Technology

Phygital

Phygital is a nerdy good term.

The combination of physical and digital is something humanity has been experimenting with for centuries. The history of electronic engineering is straight inventive and the conversational AI powering our new ChatUX in BEN BOT knew about the concept before I even asked.

Perhaps this means I’m late to the party, but at web3dsm last week, I was introduced to this “phygital” word. As I’ve thought more about it, phygital feels like a term to help us think about the blends between physical and digital worlds. Phygital experiences have connectivity (or potential to do so) in almost everything man-made.

Phygital products exist in seemingly all industry sectors. Basically anything with electricity, and of course, technology products with electronic hardware and of course, all IoT products designed to be smart. These days, everything has an app option, eh. As I roasted on this writing, the computer and smartphone kept earning my mental vote for the most personified examples of a physical device that layers the entire user experience (“UX”) into a digital counterpart. Radio and TV can earn runner-up recognition if they don’t want left out, haha!

So, how did a recent web3 conversation lead to this new word? When more wayfinders start sharing ideas, the expansion of one’s thoughts can be dilated and intensified. After Josh Larson helped us paint a conversation with generative AI, prompt engineering, and liberating bias systems in digital art, the articulated use of phygital and a compelling use case stuck with me.

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I’ve enjoyed building web3dsm with a decentralized team of volunteers. Along with being another energizing community building exercise, the compelling IRL conversations with fellow technologists has activated curiosity and thickened many people’s understandings of different concepts within web3. Over the past 7 months, we’ve featured amazing web3 projects alongside cooperative education, complimented by deep thinking amongst a growing number of community leaders.

Alright… imagine a hoodie with a passive chip.

When scanned by a phone, the clothing activates a treasured digital experience. Think about it. Maybe you already have? Ta daa! Digital clothing.

You’d need a strong tech team and some luck in loud markets, but the idea of chip-enabled clothing feels like pure wonder, but also possible with an inquisitive team, expanding access to required components, attention from the right audience, and the right community-driven initiative. Hmm…

Phygital clothing is extra crazy too, because it’s been such a traditional example of a physical product. Clothing is also designed to be a very personal choice. As clothing continues to be initialized by electronics, the digital companion will introduce almost endless depth. Embedding fresh remarkability, accessibility, different states to unlock, real-time incentives, network effects, and transcendent brand loyalty. Wow.

Whether you get electronic clothing from me or not, I predict more clothing will soon have the option to connect, even offering digital options to pair with what you wear. Alright, it’s been fun to reflect on the future of fashion, but this idea machine is scheduled for a pit stop. As always, reply to connect and I’ll look forward to bonus interactions.

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Another spellbinding term is #ChatUX. This may be our theme for next week, so if a friend shared this with you, confirm your free Roasted Reflections subscription. If you’ve enjoyed my weekly writing for years, thanks again and keep building my friend.

By Ben McDougal, ago

Installing

Installation complete. BEN BOT is now online!

Forget pranks, April 1st has been no joke since YDNTB was released on April 1st, 2021. In 2022, we celebrated one year of YDNTB by uniting this tribe with Roasted Reflections on Discord and the Roasted Reflections NFT Collection.

For this year’s art project, we voyaged into the depths of artificial intelligence. The nerd knobs have been on full blast as we developed valuable influence layers supported by AI language models. The creative collaboration, early training, and immediate response from NFT owners has been fascinating! Think ChatGPT, but when you talk about anything I write about, you’ll feel BENergy pouring into a friendly, fun, and insightful conversation.

BEN BOT infuses all 125+ weekly writings in Roasted Reflections, key takeaways from YDNTB, and other strategic embeddings into a conversational chatbot!

To celebrate, a new Roasted Robots category of 25 all-new NFTs are being minted! As you can see, our friends on the rim of the YDNTB mug have been robotized and here are the first five that were just minted today!

Five more robotic NFTs will be released into the Roasted Reflections NFT Collection every Wednesday in April. Active NFT ownership includes a variety of utilities and 24/7 access to BEN BOT. While NFT ownership is the best way to access BEN BOT, not everyone wants an NFT. Your web3 exploration is rewarded with lower prices and more value with NFTs, but to make BEN BOT accessible to all, a monthly membership (paid by credit card) is also available.

Wow. I’ll stop talking. It’s time to give BEN BOT a try! Our new friend is always thirsty to chat and we can’t wait to hear what you think – BENBOT.ai

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Wanna build your own chatbot? Why?

By Ben McDougal, ago

Munch Munch

By connecting the global datasphere with computer vision, machine learning, and language modeling, computer science has paved the way for artificial intelligence.

