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Twitch cofounder Justin Kan is back with NFT gaming marketplace Fractal

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Twitch cofounder Justin Kan has a new startup called Fractal that will create a marketplace for gaming nonfungible tokens (NFTs).

Kan said in an interview with GamesBeat that the company will focus on making the ideal marketplace for selling game NFTs, which use the transparency and security of the digital ledger of blockchain to authenticate unique digital items.

NFTs have taken off this year as a new way to monetize games, and we have seen a boom in fundraising for the opportunity with startups like Mythical Games, Dapper Labs, Sky Mavis, Animoca Brands, and others.

If you look at Google Trends, you’ll see that NFTs started picking up in February and skyrocketed after related NFT sales like digital art and NBA Top Shot took off. Dapper Labs has now seen sales and resales of those NFTs top $780 million. In March, an NFT digital collage by the artist Beeple sold at Christie’s for $69.3 million. NFT sales hit $1.2 billion in the first quarter, $1.3 billion in the second quarter, and a whopping $10.7 billion in the third quarter as games such as Axie Infinity took off.

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NFT game challenges

Above: Justin Kan is president of Fractal, a game NFT marketplace.

Image Credit: Fractal

But the road to riches won’t be easy. Big companies have hesitated on the sidelines as they await rulings from regulators. Ubisoft launched its Quartz NFT platform last week with a giveaway of NFT items for longtime players of Ghost Recon Breakpoint.

But it took down its video after facing scathing replies from gamers. Most objections fall along the lines of the environmental impact of cryptocurrency mining, scams and money laundering among the crypto startups, and the focus on get-rich schemes instead of fun games. Game industry leaders from Phil Spencer have criticized NFT games for being more exploitative than entertaining.

Yet the NFT advocates like Kan believe that blockchain and Web 3 can liberate gamers and game companies from being dependent on platform owners, which take a 30% cut for things like marketplaces and distribution. Sidechains can speed up the pace of transactions for slow chains such as Ethereum, and they can also reduce the environmental impact. (Ubisoft said the Tezos chain could reduce the environmental impact to a millionth of the impact of Bitcoin transactions.) On top of that, gamers can own their gear permanently and resell it for value when they no longer need it. This has spurred a whole “play-to-earn” movement that could disrupt the existing models for games. And part of that disruption is the emergence of new marketplaces like Fractal, Kan said.

As for the scams, Kan said, “We’re not interested in supporting scams or people who are never going to deliver projects. There are lots of entrants, but our goal is to work with the best gaming companies out there. And there are more legit companies now who have a history of making games that are coming to this industry. And we want to work with them.”

Kan believes that proper game design will result in NFT games that are fair for both developers and players.

Kan said that environmental impact is important to him, and he is making a large donation for climate causes, as he’s a “Burning Man nerd.” He’s using the Solana blockchain ecosystem, which has focused on low-cost (under one cent) and low-impact transactions.

“To me, that’s really important,” Kan said.

The marketplace

Fractal is a new game NFT marketplace.

Above: Fractal is a new game NFT marketplace.

Image Credit: Fractal

Kan said the company has partnerships with gaming studios that will be dropping new NFTs on the platform in the coming weeks. Players will be able to buy gaming NFTs directly from Fractal gaming partners as well as discover, buy and sell gaming NFTs from other players.

“Whether its starships or magical swords, or characters that are playable in NFT games, we want to be a primary and secondary marketplace,” Kan said. “Our goal is to like be that primary and secondary marketplace for all the endgame things that developers sell before or after they launch a game.”

Many gaming companies today are already generating the bulk of their revenue from selling digital goods that have in-game value to players and Fractal is the first marketplace to focus on gaming NFTs.

“Gaming is going through a transition, and it’s about how the next wave of games get funded and participate with their communities,” Kan said. “With NFTs, people are seeing that they can create a broader reach by giving up a little bit of the power to the players in the ecosystem.”

