Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Tag: ethereum

  • The real smart city is going to be a crypto city

    Vitalik Buterin — who is best known as the cofounder of Ethereum — recently penned this post on his blog where he argues that “crypto cities broadly are an idea whose time has come.” (Credit to Shamez Virani for sending the post to me this morning.) There has been a lot of discussion over the years about the rise of smart cities. I for one am not really sure what that means besides the fact that it sounds good and it likely involves a bunch of tech and data collection. But maybe crypto can help.

    What Vitalik argues in his post is that we are now at a point in time where blockchain technologies have the opportunity to do two things for cities. One, we can take existing systems and processes and use blockchains to make them more “trusted, transparent, and verifiable.” That would be a very good thing. But the more interesting one is number two. We have the opportunity to use blockchains to create radically new forms of asset ownership (land and other scarce assets) and municipal governance.

    One specific example is that of a “city coin”, which cities like Miami are already experimenting with. Supposedly they are one of the first, which of course aligns with Mayor Suarez’s vision to position Miami as a preeminent tech and crypto hub. Though as Vitalik points out in his post, it’s important to maintain some optionality, especially since we are still very much in the early innings of this new frontier. (This recent episode on the Tim Ferriss Show had a great analogy in saying that the anthem at the beginning of the game isn’t even over yet.)

    So how might a “city coin” living on a blockchain work?

    Well let’s imagine that there are incentives in place for all of us who live in Toronto to own the Toronto coin (there’s still time to come up with a better name). You need it to pay your property taxes, you need it to pay for parking, and you need it to vote in the next election, among many other things. So there’s an incentive to buy and hold it if you’re a resident of this great city, but there is far less incentive to hold it if you don’t live here. (Maybe you own a bit of it because you’re a frequent visitor and/or your relatives live here.)

    One of the interesting things about something like this is that it would immediately create economic alignment. Now all of a sudden, everyone who lives in Toronto and owns Toronto coin would have a vested interest in seeing Toronto thrive. At the very least they would want to see the coin hold its value and ideally they would hope to see it appreciate.

    At the same time, the Toronto coin could be used for all sorts of governance matters. Take for example, land use and zoning decisions. What if we set things up such that these decisions weren’t made by the people who show up to community meetings in the basement of their local church but that they were instead made by everyone who holds the Toronto coin? i.e. The entire city, all of whom are, in a way, equity holders.

    In theory we could do this kind of voting today. However, part of the problem is that the economic alignment isn’t there without something like a Toronto coin. Right now a big part of the economic incentive rests with homeownership. If I own a home and a new development is proposed next to me, I am incentivized to do whatever it takes to selfishly maximize my own individual outcomes. And if that means no development and no more homes for people, then so be it.

    But what if we all had part of our net worth tied up in the Toronto coin? And what if when housing supply did not meet housing demand, the value of our coins dropped because it meant fewer residents (less demand for Toronto coin) and more people voting with their feet and moving to other geographies (more demand for some other coin)? This is one of the things about the crypto space. It turns everyone into evangelists because there are now strong economic incentives to be that way.

    Who knows if this is the way that things will actually play out. But it is part of the promise of crypto and it is not some pipe dream. It is already starting to take hold around the world and in the US in places like Wyoming and Colorado. For more on this topic, make sure to check out Vitalik’s full blog post.

  • NFTs and real estate

    I have started using my NFT collection as a rotating face on my Apple Watch. The one you see below is a Cool Bean, but I have many others in the gallery. Lately, I have been gravitating towards NFTs on the Solana blockchain because of how fast and cheap it is to transact. Though I am still much longer with ETH.

    This is all pretty geeky stuff, but it reminded me just how early we are when it comes to web3. NFT art has exploded over the last year, but the broader ecosystem is still getting built out. We are all going to want mediums in which to display and experience this new form of art. And as soon as that happens, I suspect they won’t be thought of as “just JPEGs” anymore.

    (One of the nicest digital art displays that I have seen is the MONO X7. It’s currently available for pre-order but I haven’t yet pulled the trigger.)

    On a related note, I follow a human on Twitter who goes by 6529, because that is the Cryptopunk number that she/he owns. 6529 is incredibly bullish on crypto and NFTs, and tends to write long and insightful threads about it. One of the most recent ones is about real estate and I think that many of you will find it a worthwhile read.

    What I particularly like about it is that it reminds us that so much of what we consider to be normal and the status quo is actually just a construct that people before us created. Usually it’s not perfect and there are many inherent flaws, but it’s the best that could be done at the time. That or it just worked.