Machines have long used human logic to automate routine and AI is not new, so why has this form of knowledge engineering earned so much attention lately? It’s because AI has learned to speak our language.

Language modeling has taught our digital counterparts how to articulate what it already knows. Not in some robotic, 8-bit voice. AI is now conversational. For example, chatbots are informative, engaging, and entertaining humanoids, while generative AI uses neural networking to transform simple prompts into impressive visuals.

When innovation threatens the status quo, a common response is fear followed by complacency. This is evident in the argument that AI will take all our jobs. Yes, advancing technology will continue to reduce the need for humans to turn knobs and here’s a 2023 Cornell University study on how large language models may impact labor markets. Gone are the days of clocking in on time and keeping your head down just long enough to climb a ladder built to resist change. The willingness to play it safe may extend a sense of temporary security, but this is a choice that makes you easy to replace with cheaper labor and faster tools. To remain indispensable, let AI dine on the dull, devour inefficiencies, and support our own ingenuity.

Start a journey before you see the end. Knowledge is required, but for students, intrapreneurs, and entrepreneurs who stay creative, it’s impossible to compete with being you! As AI munches on mediocre, more of us are invited to build without a map. To make a ruckus with no permission required. To do something for the love of doing it and to care enough to fail.

AI won’t take your job. People who use AI will. It’s a lousy time to be complacent and the perfect time to be creative.

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BEN BOT goes online April 1st.

By Ben McDougal, ago

Organizational Shift

DAOs are a revolutionary way for connected humans to organize, coordinate, and pool resources without the need for centralized authorities or intermediaries.

These community-led groups transparently establish operating agreements and manage a shared treasury. By leveraging smart contracts, all decisions made by a DAO (“Decentralized Autonomous Organization”) are recorded on an immutable blockchain and governance tokens are used for gathering consensus.

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This caffeinated contribution was written by Alex Myers. This certified futurist is a DAO Agility Coach at Aragon, a web3 platform for building DAOs on open-source infrastructure with governance plugins. Alex is also a web3dsm organizer who believes the more we teach, the more we learn.

There are over 11,000 DAO’s in operation, encompassing $11B+ in treasuries, varying widely in size, scope, and AUM (“assets under management”). All of DeFi utilizes DAOs to govern their treasuries, yet many are simply small groups of like-minded individuals who want to quickly gather, pool capital, and make decisions. 

DAOs, like companies, come in many forms. Venture funds, investment groups, grant committees, philanthropy, media, and more. Here are the world’s largest DAOs and here are different types of DAOs.

Besides a wallet and owning cryptocurrency, no technical skills are required to create a DAO. Several no-code operating systems (Aragon, Tally, Colony, DAOHaus, and others) enable anyone to create a DAO in minutes by simply selecting governance capabilities, funding options, and voting requirements. Given many DAO operating systems are open-source, custom smart contracts and powerful plugins can add tailored functionality without additional cost as well.

To join a DAO, new members go through an onboarding process. Once confirmed, members can be given a digit asset, such as an NFT, to verify the details of their participation. Members are then granted access to a communication tool (like Discord, Telegram, or Slack) to collaborate with other members as decisions are made on which projects to pursue.

DAOs are different from traditional companies in that there is no hierarchy and decision-making is done through pre-set protocols and smart contracts. This decentralizes power and allows for more operational versatility. Members can work from anywhere and focus on work management rather than people management. Contributors can work in multiple DAOs and choose to remain anonymous or more identifiable within the group.

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Cheers to this web3 series brewing on the future of how we connect, communicate, and collaborate online!

As hype cycles and funding began to deteriorate in 2022, due to (mostly) macroeconomic forces, DAOs realized that community over performance was unsustainable. Today, sustainable DAOs utilize battle-hardened methodologies like Agile and KPIs to enhance coordination and productivity, while still maintaining a sense of community.

While all DAOs use crypto-assets to establish themselves, the size and scale of a DAO can impact its operations. Larger DAOs require more planning and coordination around governance optimization, commonly breaking into smaller, goal-oriented teams to define their own budget proposals, objectives, and success metrics. Since treasuries are often much more significant, DAOs members expect historical performance and analytics before voting to allocate funding.

DAOs are built on open, borderless, neutral, and censorship-resistant blockchains. This distribution is paradigm-shifting and a big reason for DAO growth. However, such dispersion also exposes DAOs to legal ambiguity. Since DAOs aren’t beholden to country-specific laws backed by traditional business structures (LLC’s, S-corps, C-corps, etc.), they must consider incorporation to minimize liability for members. Smaller DAOs with reduced financial capital are not as complex and more nimble, which allows them to define budgets, proposals, and goals with less effort.

