https://www.briansbulletin.com/p/smart-contract-languages-a-threat

Hi 👋 welcome to Brian’s Bulletin. I write essays about NFTs and blockchains, trying to work out what’s happening, where it’s going, and help you stay at the edge.

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Rekt News is a busy website; it tracks all the hacks across the crypto industry. There’s about one per week lately, and the leaderboard would scare off any risk-averse business.

Many of these “rekt” companies employ the most highly-technical and security minded engineers with the deepest experience in crypto. If they’re getting hacked for millions, then it’s unlikely mass adoption of crypto will ever happen.

I wanted to know why this is happening and what’s being done about it, so I listened (three times 😬) to an a16z podcast with leading smart contract engineers from a16z and their guest Sam Blackshear who they describe as “Co-founder/CTO of Mysten Labs, who has a long history in programming languages from his PhD to working at Facebook (and Libra/Diem) to being one of the authors of Move programming language.”

One thing seemed obvious from their conversation:

Here’s a walk through their topics of conversation:

• Traditional programming languages

• Smart Contract Problems

• New behaviors

• Designing a solution

• New language efforts underway

Let’s dig in.

Traditional Programming Languages

“Programming languages are problem solving tools. What new problem arose? What new language came in to fill that niche?” – Sam (4:20)

Over the past several decades, many programming languages were created to solve problems that emerged from new behavior patterns.

For example, they spoke about how the rise of web development brought a need for programability beyond the existing CSS language. Wikipedia explains that in the early 1990s, “during these formative years of the Web, web pages could only be static, lacking the capability for dynamic behavior after the page was loaded in the browser. There was a desire in the flourishing web development scene to remove this limitation, so in 1995, Netscape decided to add a scripting language to Navigator.”

Navigator was the most-used web browser at the time, and wanted websites to be dynamic and reactive. So Javascript was adopted, and then evolved in the following decades into a global community with many open-source libraries and support.

Anther language they mention is SQL which is now the lingua franca for handling databases and large data sets.

The key question, as Sam said, is: “What are programmers trying to do? Where is the language helping them, and where is it getting in the way?”

If its doing more harm than good, then theres a good case for something new.

Smart Contract Problems

The quantity of hacks and money lost is a sign that a new language may be in need.

Here’s the Rekt leaderboard with losses in the hundreds of millions:

Sam explains that smart contracts are the “most adversarial programming environment we’ve ever seen, with the highest stakes.” Attackers can directly call into your code, and you need to enforce protections on assets that may engage with attacker’s code you may not even imagine could exist. All the while millions of dollars are at stake.

He says it bluntly: “Smart contract safety is an existential threat to broader crypto adoption… If the developers today are the most hardcore, there’s no way this space is going to grow without making security problems worse.”

New Behaviors

In the podcast, they discuss the new programming behaviors focus on tasks like:

• Define assets

• Define policy for transferring assets

• Access controls for interacting with assets

• Enforceable constraints such as

  • Cannot copy

  • Hard to delete

  • Set supply

They also mentioned changes in developer mindsets:

• Resource usage: Normally developers code in a world of abundance, but smart contracts involve resource constraints and transaction fees

• Developer productivity: ordinarily devs write lot of code with only a few errors, but in smart contracts you write a little code that must be perfect, otherwise lose peoples money

• Upgrades: the barrier to changing code is higher than any other environment due to the immutability of blockchains

• Adversarial mindset: devs need to think not only about intended usage, but think of attackers writing code you may not even imagine yet

Sam explains at 6:55 that at first, for designing solidity, flexibility was most important because we didn’t know what would be the dominant use cases. But now we know the trends and types of constraints we need, so we can include the constraints and safety checks in the language itself.

Designing a Solution

Sam explained that the way the solidity code is written is indirect. Its like you’re trying to talk about something but there’s no vocabulary to say it (1:13:50).

For example, Eddy, Head of Engineering at a16z Crypto, mentioned how ERC-20 tokens are not designed as you would expect. You don’t hold tokens in your wallet, as many would assume; rather there is a mapping of owners and balances stored in a smart contract. It’s like a central registry. When you transfer, what’s literally happening is your balance is decreasing while someone else’s is increasing. I did a breakdown of the code in a previous article, NFTs Literally.

Creating assets in solidity is like trying to explain American football without the game-specific terms. Try explaining it without touchdown, quarterback, and first down. Sure you could, but it would take longer and potentially leave gaps in understanding. If millions of dollars were on the line, it’d be much safer to use the specifically defined terms.

Sam’s team explains their intentions for a new language is to “provide first-class abstractions for these key concepts, [that will] significantly improve both the safety of smart contracts and the productivity of smart contract programmers—having the right vocabulary for the task at hand changes everything.