    And because it’s the way it’s been “always done”, it just recedes into the background and most of us don’t give it much thought. Of course, so much of entrepreneurship is about questioning the status quo and doing things differently. Why this way? Could it be better? And it’s precisely during these moments of change where lots of value is created.

  • From free CDs to a decentralized internet

    This is a great Twitter thread by Chris Dixon talking about why Web 3 — the next major iteration of the internet — is kind of a big deal. In it, Dixon refers to Web 1 as the period from about 1990 to 2005. This is the period of time that started out with CompuServe and AOL sending us all free CDs in the mail and most of us using a dial-up modem to access the internet. Web 2 was the period from about 2005 to 2020. It is the iteration of the internet that gave birth to social media as most of us know it today. If you subscribe to this timeline, then we are in year one of what’s next. Maybe it’ll also run for another 15 years or maybe it won’t. But either way, getting in on the ground floor is usually a pretty valuable thing. When Dixon tweets, I listen.

  • The capital of Ethereum

    Few people in Toronto seem to be talking about the important role that this city has played and is playing when it comes to cryptocurrencies (specifically Ethereum). And if you believe, as I do, that Ethereum and other blockchain technologies have the ability to form the backbone for an entirely new kind of world, then this is kind of a big deal.

    The Financial Times recently published this article about “Wall Street’s crypto whisperer.” It is about a guy named Joseph Lubin who is the founder of a crypto company called ConsenSys and previously the co-founder of Ethereum. Lubin is from Toronto.

    If you read the article, you’ll see that Lubin is a pretty bright guy (and now a billionaire with his crypto assets). Born in Toronto, he ended up going to Princeton to study computer science. He worked on Wall Street for a bit (hence the whisperer moniker), but also did a bunch of other interesting stuff, including moving to Jamaica with a girlfriend and working on music production.

    In 2013, he was back in Toronto and went to a Bitcoin meetup in the city. The article says it was in a downtown warehouse (which makes it sound pretty cool and underground). And at this downtown warehouse meetup, he met a guy (actually a teenager) named Vitalik Buterin. Vitalik had just written a white paper on what would ultimately become Ethereum and he gave Lubin a copy. Lubin was so “blown away” when he read it that he decided to join the movement.

    The two (and presumably others) would then go on to live together in shared houses in Toronto, Miami, and Zug (Switzerland), and work on this new smart contract technology. Today, Ethereum has a market cap of nearly $400 billion (as of September 12, 2021).

    Even if you ignore for a second that we’re talking about crypto technologies, this is still a fascinating city building story. It is fascinating because it shows the value of in-person urban interactions (again, the two allegedly connected at a meetup in a downtown warehouse). And it is fascinating because the Toronto braintrust has been instrumental in advancing a technology that could arguably end up powering not only the future of the internet but perhaps the world.

    At the same time, it strikes me that we need to be much better at both celebrating and encouraging these kinds of new ideas locally. Are we out in the world telling this story to the best of our abilities? Have we properly positioned Toronto as one of the most important places for cryptocurrencies and innovation in general? Mayor Suarez of Miami has been a great promoter of his city in this regard.

    “Innovation” isn’t usually neat and tidy. It happens on the fringe and it is often not obvious at the outset. Imagine what an Ethereum pitch would have sounded like back in 2013. But this is how new ideas start. And Toronto has proven to be full of them.

    Photo by Narciso Arellano on Unsplash

  • Optimistic and excited

    With seemingly so much happening in the world these days — everything from COVID to climate change — it is perhaps easy to feel a little discouraged about the current state of affairs. But I am an optimist. And as I mentioned on Twitter a few weeks ago, I haven’t been this excited about the future of tech and the internet in a long time.

    We are seeing the auto industry quickly transition to electric vehicles (though, in my opinion, not driving at all is still better for our cities than driving something that is electric). Norway has created the world’s first ever zero emission, autonomous cargo ship. And LIDAR vision systems are looking pretty promising as one of the technologies that will ultimately power fully autonomous vehicles.

    I believe in the resiliency of cities and, as I have been arguing on this blog all throughout COVID, I think the claims about the demise of our cities have been greatly exaggerated. In fact, I think this pandemic has forced us rethink a lot of things about our urban environments, including how we allocate and use our public spaces (think patios). Some of these changes have been for the better and they’re not going to go away.

