high, the bubble burst. This caused a recession in many parts of Asia.

Macro maven Raoul Pal (another great potential Gotham City name) tweeted out that today’s Euro/Russian environment might just rhyme with 1997…

🎵 Music To Set The Mood

Send us your GMs won’t ya?

See those little glasses used to break up opening thoughts in this newsletter?  Those unicode spectacles are the symbol of Web 3, created by someone who was building off of innards of NounsDAO, where the glasses originated.  If you want to think bigger, they are the new Nike swoosh, a symbol that projects a certain ethos, if everyone in the world was allowed to embrace and extend the Nike swoosh without receiving a cease and desist from the sneaker giant.

⌐◨-◨

If this is the case why in most NFT Discords when you ask if the project is CC0 do you get either no response, or a quick “What is CC0 bro?”.  Seems most people don’t know what CC0 or why it matters.  For that matter, we are still not exactly sure what CC0 is or what the results will be in the years to come.  Much like how the symbiote produced a different result inside of Peter Parker and Venom, CC0 does the same for the different projects that come after the primitive.

⌐◨-◨

We can look to the past for clues.  Romeo & Juliet, the Happy Birthday song, and the Smiley Face (in the US only oddly enough), are all in the public domain (no rights reserved, just like CC0), meaning anyone can use, build, and profit from these works without permission (ex: Romeo and Juliet pulled in $67.6 MM for 20th Century Fox in 1996, mostly because Paul Rudd was in it).

⌐◨-◨

CC0 also already dominates code, just ask Facebook.  A $600B company (valuation is falling by the minute!) that was originally built mostly on open source, copyright free LAMP tech stack (Linux, Apache, MySQL, PHP) and these days is probably an amalgamation of open source and custom code that is impossible to untangle.

⌐◨-◨

Point is, both tech and culture creators have a history of making something new and exciting on top of CC0, and the same will be true for Web 3.

🐸 Memability 

What matters in Web 3?  

Thus far attention and velocity are right at the top of the list.  When the NounsDAO came together in the summer of 2021 the original builders went to extremes to try and create memable digital assets.  The project is incredibly ambitious and currently has over 20k Ξ (~$60MM) in their treasury, all coming from their daily auction of Nouns — these pixelated characters that serve as your credentials for a seat at the table, to govern alongside other Nouns.  Basically, it is like this scene from Phantom Menace — hopefully 4156 doesn’t turn out to be Chancellor Palpatine. 

Each one of these Noun NFTs have these ⌐◨-◨ on them.

If you spent any time inside the Nouns Discord in the last six months you would have noticed many in the group seemed laser focused on meme acceleration and distribution.  This memetic strategy reached new heights during this years Super Bowl when Budweiser, who weeks prior had purchased a beer headed Noun, placed the ⌐◨-◨ inside one of their ads.  It was an easter egg sure, most people probably didn’t notice or care, but it is an example of even the biggest of brands utilizing the Noun meme & brand to reach the biggest of audiences (Super Bowl watchers) — this feels like a clear sign of what’s to come.

⛓️ Check The Chain

In an age where deep fakes are quickly becoming difficult to detect, and GAN is being trained to recreate new Picasso’s on the spot, it appears more and more likely that we will be “checking the chain” to ascertain the authenticity of many things in the not too distant future.

Yes, this means that signed hash of the token you purchased is more than likely going to be a store of value.  Whether it stores the deed to the house you live in or a URL to the latest digital art you purchased, we will all no doubt be relying on this mechanism as a source of truth.

What does that mean for CC0?  Well, if you can imagine a world where undistinguishable derivatives are almost instantaneously produced and distributed, it isn’t hard to see that the next step is assigning value to the originals.  

We saw glimmers of this last fall with Cryptoadz, when after the meme ready toads mooned on OpenSea many complete copy pasta collections showed up ready to cash in.  Even worse, some of the many low effort derivatives that sprung up ended up being rug pulls, which reflects horribly on the originals.  Nouns, has also gone through a similar cycle to some extent.  Point is, once you go CC0 you loose all control.  The narrative is turned over to those who build on top of the primitive, for better or worse.

The most interesting part of all this is that the market has not assigned much, or any value to these low effort derivatives thus far, and virtually zero value to any straight up copies of popular CC0 projects.

We are all still sifting our way through the perils and advantages of digital ownership, specifically CC0 ownership, and while it is safe to say there hasn’t been a Romeo and Juliet moment for CC0 yet, it is clear that provenance will only get more important in the future and checking the chain will be a new behavior most of us engage in to verify not only ownership, but creatorship as well.

🐭+💻 Culture API

It is still hard to articulate why CC0 seems so important now, but it feels like what is next as media, tech, culture mix all over again.

CC0 projects are potentially transformative, but since they aren’t skeuomorphic (thanks Chris Dixon!) it leaves most of us scratching our heads, until that obvious aha! moment hits.  

For us, the best analogy we have at the moment is CC0 projects like Nouns are building a Cultural API.  These creations send a signal and project an ethos that travels as far as their meme distribution will carry them.

