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Okay, everyone, I think we are now all set.

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This is session 6 of META-511 Non-Fungible Tokens and the Metaverse.

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And today, the session sounds a little bit more general.

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It's called Key Considerations in the NFT space.

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And I'll get into what that means in a little bit.

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Before I do that, I'd like to acknowledge that the last 24, 48, 72 hours in the general

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crypto space, I think, has been quite dramatic.

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I assume almost everyone here knows, but in case we have non-crypto folks here who don't

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over the last couple of days, FTX, which is one of the largest exchanges in the world,

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and has failed to meet redemptions withdraws.

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And this is causing understandably a lot of turbulence in the market, a lot of anxiety

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of what it might mean.

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And it looks like there's no immediate end in sight to this situation.

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What I wanted to just say for a second, what I wanted to share with you what I've said

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on my Twitter feed, first of all, I'm sure some people, a lot of people, maybe some people

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here, have been hurt by this.

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And I feel very badly for anyone who has been hurt by this.

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You should be able to trust that an exchange that has your tokens or your money can give

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them back to you when you want to.

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But sadly, that often in crypto has not happened.

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Unfortunately, the natural keys, not your coins, stay of crypto has often been this way.

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But what I wanted to share is it might feel very bleak.

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And this has happened many times before in crypto.

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And as many times as anyone who's been in the field for a very long time has been through

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multiple of these cycles and has been hit at various points through these cycles.

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So if you're just regular, sad, and don't talk to your non-crypto friends, it will pass.

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If you're seriously sad, please do seek help.

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This is, crypto is important, money is important, of course, all these things are important.

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But they're not as important as your health as you're well-being, your family, and

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a lot of people are really in shock today.

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And for a lot of people, this might be the first time that this has happened to them.

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And so do take care of yourself.

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In the end, you look back at these things over time and they feel very different than

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a point of when they do while they're happening.

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I have had things like this happen to me multiple times over the last decade.

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And when you're in it, it is extraordinarily stressful, painful, maybe emotionally painful.

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And over time, then it feels very different.

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And there, in the fullness of times, I mean, it's just become really interesting stories,

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which sounds crazy at the moment to think about it, the moment you're just saying, my

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own disaster.

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But I'm here to say that it's not like that.

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The vast majority of cases, it's not like that.

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And just like when everything is going super super well, it's never as good as it seems.

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When things are going badly as they are now, it's never as bad as it seems.

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And so do take care of yourself, don't let yourself take it too hard.

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Whatever has happened in this case has probably more or less happened and is probably out

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of your control in the case of FTX.

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And so do me, do me, be kind to yourself, be kind to yourself, be kind to your family.

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And as I said, it's never as good as it seemspol as it seems Brund Time is probably a good

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life- Executioners are something that we9 arcade time for and letters are a good model for

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you.

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seems perfect, there's some reversion to the meme in your happiness and in your life,

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and when everything seems terrible, the same is actually true.

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So I didn't want to share that, so I shared it on Twitter.

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It is some of us are hardened now.

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We've been through this many times.

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So to the degree that is helpful for people who are going through it for the first time,

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now would like to be helpful and find a friend, talk to a friend, talk to a fellow,

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get off Crypto Twitter, that's possibly a good idea.

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Be kind to yourself.

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Okay, now today's session is another framework session.

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What do I mean?

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These are topics that we are going to dive into in-depth with a lot of the guests.

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We are going to bring guests without who are specialists in these topics.

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And maybe on something that today is a slide, we'll spend a whole hour.

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So just like we did in a couple of the more recent sessions,

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and particularly for folks who are newer to this field,

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I want to make sure we have the same basic frameworks among all of us.

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And then, and then we will go into the individual sessions and dig into this in much more detail.

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So my guess is as many of the prior sessions, this is going to be more fairly basic for the advanced folks today.

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And we'll get into the advanced topics in sessions, but for folks who may be not as deep into the space,

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it'll be helpful.

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It's a level setting.

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It's a level-setting session.

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So, let me, that's the same.

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I want to talk about pre-topics today.

