Internet Cats, Virtual Worlds, & the Future of Collecting

Internet Cats, Virtual Worlds, & the Future of Collecting

A whirlwind tour of the history of collecting: some anthropology, some programming, and an overview of how smart contract technology (Ethereum in particular) makes collecting globally digitally scarce items a reality via non-fungible tokens (NFTs).

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Eric Weinstein

October 06, 2018
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  1. INTERNET CATS, VIRTUAL WORLDS, & THE FUTURE OF COLLECTING C

    O N ERIC WEINSTEIN PORTLAND, OREGON, USA 6 OCTOBER 2018
  2. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM ABOUT ME

    Speaker Eric = Speaker({ role: "CTO @ AUX", languages: ["Clojure", "Go", "Idris", "JavaScript", "Python", "Ruby", "Solidity"], funFact: "New dad!" });
  3. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM AGENDA ▸

    History of collecting: 3,000,000 years ago to present ▸ The rise of the Internet and electronic collectibles ▸ Digital scarcity and the blockchain ▸ The Internet of auctions: what we’re building at AUX ▸ What’s next?
  4. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM MANUPORT ▸

    Makapansgat pebble ▸ ~3,000,000 years ago ▸ Australopithecus africanus ▸ First “collectible”?
  5. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM WHY DO

    WE COLLECT? ▸ Hedge against future scarcity ▸ Social status (e.g. access to limited editions or expensive/ rare items) ▸ Curation (“Shorthand” for our personalities and preferences)
  6. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM PHYSICAL TO

    DIGITAL ▸ Historically limited by physical resources (skilled artisans, precious/rare materials, time, &c) ▸ More of our lives and personal data exist digitally and/or online than ever before ▸ The Internet not only introduced a new way for us to share information about real-world collections, but an entirely new reality in which to collect
  7. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM THE RISE

    OF THE INTERNET ▸ Parallels between the early Internet and current blockchain development ▸ Packet switching (1960s) and TCP/IP (1970s) ▸ World Wide Web (1980s) ▸ Web browsers, including Mosaic/Netscape (1990s) ▸ Rise of the global Internet (1990s - present)
  8. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM THE RISE

    OF THE INTERNET ▸ Parallels between the early Internet and current blockchain development ▸ Packet switching (1960s) and TCP/IP (1970s)* ▸ World Wide Web (1980s) ▸ Web browsers, including Mosaic/Netscape (1990s) ▸ Rise of the global Internet (1990s - present)
  9. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM THE RISE

    OF THE INTERNET ▸ Critical for us to get things right while we’re still in the protocol phase ▸ TCP/IP ✓ ▸ BGP, DNS ✖ ▸ Transparently transporting value cross-chain signals (to me, at least) that we’ve “made it” ▸ We’re moving faster because the Internet is already here!
  10. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM BLOCKCHAIN: TRUE

    DIGITAL SCARCITY ▸ As opposed to artificial digital scarcity (e.g. the library only has “one copy” of an ebook) ▸ For the first time, digital assets are truly scarce: cryptographic protocols ensure a limited number of any given item ▸ End to the tyranny of DRM
  11. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM BLOCKCHAIN: TRUE

    DIGITAL SCARCITY ▸ Scarcity of both fungible and non-fungible stores of value ▸ Enter Ethereum, where the largest number of blockchain assets are currently available ▸ Ethereum does come with its own set of challenges (e.g. gas, UX, scaling)
  12. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM NON-FUNGIBLE TOKENS

    (NFTS) ▸ Fungibility just means tokens are interchangeable; with non-fungible tokens, we care which one we get ▸ Standards (e.g. ERC721) ▸ Examples (e.g. CryptoKitties, Decentraland)
  13. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM NON-FUNGIBLE TOKENS

    (NFTS) function approve(address _to, uint256 _tokenId) public { address owner = ownerOf(_tokenId); require(_to != owner); require(msg.sender == owner || isApprovedForAll(owner, msg.sender)); tokenApprovals[_tokenId] = _to; emit Approval(owner, _to, _tokenId); }
  14. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM NON-FUNGIBLE TOKENS

    (NFTS) Credit: Decentraland (decentraland.org)
  15. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM AUX: THE