Depending on the size, composition, ongoing activity, and how a treasury is funded (seed funding, ICOs, airdrops, grants, etc.), taxation and regulatory compliance is another presiding element for DAOs. This is especially true if a DAO is generating revenue by charging fees and distributing them back to token holders, as they could be redefined as securities and create taxable events. In short, the larger a DAO becomes, the more professional legal support, financial strategy, administrative attention, and overall leadership is required.

As we consider the future of work, DAOs have the potential to revolutionize the way organizations are structured and operated. DAOs re-imagine human coordination to be more equitable and transparent. With exponentially improving blockchain technology, alongside network effects, joining and contributing to DAOs will become a self-sustaining cycle of growth. As the world digitizes and becomes more decentralized, DAOs are poised to become a powerful force for change, disrupting traditional institutions and fostering a new era of innovation.

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You’re now ahead of the curve! Welcome to Web3 is a shareable reference and follow the Web3 tag for more reflections flavored in futurism.

By Ben McDougal, ago

Non-Fungible Fabric

Ownership is a fundamental principle of web3. NFTs (“non-fungible tokens”) are digital assets supported by smart contracts that connect to a blockchain. Each NFT is unique, which allows code to autonomously apply, track, and transfer digital signatures and verifiable ownership.

With cryptocurrency supporting the economy of web3, NFTs can be thought of as property within this space. Leveraging the immutable nature of a blockchain, NFTs allow anyone to instantly verify authenticity or trace provenance through the history of ownership.

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This caffeinated contribution was written by Will Schneller. This artist turned founder, graduated from Iowa State University and is now an Entrepreneur-in-Residence at Drake University. As a curious creator, volunteer organizer for web3dsm, and owner of Totality – #14, Will has been exploring web3, AI, and how community brings it all together.

The hype of Beeple’s $69M NFT sale led to an explosion of interest in 2021, but the first NFT-like implementation can be traced back to Bitcoin’s Colored Coins Project proposed, in-part, by Ethereum co-founder Vitalik Butrin. Within this 2013 project, the process of making something distinct, like a fungible Bitcoin, was scrutinized by adding metadata into a coin. Smart contracts that include trackable metadata has become a critical component of NFTs. The most common standard for representing ownership of non-fungible tokens, is ERC-721, which has been battle-tested with the most recognizable NFT collections and is continually being refined.

There are two main misconceptions with NFTs. The first is that an NFT is only digital art. This overlooks one of the most powerful attributes of NFTs — flexibility. NFTs are web3 primitives that can represent nearly anything. They allow us to weave together a future that removes the barriers between the physical and digital worlds. The second is that an NFT is only a URL. While some NFTs use generative algorithms to write an image or other types of data directly to a blockchain, most NFTs reduce computational costs (which translates into higher gas fees) by innovating around the theory of ordinals or hosting larger elements of the asset on a decentralized storage system. The token itself goes beyond simply being a pointer and acts as an immutable record of ownership on a decentralized ledger. In an environment where code is law, the entire network recognizes and enforces your ownership via consensus.

Each NFT has no exact equivalent, but they can still evolve. How a token is organized within a collection, where it’s created, who collectively governs the network, and what future states may unfold, gives each NFT its own life cycle.

Before creation, NFTs are often organized into collections, regardless of how many tokens are minted. A blend of “token” and “economics”, tokenomics determine issuance, supply, and any mechanisms that will either reduce supply or incentivize holding. Since NFTs are immutable, a collection’s tokenomics should be carefully considered. Testnets allow for experimentation in the development stage, which aids in NFT development. While coding smart contracts directly into a blockchain is the most powerful, cost efficient, and flexible way to create NFTs, platforms like OpenSea, Thirdweb, Crossmint, and Manifold aspire to make NFT management more accessible.

To begin life on a blockchain, an NFT first needs to be minted. During this creation process, smart contract functions are executed. This assigns token IDs from the collection and may perform metadata randomization before broadcasting the ownership record over the blockchain. Mints can be public, or limited to allow lists. To reduce the potential for scams, allow lists (also called “whitelists”) collect, prioritize, and manage interest using wallet addresses from potential NFT buyers. The release of NFTs within a collection can be done all at once, scheduled over time, or perpetually open. Highly anticipated collections can cause congestion on a network, creating gas wars in which buyers can push their transactions to the front of the queue by paying higher fees.

Once minted, NFTs can be exchanged in many ways. They can be bought and sold using cryptocurrency on marketplaces like OpenSea, Blur, SuperRare, or Foundation. Marketplaces provide key infrastructure which, in addition to facilitating trade, aids in collection discovery. They can also be transferred via an airdrop, which is when NFTs are gifted into a digital wallet. Airdrops provide a creative way to share assets with each other, with senders usually paying any gas fee.