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This topic of collectibles, this question of aesthetics and versus rarity,

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which is often discussed in the space, a little bit of NFT-5, which is a play on the word DeFi,

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or DeFi being decentralized finance, and a variety of crypto services that are effectively financial services,

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but they're running as on-chain protocols, not as centralized companies.

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So, Uniswap is a DeFi exchange, compound is a DeFi lender, a small editorial note.

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A nice thing about DeFi services is you can see, transparently, what's happening all the way through,

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which apparently has not been the case for the centralized crypto services,

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which have truly performed very poorly during this fair market.

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So, the theory that the value and the interesting thing and the magic of crypto assets and crypto currencies

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of blockchain is the on-chain part, not a centralized company wrapped around your on-chain balances,

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un-beated, undefeated. This is what it's all about for better or for worse.

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So, we'll talk a little bit about how NFTs may or may not interact with DeFi.

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So, let's talk about collectibles.

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And collectibles is one of these concepts that is thrown around a lot in the space.

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Mostly as a criticism, mostly its people saying, you mostly hear this concept from people from outside the space

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saying, well, this stuff's not really art. It's collectibles.

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And they mean that primarily in a negative way. Sometimes in a neutral, it's really meant in a positive way.

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And it's interesting to think, is that true? Is that accurate? Or is it accurate?

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And I thought it was something like, okay, what are collectibles?

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One of the things that are unambiguously collectibles that nobody really questions that they are collectibles.

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How many, many things? Humans love to collect things.

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Different humans love to collect different types of things.

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But it does seem to be some type of innate human desire. What are like things that are real people collect?

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Well, those are stamps. I'm a stamp collector. I'm a coin collector.

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I'm a baseball card collector. I'm a football card collector. I'm a comic book collector.

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I'm a Beanie baby collector. It's always an example. Everyone always mentions beanie because it all comes to this.

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I'm a collectible wine collector.

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And wine's interesting because there's two categories of wine, right? There's collectible grade wine.

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I mean, not collectible grade wine. There's the kind of cheap and cheerful wine that you buy from the supermarket

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and you'll have tonight for dinner.

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That wine, even if you collect, it's not going to make any difference like it's not.

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It's not actually collectible wine. And then there's wine that is, that ages well and is limited supply and is high quality.

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It is collectible. Classic cars are collectible.

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Comic books are collectible.

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But also things from the fashion world. Certain handbags are collectibles.

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Certain watches are collectibles.

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Genstones, jewelry. All of these are broadly in the category of collectibles.

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And many of these things, many of them, have long-term established value.

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So, stamps have been something that people collected a decade ago and 50 years ago and 100 years ago.

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It's not going likely to change.

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Genstones have been collected for millennia.

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And in categories of collectibles, where it has become established that the categories important and people care about it,

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they tend to trade on rarity. Stamps are a great example. They are.

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A very large number of stamps involved. Some of them are very pretty. Some of them are beautiful.

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But a typical run of stamps is gigantic.

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There might be millions. The United States, they have the stamps. It's the American flag.

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I don't think it's even millions. It might be hundreds of millions that have been printed of that stamp.

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That might be an aesthetically appealing stamp. It might be more aesthetically appealing than a rare stamp, but it does not generate collectible value.

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Because the supply is very large.

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And so, even if 100,000, 100,000 people say, oh, yeah, what one of those things?

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There's so much supply that when the basic laws of supply and demand kick in, the laws of supply and demand being the price of something is how much demand there is for it, how many people want it.

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And also how much of it there is.

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So, you know, people who haven't taken a microeconomic class sometimes, you know, get a little confused on this.

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Things might be extremely valuable, and you have a low price.

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For example, air. Oxygen is extremely valuable. Without it, we'd all be dead in a couple minutes.

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And demand for oxygen is off the charts.

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But oxygen is also extremely plentiful.

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It's available all around us.

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And therefore, it trades for free.

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The primary driver of established collectible category value tends to be a bread.

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You have to, for their to be value, there has to be some shortage in quotes, air quotes of supply.

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And I think also it becomes a little bit reflexive.