Game companies have found a new kind of Kickstarter with the tokens they’re launching, sometimes ahead of when the game is ready and sometimes after it has launched.

“It’s a way to reward the people who are participating early on,” Kan said. “And it can also pre-fund the game. Existing gaming companies are really excited about that future, and for the first time since Twitch, I was excited to be in the game industry again. We decided to build an NFT gaming marketplace to empower this kind of new world.”

Project verification will be an important task, as no one wants to see a company announce a 10,000 item limited edition NFT drop and then discover 70,000 fake items for sale in a market. Discoverability for new projects is also important. And crafting the right kind of NFTs also matters.

“I’m not particularly that interested in creating a marketplace where people are gambling on prices going up and speculating on NFTs,” Kan said. “I think what’s really interesting is how NFTs interact with the world and how people build experiences on top of NFTs that can go beyond the game. Maybe you can craft an awesome sword and lend it out like someone renting a Ferrari for a birthday.”

Ultimately, Kan sees NFTs as an onramp to the metaverse, the universe of virtual worlds that are all interconnected, like in novels such as Snow Crash and Ready Player One. (We’re doing our second GamesBeat metaverse online conference on January 26-27). That metaverse will get stronger when they are social channels like Discord and commerce opportunities as well through NFTs.

The company

Above: The Fractal logo

Image Credit: Fractal

Fractal’s leaders include serial entrepreneurs in gaming and ecommerce: Kan, president; Robin Chan, head of business development, and founder of XPD Media which was acquired by Zynga; David Wurtz, chief product officer, cofounder of Google Drive and an adviser to Shopify; and Mike Angell, chief technology officer, a 20-year ecommerce veteran who was previously at Fast and Shopify.

Fractal’s first partners include some of the most innovative games that have already been working on blockchain integrations. The exclusive NFTs they will be dropping on Fractal will be items that will give players abilities and experiences within their upcoming games. Fractal is focused on the crypto gaming companies that are building fun and engaging games with replayability.

“Gaming companies want to partner with us because we are industry veterans who are building for their needs.” said Chan, in a statement. “We’ve seen an influx of traditional developers who want to build a crypto experience, and we are excited to support them.”

Those interested in getting early access to Fractal can join its Discord here.

Competition

Above: Browsing through Fractal.

Image Credit: Fractal

Rivals include OpenSea, which has become the largest NFT marketplace with $16 billion worth of the total $27 billion in NFT transactions this year. But Kan believes that the market will eventually segment into vertical marketplaces, and he believes gaming should have one of its own.

“If you look at Steam, there are marketplaces for software, but the focus on gaming has existed at the same time,” Kan said. “I think the same thing is going to happen with game assets. You’ll be able to showcase your NFTs in a different way.”

It is similar to the way Twitch evolved. At first, Kan’s Justin.tv was a livestreaming site for anything. But the thing that took off was gaming livestreams, and the company morphed itself into Twitch.

“There was a specific community that created its own culture,” Kan said.

Origins

After Amazon bought Twitch for $970 million in 2014, Kan has been investing in crypto since 2013, and has been an adviser to decentralized projects like Theta and Audius. And he’s returning to his roots.

“When I was growing up and playing games, I played an absurd amount of Ultima Online and World of Warcraft,” he said.

Richard Garriot’s massively multiplayer online role-playing game gathered thousands of players together in a virtual, persistent fantasy world. You could team up with players to kill monsters and collect loot. But if you died in the game, your hard-earned goods could be looted off your corpse by random passersby. It was brutal, unforgiving, but Kan loved the high stakes.

Players could keep their digital treasures in their persistent homes, but the real estate was scarce and eventually, houses started selling on eBay for hundreds of real dollars.

“Real-world value was ascribed to these digital items,” Kan said.

A real economy started up, and some players began farming and selling in-game currency online. To anyone not playing the game, this sounded ridiculous: how could something inside a video game be worth real dollars? The idea that digital goods could have monetary value wasn’t yet established, Kan said in a blog post.