    INTERNET OF AUCTIONS ▸ Founded one year ago ▸ Network of marketplaces/auction houses ▸ Houses conduct auctions (connecting buyers & sellers) ▸ Houses leverage (create and lease) auction template contracts (ATCs) ▸ Templatization of auction logic fosters innovation and leads to community-driven standardization
  16. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM AUX: THE

    INTERNET OF AUCTIONS ▸ Intersection of decentralized exchange, online marketplace, and auction logic ▸ Primary value-add: price discovery ▸ In (relatively) illiquid markets, auctions are an ideal mechanism for price discovery ▸ Game theoretic assumptions (e.g. users have private valuations and are interested in the lowest price for their desired item)
  17. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM AUX: THE

    INTERNET OF AUCTIONS ▸ React + Web3/MetaMask ▸ Solidity + Truffle + Solium (linting) ▸ API (Ruby/Rails) + caching ▸ Let’s look at an example of an AUX ATC
  18. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM EXAMPLE: DESCENDING

    PRICE ERC721 AUCTION function bid(uint256 auctionId) whenNotPaused onlyAcceptingBids(auctionId) external payable { require(msg.sender != 0x0); uint256 currentPrice = getCurrentPrice(auctionId); require(msg.value >= currentPrice); auctionIdToAcceptingBids[auctionId] = false; transferWinnings(msg.sender, auctionId); uint256 overbidAmount = msg.value.sub(currentPrice); if (overbidAmount > 0) { msg.sender.transfer(overbidAmount); } auctionIdToSeller[auctionId].transfer(currentPrice); }
  19. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM EXAMPLE: DESCENDING

    PRICE ERC721 AUCTION function getCurrentPrice(uint256 auctionId) public view returns (uint256) { uint256 priceFloorBlock = auctionIdToPriceFloorBlock[auctionId]; uint256 priceFloor = auctionIdToPriceFloor[auctionId]; if (block.number >= priceFloorBlock) { return priceFloor; } uint256 startBlock = auctionIdToStartBlock[auctionId]; uint256 startPrice = auctionIdToStartPrice[auctionId]; uint256 priceDifference = startPrice.sub(priceFloor); uint256 blockDifference = priceFloorBlock.sub(startBlock); uint256 numberOfBlocksElapsed = block.number.sub(startBlock); uint256 priceDecrease = numberOfBlocksElapsed.mul(priceDifference).div(blockDifference); return startPrice.sub(priceDecrease); }
  20. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM EXAMPLE: DESCENDING

    PRICE ERC721 AUCTION ▸ Auctions are multiplayer, non-zero-sum games of hidden information ▸ May have multiple Nash equilibria with bidders seeking out strictly dominant strategies if they exist ▸ Interesting data that can be gleaned over time include distribution of valuations and bids (pricing data), risk tolerance for different cohorts of bidders, common strategies, and trends in auction formats/asset types
  21. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM WHAT’S NEXT?

    ▸ Tokenization of things + fractional ownership (real estate, luxury items, art) ▸ Composite NFTs (ERC-998) ▸ Multi-blockchain tools (e.g. Metronome, Truffle) ▸ Identity-aware tokens (e.g. securities, deeds, taxes) ▸ Infrastructure layer for other cutting-edge technologies (e.g. AR, IoT)
  22. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM WHAT’S NEXT?

    ▸ Near-term: proposed Ethereum improvements (e.g. sharding, PoW → PoS) ▸ Medium-term: new asset types and standards (e.g. ERC-1400) and fractional ownership ▸ Long-term: imagine your property, identity, &c all part of smart contracts that pay taxes for you; simplification of codes and governance for modifying
  23. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM TL;DPA ▸

    Humans have been collecting for millions of years and won’t stop any time soon ▸ The Internet revolutionized how people view and transmit value, and blockchain technology is poised to do the same ▸ Auctions are ideal for price discovery in new/illiquid markets, so we’re building a network of houses at AUX ▸ Improvements to Ethereum, new asset types, and wider adoption could lead to some really cool futures
  24. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM

  25. ERIC WEINSTEIN | @ERICQWEINSTEIN | ERICWEINSTE.IN | E@AUXTOKEN.COM QUESTIONS?