Many future creators will come along and create something that non of us have even thought about yet that extends that ethos even further into their culture — in much the same way that back in the day you could build off the Google Maps API, or the Twitter API and create new applications that people loved.

What will those creations be ¯\_(ツ)_/¯ , but we will all know ‘em when we see ‘em, and NounsDAO may end up funding some of them themselves.

⏲ Back in the 90s…

In the 90s there were two famous yodelers.  Jewel and Wylie Gustafson.

When Yahoo was a scrappy startup with a bit of VC cash for marketing they hired Wylie, who created the signature Ya-hooooooooo!  Everyone knows and loves.

Thing is, years later, when Wylie heard his yodel in a Super Bowl commercial and Yahoo was worth tens of billions, he felt the deal had been altered.  Wylie claimed he sold his yodel for a regional commercial, Yahoo claimed they bought the yodel to use however they wanted.

Lawyers got involved and in the early aughts Wylie walked away with a multi-million dollar check for his signature yodel, which he admits took him about 10 minutes to create.

🎵 Music To Set The Mood

CC0 is currently in the Ice Ice Derivative stage.

Ours goes “ding ding ding ditty ding ding tch”  

Send us your GMs or your FUD!

Airdrops are a huge part of Web 3. 

The basics go something like this…

We are early, we currently use a bunch of half baked product and services, many of which lack for much of a UI, others that are buggy, and in the worst case, dapps that can threaten the contents of your wallet in some way.

⌐◨-◨

Doesn’t sound like much of a benefit so far, does it? However, unlike most previous web products these new products and services reward their earliest users, usually in a token drop. You use their service to some level, and they airdrop tokens into your wallet, good deal? Maybe.

⌐◨-◨

On January 10th a token called LOOKS dropped, and the big difference between this airdrop and many others was LooksRarewas up and running on day 1.

⌐◨-◨

LooksRare is an NFT marketplace hoping to compete with OpenSea (aka BrokenSea because it is reliably unaccessible, think Twitter fail whale circa 2008), a Web 2.5 behemoth valued at $13 billion. How did you get these LOOKS? If you have them, what do you do with them? And 30 days post launch, does LooksRare have a chance?

Interview with a Vampire

How does a new potential new service you have never interacted with get your wallet info to offer you tokens?

In LOOKS case it was a well orchestrated vampire attack on OpenSea. Since Web 3 transactions are all eventually recorded on a open ledger and tattooed to a blockchain, it allows other enterprising sorts to go out and collect that data, and attempt to build a better mousetrap. Competition is good! 

Think of it as an open source API, for customer data. Ok, yes this is scary, but everyone remembers Equifax right? It isn’t as if the current crop of corporations keeps our data under lock and key. In the case of a vampire attack the developers get your wallet ID and then you must take action from their to collect your tokens. 

Wait that is it? Free money? Sort of, here is how we assessed LOOKS before claiming.

Remember none of this is any sort of advice, let alone advice of the financial sort.

LOOKS That Shill

Your first reaction when you see an airdrop come into your social stream should always be “this is a scam”, if it ends up not being a scam, then more than likely ponzinomics is at work, so seek to understand how the drop is organized, who is shilling & why, who gets what % of the tokens, and most importantly…don’t be first, instead…

Check With Them

@0xquit

If 0xQuit hasn’t reviewed the Solidity contract yet, we hold off — just our own personal protocol. There are plenty of other folks to check with, find your trusted sources, the truth is out there.

Connect Wallet & Claim

This is always the scariest part…

Triple check the website URL and make sure it matches the official twitter bio of the airdrop.

In the case of LOOKS you needed to first connect your wallet and list one of your NFTs for sale on their site before claiming. Clever.

Revoke Access From The Site

If you didn’t lose anything, you made it! But we like to immediately revoke access via revoke.cash (or other services) just to be sure.

🎉 Congratulations 🎉 You now have your tokens…

we have a bag of $LOOKS!

Wen Moon?

Time to head over to your favorite AMM – Automated Market Maker (Uniswap & SushiSwap are our current favorites) and check the price of your tokens against your favorite coins. You can swap them for other tokens, or in many cases you can stake them, or LP them, we will possibly get into all that in some future letter.

LOOKS Promising?

Who knows! LooksRare has been responsive to product requests, though their UI still has a ways to go, they are only 30 days old and so far they have definitely made more product improvements than $13B OpenSea has in the last month.

75,000+ Ethereum addresses have claimed a LOOKS airdrop and most days it is hovering in the top 250 tokens by market cap.

Furthermore, the protocol has rewarded buyers and sellers with 2,866,500 LOOKS tokens (over $10 million) per day in its first 30 days (Jan 10 - Feb 10).

Of course, that attracted wash traders in droves. Now, LOOKS has has started cutting emissions, however, the rewards are still juicy and they pay out some of them in straight ETH, which is nice. 

The dance for these “liquidity mining” schemes, where platforms reward users for providing liquidity and activity, is to be nimble, responsive, and remain sticky enough for both rewards seekers and new users, and in this case ride that overall up and to the right trend for NFTs.