    I think the benefits of working in close proximity to others are too great to have everyone working remotely. Yes, we have learned that decentralization is possible. But there’s an overwhelming amount of research telling us that we’re all more innovative and productive when we cluster together in cities and in offices.

    I have been back in the office almost 100% of the time since it has been possible to do that. And I am much happier and more productive as a result. There’s also research suggesting that there are psychological benefits to a reasonable commute. It creates a break in our day, allows us to detach from our work, and gives us time to process stuff in our mind.

    I think things like digital fashion and augmented reality are going to have profound impact on the way we consume things. You could also argue that there’s a sustainability angle to more digital and less physical. And of course, I am excited about the transformations that I believe cryptocurrencies and blockchain technologies will continue to bring to many different industries (if not most).

    This morning I was reading a Financial Times article about cryptocurrencies in the developing world. It it perhaps no surprise that many of these countries are providing to be early adopters. People are leapfrogging over to cryptocurrencies because their existing currencies and financial systems aren’t effective enough. That has lead to adoption and penetration that looks something like this according to FT:

    There is, of course, many other things to be optimistic and excited about. But I’ll leave that for the comment section below. What are you excited about these days?

  • Digital-only clothing is seemingly taking off — is real estate next?

    https://www.instagram.com/p/CPX05kKAXPb/?utm_source=ig_web_copy_link

    Last month a digital-only version of a Gucci bag sold on gaming platform Roblox for about US$4,115. Again, digital-only. No physical bag that can be brought to brunch. At the time, this was about US$800 more than the real life version of the same Gucci bag. So why not go and buy that one instead?

    I am sure that most of you are scratching your head at this and wondering: who the hell is valuing the digital more than the physical? Could it be that status and signaling — perhaps the real purposes of a designer bag — are even more important online in the world of Roblox than in real life? In this case, it wasn’t even an NFT and so presumably there aren’t any value claims around scarcity and authenticity. (Full disclosure: I don’t know how Roblox works.)

    It’s important to keep in mind that meaningful innovation often starts out looking pretty silly to some/most. And to me, this feels like one of those times. What we are clearly seeing is a blurring between our digital and physical worlds. In fact, just today I was reading about a slew of digital-only clothing companies that sell, you know, contactless cyber fashion. One of those companies is Tribute (embedded post above).

    The way it works is that you first buy a piece of digital clothing (which can sell out just like regular clothing). You then send them a picture of yourself and the company goes and renders that piece of digital clothing onto your photo. The result is what you see above, which to me looks fairly realistic (though at the same time fantastical, which I think is part of the point).

    As out-there as this may seem, this strikes me as something that could become a very big deal. What is real on Instagram anyways? I can also see this being applied to other industries, including real estate. Maybe that is already happening.

    What do you think?

  • A fundamental and profound innovation

    I setup a new cryptocurrency wallet (offline hardware storage) this evening and then used it to buy brandondonnelly.eth using ENS (Ethereum Name Service). I don’t know what the hell I’m going to use it for, yet, but I own brandondonnelly.com. So I figured I should grab the decentralized blockchain version of my name as well. Perhaps at some point in the future I’ll be glad I did.

    I plan to buy a bunch of other .eth domains in the near future as well. The costs are similar to registering a traditional domain.

    Part of the reason why I’m doing all of this because I’ve decided that it’s time to do a deep dive and better understand the possibilities of the blockchain (a decentralized vs. centralized internet). I’ve been following for a number of years, but it has been pretty surface level. It’s time to get serious. And I must say that it felt pretty cool to use my new hardware wallet to buy something with ETH.

    Overall, things started to really click for me when I saw the digital economy that was emerging with Ethereum (applications, NFTs, DeFi, etc.). Instead of just digital money, I could now see clear use cases and demand drivers for the cryptocurrency. Again, I used ETH to buy brandondonnelly.eth, which means I first had to be an owner of ETH.

    If you’re looking to better understand the possibilities of a decentralized internet — specifically why non fungible tokens are bad ass — check out this blog post by Albert Wenger. He uses the example of the Mona Lisa sitting in the Louvre to explain why NFTs are not a fad and, instead, a “fundamental and profound innovation.”

  • Plastic surgery, LA mega-mansions, and digital NFT art

    “Price is what you pay. Value is what you get.” -Warren Buffet

    According to the Wall Street Journal, there is a real estate trend underway in Los Angeles: Celebrity plastic surgeons are piling into the business of building over-the-top spec homes. (Spec means that they are built speculatively, without a buyer in place, and sold — hopefully — upon completion.)