To design a safer and more useful language, he mentions three specific elements:

1 & 2) A strong type system at the source and byte code level + Guarantees about constraints

Wikipedia explains a type system: “In computer programming, a type system is a logical system comprising a set of rules that assigns a property called a type (for example, integer, floating point, string) to every “term” (a word, phrase, or other set of symbols). Usually the terms are various constructs of a computer program, such as variables, expressions, functions, or modules.^[1] A type system dictates the operations that can be performed on a term. For variables, the type system determines the allowed values of that term. Type systems formalize and enforce the otherwise implicit categories the programmer uses”

In this case, the types could refer to an asset with the associated enforcement of values and operations allowed to be performed on it (e.g. can or cannot copy). The designers could also make more intuitive asset ownership model, instead of the central registry model.

Quick aside on source and byte code from Mastering Ethereum: “The EVM is a virtual machine that runs a special form of code called EVM bytecode… [which] is rather unwieldy and very difficult for programmers to read and understand. Instead, most Ethereum developers use a high-level language to write programs, and a compiler to convert them into bytecode.”

3. Permission checks or Access control

OpenZeppelin describes access control: “That is, “who is allowed to do this thing”—is incredibly important in the world of smart contracts. The access control of your contract may govern who can mint tokens, vote on proposals, freeze transfers, and many other things. It is therefore critical to understand how you implement it, lest someone else steals your whole system.”

Unfortunately, access control vulnerabilities have contributed to billions of dollars in exploits. A more tailored language design could be safer.

New Language Efforts Underway

They spoke primarily about two new language efforts, and then I’ll add one they did not mention.

1) New languages that compile to the EVM. Vyper in particular.

Eddy said the reasons to pursue this avenue are that there are existing network effects in solidity and EVM, and there’s plenty of space to improve the experience and safety at the source code level (22:25).

However, there’s one big limitation that the low-level design of the EVM constrains how much a new high-level source language can help. At minute 21, Sam says “what’s important is protection at the byte code verifier and VM level from other programmers… and a new source code language cant give you that. That has to be baked in to the VM. No matter how much you iterate at the source language… where you get to is not as good as where you get to if you have these protections built into the VM.”

Eddy agreed: “The ability to do type checking for more useful blockchain native types or smart contract native types in the EVM is really difficult to solve” (22:10).

2) Move

This is a new language that Sam helped create starting at Libra/Diem. It’s now used on a few blockchains like Sui and Aptos. It includes the design elements above, and its created to be flexible across different VMs, so developers can take their skills between blockchains.

Sam mentioned this tweet thread where he explains how hacks on Ethereum could have been prevented with Move.

3) Cadence

They did not mention this language but it’s similar to Move and also used by some of the largest web3 products like NBATopShot. It’s also potentially a competitor to Move, and the two tech architects later had a little spicy twitter exchange, which may be why it wasn’t mentioned.

The Cadence docs say its “use of resource types maps well to that of Move.” And Cadence’s other design features seek to solve many of the same fundamental issues that Move addresses.

From my research so far, it seems both Move and Cadence teams identified similar smart contracting behaviors, problems with existing languages, and possible designs for a better solution. Then they took their own paths to solve it, which are different, but appear directionally compatible.

A direct comparison is a topic for another day .

The Road Ahead

The creation and adoption, or not, of new languages will affect the safety and potential for web3.

The bigger the developer community, the more investment in tooling and libraries, which all attract more developers and support.

With this, we’ll start to see answers to Eddy’s question kicking off the podcast:

https://www.briansbulletin.com/p/anatomy-of-a-breakthrough-the-bitcoin

Bitcoin transaction fees hit their highest level in over 2 years this week. Up 30x from just a few months ago. Demand for the network is rocketing. And it’s because of ordinals and inscriptions. (See last post for an intro.)

As I researched them, I was struck how the creation story follows a familiar path as many other crypto breakthroughs. It seemed like a surprise at first, but after digging deeper I found a decade-long evolution in thinking and technology that led to this pivotal moment. The confluence of the right people, technology, and market conditions set fertile ground for the Cambrian explosion of development.

All the familiar signs that we could be living through a special moment.

Here’s the back-story.

Motivation

Casey Rodarmor is a programmer with past jobs as Google, Oculus, and Chaincode Labs. He hosts the SF BitDevs meetup which is where the grassroots Bitcoin developer community meets. I went to a few NYC BitDevs meetups around 2017 and the Bitcoin ethos and revolutionary energy was palpable, even though 90% of the discussion was over my head.

Although an active crypto developer, Casey couldn’t morally justify participating in the Ethereum NFT boom. He’s a bitcoiner, a generative artist, and has controversial opinions on the Ethereum tech stack.

His view (4:50 in this video) is that Ethereum’s smart contract language is “complicated and insecure.” And that (3:30 in this video) NFTs have weird properties, such as the content is often stored off-chain, meaning it could be removed or changed.

For high value art, he says, we expect it would be stored on-chain. Many people are surprised it’s not. So in 2022, he set out to build a way to bring the digital art and artifacts to Bitcoin.

10+ Years of Development

From 2011-2014 a few projects experimented with NFTs in the Bitcoin community: Colored Coins, Namecoin, and Counterparty are some examples. Counterparty “had a significant role in successfully introducing NFT culture to the Bitcoin community for the first time,” says Galaxy Research. It is the foundation for the most famous Bitcoin NFT project to date, Rare Pepe Cards. Yet it is not very relevant today, and has some features that the Bitcoin community typically rejects, as Casey points out, namely that it has its own token and separate layer on top of Bitcoin L1.