Liquidity Is King

There is no doubt in Web 3 they who own the liquidity own the world. Thus far, OpenSea owns the liquidity of NFT buying and selling & thus far, they don’t seem to want to share any of the loot with their users, but it is early in the game. 

A service like LOOKS, which rewards the community for participating is definitely the future, the question is, will LOOKS capture enough liquidity to build a thriving Web 3 business — time will tell —we are certainly pulling for a model like this to work, as one of the biggest pillars of Web 3 is universal basic equity.

Grab your 🍿 because the number of products and services building products in hopes of getting a slice of NFT buyer/seller liquidity is going to be fun to watch.

Seize The Memes Of Production!

⏲ Back in the '90s...

Think airdrops are a Web 3 invention? Nope. Back in 1998 Ralph Bartel spammed our email inboxes with free TZOO shares if and when they went public. Travel Zoo, a dot.com era travel publishing outfit did not, at least at the time, have a bank account full of fresh VC money like many of their contemporaries, so they airdropped. 

Thus, instead of shelling out for a Super Bowl commercial, they came up with an innovative scheme, 3 free shares of TZOO if you visited the website and signed up for their newsletter, and 7 more if you referred a friend who did the same. 

Funny thing happened to this then Bahamas based company, they actually survived, created a thriving business, went public in the US, and those 3 shares of TZOO were worth around $500 in the mid aughts. Of course, claiming the shares, and dealing with the taxation was a bit of a nightmare for both TravelZoo and the early adopters who claimed their shares. Sound familiar???

Where Are The Now?

📜 Call Back 🐸

Below is the best 2022 Super Bowl ad you won’t see during the telecast. A call back to the 1995 classic Bud-wise-er ad, completely concocted in the Cryptoadz Discord and created by Cryptoadz community members in less than two weeks.

Budvibeser

🎵 Music To Set The Mood

Mötley Crüe's Got The $LOOKS

By New Salt

Collating Digital Culture Since '22

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By New Salt • Issue #1 • View online

Issue 0x1…

Web 3. 

At this point just reading that probably evokes some sort of emotion. 

Maybe it is hopium, and excitement about a third bite at the ‘ole web apple. Or possibly, you agree with the browser god that we have “the original sin of the Web” (16:02) to atone for. 

On the other hand, it could be fear and anger, which as we know by now, leads to…suffering.

⌐◨-◨

Either way, for better or worse, 2021 ushered in the term Web 3 and with it, an undeniable explosion of digital culture that was lurking in plain sight. 

The culture is what got me hooked. Dollar cost averaging into BTC & ETH and having a call option on the future was fine and all, but it was the ability to build and invest in this new digital culture that took me back to the future. 

⌐◨-◨

Punks, Nouns, Toadz, DAOs, Discords. All together producing an Internet energy I haven’t felt since the 90s. 

Wait, What is Web 3?

🏰 Property rights for the Internet. 

Yes, none of it is perfect, but what is? Web 3 is complex. The UI is mostly horrible. Some of it barely works. Gas fees are insane. You can get rugged in the blink of an eye and get rekt with one wrong click. 

However, does anyone remember dial up? This sound, giant phone bills, and long days before cheap broadband came along to save the day. 

Remember blue links on gray backgrounds and not much else? 

Remember someone random in your address book begging you for money in an email because they were “stranded abroad after losing their passport”? 

Remember everyone saying typing your credit card into a computer was something you should never do? 

Remember people telling you that the Web was just a passing fad and you needed to get a real job? 

I do.

You can also have a deep, and useful, philosophical debate on whether we need, or should have property rights for digital goods. That said, you can’t stop it from happening, it is already here.

There are at least 21MM M3taMa8k Wallets (if I write this in a newsletter does the same thing happen as when you write it on Twitter? Taking no chances.) and Open Sea has done almost $4 billion in January 2022 alone.

If you are still skeptical of Web 3, totally fair, the world of digital assets is currently Mos Eisley in digital form, this won’t be the newsletter for you.

However, if you are curious where this digital culture might lead us, welcome!

Why Newsletter?

After a year of learning, participating and dabbling in Web 3 it was time to get these thoughts out of our collective head, and organized in the only way I know how – web content delivered in email form. 

This newsletter has two jobs, for now:

1. Tell stories about digital culture & Web 3.

2. Invite other people building, investing, and participating in digital culture to share their stories.

Much of this will be done through the lens and voice of people, both pseudonymous and doxxed, who have lived through and participated in Web 1, Web 2, and/or Web 3.

The quicker this letter transitions to being written in the royal we the better as far as I am concerned, so let’s hope for that.

Like a good DAO, this newsletter will be amorphous. That might change, or the whole thing might go away, just like everything else.

At the end of the day, every good story has a three act structure, so let’s see what the third part of this Internet trilogy has to offer, shall we?

— mgj

👋 Share your Web 3 stories, questions, send alpha, spread FUD, or just say GM.

👂Heard It On A Podcast…

There are only 4k public companies to invest in and currently 12k digital tokens to invest in.

📜 Call Back

When you get dismissive travel back to 1995 for Episode 1

🎵 Music To Set The Mood

A visionary, vision is scary.