The worst threat coming out of the FTX meltdown isnât something most gamers ever think about. But Frank & Ettore agree that #SAND will ultimately end up with an even bigger market share.
Hi, Iâm Frank! Iâm a tech writer at Cloudbeds. Thatâs my work friend Ettore đ over there in Spain. đŞđ¸ Nice crown, Ettore! Who are you supposed to be⌠king Felipe the Sixth?
( Ettore ) Itâs called a tiara, Frank. Hey, Iâm Ettore! Iâm a product manager at Cloudbeds. That aging hipster over there in Bermuda đ§đ˛ is Frank.âď¸ Heâs not my stylist.
( Frank ) But I could be.
( Ettore ) Iâll hire you if I ever want to wear the same âYOU DIEDâ tee shirt four days in a row. Do you ever wash that thing?
F__ Haha, no comment.
E__ No surprise.
F__ But talk to me, Ettore. Unless youâve been in Narnia or wherever then Iâm sure youâve heard all about the
Iâm calling it Fallout â22: a franchise worst. In one way or another, itâs stanking up pretty much every corner of the cryptocurrency metaverse. Further, the collapse of FTX will have a
E__ Youâre talking about the CeFi exchange platform that collapsed? That FTX?
F__ Yeah, that FTX. But itâs not just about them anymore. The virus keeps on spreading, and nothing that runs on the blockchain is immune. Like on Monday when Bermudaâs own BlockFi InternationalâŚ
E__ Lemme interrupt him, folks. BlockFi International is a major crypto lender. Just so you know.
F__ BlockFi International was a major crypto lender. They filed for liquidation here in Hamilton on Monday.
Theyâre winding up their business because they had too much exposure to FTX.
E__ Thatâs definitely unfair to a lot of people. Iâm sorry to hear it. But you think thatâs going to impact blockchain games? Whereâs the connection?
F__ I think all the growth weâve seen in blockchain games since 2021 is about to get erased.
E__ Then I think you need to quit whatever it is youâre reading and/or smoking, Frank! NFT marketplaces shared zero critical dependencies with FTX or BlockFi. The FTX trainwreck just underscored what we already knew was wrong with centralized crypto.
F__ Enlighten us, Ettore.
E__ Okay, a CEX is usually a black box. Theyâre managed by people, not protocols, and that creates all kinds of vulnerability.
Everything youâre reading about FTX boils down to a human error on the part of just a handful of humans.
Thatâs why the same people who said DeFi was dead a year ago are flooding to Curve and Uniswap right now.
F__ Wow. I didnât know you were so passionate about this, Ettore. I figured you had your mora hidden under your mattress.
E__ I donât play Genshin, Frank.
F__ Yeah, my niece does. So hereâs the TLDR. FTX is a Bahamas corporationâŚ
E__ And the elephant's heavy. So what?
F__ So on November 2nd, Coinbase
E__ You mean FTTs?
F__ Right! Itâs basically worth Camel Cash. So, on November 8th, FTX
E__ I'm losing you, Frank. Focus on this centuryâŚ
F__ Fair enough. So, on November 10th, Sam âdas Wunderkindâ Bankman-Fried finally betook himself to Twitter and
At the time of this writing, ETH has taken about a 25% nosedive compared to where it was before the Alameda leak. BTC plunged to the lowest itâs ever been in an already-dismal year. But youâre saying this is a nothing burger?
E__ No, Iâm saying itâs natural, Frank. Crypto is a free market. Right now, itâs the only free market. Market corrections taste bad, but theyâre good medicine. Phony crypto celebs like Sam Bankman-Fried⌠do we have to keep calling him âSam Bankman-Friedâ?
F__ Everybody just says SBF.
E__ Crypto bruhs like SBF shouldnât be a thing, but they are. When you let markets correct, instead of governments running up planned-economy debt and basically deciding who doesnât have to fail, then everybody is better off. Thatâs why the worldâs No. 1 most-regulated economyâŚ
F__ You mean the United States?
E__ I mean the United States. Thatâs why the SEC, the IRS, and the US treasury department are scared of crypto. It means they donât know what to tax, they canât define capital gains, they canât decide precisely how much currency is out thereâand therefore they canât police how much everybodyâs money is worth.
F__ Right you are, monsignor! Youâve touched on precisely the biggest threat coming out of the FTX meltdown. There could be wide-ranging consequences for all digital assets, including NFTs. In Bermuda, BahamaâŚ
E__ Come on, pretty mama!
F__ Okay okay. One of the things that made SBF famous was how he went to Washington and cozied up to lawmakers. He
E__ Thatâs not all bad. Thereâs an older generation who still thinks crypto is imaginary.
F__ Yes!
E__ SBF was doing Godfather II. Trying to legitimize crypto in the eyes of the government.
F__ I agree, and that definitely needs to happen. But going around the U.S. capital saying âwe want regulation, we just want it to be good regulationâ â that
E__ Binance is Changpeng Zhaoâs platform. Theyâre registered in the Caymans, yeah?
F__ Precisely. People take crypto offshore for a reason. Changpeng Zhao doesnât exactly hang out in D.C. and get drinks with regulators. SBF broke his trust.