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The price itself becomes in some cases, part of the value of the rarity, somehow independently of the rarity.

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What are we, but let's just work through an example.

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We'll stay with an example that's like you're going to be very neutral to people.

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Stamps.

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If there are this, not a ton of people in the world want to go at stamps, right?

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But of the very rare stamps, there's really quite not that many of them at all.

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They tend to be older. They tend to be things like misprints, or only fewer printed, or they vary old and most of them destroyed.

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And even though you might not be interested in it generically in a stamp as well, it will feel special to own one of ten late Victorians.

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And you know, the other ones in a museum somewhere in the UK, right?

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Another one is with some other person, and you now own one of them.

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And then you maybe pay a lot of money for it.

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To a thousand dollars for it, making these numbers up.

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All these examples are made up.

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And then you see a story that says, wow, someone paid $200,000 for this rare Victorian stamp.

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And somehow even the price itself gets embedded into the rarity, into the status.

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Now, this reflexivity causes booms and busts and bubbles, right?

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So it's not in and of itself a good or a bad thing.

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It's a neutral thing.

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But what ends up being the case is that ultimately,

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ultimately, I think, I think this might be controversial and it might cause people to react.

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But a huge amount of what drives collectable of us is status issue.

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And I said, oh, no, no, no, I really like stamps and the stamps are super interesting, and this is a very special stamp.

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And now I own the special stamp.

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Okay, cool, there's all two.

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And I think when you're a stamp expert, you don't think you're collecting that special stamp for status purposes.

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Just like when I'm pouring through out blocks curated for a rare piece of genital art.

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And genuinely don't think I'm doing it for status purposes.

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What I think I'm doing it for is for the intellectual challenge to find something interesting,

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to find something special, to put it in the museum to complete the collection, all these things, right?

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But the underlying driver, the underlying psychological driver, has to somehow biologically be status related, right?

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Like birds.

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Oh, sorry, some species of birds decorate their nests.

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And when you see them how they decorate their nests, you kind of laugh because it's sort of the way humans would decorate their nests.

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They like sparkly and colorful things.

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And what I think is going on is, I know, look, I have a special nest.

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I have nice and valuable things in my nest.

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This is prestigious in the pigeon community or whatever, but you don't know if pigeons decorate their nests, but it's prestigious in my bird community.

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I'm perhaps more likely to attract the mate to my nest.

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And it's a sign of fitness, right?

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I was able to find these nice and sparkly things and bring them there.

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Maybe it means I'm a good hunter or something, gatherer food.

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By the way, the bird's not thinking any of these things, right?

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The bird itself is just thinking, oh, look, sparkly thing.

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I'd like this in my nest.

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And then the bird's partner might be like, oh, well, that's pretty cool.

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It's sparkly.

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I'm going to hang out here for a second. I'm going to get to know each other and hear how birds flirt, but the rest is history.

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And we don't 100% know why we're doing the things we're doing, right?

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We're highly biologically driven. We're highly evolutionarily driven.

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But I think it comes from a similar place.

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And I think it is a very deep human tendency.

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Because we say collectible behavior across category, across demographic, across societies, across centuries, across quote unquote asset classes.

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And so there's something very deeply human about collecting.

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Collectibles, for me, are not a dirty word.

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They're not an interesting thing, a boring thing.

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No, someone who is super into restoring classic cars and finding the one of whatever 20 old Mercedes Benz from the 1930s that,

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and finding the original parts and making that car complete.

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That is a nice behavior, arguably a noble behavior, a human behavior, and a negative behavior.

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Again, let's come to the Beanie babies. Part of what people say collectibles when they say it in this context, a lot of times, I mean, it's a lot longer.

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It's a fad, it's a bubble, and that absolutely happens.

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The Beanie babies were very popular and very valuable, and then they were not.

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Certain baseball and football courts in the 90s and 2000s were very popular and very valuable, and then they were up.

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Usually, not always, but usually.

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These bubbles occurred in corporate backed collectibles.

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Usually the model does something like this. Something starts organically normally. People start buying, they think it's good.