Then from 2017-2022, NFTs on other chains (e.g. Ethereum, Solana, Flow) exploded into a multi-billion dollar industry, currently valued over $15 billion. A flurry of developers built a broad NFT ecosystem and even breached into a mainstream consumer base. NFT became a household acronym. It seemed like every media, fashion, and entertainment company was developing their NFT strategy, from Nike to Starbucks to the NFL.

During this period, applications like ArtBlocks ushered in a new era for generative artists. NFTs are a perfect fit for generative art—both are digital native mediums and NFTs are a way for digital art to prove authenticity and ownership. This is one of only a few areas with product-market fit in this industry, and it caught the eye of Casey who also creates generative art. But again, after his reservations with Ethereum, he decided to hold back.

Technology Upgrades

Meanwhile in this period, Bitcoin released two upgrades that would set the stage for ordinals and inscriptions. The two upgrades, SegWit and Taproot, effectively opened a space for arbitrary data storage that could sufficiently house the digital artifacts. These were the necessary building blocks. For a deeper technical explanation, let me bring back Galaxy Research to explain:

“First, the Segregated Witness upgrade (BIP 141) that enacted in 2017 reorganized transactions by moving the signature data (witness) to the end of the transaction, replaced the concept of bytes (data size) with virtual bytes (weight), and recalculated the weight of signature data such that each byte of it counts as only ¼ of a weight unit. This change resulted in an effective block size increase, particularly when lots of data is stuffed into the witness portion of a transaction. Bitcoin’s next (and most recent) major upgrade, Taproot (BIP 341), activated in 2021 and brought several upgrades to the network. Importantly, though, Taproot allows for much more complex scripting in the witness portion of a transaction and also removes the size limit for witness data, among several other changes.”

Market Conditions

Then in 2022, the crypto market crash ushered in our current bear market. People are looking for something new, something interesting, and many are out of a job from the tech sector layoffs.

Amid the slumber, Casey works on Ordinals. He wants to bring digital art and culture to Bitcoin. His discovers that creating serial numbers for satoshis has been debated before, but never implemented. He finds inspiration from satoshi atoms, included but commented out of the original Bitcoin code, and a BitcoinTalk forum in 2012. Then in December 2022, Casey pushes his ordinals code live.

Breakthrough

Today, in May 2023, ordinals has become the building block for so much activity attracting headlines like “Bitcoin Network Struggles with Unprecedented Traffic.” There’s over 4 million ordinals inscriptions. You can view them at Ordinal.art.

Much is left to be written, but this journey through technology and people and market cycles is a familiar symptom of a breakthrough moment.

And hopefully we can achieve the most important of Casey’s goals:

https://www.briansbulletin.com/p/bitcoin-nfts-a-billion-dollar-market

Hi 👋 welcome to Brian’s Bulletin. I write essays about NFTs and blockchains, trying to work out what’s happening and where it’s going. Subscribe to get it delivered.

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Amid the rubble of the crypto market collapse, one area is growing exponentially: NFTs on Bitcoin. From what was virtually unknown just a few months ago, Bitcoin ordinals NFTs are now predicted to be a $4.5 billion market by 2025.

And this is not a flash in the pan; there is real differentiated value to creating NFTs on Bitcoin.

In this article I’ll cover:

• Intro to Bitcoin ordinals NFTs

• Why this is happening now

• What this means for the NFT creators and buyers

• What comes next

Onward.

Bitcoin Ordinals NFTs

In December 2022, bitcoin developer Casey Rodarmor introduced the ordinals protocol that runs on the bitcoin network. It’s a way to verifiably own a digital media asset. And this asset is stored on arguably the most secure and indestructible data file storage in the world: the bitcoin blockchain.

Here’s how it works.

First, let me state that the smallest denomination of a Bitcoin is called a ‘satoshi.’ Its like the penny to the dollar, but there are 100 million satoshis in a Bitcoin.

Ordinals works by doing two things: first, it defines an ordering of the satoshis from the date they were created. This is like adding a serial number to the US Dollar—while all dollars appear the same, actually each is marked differently. Second, it enables you to attach a data file to that satoshi. This is something like if Picasso painted his famous self-portrait on top of a dollar. It would be valued as a collectible artwork more than the money itself.

With ordinals, the media asset can be any file type from text to video and audio. You can see the exponential growth:

The Gold Standard for NFTs

Bitcoin is digital gold because of its unrivaled security and decentralization. It would make sense then, that Bitcoin could set a new premium standard for NFTs. Owning one of these assets would carry a premium because of its added durability. And beyond the blockchain’s security properties, the ordinals protocol stores the media file completely on-chain. This is in contrast to, and more reliable than, most existing NFTs where the media file is stored off-chain on a less robust decentralized storage network or a centralized server with its own centralization risks.

What This Means for the Industry

In this down-market, ordinals are a revenue making opportunity for NFT creators. It’s a new frontier for the industry filled with early adopters who want to be early and learn. And it appeals to a whole new audience of Bitcoin holders—with market cap of $500+ billion.