E__ Indeed, indeed. So back to NFTsâŚ
F__ Right. So hereâs
âThey will come for other people next. Itâs starting,â wrote Loopify, a web3 builder with 190K Twitter followers. Roberto Nickson, founder of The M3taverse, an NFT media company, was also shocked by the news. âInsane,â he tweeted. âFirst of its kind. Wonât be the last.â
E__ That sounds ominous.
F__ He signs off with
âUS Govt not playing games anymore.â
âŚwhat if thatâs true?
E__ What if thatâs not? People overreact. But thatâs great for DeFi. Thatâs great for Pancake and Uni and all the rest.
People are jumping to decentralized crypto because theyâre finally coming to their senses. Yeah, thereâs more of a learning curve than with CeFi.
But you donât run into the same risk of fake capitalization or straight-up fraud.
F__ Ettore, you know that and I know that. But the IRS, the SEC, the treasury departmentâthey wonât split those kinds of hairs. For instance, in May, the US treasury secretary, Janet Yellen,
E__ Iâve heard FTX get called that recentlyâŚ
F__ Yellen, Elizabeth
On November 16, Yellen
E__ That tells me you know how to google things, Frank. One hot take from one political appointee in one country doesnât mean the sky is falling. But youâre right: they donât know the difference between CeFi and DeFi.
Auditing blockchain gamersâor whatever youâre suggesting might happenâthatâs way beyond their competence. They wouldnât know an NFT from⌠from an Axie skin.
F__ Hahaâfunny you mentioned it. Hereâs another thing I googled. Youâll love this. It says âthe patchwork of new tax laws aimed at collecting revenue from the growing digital assets market creates new risks and obligations[.]â
E__ Okay. Boring.
F__ âMost of the NFTs being issued at the moment are effectively ownership receipts[.]â
E__ Great. So what?
F__ So hereâs the rub,
â[It] could be the ownership of a piece of digital land in the metaverse, or an object or skin to be used in a game.â
Ha haâtaxing an object or skin! Do I want to know who said that?
E__ I probably donât.
F__ Ernst & Young said that in
E__ Okay, thatâs⌠depressing. A big-four tax accounting firm. They advise a lot of regulatory agencies.
F__ Yep.
E__ But, if anything, Frank, it means that cryptoâand the metaverse in generalâare here to stay. Theyâre big enough to aggro the worldâs biggest governments. #EnterTheMetaverse already, Frank! These bankruptcies are growing pains, not death throes.
F__ Thatâs completely true. Thanks for that.
E__ The FTX fail could have a dampening effect, sure.
F__ Yeah, and a lot of gamedev partnerships will be put on hold if they arenât
E__ Itâs a paper bag. Breathe into it.
F__ It smells like jamĂłn serrano.
E__ You good, my man?
F__ Iâm good. Okay. Last rant, I swear. Iâm not gonna attribute these quotes. Iâm looking at a top-10 blockchain gaming publication here.
E__ Ha haâyouâre protecting their sources?
F__ Iâm protecting myself, from their sources. I donât feel like getting doxxed. So earlier this year, they said gaming constitutes more than half of all blockchain activity, period.
E__ Theyâre right. It does. Thatâs why FTX is just a blip for blockchain games.
F__ Okay, same publication, Ettore. The FTX bankruptcy was less than a week old when the same experts were warning everybody that dapp, NFT, and DeFi in generalâtheyâre all seriously threatened by the fallout. FTX was dragging down the whole metaverse economy.
E__ That was premature. That hasnât happened.
F__ Then two days laterâsame people, Ettore!âthey do a complete 180 and say blockchain games are basically unaffected by the FTX collapse. Seriously? Think of how many gaming platforms were funded with FTT! Plus everything ever built on
E__ Itâs entirely possible! Itâs an evolving situation.
F__ You think their reporting was biased?
E__ I think youâre biased. People always assume the worst. I mean, it could theoretically be tougher going forward for, like, DeFi Land. But their token is already bouncing back. And, sure, you might see slower rollouts, tighter liquidity, and less venture capital.
F__ For now?
E__ Exactly! Just for now. That always happens after a market scare. Then the market swings back the other way and everybody says⌠theyâre gonna be saying oh, I wish Iâd bought #SAND back in late 2022.
F__ Ha ha! One hundred percent.
E__ Right? And blockchain games are resilient at a level the world has never seen before. Theyâre practically⌠I dunno⌠employee-owned businesses.
F__ Come on! Thatâs a stretch.
E__ Kind of, but you get the idea. You build your world, you monetize your world, and you live in your world. Everybody has that sense of ownership. Thatâs the essence of Metaverse.
F__ Well thereâs going to be winners and losers, but The Sandbox is going to come out of this with even more market share. They were game metaverse pioneers. Iâm seeing a lot of fours around here⌠40K daily users, 40% retention rate, and more than 4 million total walletsâŚ
E__ Yeah, kids today are going to grow up in a world where a game is something you create.
F__ My kid loves blockchain games. Heâs nine.
E__ Your son sounds very relatable. You should interview him next.
(Frank) He says Iâm a hack.
(Ettore) No, he doesn't.
(Frank) Ha haânaw, heâs a nice kid.
(Ettore) And speaking of hackinâ it, Frank, howâs General Radahn coming?
(Frank) Too soon, Ettore. Too soon.
Frank Morgan is a tech writer at cloudbeds.com. Ettore Zotarelli is a product manager at cloudbeds.com. Frank is currently getting pwned by a boss in Elden Ring.