Amazon's web3 secret

Can web2 go next-gen?

Welcome back. It’s February, meaning we only have to wait *checks notes* eight more months until SBF’s court trial. I guess that’s plenty of time to place our bets on what he'll wear (my money’s on a grey t-shirt).

Today: Amazon’s mystery foray into web3, Bitcoin’s NFT drama, and a legal win for Coinbase (and crypto). Let’s go.

—Angelina

What Is Amazon Up To?

What’s that? The world’s largest online retailer is entering web3, regardless of bear market conditions? Probably nothing…

Amazon will reportedly unveil a web3 initiative as soon as this spring, according to Blockworks. Citing unnamed sources familiar with the matter, the story still got crypto’s rumor mill churning.

The TL;DR:

  • It’s unclear what this mystery project will look like. But it will reportedly likely involve NFTs and blockchain-based gaming.

  • Amazon has been busy shopping for layer-1 blockchains, web3 gaming startups, digital asset exchanges, and skilled web3 devs in recent months—signs that the e-commerce giant is serious about its web3 operation.

Some context: Amazon has been hovering at the edge of web3 for some time now. Much of the Ethereum network is hosted on Amazon Web Services (AWS) and Amazon even has its own crypto token. But other than the occasional dev hire, the company hasn’t been known for actively pursuing web3.

Big picture: Amazon is a poster child for web2’s philosophy of collecting and profiting from user data that those individual users don’t get to own. Web3 is largely antithetical to those web2 ideas made famous by Big Tech.

So? Amazon’s foray into web3 isn’t so simple, as far as the crypto space is concerned.

  1. The pros: Crypto wants (and needs) Big Tech to embrace web3 for mass adoption. Introducing NFTs to Amazon’s massive customer base could create meaningful exposure.

  2. The cons: Silicon Valley (and its web2 ethos) has the potential to wipe web3 out. And regulatory uncertainties could render Amazon’s NFT project yet another failed corporation-goes-web3 venture.

Looking ahead: We’ll be watching for more information about the full extent of Amazon’s web3 initiative. If it plans on taking on NFT marketplaces like OpenSea and Rarible, that could seriously threaten web3-native companies—Amazon has the size and resources to establish itself as a serious competitor.

The Big Bitcoin NFT Controversy

NFTs on Bitcoin are a thing now—and they’re just as controversial as they are technically unique. Let’s unpack.

The Ordinals protocol, which debuted just over two weeks ago, stores NFTs (well, technically, inscriptions) directly on the Bitcoin blockchain.

How it works: Ordinals inscribes individual satoshis (the smallest denomination of BTC) with specific code that may include jpegs, videos, or links to other types of content. It’s like etching your initials into a penny.

The controversy? Ordinals sparked an existential debate about the valid uses of Bitcoin.

  1. Purists are saying: Bitcoin should be restricted to financial transactions. Maxis argue that adding inscriptions to satoshis will increase block size, reduce the amount of transactions the Bitcoin network can process in a set time period, and increase transaction fees.

  2. Everyone else is saying: Bitcoin has transcended Satoshi Nakamoto’s original purpose and is ready for innovation. The Ordinals protocol expands BTC’s financial applications and might even solve the problem of Bitcoin’s decreasing block subsidy.

Zoom out: The Ordinals-driven discussion about Bitcoin’s true purpose is healthy for the Bitcoin community. It forces its members to really dig deep on what Bitcoin could—and should—look like in future.

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Win for Coinbase, Win for Crypto

Coinbase won the dismissal of a proposed class-action lawsuit last week, bringing the exchange out of hot regulatory water (for now).

  • The suit filed by U.S. consumers claimed that 79 of the tokens listed on Coinbase should have been classified as unregistered securities.

  • Customers were seeking damages that arose from the sale of those tokens.

Big picture: With the SEC swooping in on crypto firms—most recently Gemini and Genesis—for selling unregistered securities, the dismissal of the suit is important for crypto. It goes against the SEC’s recent regulation-by-enforcement approach which sets warning precedents in the absence of clear regulatory guidance.

In other news:

  • Apple had a problem with crypto from day one, according to the ex-App Store director.

  • 50% of the Bitcoin hashrate is controlled by just two mining pools, new data shows.

  • Binance launched a prepaid crypto card in Brazil in partnership with Mastercard.

  • The Binance-WazirX dispute escalated even further as the Indian crypto exchange was forced to move funds out of Binance.

  • NFTs aren’t dead—not if Murakami is launching exclusive Hublot NFTs.

Crypto Job Board

And that’s what you need on your radar this week in crypto. What are your thoughts on Bitcoin “NFTs”—love or hate to see it? Shoot me a reply. See you back here next week!