Ordinals appear to be attractive for high-value assets from the leading creators. Yuga Labs, who’s NFTs command 6-7 figure prices, netted $10+ million with their Twelvefold NFT art project. Later this month, another NFT collection OnChain Monkey is hosting a generative art drop, selling 300 pieces for 0.08 BTC, which will net them 24 Bitcoin, or almost $700,000.

What Comes Next

The ordinals ecosystem infrastructure is ramping up quickly. Companies are going to build the tools similar to the NFT ecosystems on other chains—wallets, explorers, marketplaces, token-gating APIs, physical displays.

New standards will be introduced to unlock new use cases. For example, the BRC-20 standard was launched recently to create fungible tokens on ordinals (i.e. the ERC-20 parallel.) Danny Yang, serial web3 founder including OnChainMonkey NFT, calls out one critical standard needed. He explains that ordinals all fall within the same NFT collection, so it’s hard to distinguish between collections like you can with ERC-721 on Ethereum (i.e. the Bored Apes are a separate smart contract and separate collection from CryptoPunks and all others.) A new ordinals standard for collections will unlock the user experience and use cases we expect.

Lastly, more NFT companies will launch on Bitcoin. It’s a way to add value to their holders, a way to make money in this down market, and a way to show they’re at the edge of the industry.

NFTs were first invented on Bitcoin between 2012-2014 with Colored Coins and Counterparty. The traction since moved mostly to Ethereum, but now Bitcoin NFTs are back to claim their place in the market.

https://www.briansbulletin.com/p/reddit-nfts-are-the-future-of-nft

Hi 👋 welcome to Brian’s Bulletin, a weekly essay helping you stay at the edge of NFTs and blockchains. I deep-dive into the products and markets so you don’t have to. Subscribe to get it delivered.

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Reddit built an NFT product experience that I think we’ll see a lot more of in the near future. You can buy on the mobile app with Apple Pay, you can onboard with zero knowledge of web3, there’s a clear value proposition to own the asset, and you can take the NFT off Reddit to use on third-party applications.

And they’re doing well: The product, called Collectible Avatars, just launched the Generation 3 sale a couple weeks ago, with many of the NFTs sold out. Dune Analytics shows their total collection volume at 7.8 million owners and 11 million NFTs minted. Although data is often ambiguous in this industry, the magnitude of these numbers means its possibly the most widely-distributed NFT project.

There is much to learn from how they’ve built the product to attract both mainstream and degens. I’ll unpack it here.

The plan is:

• Reddit Avatars background

• NFT value proposition

• The business model

• Tech and Product decisions

• Prediction for what comes next

Let’s do it.

Reddit Avatars

Reddit is a top 10 social media site with 57 million daily active users. Like most similar sites, its users display profile pictures to represent their identity and status. For years, they could purchase a Reddit Premium subscription to unlock exclusive image styles like above and boost their status with badges.

Over the past year, they built a new business line selling limited-edition avatar artwork NFTs that users can display as their profile pictures. This new business appears to be the way of the future as they’ve committed prime real estate in their app to it—this shop is the first page displayed when you click to style your avatar.

NFT Value Proposition

So why buy this? First and foremost, it can be displayed as your Reddit profile picture which helps you “stand out in the comments” as they say on their explainer. It helps users win at a game they’re already playing. It’s about status and identity—flexing your limited-edition avatar; getting noticed; being part of the trend; being an early adopter; collecting artwork you like. It sounds simple, but they built something people want.

Furthermore, when you purchase, you claim the rights to “use, copy, and display the avatar art for your own personal use, and you can transfer these rights to others by selling or transferring your Collectible Avatar to another individual.” This gives owners the sense of true ownership beyond the walls of Reddit properties.

Sustainable Business Model

For Gen 3 which just launched, Reddit partnered with 100 artists who designed the avatars. Reddit took a 20% split on primary sales and half of the 5% royalty fee on secondary sales. This is a model that can scale to the millions of Reddit users and generate income for the platform.

Technical and Product Decisions

The crypto wallet design is what I find most interesting. They designed a user experience that requires no knowledge of web3 to participate, while allowing advanced users all the options they may desire.

Here’s how it works:

1. User requests to create an NFT Vault on Reddit mobile app

   1. Mobile device receives: Public address, Private key, and Recovery phrase

   2. Note: Reddit does not have access to the Private key and Recovery phrase

2. User chooses an option for how to back up the Vault (image below)

   1. Backup to Reddit stores the encrypted private key on Reddit servers secured by a user’s password

   2. Cloud backup stores the recovery phrase on a cloud (e.g. iCloud)

   3. Recovery phrase backup is the user manually storing the phrase how they like

3. How to Transfer NFT from mobile device

   1. Click transfer

   2. Mobile device signs transaction with private key

   3. Reddit submits the transaction to blockchain

   4. Reddit pays gas for first transaction (for a limited time)

4. How to Transfer from NFT from web

   1. User must have backup encrypted private key stored with Reddit

   2. User inputs Vault password to decrypt the private key

   3. Transaction signed with decrypted private key 

   4. Reddit sends transaction to blockchain

(Note: this is an analysis based on data provided in FAQ and legal terms. There may be differences as they’ve evolved the product.)

