🗞️ Digg wallet?

Hey frens. It’s finally Friday, but honestly, Monday felt like Friday this week.

Today we’re bringing you news about Digg and OpenSea. 

Let’s dive in.

— Kate Irwin

P.S. Let me know how you’re liking The Drop! Send me an email at [email protected].

Digg reboot will have crypto tie-in

Digg was an early 2000s news aggregator, predating Reddit, that was dismantled and sold for parts in 2012. 

The original site was founded by Kevin Rose, a man you might know better as the creator of the Moonbirds NFT collection. Yuga Labs purchased Rose’s NFT company, Proof Collective, and the Moonbird NFT brand for an undisclosed sum in 2024.

Now, more than ten years after Digg’s shuttering, both Rose and Reddit co-founder Alex Ohanian are back to reboot the news aggregator.

Rose’s crypto antecedents are clear, and Ohanian has also praised blockchain tech (plus Reddit added NFT avatars in 2022). 

So is Digg making a crypto-powered comeback?

A crypto executive familiar with crypto wallet infrastructure firm Privy told Blockworks that Digg is using the firm’s tech — and shared a screenshot showing a login screen with a privy.digg.com URL. Another screenshot of the login screen shared on X shows “protected by Privy” with Privy’s circle logo. 

Privy will be the sign-in method for Digg at launch, Digg team member Forest Anderson, who describes his title there as “Shovel Sharpener,” confirmed to Blockworks in a DM Friday morning.

Privy offers crypto-powered login solutions for platforms to help “​​developers onboard any user to web3 apps securely,” according to the company’s website. It can support both self-custodied wallets and embedded wallets. Business clients can tailor the design and login options. Crypto transactions can also be signed in-app after logging in. It’s not unlike what Sequence is also doing in the space for developers who want to add wallets for users.

A link to Digg’s community platform viewed by Blockworks lands on a “Groundbreakers” early-access page, which triggers a crypto wallet pop-up. Paying $5 via credit card gets “Groundbreakers,” or early community members, into a space where they can get updates on Digg’s development. 

Upon creating a Digg account and choosing a username, a verification code email from Digg, featuring Digg’s logo, also includes “powered by Privy” at the bottom of the email.

Digg’s use of Privy or blockchain tech more broadly had not been previously reported.

On Friday morning, after multiple tweets from X users about the Privy integration (including my own), and after I reached out to the Digg PR team for comment, Rose wrote this on the Circle community: 

“Some of you have noticed we’re using Privy for auth, it’s true! The why: Privy gives us all the modern and legacy authentication methods we'd like to support. Embedded wallets are a future-proof feature worth having there from day one. We want to preserve maximum optionality as we move into a world of trusted users, their attestations, and powering transparent AI agents. More on this later in the coming weeks as will lift more of the curtain,” Rose wrote (emphasis mine).

Usernames from the Digg Groundbreakers forum will transfer over to Digg 2.0 when it ultimately launches, the team has confirmed. 

What’s available on the Digg community platform right now is powered by Circle and isn’t actually what Digg will be in its final form. Rose shared a mockup in a post on the Circle site showing part of what the real site’s design is looking like at the moment:

That homepage features a leaderboard of top users as well as featured news, top comments, and a look at communities.

A desktop web version, as well as a Digg mobile app, are in the works. 

Gems — which take the whole digging metaphor to the next level — are an additional way the team wants to reward users for their contributions. 

“We think that followers was a great vanity metric for a long time,” Rose said in a voice note posted to the early-access forum when explaining his vision for Gems. But he called the follower metric “tired at this point,” in part because of bots.

Rose said he wants Digg users to be able to easily understand why certain types of content is being shown to them, as well.

Right now, it looks like crypto wallets via Privy will be optional in the final version of Digg 2.0.

OpenSea’s letter

OpenSea sent an eight-page letter to the SEC on Wednesday, arguing why its marketplace shouldn’t be classified as an exchange and that NFTs are not securities under US laws.

“It would be appropriate for the SEC to use its authority under Section 36 of the Exchange Act to specifically exempt NFT marketplaces like OpenSea, thereby eliminating any doubts regarding the statute’s interpretation and application,” attorneys for the crypto firm wrote in their letter.

Of course NFT marketplaces want to be an exception — they don’t want the fees and restrictions that come with existing securities laws. 

But OpenSea argues that it’s exempt because it doesn’t do what traditional brokers might do. OpenSea doesn’t help negotiate transactions, doesn’t offer “valuations, solicitations, or investment advice” on its platform, and doesn’t “hold” or “control” user assets, either, the firm argued. It also doesn’t offer financing.

“The transaction logic set forth in smart contracts, along with the blockchain rules that underpin them, are publicly accessible for anyone to examine. As a rule, blockchains and smart contracts do not prioritize some market participants over others, but even if they did, that would be easily discovered by market participants—who would take their business elsewhere,” OpenSea said.

OpenSea also claims NFTs aren’t securities because they are mostly “collectibles or art, purchased primarily for consumption, novelty, or aesthetic value rather than for investment,” the company wrote in its letter.

In the comments to OpenSea CEO Devin Finzer’s X post about the letter, over a dozen X accounts told OpenSea to just “drop the token,” referring to the planned SEA token announced back in February. 

Another NFT trader wrote: “I bought NFTs to make money, you cant [sic] tell me otherwise fren.”

(Why do you buy NFTs? Let me know in this poll!)

While OpenSea does offer a user-friendly interface for self-custodied transactions via smart contracts, that doesn’t mean OpenSea should be entirely immune to any regulation — or that its claim that most buy NFTs for reasons other than for financial gain is necessarily accurate.

“We're committed to advocating for clear, sensible regulations for NFTs and crypto, and proud to represent the community,” Finzer said in his Thursday post.

The crypto industry has virtually no regulatory framework in the US at the moment. And under the current administration, the federal crypto enforcement team has been disbanded. 

Memecoins from the president and his family — which sparked questions of whether it’s ethical for politicians to use crypto like that — have surged and fallen. 

Crypto is still its own Wild West. And while that’s certainly been fun, I’m not sure it’s sustainable in the long term.