The definition of insanity, Web 3.0 version

The tl;dr version of this:

The longer version:

So, Square Enix’s CEO, Yosuke Matsuda, who previously was known primarily for avidly promising to shove NFTs into the hands of his customers that absolutely 100% did not want them, was in the news again today, talking about facing the events of last year with humility and grace, learning from the mistakes he and others have made and promising to do bettHAHAHA no.

Looking externally, I think it is fair to say that blockchain gained significant recognition as a field in 2022, as evidenced by “Web 3.0” becoming a firmly established buzzword among businesspeople. However, the year also saw volatility in the cryptocurrency and NFT (non-fungible token) markets that tracked the dramatic shifts in the macroeconomy described above. The latter half of the year in particular produced a somber string of news stories with blockchain connections, including the scandalous bankruptcy filing of FTX in November.

It’s always a great sign when your message to investors (which is essentially what this letter is) has as its core, “our primary objective to dominate the market most known for being at the root of one of the largest frauds in financial history”.

But bear in mind Matsuda is the same executive who, one year ago when announcing Square Enix’s NFT plans, dismissed the backlash he was sure his letter would cause amongst the rabble-rousing customer base who, in his words:

I realize that some people who “play to have fun” and who currently form the majority of players have voiced their reservations toward these new trends, and understandably so. However, I believe that there will be a certain number of people whose motivation is to “play to contribute,” by which I mean to help make the game more exciting. Traditional gaming has offered no explicit incentive to this latter group of people, who were motivated strictly by such inconsistent personal feelings as goodwill and volunteer spirit.

It’s been a year since that was written and I’m still dumbfounded at the sheer unmitigated chutzpah of a gaming industry executive shaming his core customers for “playing to have fun” instead of contributing out of “goodwill and volunteer spirit” to make money for, you know, Square Enix.

Then again, this is Web 3.0 we’re discussing. Unmitigated chutzpah is kind of, you know, their thing. Exhibit A being the most successful NFT release of the past month and I can’t believe I’m typing this with the digital equivalent of a straight face: The Donald J. Trump NFT Collection.

Yes, your favorite President (just ask him, he’ll tell you, repeatedly, using those words) actually released NFTs of himself looking like a superhero, a cowboy, a test pilot, a serious commentator on policy issues, a secret agent, and other completely fictional images of Donald J. Trump. And they sold out almost immediately, despite Trump being so unaware of what NFTs or Web 3 or really anything at all is, that he described them as baseball cards. Or, as one of the few memorable sketches of SNL in the past year put it, “You can also get them for free by just going online and looking at them maybe, I don’t know. maybe a screenshot but we’d really prefer it if you sent the $99.”

Given that the cryptocurrency market in general is in a state of near total collapse, its most notable icons are known chiefly for whether or not they’ve actually been caught in billion dollar scams yet, and the NFT market specifically has cooled to the point that no one makes “all my apes are gone” jokes any more, why would any gaming company want to announce its continued investment in such a reliable market segment?

Well, I’ll tell you. There’s a few reasons.

1. There’s still stupid money available.

Apparently people still desperately want to set their money on fire, and Web 3.0 is a constantly growing source of napalm. The best monitor of this continuing crisis in money still inexplicably seeking to be set ablaze is Molly White‘s essential Web3 is Going Just Great tracker. With $16 million reported lost to fraud and stupidity in just the past 3 days, it indeed is going just great.

You may ask yourself, WHY would anyone want to just set their money on fire? I mean, *waves arms furiously* Well, for some it’s sunk cost fallacy - surely THIS time I can cash out of this coin offering with a profit. For others, it’s religious belief - yes, times look tough right now, but the fundamentals are strong, dammit, and people are always going to want to buy tulips. Er, NFTs. Something.

And if it’s one thing - perhaps, really, the only thing - the CEO class is capable of doing well, it’s extracting stupid money from the pockets of people who really don’t know what to do with it.

B. Someone has to make money at this.

For all its buzzworthiness, blockchain gaming hasn’t really had a lot of notable success. Sure, there’s Axie Infinity, the Pokémon clone that for a brief, shining moment, thanks to the inherent exploitative nature of global labor, provided Philippine “game” “players” a stable income that was barely above the local minimum wage before the whole thing collapsed into a messy finger-pointing heap. And before that was CryptoKitties, which successfully monetized the kind of people who have very strong opinions on Linux distros. But no one has come barreling out the door with a AAA production that has at its core unsustainable technology and financially suspicious practices. I mean, since MMOs were invented. And the siren song of “you can be the firrrrrrst” is crack to the CEO class. Literal crack.

Δ. The Metaverse!

Speaking of “since MMOs were invented”, did you know that we will someday all meet in an online space, talk to each other using digital avatars, and people will make money from this? This is all very new and exciting to anyone who hasn’t played an online game in the past quarter century, and coincidentally, that does actually describe your average game industry CEO, so if you were wondering why people were talking so much about THE METAVERSE, well, there you go.

And what’s going to drive THE METAVERSE? Blockchain! NFTs! Proof of Stake! Exoderms! AI-Driven Design! Play to Earn! Why not? (I just threw a nonsense buzzword in there to see if you were still paying attention. Bonus points if you have no idea which it was.) I mean, it’s not like the most successful online products restrict themselves to using the most off-the-shelf generic battle-tested technology possible to ensure as little point of failure as humanly possible, that’s just for LOSERS! Real men develop the Metaverse in Node.JS, persist its data on peer to peer hosted blockchains, and leave all gameplay decisions up to the end user. I think I just made some game industry CEO wet themselves.

Anyway, I have every expectation that in the coming year vast new levels of stupidity in the intersection of the gaming industry and the tech industry at large will continue to manifest, mostly at SXSW Interactive, and that we’ll continue to bitterly laugh about it while the world burns all around us. Because everything continues to be horrible.