In this setup, Reddit cannot access the account without the user’s decryption password, and the user can choose to transfer the assets to their own crypto wallet, or import their vault to a third-party crypto wallet with the recovery phrase. Thus, novice users can easily join with a few button-clicks, and advanced users can take advantage of web3 ownership and interoperability.

The technical design of the NFTs also satisfy the expectations of web3 die-hards. They chose to build on public blockchains with image data stored in IPFS, which is a decentralized data storage that will retain the images even if Reddit were to cease existing. They expose the links to blockchain explorers and IPFS to prove the asset’s existence. This is table stakes to appeal to the degens.

And critically important, because of this design, they’re able to offer payments through Apple Pay. I was able to make a purchase quick and easy.

Prediction for What Comes Next

While continuing to offer Collectible Avatars, I think they will evolve this NFT project into a community building platform for subreddits.

They’re already building the infrastructure to create and distribute NFTs that interact with the Reddit app. The next step would be to allow their communities to create their own.

Reddit distinguishes itself from other social media because of its focus on community building through subreddits. Subreddits are forums focused on a theme or topic, with moderators and rules. There are over 100,000 active communities. One of the most popular you’ve likely heard of is WallStreetBets, which has 13.9 million members.

Imagine the power of WallStreetBets issuing its own NFTs which can be displayed as the profile picture and signal of group identity. From there, they could offer token-gated content to members of the subreddit. This gives the moderators a way to monetize their community, and Reddit would get a split.

Reddit understands community better than most, so I’ll be watching how they integrate NFTs into their flow, or not. There will be more to learn.

But one thing seems obvious: the future NFT UX will embrace more mobile, non-custodial options, social, and mainstream UX.

https://www.briansbulletin.com/p/writing-remarkable-content-online

Hi 👋 welcome to Brian’s Bulletin, a newsletter about NFTs and blockchains, helping you stay at the edge with in-depth insights on the technology, business, and markets.

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You may have noticed some changes around here in Brian’s Bulletin. Well I’ve decided to step up my game, and try to grow this newsletter into a business. There’s a lot to figure out, and many unknowns, but I’m going for it, and hope you’ll enjoy this ride with me. For you, what this means is that, in addition to the usual programming on NFTs and blockchains, I’m planning to share the most interesting things I’m learning about writing and building this newsletter.

This article is the first one of those updates. I’ll share why I’m doing this and how I’m approaching the business and content. It was fun to write, and I hope it’s useful and entertaining for you too.

I started this newsletter two years ago because I found myself saying things about web3 that I wasn’t sure were true.

Let me take you back to early 2021. NBA TopShot burst on the scenes introducing mainstream audiences to NFTs, then Beeple sold an artwork that garnered the New York Times headline “JPG File Sells for $69 Million, as ‘NFT Mania’ Gathers Pace.”

At that time, I was leading Partnerships at Dapper Labs, creators of NBA TopShot and the NFT token standard. What felt like everyone remotely thinking about NFTs reached out to us for advice and collaborations. Unfortunately for them, that partnerships email address went to me—someone who joined the company just months before. For sure the founding team were pioneers, but if my calendar was full, imagine how hard it was to get their time. It was an extreme period; all hands on deck all the time.

For me, it was sink-or-swim. I needed to learn fast if I was to be an advisor and attract partners. So I started writing this newsletter to examine my thoughts and gather evidence for what I heard from other people—in other words, it was to do my own research. I wanted to be armed with data to defend my views, and call bullshit on the trends that weren’t quite what they seemed.

Looking back I’m pleased to say I had some pretty good insights along the way and heard from many partners how helpful it was to them too. Meanwhile, I developed a love for writing and publishing. So now, I want to try to make this more central in my life. If I can help people achieve their goals while doing something I enjoy, thats a shot worth taking.

For the past couple months, I’ve been approaching this newsletter like a startup. The first phase of a startup is Problem/Solution fit—Have I identified a problem worth solving? From the book Running Lean, a problem worth solving boils down to three questions:

1. Can the problem be solved? (feasible)

2. Is your solution something customers want? (must-have)

3. Will they pay for it? If not, who will? (viable)

For the Bulletin, the customers are its readers, so I’m validating if they have a problem worth solving. To do this, I’m collecting evidence to answer questions like: Are people struggling to keep up with the fast-changing events across NFTs and blockchains? Do they want a newsletter that helps them understand what’s happening at the cutting-edge? Does Brian’s Bulletin offer something new that helps them achieve their goals better in some way?

My job is to validate my belief that it does. I think it does because of my writing style and ability to engage with topics at a deeper level than other web3 writers. For example, I have experience working at five crypto and NFT companies, and have learned the subjects required for an understanding across technology, business, and markets. I’m still a student of these subjects—they get very deep—but I do have the foundations. So I’m looking for evidence to support my belief that if the Bulletin produces this type of in-depth content with the right writing style, more readers will join.

