In the category of stuff you see in sci-fi that ends up becoming reality, I’ve recently hopped on some Discord servers discussing a platform (and various projects utilizing it) that you could describe as the early stages of The Matrix.
Except, with way less killer robots.
In a nutshell the concept involves a virtual map space of a specified size with units of land available for users to purchase and control as an NFT. Then, within that map, users would be able to use VR gear to essentially exist within this digital world and walk around that map.
They can engage with all that is built up and exists within that map, and the path between everything would correlate perfectly to as if you were viewing the map 2-dimensionally and traveling between tiles of predefined space.
Presumably that means your digital avatar could walk from a virtual Pong tournament over to a law office with an actual digital presence, where one could even engage with members of that firm that are also on the platform.
Much like physical real estate, this digital land will vary in price/value by location and proximity to other digital real estate. For instance, a unit/tile on the map might cost very little to acquire if it’s remote or not near much other developed space.
On the other hand, tiles in much busier areas with a lot of well-developed neighbors would be much more in demand (and expensive).
But the uses of this go far beyond investing in digital land to flip it.
So… what is Sandbox?
Let’s unpack their ‘About’ statement:
The Sandbox is a community-driven platform where creators can monetize voxel ASSETS and gaming experiences on the blockchain.
It seems to be a collection of a few different concepts related to the crypto space:
- Creating and exporting voxel art (as NFTs) to sell
- Making games that can be played within the virtual map (game maker software)
- Customizing a Sandbox avatar to represent you within the digital map (VR applications)
The NFT aspects of this could create entire sub-communities of their own where creators can own and trade these works.
The idea of selling advertising in a digital/VR space is also already on the horizon. This, too, seems inevitable since advertisers are always keen to put themselves where the attention is.
Some may see that as a bummer, but it could also become a form of funding projects tied to the sandbox and making more use of their digital land, so there are certainly upsides. More on that in another post.
Regulations for Monetizing The Sandbox Model
Buying digital land in the form of NFTs is relatively straightforward and thus far hasn’t seen as much friction. But in many cases in the crypto space people have pondered whether monetizing specific ownership of the map beyond what Sandbox is doing by default was feasible.
The government has some far-sweeping categories it can place activities at whim, which allows them to effectively shut down those same ideas or activities once they are categorized as something that is commonly regulated.
One simple example is where selling tokens or other methods of dividing ownership of a given space is seen as selling securities by the US government.
Selling securities, of course, is limited to traders and those generally with a given net worth.
That means the regulation excludes the average person from being involved in that way. These are exactly the sorts of frustrations driving the decentralization movement sparking so much debate.
According to Global Legal Insights (GLI), there is not yet a uniform definition of what cryptocurrency is. Some bodies refer to it as virtual currency — others as digital assets or simply digital tokens. This has muddied the legal waters a bit because precisely how we classify it determines what sort of laws and regulations affect it.
In a nutshell, critics of decentralization are quick to point out where regulation has prevented bad actors from taking advantage of the system worse than they already do. Any unregulated system that involves money, they say, is risky and scary to the degree that we should all avoid it. (Or discourage it.)
Proponents of decentralization tend instead to look at the governmental bloat, the bureaucracy, the potential ways those powers are abused, or never seem to favor the typical person.
Crypto Under The Biden Administration
For this bit we look at the view of crypto in a broader sense and not simply with a digital sandbox.
According to Coindesk, as of June 2021 the Federal Deposit Insurance Corporation has officially requested clarification from banks about how they are using digital assets and what federal bodies could to do assist.
This trend evidently extends into looking backward and re-assessing interpretations made under the Trump administration. Acting Comptroller of Currency, Michael Hsu, has apparently ordered his staff to make this step.
Shortly thereafter, the Department of Treasury published a tax plan with an entirely new section in it about crypto. While they admitted significant challenges in detecting when crypto is used for “illicit activities” they’ve thus far simply advised that any transactions over $10,000 are reported.
There’s been a lot of talk around how banks will utilize crypto.
In a way, it seems like their adopting it will ease the government’s acceptance of say Bitcoin or Ethereum as official currencies. Some in the space might call that a win from a regulation standpoint given what being a “real” currency would mean.
For others, I suspect, banks sniffing around the crypto space is frustrating since the initial beauty of cryptocurrency was how it could avoid the traditional middlemen (banks). Those very middlemen worming their way into it might, to that type of viewer, feel like a real step backward.
Ramifications for U.S.-Based Crypto Projects
A close friend of mine whose finger is much more firmly on the pulse in these matters has expressed concern a few times about how much more heavily the U.S. government is regulating crypto-related concepts than other countries.
The result is that people in other countries are often reluctant to work with U.S. citizens interested in the projects. Their fear is that by involving an American their whole project could then become subject to interference by U.S. regulations.
It’s an understandable concern given the nature of most decentralized projects.
And with El Salvador recently officially recognizing Bitcoin as legal currency — the first country to do so — it feels like the beginning of a surge of adoption elsewhere in the world. People all over Reddit are theorizing about next steps and what this could mean for other countries deciding to follow suit, and what that would mean for the whole industry.
One interesting counterpoint about El Salvador’s ruling is that evidently Bitcoin being a currency means that all El Salvadorian businesses must accept it as legal tender unless they are unable to provide the tech to make the transaction.
That might be an uncomfortable jolt for some businesses (who weren’t interested in it) now feeling obligated to figure out how crypto wallets work, and how a new chapter of business taxes work. (Unless businesses taxes on Bitcoin are directly equivalent to cash.)