Now, it isn’t weird to make your entire living online now, making games on Roblox, trading cryptocurrency, or entertaining the masses as a Twitch streamer, Kan wrote. Game companies have embraced digital goods: in its first two years Fortnite made $9 billion in revenue primarily from selling skins. The business model of gaming has shifted away from game sales revenue to selling items and skins that have durable in-game value to players.

Kan’s own investment company backed Syn City in the crypto space, and that gave him insight into blockchain projects.

The next step

Above: Fractal is self-funded.

Image Credit: Fractal

Putting these durable in-game assets on a blockchain is the next step in gaming, Kan wrote. While players have recognized the value of items in centralized games for a long time, when game companies create lasting durability beyond their games by making their in-game assets NFTs on a blockchain, tremendous amounts of value will be unlocked for players and the gaming ecosystems themselves, he said.

For players, this will mean they can truly own the value of their in-game work: items they own will be buyable, tradeable or sellable. For game companies, their in-game assets become persistent platforms on top of which other developers will be able to build experiences, Kan said.

Kan said that his previous startup, the legal firm Atrium, raised too much money too early and it became a problem. This time, the founders are putting their own money into the company and they’re focusing on getting a good product out the door first. The firm remains small with a handful of people.

Web 3 and decentralization

A glimpse at Fractal

Above: A glimpse at Fractal

Image Credit: Fractal

“The building of the decentralized Web 3 feels like the building of the web years ago,” Kan said. “It felt very exciting building Justin.TV and then Twitch, like anything was possible. It matured and became a lot of big companies. I think with Web 3 we’re back to people creating new experiences that are exciting.”

Decentralization will put ownership in the hands of people that make your marketplace, Kan said.

“I think it is a really powerful idea,” he said. “These big companies own the entire experience, and they’re able to rent the digital items for a pretty substantial fee. There is a lot of control they exert over the marketplace and a lot of fees they can charge customers. The way the web is supposed to work is communal ownership and a free exchange of ideas. That’s the future I want to live in.”

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8 Ways You Can Save Yourself and Others From Being Scammed

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Opinions expressed by Entrepreneur contributors are their own.

Statistics on the number of scam websites that litter the internet are disturbing. During 2020, Google registered more than 2 million phishing websites alone. That means more than 5,000 new phishing sites popped up every day — not to mention the ones that avoided Google’s detection. In 2021, the U.S. Federal Bureau of Investigation (FBI) reported nearly $7 billion in losses from cybercrime that is perpetrated through these sites.

What exactly are scam websites? Scam websites refer to any illegitimate website that is used to deceive users into fraud or malicious attacks. Many scammers operate these fake websites and will download viruses onto your computer or steal passwords or other personal information.

Reporting these sites as they are encountered is an important part of fighting back. In other words, if you see something, say something. Keeping quiet, even if you avoid falling prey, allows the scammers to aim at another target.

Perhaps you’ve received a suspicious link in an email? Or maybe a strange text message that you haven’t clicked on. Fortunately, there are many organizations out there that have launched efforts aimed at reducing the threat that they pose. In general, these organizations put scam websites on the radar by collecting and sharing information about them. In some cases, they prompt an investigation into the scammers behind the sites.

Related: Learn How to Protect Your Business From Cybercrime

It’s free to report a suspicious website you’ve encountered, and it takes just a minute. Here are eight ways you can report a suspected scam website to stop cyber criminals and protect yourself and others online.

1. The Internet Crime Complaint Center

The IC3, as it is known, is an office of the FBI that receives complaints from those who have been the victims of internet-related crime. The IC3 defines the internet crimes that it addresses to include illegal activity involving websites. Complaints filed with the IC3 are reviewed and researched by trained FBI analysts.