On the topic of writing style, my goal is to create content on par with the best online writers. To do this, I thought about my favorite online writers—what do they do to stand out? How do they produce remarkable content that people will literally remark about? I studied WaitButWhy, Not Boring, Stratechery, Farnam Street, Lenny’s Newsletter and many others. Do they have common style patterns? What makes them work so well?

I was surprised how clearly the patterns popped out, and I packaged them in a framework called ACES: Accessible, Complex or Controversial Topics, Entertaining, and Smart. These are the elements they rely upon to produce winning content.

Here are examples of each:

These style elements along with in-depth insights are how I plan to solve the problem for readers keeping up with the industry.

And finally, to address the monetization, I am trying to validate and discover the types of companies who would pay for sponsored posts where I deep-dive on their products (that I objectively support without financial incentive, and that readers would want to hear about). From conversations with my network, there’s enough early signals that marketing content and distribution is something companies want as they continue to invest in growth. The question for them becomes how to choose the right partner to tell the right story to the right audience and achieve the most growth. I’m working to create a style and audience that would make Brian’s Bulletin an easy decision for them.

From here, it’s a continuous cycle: create, publish, learn, and iterate. I hope to validate this can be a sustainable business. And the only way to find out is to take a shot, so here we are.

Thanks for reading! I’m glad you’re here with me.

P.S. If you have feedback from this article, or ideas you’d want to see in the future, I’d love to hear from you! Hit reply or comment below.

https://www.briansbulletin.com/p/starbucks-odyssey-into-nfts

“Get to know us and you’ll see: we are so much more than what we brew.” – Starbucks

Earlier this year on March 9th, Starbucks sold out 2,000 of their latest NFT called The Siren Collection. Each purchased for $100, they’re now selling for over $500 on secondary marketplace. In the midst of a bubble-bursting market downturn, with bankruptcies and botched corporate NFT drops, this success comes as a shining light. More exciting, however, is the profound story behind this drop. Starbucks is a deeply principled and long-term committed company. I wanted to know, how are they designing the NFT strategy to align to those commitments, what are their technical decisions, and what it could mean for corporate NFT adoption overall? Writing this essay opened my eyes.

Hot or iced? Room for milk? To be honest, I want the Mocha Frappuccino every time. While everyone has their own order, we can all agree that Starbucks is an iconic company. They have a track record of pioneering industries and technologies; from introducing America to the Italian-style coffeehouse, to innovation in corporate loyalty programs, mobile apps, retail stores designs, and restaurant product launches. One of their core values is “challenging the status quo and finding new ways to grow.” It’s in their DNA to be visionaries and leaders, and they have the business success to back it up. I think they could lead again with NFTs, in a way unlike anyone else in the industry today.

I’ll show you why. Here’s the plan:

• Starbucks Heritage and The Third Place

• Culture of Innovation

• The Digital Third Place

• Odyssey Stats and Technical Details

• Why NFTs and Why Now?

• Broader Implications

Starbucks Heritage and The Third Place

Starbucks is the largest coffee brand in the world. They have 33,170 stores. In 2022, they had record revenues of $32.2 billion. This is a global giant.

More importantly than their business power is their heritage and origin story. They bring something different than any other company building in web3.

The origin story centers around a trip that future CEO Howard Shultz took to Italy in 1983. He was marketing director for Starbucks who, at the time, was a coffee bean roaster with six stores in the Seattle region. Coffee was a commodity business then; you pick up your beans or beverage and be on your way . But in Italy, Howard fell in love with the Italian-style espresso bars that we know from Starbucks today. It was a daily ritual, a neighborhood hangout; what would later become known as The Third Place—a gathering spot between home and work. He decided to bring this back to America. He saw that the Third Place was a luxury that people would be happy to pay a higher price for. While the $4 coffee has been mocked through the years, Howard’s original insight has remained fruitful as people continue to see the value beyond the beverage.

It’s about community and culture. Yes, centered around coffee, but it’s the experience that is the daily-ritualized product. Next time you walk into a Starbucks, notice how intentional everything is to create the neighborhood vibe: the long tables, barista greetings, local community notices boards, personalized loyalty rewards, and consistency across all their stores.

Their heritage also includes world-class leadership in ethical business practices. To name a couple, their coffee is verified 99% ethically sourced, as they’re one of the largest buyers of fair trade coffee in the world. Also, they offer free college education to their employees through a partnership with Arizona State University. Their actions prove how they put their people and environmental sustainability top of mind.

It was this vision to see beyond the coffee that turned a small regional operation to a multi-billion dollar global enterprise.

Culture of Innovation

The Third Place insight was just the start of a long history of innovation. As stated before, it’s in their DNA to challenge the status quo. Let’s look at three more world-class examples.

