By
Thomas Lipari
About the Author: Head of Engineering @VenturePunk. He likes building cool things and is very passionate about the future of Web3. Ex-ConsenSys/Nifty's/BlackBerry/Cylance Engineer.
Let me set the stage a little bit.
Apple has never stood down from enforcing their 30% levy on sales through their App Store. We were all there for their court case with Epic, right? I mean, that makes complete sense and appeals to the laissez-faire side of business. It is their platform, and they have free rein charge what they want to allow people to publish on it.
But it’s more nuanced than that, isn’t it?
The Apple “bite” isn’t just in their 30% levy but also in the way they dominate the app store market– with a lack of transparency and a failure to consider other app stores. For years, they’ve built an uncompetitive marketplace and these have led to fewer choices for consumers. They get to decide, with no oversight whatsoever, the applications that can be used by millions and millions of iPhone owners.
Alright. Now that I’ve set up the backdrop, let’s move onto the real issue:
Apple is now trying to apply that 30% levy on transaction fees for NFT transfers on the Ethereum network when performed through the Coinbase Wallet app. This shows Apple is completely ignorant to how this technology works, doesn’t it?
Why isn’t it possible?
NFTs (non-fungible tokens) are created through a peer-to-peer decentralized system and are stored on the blockchain. They are transferred from one account to another without the need of a mediator or middleman. In other words, Apple can’t impose the 30% transaction fee on these transfers because there is no Apple-controlled platform where the transfer is taking place. On top of all of that, who are they taxing? The developers making the wallet? Not at all. They make no money from these transfers anyway. They’re taxing users for owning iPhones. Plain and simple.
What do they expect wallet app developers to do? Calculate the gas before a transaction fires and then pop an Apple Pay modal to pay Apple for the privilege to emit an RPC call? And what if it fails? Really, now? No.
Are they going to deploy an AppleFeeCollection.sol smart contract and force wallet app developers to conduct all NFT transfers through this contract as a way of collecting fees on the blockchain?
No. No, they’re not.
So, what’s Apple’s play here? Like, really?
*TINFOIL HAT ON*
It feels like the beginnings of a soft-ban on crypto wallets on iOS. Yes, it’s only Coinbase Wallet right now, but why would they single out one app and never apply it to the others? If this is actually their policy and not a fluke then you can be sure that MetaMask, Rainbow, and all other wallets will be affected by this rule as well.
It seems obvious, at first glance, that Apple is trying to get a bite out of the crypto market. But, at the end of the day, what they’re really doing is trying to stifle innovation and competition. They’re trying to leverage their platform to control how users interact with a technology that has no centralized control. And, frankly, that’s just not cool.
Right now it’s NFTs. But there’s no meaningful difference between an ERC721 transfer and an ERC20 transfer. There’s also no difference between how the transaction fees work for tokens, including native Ether. It’s simply a fee to validators that scales based on the amount of computation that the transaction needs in order to complete. So let me ask you:
👏 Why 👏 would 👏 they 👏 stop 👏 at 👏 NFTs? 👏
What’re they doing? Are they trying to stop all apps on their store from interacting with blockchains? Are they building their own wallet in secret and trying to stomp out competitors ahead of time?
I have no idea. I really don’t. But am I wrong for feeling like they’re slowly setting the stage for more anti-web3 App Store policies going forward?
*TINFOIL HAT OFF*
…phew…
That all being said, Apple’s ignorant payment fee structure should not be allowed to stand. Decentralized protocols like Ethereum should not be beholden to the whims of centralized companies. We need to push back against Apple and ensure that our wallets remain the dominion of users, and stay respected as a peer-to-peer transactional platform.
But do we even have a chance of winning that fight? I really have no idea.
But is there any other way forward?
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Disclaimer: Not financial or tax advice. This newsletter is strictly educational and is not intended to be investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Do your own research.
Don't think the 'tin-foil hat on' part is too crazy. Pretty clear IMO that
- Apple is going to build their own wallet
- They're behind vs. competition
- One of their moats is the App Store
- Leveraging this moat to catch up
- Once caught up they'll release their Web3-enabled wallet to strengthen their overall moat vertically and horizontally
- As a result Apple retains marketshare for paradigm shift into Web3 enabled future