To defeat Elon Musk, Twitter needs … more NFTs

Ahhhh I can’t tell you how much I’m finally excited to say … Welcome to Chain Reaction.

This is a new experiment for TechCrunch — it’s a newsletter and a podcast working together to keep you informed on what’s happening in the world of cryptocurrencies, NFTs and web3. Every week, I’ll hash out the hottest topics in crypto with my colleague Anita Ramaswamy on our podcast before diving into an interview with an industry expert. Then, I’ll pour some additional thoughts into this newsletter, capitalizing on the state of the industry, while flagging funding rounds and other spicy industry gossip.

This is the first episode and edition of Chain Reaction, but as with any good chain reaction, things get more exciting the further along we get. So, thank you for kicking off this journey with us and I hope you like what you see.

the hottest take

Even with tens of millions of crypto owners out there, the fact is that web3 and NFTs have a comically small number of users relative to the anger and ecstasy those topics generate.

Nevertheless, Silicon Valley venture capitalists are betting that these platforms will reach the mainstream quickly, and are bestowing hefty valuations on private startups aiming to expose users to things like NFTs. Just looking at relatively fresh startups like Dapper and OpenSea fetching valuations of $7.6 billion and $13.3 billion, respectively, and you can see just how thirsty VCs are.

But when it comes to crypto powerhouses, I’d still argue there’s no bigger presence in web3 than Twitter. The social network is at the heart and soul of crypto and NFTs (whether they like it or not) and the vast majority of deals and relationships in the space spark up because of interactions on the Twitter platform.

The above is my justification to talk a bit about Elon Musk’s Twitter bid and the world that could be. Now, Musk’s stated intent of making Twitter a safer hub for free speech doesn’t explicitly have much at all to do with crypto, but fielding a $43 billion offer will likely lend Twitter’s board and shareholders a moment to consider the current state of the business and where it could be making more concerted strides.

This week, Coinbase launched a beta of their NFT marketplace with partnerships with a handful of top NFT collections. They’re looking to take on OpenSea, which dominates NFT sales volume, and it appears a big part of Coinbase’s offering will be social features, with groundbreaking features like… commenting. I won’t judge the effort too much out of the gate, but it’s clear that they’re mainly looking to compete on the strength of their reach.

But as I think about an NFT marketplace with social at its heart and reach aplenty, I’m left wondering how Twitter could possibly ignore the opportunity they have to build their own NFT storefront and OpenSea competitor.

The social media giant has largely treated its crypto-enthused users as a happy little accident. Hilariously, the only way it monetizes these users — who are spending billions on NFTs which they are largely discovering and hocking via tweets — is through their $2.99 per month Twitter Blue subscription, which gives users a nice little hexagon to let their NFTs live inside. In the meantime, Twitter is basically serving as the central curation frontend for every NFT storefront and letting users leave the platform to transact before they come back to surf the timeline.

It shouldn’t be a huge surprise that the company is leaving money on the table. Twitter has spent the last decade or so sucking at product, but the last couple of years they’ve sucked a lot less, making more aggressive monetization moves, buying startups and generally proving themselves a bit more as they look to stay competitive with rivals like Spotify and Substack.

That said, Twitter has more unrealized potential than any other consumer company of its size, but its unilateral focus on publishing opportunities is causing it to miss bigger vertical opportunities that its much larger Big Tech competitors would kill for the chance at building. Facebook likely could not buy its way into dethroning OpenSea with any amount of money possible, but here Twitter is with a wide-open pathway toward web3 dominance and the company is just ignoring it.

Twitter has flirted with community-specific features over the years, including their fledgling Communities product, but something like a dedicated marketplace would really shake things up. Crypto is hardly the easiest place to start — NFT spam has already proven to be a formidable opponent for Twitter — but the vertical is still ripe for the picking.

Ultimately, the realest stumbling block with Twitter is the same one that gaming chat app Discord has struggled with: mainstream user perception. Twitter knows that they would infuriate just as many users as they would excite if they built out their own NFT platform. Discord tried to beta test some NFT-centric features several months ago and a short tweet showcasing an in-app wallet plug-in led to thousands of dunk tweets on the Discord CEO and a concerted pullback. This would undoubtedly be the case for Twitter, which already finds itself wandering ass-backwards into plenty of controversies, so I can understand that they might be a little wary to walk straight into more.

But with a $43 billion offer on the table, it’s worth questioning how a company at the center of an industry worth trillions is gleefully ignoring the chance to be indispensable to it.