2. Cybersecurity and Infrastructure Security Agency

CISA, which is an agency of the U.S. Department of Homeland Security, targets a wide range of malicious cyber activity. It specifically requests reports on phishing activity utilizing fraudulent websites. Information provided to CISA is shared with the Anti-Phishing Working Group, a non-profit focused on reducing the impact of phishing-related fraud around the world.

3. econsumer.gov

The econsumer.gov site, run by the International Consumer Protection and Enforcement Network, is for reporting international scams. It is supported by consumer protection agencies and related offices in more than 65 countries. A secure version of their site is used by law enforcement agencies to share info on scams.

4. Google Safe Browsing

While Google does not have a mechanism for reporting all varieties of website scams, there is a form for reporting sites that are suspected of being used to carry out phishing. Reports made via the form are managed by Google’s Safe Browsing team. Google’s Transparency Report provides information on the sites that it has determined to be “currently dangerous to visit.”

Related: Is That Instagram Email a Phishing Attack? Now You Can Find Out.

5. PhishTank

This service was founded by Cisco Talos Intelligence Group to “pour sunshine on some of the dark alleys of the Internet.” Phishtank includes an ever-growing list of URLs reported as being involved in phishing scams. To date, it has received more than 7.5 million reports of potential phishing sites. It says that more than 100,000 of the sites are still online.

Related: 6 Ways Better Business Bureau Accreditation Can Boost Your Business

6. Antivirus Apps

Antivirus providers such as Norton, Kaspersky, and McAfee have forms that can be used to identify pages that users feel should be blocked. Scam sites would definitely fall under that category. With some antivirus platforms, reporting forms can only be accessed by registered users. Norton’s is open to anyone.

7. Web host

There is a chance that the DNS service hosting the scam site will take action to shut it down. There are a variety of online resources that can help you to find the DNS of a particular site. Once you identify it, send a message to their customer service reporting the site in question and the experience that you had.

8. Share your experience on social media

This is actually more like sounding an alarm than filing a report, but it might protect one of your connections who stumbles upon the same site or is targeted by the same type of scam. At the very least, it could draw attention to the fact that scam sites affect real people. A post on Facebook about a close call you had with a scam might better equip your network to avoid any dangerous entanglements. If it does, they’ll thank you.

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LastPass hacked, OpenAI opens access to ChatGPT, and Kanye gets suspended from Twitter (again) • TechCrunch

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Aaaaand we’re back! With our Thanksgiving mini-hiatus behind us, it’s time for another edition of Week in Review — the newsletter where we quickly wrap up the most read TechCrunch stories from the past seven(ish) days. No matter how busy you are, it should give you a pretty good idea of what people were talking about in tech this week.

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Instafest goes instaviral: You’ve probably been to a great music festival before. But have you been to one made just for you? Probably not. Instafest, a web app that went super viral this week, helps you daydream about what that festival might look like. Sign in with your Spotify credentials and it’ll generate a promo poster for a pretend festival based on your listening habits.

LastPass breached (again): “Password manager LastPass said it’s investigating a security incident after its systems were compromised for the second time this year,” writes Zack Whittaker. Investigations are still underway, which unfortunately means it’s not super clear what (and whose) data might’ve been accessed.

ChatGPT opens up: This week, OpenAI widely opened up access to ChatGPT, which lets you interact with their new language-generation AI through a simple chat-style interface. In other words, it lets you generate (sometimes scarily well-written) passages of text by chatting with a robot. Darrell used it to instantly write the Pokémon cheat sheet he’s always wanted.

AWS re:Invents: This week, Amazon Web Services hosted its annual re:Invent conference, where the company shows off what’s next for the cloud computing platform that powers a massive chunk of the internet. This year’s highlights? A low-code tool for serverless apps, a pledge to give AWS customers control over where in the world their data is stored (to help navigate increasingly complicated government policies), and a tool to run “city-sized simulations” in the cloud.

Twitter suspends Kanye (again): “Elon Musk has suspended Kanye West’s (aka Ye) Twitter account after the latter posted antisemitic tweets and violated the platform’s rules,” writes Ivan Mehta.