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Pay close attention when using your wallet to complete signature requests. Signing a malicious smart contract can grant token approvals for all assets in a wallet. One common hack is packaged in NFT airdrops. If you receive an unknown NFT in your wallet, do not interact, transfer, or sell it as these actions can activate unwanted access. There are many stories of epic heists, so do your research and stay vigilant.

Once acquired, you’ll receive the NFT at your wallet address. Despite the token appearing in a wallet, it’s not really in your wallet; your wallet is like a web browser for the blockchain. Using a wallet address, you can see NFTs you own, and due to the transparent nature of public blockchains, you can also see other people’s collections.

While creator compensation and basic commerce has been the most publicized aspects of NFTs, with over $40B in transaction volume in 2021 alone, there are also ways to extend the life cycle of NFTs. Concepts like “burning”, and “staking” create extensions to what an NFT can become. When an NFT is burned, it’s sent to a null address for which nobody has the private key. Burned tokens are effectively removed from circulation and reduce the initial collection’s supply. This action can support the tokenomics of a project, while also adding depth to ownership within an NFT collection. Another concept is staking, or the act of locking an NFT in a specialized contract that prohibits transactions. Staking also reduces the circulating supply, but does not permanently reduce the size of the collection, as an owner can reclaim the token. Staking is often used as a way to incentivize holding for long periods of time and often yields rewards.

Alright, we’ve covered what an NFT is and how they work. Let’s pour into some current applications of NFTs, such as digital art, curating collectables, celebrating ownership within video games, administering membership benefits, managing events, enhancing security, and even raising financial capital for a new business.

To date, digital art has emerged as the most common use of NFTs. Artists can now monetize their work, push creative boundaries, and even earn royalties on secondary sales. Platform take rates have thankfully plummeted, which further extends the runway for artists to stay creative. Art buyers also appreciate fewer intermediaries, verifiable provenance, and new ways to connect with the creator. Along with access to art, NFTs can also help identify authenticity alongside the dynamic rise of machine learning and generative AI.

Collectables are also being enhanced with NFTs. Sports memorabilia, trading cards, toys, clothing, accessories, or classic cars can now be supplemented with digital assets that go further than a linked QR code. NFTs can add discoverability, more ways to socially trade with fellow collectors, and have enabled creative ways to digitally interact with physical items. For example, imagine buying a fresh pair of shoes that come with an NFT. Whether you decide to wear this prized possession IRL or not, using the connected NFT, your upgraded character can now rock these collectable kicks in your favorite video game. This is just an example, but the convergence of online status and identity makes NFTs a prime way to create communities where people feel a sense of belonging.

Speaking of gaming, NFTs provide a natural fit for gamers to celebrate ownership and authority in video games. Currently, in-game items, whether consumable or cosmetic, are effectively rented by the players. If a game developer shuts down the servers, these treasured items would vanish. In a web3 world, NFTs would support more lasting ownership. A few early examples are blockchain-based games like Cryptokitties and Axie Infinity, but consider when in-game items in Minecraft, Fortnite, or Call of Duty, are NFTs that can be transferred between players and different games. Web3 is inherently permissionless and interoperable, so innovative tools and conventions need to be created to foster these harmonious initiatives. While there’s more to be done, we are seeing more trust-minimizing technologies championed by industry leaders like Yuga Labs and Polygon, who are focused on unlocking such compatibility at a fundamental level.

Beyond entertainment, NFTs offer a decentralized method to managing memberships and associated benefits. A few examples include NFTs that grant access to events with commemorative NFTs, such as POAPs, serving as artifacts to mark the moment. Like a ticket, NFT ownership can also grant access to communication platforms like Discord, decentralized autonomous organizations (“DAOs”), and commercial copyright licenses, enabling token holders to create products or services with built-in network effects. Founders can build real-time brand equity in a crowdsourced startup and established corporations like Starbucks, Lowe’s, and Reddit are inventing new ways to add value, enhance security, and deepen brand loyalty using NFTs.

If we accept that our world is becoming increasingly digitized, there’s a natural fit for NFTs to enhance products, services, and verifiable value. In the neon future, it’s not crazy to think NFTs may soon power simple assets like concert tickets, but also critical belongings such as birth certificates, college diplomas, real estate titles, and more. As web3 matures, the challenges of digital money, property, ownership, and commerce may introduce new barriers, but mainstream adoption into more advanced economic constructs can seamlessly reshape today’s barriers into tomorrow’s non-fungible future.

By Ben McDougal, ago