Image Credits: Jam STA ROSA / AFP

the inaugural pod

We just released the very first episode of our weekly podcast, Chain Reaction! Every Thursday, we’ll spend some time breaking down a few of the top crypto stories and we’ll bring in experts to go deeper on big topics.

Here’s what we chatted about this week:

  • By way of news, Coinbase finally launched its NFT platform this week in beta after announcing its plans six months ago, as Jacquelyn reported. Of course, we had to unpack the details around this much-hyped debut. Crypto exchange Okcoin launched an NFT platform this week too, so we talked strategies, fees and what this means for current market leader OpenSea.
  • We also got into the background of the Axie Infinity hack, which was the largest in the history of DeFi. Turns out, the U.S. government thinks a North Korean hacker group was behind this one, and the funds could be used to grow the country’s nuclear program, TC’s Carly Page tells us. Scary stuff, especially considering how small and under-resourced some of the most powerful crypto startups are, if they have to face off with literal nation-states to safeguard user funds.
  • Meta made itself an easy target for the crypto community to roast yet again this week, so we had to chat about the company’s latest announcement that it plans to charge exorbitant transaction fees on the sale of digital goods in its Horizon Worlds metaverse.
  • We topped it off with a conversation with Justin Blau, better known by his DJ name 3LAU, about all things music and NFTs.

Subscribe to Chain Reaction on Apple, Spotify or your alternative podcast platform of choice to keep up with us every week.

Anita Ramaswamy

Pixel art coins different sizes. Vector illustration.

Image Credits: PixelChoice (opens in a new window) / Getty Images

the money

Where startup money is moving in the crypto world:

  1. Indian crypto exchange CoinDCX raises $135 million Series D co-led by Steadview and Pantera at $2.15 billion valuation 
    Despite a challenging regulatory environment, CoinDCX is looking to double down on crypto opportunities in India. “We will do whatever it takes to give more comfort to the regulators,” CEO Sumit Gupta tells us.
    Read more on TechCrunch
  2. Enterprise crypto startup BlockApps raises $41 million in round led by Liberty City Ventures
    Plenty of traditional enterprise companies probably don’t understand why they would invest in putting their business on the blockchain, BlockApps is looking to help tap the “boring” opportunities in crypto.
    Read more on TechCrunch
  3. Ethereum sign-in startup Spruce raises $34 million Series A led by Andreessen Horowitz
    Crypto startups are looking to turn wallet addresses into the new user name, Spruce’s “sign-in with Ethereum” solution is aiming to streamline logins and payments simultaneously.
    Read more on TechCrunch
  4. Blockchain analytics company Flipside Crypto raises $50 million round led by Republic Capital at $350 million valuation
  5. Crypto exchange Fasset raises $22 million Series A led by Liberty City Ventures and Fatima Gobi Ventures
  6. Ethereum Push Notification Service (EPNS) raises $10.1 million Series A led by Jump Crypto
  7. Solana-based Hedge lending protocol raises $3.7 million led by Race Capital
  8. “Enterprise metaverse” platform Mytaverse raises $7.6 million in round led by Blumberg Capital
  9. Robinhood acquires crypto wallet startup Ziglu for an undisclosed sum
  10. Framework Ventures unveils a $400 million crypto fund with focus on blockchain gaming

the added analysis

Some more crypto analysis from our TechCrunch+ subscription service:

Top NFT collections are bringing in millions of dollars weekly, but which will survive?
The most popular NFTs are raking in millions of dollars every week, but how long can it last? We dove into what it means to have liquidity in the NFT marketplace, how many buyers are truly buying, what’s driving prices and where does this (seemingly booming) sector go from here. Hint: the majority will fail in years to come. 

Dallas Cowboys’ partnership with signals more mainstream crypto exposure
Another week, another announcement of a sports team partnering with a crypto company. But this time is a bit different: It’s the first time a crypto exchange is partnering with an NFL team, the Dallas Cowboys, for that matter. This could open the door to a whole other untapped fan base and further expand crypto’s adoption into mainstream audiences. 

Blue-chip NFT owners explore alternative uses as sales decline
Even though the most high-profile NFTs are bringing in a lot of dough, NFT sales have fallen from all-time highs; but this isn’t stopping collectors from looking for other opportunities to gain capital on their prized blue-chip collectibles. The NFT loan market is heating up as owners are leveraging their assets to gain liquidity and generate additional yield. This could open the door to new possibilities for top NFTs and the ability to maximize capital efficiency in an emerging marketplace.

Jacquelyn Melinek

That’s it for this week, thanks for reading!

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