Spotify Wraps it up: Each year in December, Spotify ships “Wrapped” — an interactive feature that takes your Spotify listening data for the year and presents it in a super visual way. This year it’s got the straightforward stuff like how many minutes you streamed, but it’s also branching out with ideas like “listening personalities” — a Myers-Briggs-inspired system that puts each user into one of 16 camps, like “the Adventurer” or “the Replayer.”

DoorDash layoffs: I was hoping to go a week without a layoffs story cracking the list. Alas, DoorDash confirmed this week that it’s laying off 1,250 people, with CEO Tony Xu explaining that they hired too quickly during the pandemic.

Salesforce co-CEO steps down: “In one week last December, [Bret Taylor] was named board chair at Twitter and co-CEO at Salesforce,” writes Ron Miller. “One year later, he doesn’t have either job.” Taylor says he has “decided to return to [his] entrepreneurial roots.”

audio roundup

I expected things to be a little quiet in TC Podcast land last week because of the holiday, but we somehow still had great shows! Ron Miller and Rita Liao joined Darrell Etherington on The TechCrunch Podcast to talk about the departure of Salesforce’s co-CEO and China’s “great wall of porn”; Team Chain Reaction shared an interview with Nikil Viswanathan, CEO of web3 development platform Alchemy; and the ever-lovely Equity crew talked about everything from Sam Bankman-Fried’s wild interview at DealBook to why all three of the co-founders at financing startup Pipe stepped down simultaneously.

TechCrunch+

What lies behind the TC+ members-only paywall? Here’s what TC+ members were reading most this week:

Lessons for raising $10M without giving up a board seat: Reclaim.ai has raised $10 million over the last two years, all “without giving up a single board seat.” How? Reclaim.ai co-founder Henry Shapiro shares his insights.

Consultants are the new nontraditional VC: “Why are so many consultant-led venture capital funds launching now?” asks Rebecca Szkutak.

Fundraising in times of greater VC scrutiny: “Founders may be discouraged in this environment, but they need to remember that they have ‘currency,’ too,” writes DocSend co-founder and former CEO Russ Heddleston.

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Building global, scalable metaverse applications

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Previously we talked about the trillion-dollar infrastructure opportunity that comes with building the metaverse — and it is indeed very large. But what about the applications that will run on top of this new infrastructure?

Metaverse applications will be very different from the traditional web or mobile apps that we are used to today. For one, they will be much more immersive and interactive, blurring the lines between the virtual and physical worlds. And because of the distributed nature of the metaverse, they will also need to be able to scale globally — something that has never been done before at this level.

In this article, we will take a developer’s perspective and explore what it will take to build global, scalable metaverse applications.

As you are aware, the metaverse will work very differently from the web or mobile apps we have today. For one, it is distributed, meaning there is no central server that controls everything. This has a number of implications for developers:

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  • They will need to be able to deal with data that is spread out across many different servers (or “nodes”) in a decentralized manner.
  • They will need to be able to deal with users that are also spread out across many different servers.
  • They will need to be able to deal with the fact that each user may have a different experience of the metaverse, based on their location and the devices they are using due to the fact not everyone has the same tech setup, and this plays a pivotal role in how the metaverse is experienced by each user.

These challenges are not insurmountable, but they do require a different way of thinking about application development. Let’s take a closer look at each one.

Data control and manipulation

In a traditional web or mobile app, all the data is stored on a central server. This makes it easy for developers to query and manipulate that data because everything is in one place.

In a distributed metaverse, however, data is spread out across many different servers. This means that developers will need to find new ways to query and manipulate data that is not centrally located.

One way to do this is through the blockchain itself. This distributed ledger, as you know, is spread out across many different servers and allows developers to query and manipulate data in a decentralized manner.

Another way to deal with the challenge of data is through what is known as “content delivery networks” (CDNs). These are networks of servers that are designed to deliver content to users in a fast and efficient manner.