Mobile payments. According to InsiderIntelligence, “the Starbucks app is the second most used mobile payment app for point-of-sale transactions in the US, right after Apple Pay. The coffee shop contender beat out Google Pay and Samsung Pay, and is used by over 30 million Americans.” They accomplished this by prioritizing ease for mass audiences. Forbes explained that they “inverted the use case that most companies were using.  By allowing the register to scan the 2D barcode rather than the user scan a 2D barcode.  This was a maverick move at the time as most technologists were laughing at the 2D barcode and the way it was used.” Their payments were smooth and easy. This, in addition to the custom features of their app, set the industry standard for retail mobile apps. They benefit in a number of ways, including avoiding credit card fees at each purchase, and collecting customer purchase information that allows them to optimize the loyalty program perks.

Loyalty program. Starbucks Star Rewards program has 30 million active members in the US alone. And these members drive around 50% of revenue, according to Axios. I listened to The Brainy Business podcast explaining all the ways they’ve pioneered methods in behavioral economics and psychology to create daily habits and keep customers coming back. In 2013, Howard Shultz said: “No single competency is enabling us to elevate the Starbucks brand more than our global leadership in mobile, digital, and loyalty.”

Beverage innovation. Let’s remember who we’re talking about here: the company who built a $2 billion Frappuccino brand, who takes over each fall season with Pumpkin Spice Lattes, the company who makes headlines every year with red holiday cups, who introduced so many in the world to espresso and coffee. They know how to innovate, test, build hype, create scarcity, and drive headlines. All in service of long-term business growth.

Their CMO says it best: “Starbucks has a history of taking leading edge technology, innovating and making it accessible and approachable for mainstream audiences. Our history… has taught us how to engage customers at scale to unlock opportunities.”

The Digital Third Place

Last year, in their biennial Investor Day, Howard Shultz announced Starbucks’ Reinvention Plan to spur its next phase of growth. One highlight was they’re evolving the “Rewards program with Starbucks Odyssey, a Web3-enabled experience that will bridge the physical and digital customer experience. Through Starbucks Odyssey, customers will unlock a new generation of experiential benefits – both digitally and in-person – and become a part of a digital community built on human connection.” This is a big deal; it’s a strong commitment from the top executive to the shareholders.

Their CMO Brady Brewer added more details in an article where he explained the intention to “extend the Third Place Connection wherever customers experience Starbucks.” In this program, they’re asking “What if Starbucks could create a new, global digital community … centered around coffee to start, and then perhaps expanded into the many of the areas Starbucks has played in over the years as a coffeehouse; art, music, books and beyond?” “What if we could create an accretive business – adjacent to our stores – that ultimately benefited our partners, community and business?”

To achieve this, they plan to create a series of branded NFTs that provide a digital art asset, a membership pass to the community, and access to exclusive experiences and perks.

While many companies use similar language for their NFT visions, this holds more weight coming from a company with such rich history of making cutting-edge technology approachable for the mainstream in a way that drives business results. They have the culture and global reach to pull the entire industry forward along with them.

Odyssey Stats and Tech Details

Starbucks Odyssey is an extension of their Reward program. Users collect NFTs through completing tasks or journeys that “deepen their knowledge of coffee or Starbucks” says Axios. The NFTs are called “stamps.” Each stamp carries a point value which will unlock unique benefits and experiences. They say the “experiences could range from a virtual espresso martini-making class, invitations to exclusive events at Starbucks Reserve Roasteries, trips to Starbucks Hacienda Alsacia coffee farm in Costa Rica to access to unique merchandise and artist collaborations.”

There are 6 stamps available today, which you can see above and on their market website. Previous collections vary in quantities from The Siren Collection with 2,000 editions up to others with 30,000.

The Stamps today are minted on Polygon blockchain, but they said the project is likely to be multi-chain in the future. Original listings are sold through NiftyGateway, where Starbucks is able to gate the purchases to those who have signed up for the Starbucks Odyssey program, which has a waitlist (that I’m still waiting to be approved on.) NiftyGateway has a mainstream-ready offering, where users can pay with credit card and do not need to have self-custody wallets; NiftyGateway will custody the assets for you. Users can withdraw to their self-custody wallet if they want to, and sell on other marketplaces like OpenSea.

Starbucks is advised by Forum3, a consultancy for web3 loyalty programs co-founded by Starbucks’ ex-Chief Digital Officer Adam Brotman. It looks like they’ll scale this playbook to other brands. 

Why NFTs and Why Now?

The NFT aspect is needed for true ownership and composability, said Adam Brotman in his podcast on Overpriced JPEGs. The NFT assets can be held in self-custody wallets or trusted third-parties like NiftyGateway, which hosts the primary sales. The assets have their own value and are freely tradeable.

Composability is a benefit of building in web3 that allows for enhancements to owning an asset; the asset can be remixed through partner collaborations, and added to third-party experiences. Building on blockchains puts the data and software out in the public, so these enhancements can be provided by more than just the creating company. For example, if you wanted to sell your Siren Collection NFT, and didn’t like the prices offered on the NiftyGateway marketplace where your original purchase is held, you could withdraw to your self-custody wallet and list the asset on third-party marketplaces like OpenSea. Composability is a competitive advantage as it adds value to your product without any additional effort.