    What is clear from this phenomenon is that there appears to be a bit of money to be made in the world of LA plastic surgery. What is also clear is that the market value for a 21,000 square foot mega-mansion in Los Angeles is basically who-the-hell-knows:

    The rush of new contemporary spec homes built in the Los Angeles area has put downward pressure on prices. While Dr. Nassif says he’s had significant interest in his home since listing it earlier this year, Dr. Kanodia recently slashed the asking price of his home to $99 million from $180 million. Developers like Nile Niami, known widely as the king of Los Angeles spec homes, handed the keys over to his lenders on at least one project and is facing default on others, The Wall Street Journal has reported.

    Is the market price $180 million? Is it $99 million? Or is it much less? Probably depends on which way the winds are blowing that day. At this snack bracket, you’re looking to harpoon a whale and there are only so many of those. But ultimately, the market price is whatever someone is willing to pay.

    One thing that is interesting to see in some of these homes — besides hidden DJ platforms on hydraulic lifts — is that NFT art displays are now starting to get incorporated into these new builds. Assuming that digital NFT art does continue to take off, which is still TBD, there is going to be an explosion of different display/gallery solutions.

    Perhaps these mega-mansions are a leading indicator for that trend.

  • The tokenization of cities

    The web in its current state is like a city without public spaces. People can only interact in places owned by someone else, and a small group of landlords captures an oversized share of all economic activity. – Dror Poleg

    I would encourage you all to read Dror Poleg’s recent article called, “The Token Society: Cryptocurrencies will change the way we work, live, and love.” It’s an interesting read, particularly for us urbanists. Poleg starts with urban history. He first talks about how the emergence of industrial cities allowed for new divisions of labor. The example he gives is that of the quatorzième, which is a job that emerged in Parisian society sometime in the late 19th century. The job of a quatorzième was literally to be the 14th person at dinners and functions. Since a headcount of 13 was thought to be bad luck, it was important to be able to call on someone at a moment’s notice to fill this critically important role. While this probably seems silly in today’s context — I mean, who goes out anymore? — it was a real thing and it was a thing that the modern city was suddenly able to provide. Poleg goes on to thread this idea all the way through to today. Web 2.0 enabled a new sharing economy and much larger digital communities (though note the quote at the top of this post). However, we’re nowhere near done yet. Web 3.0 is going to, in his words, enable “the finalization [or tokenization] of all human activity.” Welcome to the new token society.

    P.S. I’m by no means an expert on cryptocurrencies. I have just been watching from afar for the past several years. But over the last few months, it has been hard not to pay attention to what is happening with NFTs and the Ethereum network. And I’m not just talking about the price of ETH (which is up ~56% over the last month alone). I am now of the opinion that we are seeing one of the first mainstream use cases emerge on top of a blockchain network. And yes, I believe it will also change our cities.

  • NFTs, luxury brands, and reclaiming ownership

    Here is an interesting interview discussion about NFTs (non-fungible tokens) and the world of luxury brands. It’s a conversation between Benoit Pagotto, cofounder of the NFT brand RTFKT Studios, and Ian Rogers, who is Chief Experience Officer at the blockchain startup Ledger (he was previously the Chief Digital Officer at LVMH). Below is an excerpt that stood out to me. It starts to speak to the potential of NFTs for fashion/luxury brands. Rogers also makes an interesting comparison to the music industry in that things are playing out very differently today compared to what happened back in the late 90s.

    Benoit is proving that he can basically sell a $4,900 digital good alongside a $100 physical good. Now imagine when the lightbulb goes off in Adidas’s head, that the item on adidas.com comes with a digital collectible and the item at “retailer dot com” does not. It fits with their focus way more than the internet did. The internet didn’t fit in any incumbent’s focus. It was the opposite. It was like, “Oh my God, this threatens our monopoly in some way,” right? For the music business, it was, “Wait a minute, we want to sell a $17 compact disc, not a $1 digital file.” They got dragged into that world. 

    On a related note, it was recently announced that model Emily Ratajkowski has made an NFT containing a photograph of herself standing in front of a Richard Prince print that had previously appropriated one of her photos. (Richard Prince’s artwork is known for appropriation.) So this is an exceptionally neat idea. Here she is using an NFT to try and take back some control. Basically: You took my photo and then profited from it. So now I’m going to stand in front of that image, take a new photo, and then reclaim some ownership using the blockchain. Is this the future?