CDNs are often used to deliver web content, but they can also be used to deliver metaverse content. This is because CDNs are designed to deal with large amounts of data that need to be delivered quickly and efficiently — something that is essential for metaverse applications.

Users and devices

Another challenge that developers will need to face is the fact that users and devices are also spread out across many different servers. This means that developers will need to find ways to deliver content to users in a way that is efficient and effective.

One way to do this is through the use of “mirrors.” Mirrors are copies of the content that are stored on different servers. When a user requests content, they are redirected to the nearest mirror, which helps to improve performance and reduce latency.

When a user’s device is not able to connect to the server that is hosting the content, another way to deliver content is through “proxies.” Proxies are servers that act on behalf of the user’s device and fetch the content from the server that is hosting it.

This can be done in a number of ways, but one common way is through the use of a “reverse proxy.” In this case, the proxy server is located between the user’s device and the server that is hosting the content. The proxy fetches the content from the server and then delivers it to the user’s device.

Location and devices

As we mentioned before, each user’s experience of the metaverse will be different based on their location and the devices they are using. This is because not everyone has the same tech setup, and this plays a pivotal role in how the metaverse is experienced by each user.

For example, someone who is using a virtual reality headset will have a completely different experience than someone who is just using a desktop computer. And someone who is located in Europe will have a different experience than someone who is located in Asia.

Though it may not be obvious why geographical location would play a part in something that is meant to be boundless, think of it this way. The internet is a physical infrastructure that is spread out across the world. And although the metaverse is not bound by the same physical limitations, it still relies on this infrastructure to function.

This means that developers will need to take into account the different geographical locations of their users and devices and design their applications accordingly. They will need to be able to deliver content quickly and efficiently to users all over the world, regardless of their location.

Different geographical locations also have different laws and regulations. This is something that developers will need to be aware of when designing applications for the metaverse. They will need to make sure that their applications are compliant with all applicable laws and regulations.

Application development

Now that we’ve looked at some of the challenges that developers will need to face, let’s take a look at how they can develop metaverse applications. Since the metaverse is virtual, the type of development that is required is different from traditional application development.

The first thing that developers will need to do is to create a “space”. A space is a virtual environment that is used to host applications.

Spaces are created using a variety of different tools, but the most popular tool currently is Unity, a game engine used to create 3D environments.

Once a space has been created, developers will need to populate it with content. This content can be anything from 3D models to audio files.

The next step is to publish the space. This means that the space will be made available to other users, who will be able to access the space through a variety of different devices, including desktop computers, laptops, tablets, and smartphones.

Finally, developers will need to promote their space. This means that they will need to market their space to users.

Getting applications to scale

Since web 3.0 is decentralized, scalability is usually the biggest challenge because traditional servers are almost impossible to use. IPFS is one solution that can help with this problem.

IPFS is a distributed file system used to store and share files. IPFS is similar to BitTorrent, but it is designed to be used for file storage rather than file sharing.

IPFS is a peer-to-peer system, which means that there is no central server. This makes IPFS very scalable because there is no single point of failure.

To use IPFS, developers will need to install it on their computer and add their space to the network. Then, other users will be able to access it.

The bottom line on building global, scalable metaverse applications

To finish off, the technology to build scalable metaverse applications already exists; but a lot of creativity is still required to make it all work together in a user-friendly way. The key is to keep the following concepts in mind:

  • The metaverse is global and decentralized
  • Users will access the metaverse through a variety of devices
  • Location and device management are important
  • Application development is different from traditional development
  • Scalability is a challenge, but IPFS can help

Clearly, we can’t have an article series about building the metaverse without discussing NFTs. In fact, these might be the key to making a global, decentralized, metaverse work. In our next article, we will explore how NFTs can be used in the metaverse.

By keeping these concepts in mind, developers will be able to create metaverse applications that are both user-friendly and scalable.

Daniel Saito is CEO and cofounder of StrongNode

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