And why now? Well, Starbucks knows the benefits of being early to tech trends. A Harvard case study explained a key reason to their mobile payment success was timing. They launched mobile payment in 2011, years before Apple Pay and Google Pay. “Since Starbucks launched its own branded mobile payment function before technology companies could successfully enter the space, many users became accustomed to mobile payments through Starbucks first.” And 10+ years later, as mentioned, they remain the #2 retail payment app.

Are there benefits to being early to NFTs? There’s already evidence of this; many early NFTs hold value better than others. Some examples are CryptoPunks as one the earliest created NFTs, CryptoKitties as one of the first NFT games, and Chromie Squiggles as the first ArtBlocks project. This could be related to the Lindy Effect, which states the future life expectancy is proportional to the current age; the longer something has been around, the longer it will stick around. For NFTs, it could mean the longer an asset has retained value, the longer we can expect it to in the future. So starting the timeline earlier will be a competitive advantage.

Broader Implications

Starbucks has the power to move industries. With NFTs, they can prove the use case for loyalty programs and customer experiences. If they succeed, many others will be watching to do the same.

And equally important, Starbucks can help rebuild trust that the NFT industry has lost through the mania and bubble burst last year. They’re a trusted brand that’s part of the daily lives of millions. They’re long-term thinkers and global leaders in business ethics. They can introduce NFT technology to millions in an accessible and scalable way. The industry needs ethical champions to break through to new user bases. 

It’s clear to see, for NFTs and so much else, Starbucks really is much more than what they brew. 

https://www.briansbulletin.com/p/the-custody-chasm

If you’re a company selling NFTs today, you’re stuck in a pickle. There are dozens if not hundreds of companies clamoring for a small population of NFT buyers who are spending less than they used to: trade volumes are 1/10th of a year ago. On more occasions than I’d like to admit, I’ve endured the disappointment of not reaching sales goals even though we did all the right things.

The alternative path is to appeal to newer or first-time NFT buyers. The pickle is that these new buyers are different from the existing ones; they have different demands for what they find valuable. The core of this is the Custody Chasm.

All customers fall somewhere on this spectrum.

Early Market Earl is on the left side of the chasm. He works at a tech startup and bought his first bitcoin in 2017. He owns a Ledger self-custody wallet where he holds 17 different NFTs, two of which are worth over $5,000. He’s skeptical of Big Tech and excited for the promise of a more open web3.

Mainstream Maddie is on the right side. She’s an executive at a media company who loves listening to Lizzo and watched every episode of House of the Dragon. She bought her first NFT recently, the Game Of Thrones one, through a website Nifty’s where she could use a credit card. She thinks it’s cool, but isn’t sure what to do with it.

The Custody Chasm is the technical barrier inhibiting companies from appealing to both Earl and Maddie.

Earl demands a self-custody option where he can hold the NFT in his Ledger wallet. He wants to be able to trade the asset on a third-party marketplace like OpenSea and retain ownership even if the issuing company goes out of business. He has no problem connecting his Ledger wallet to do in-app interactions.

On the other hand, Maddie appreciated that she could buy the GoT NFT with a credit card and email address. She has no desire to learn about Ledger wallets and crypto exchanges. Nifty’s uses an app-custody model where they do the on-chain activity behind the scenes; they link your email to a blockchain wallet that they create for you. This opens the door to offer mainstream experiences that she is familiar with. The trade-off is that Nifty’s controls her assets; she can only do what they allow. Earl thinks this defeats the whole promise of true ownership in web3.

How can we attract Maddie without alienating Earl?

What if there was a hybrid custody model that allowed both a self-custody wallet and app-custody wallet to access the single account holding an asset? The app could provide mainstream UX — credit cards, email signup, and avoid external wallet signing — and the self-custody wallet could interact with 3rd party marketplaces.

This is the recent proposal from the Flow blockchain team. It works like a joint custody bank account; two parties can have access. It’s still early in its implementation, so we’ll see how it gets adopted, but it looks to be a way to solve this chasm problem.

Flow Chief Architect Dieter Shirley described it this way: “A new user, without a self-custody account, can sign up for a new account without having any wallet software. But when they are ready for self custody, they can delegate control of the app-custody account to their self-custody account.”

It would look something like this:

Flow Product Manager Chris Ackermann summarized the benefits:

• Full user control of their assets in both their self-custody wallet and in-app account, while the app can continue to use the assets in the context of the app without an interrupted user experience through transaction approvals.

• The option for users to bring their assets with them elsewhere in the ecosystem of Web3 apps, while retaining the ability to seamlessly use them within the app.

• App visibility into assets that the user holds in their self-custody wallet, and the ability to request temporary access for use within the app, if it makes sense to do so.

I’ll also underscore a problem I’ve faced across multiple companies where my team dropped NFTs before our marketplace was ready. We used an app-custody model so transactions were impossible for users. In the hybrid scenario, the user could trade from day 1—through a 3rd party marketplace— while the app builds out their own.

It looks like someday soon Maddie and Earl will be able to enjoy the same NFTs. Companies will welcome customers from both sides of the chasm. And we’ll all be able to buy, to hold, and to loiter in Discords as projects take-off together.