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It hits the spirit of that era for whatever reason.

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It usually starts off with a very good scenario. The beginnings always organic.

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The people say, oh, yeah, I like this. I want to own one of these things.

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And then because people want to own one of these things, I don't know what this is.

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They buy them, and there's no things different.

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Where it is with different statuses.

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Oh, I want one of these more interesting ones. I want purple one, blue one, red one.

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And then because lots of people might want it, when the price goes up and people tell, that's interesting.

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Someone's made money, and any babies. And now it attracts certain people who might say,

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oh, this is also interesting. It's a speculative opportunity.

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And then more people come in, now the manufacturer, a counterparty in financial terms,

215
00:24:29,620 --> 00:24:41,620
the person who's controlling the supply in financial terms, says, oh, this is very exciting.

216
00:24:41,620 --> 00:24:44,620
They might even think of it in a completely innocent way.

217
00:24:44,620 --> 00:24:52,620
Or they could be in a state of the world. People are really into our many babies.

218
00:24:52,620 --> 00:25:00,620
They are valuable, important, symbolically interesting to people.

219
00:25:00,620 --> 00:25:08,620
Let's make more. And it works first.

220
00:25:08,620 --> 00:25:14,620
Everyone wins. More people come into the community.

221
00:25:14,620 --> 00:25:17,620
The price and the rare one goes up some more.

222
00:25:17,620 --> 00:25:22,620
The manufacturer is making lots of money. They hire people. They do more marketing.

223
00:25:22,620 --> 00:25:28,620
They open stores, they put ads and relevant publications.

224
00:25:28,620 --> 00:25:33,620
So this continues to work. And now everyone's really happy.

225
00:25:33,620 --> 00:25:41,620
And usually what happens in this model, because supply is not constrained.

226
00:25:41,620 --> 00:25:50,620
Supply tends to overshoot. And all this cycle works in reverse.

227
00:25:50,620 --> 00:25:55,620
I don't like it prices aren't going up. This is not great.

228
00:25:55,620 --> 00:26:00,620
In fact, really follow. But, you know, let me take some of my money out of this.

229
00:26:00,620 --> 00:26:08,620
And then the cycle goes in reverse.

230
00:26:08,620 --> 00:26:12,620
And then a few years later, everyone's looking at each other.

231
00:26:12,620 --> 00:26:16,620
And people outside are the space of looking at it.

232
00:26:16,620 --> 00:26:19,620
My God, what happened to people?

233
00:26:19,620 --> 00:26:28,620
They lose their minds. Like, how are they paying so much money for this thing that looks like nothing.

234
00:26:28,620 --> 00:26:34,620
And I believe, and this is not like some grand unifying theory like quantum physics or something,

235
00:26:34,620 --> 00:26:43,620
but I do believe, there are generally patterns for when it plays out that way.

236
00:26:43,620 --> 00:26:47,620
And counter patterns. Now, it doesn't have to play out that way.

237
00:26:47,620 --> 00:26:50,620
Even if you have a corporate counterparty.

238
00:26:50,620 --> 00:27:04,620
The Birkenbag has managed to remain popular, rare and collectible for several decades.

239
00:27:04,620 --> 00:27:06,620
This is a very impressive achievement.

240
00:27:06,620 --> 00:27:12,620
This is an achievement of both marketing.

241
00:27:12,620 --> 00:27:21,620
Both staying in tune with a customer segment over decades through changing fashions.

242
00:27:21,620 --> 00:27:24,620
It's really impressive.

243
00:27:24,620 --> 00:27:27,620
And managing supply.

244
00:27:27,620 --> 00:27:33,620
If the Birken bags, if there were millions and tens of millions of Birken bags,

245
00:27:33,620 --> 00:27:35,620
they'd say, oh, look, everyone's a Birkenbag.

246
00:27:35,620 --> 00:27:42,620
Back here, let's make, let's fill all the demand. Let's make more money.

247
00:27:42,620 --> 00:27:45,620
It is almost certainly the case that don't want a Birkenbag today.

248
00:27:45,620 --> 00:27:50,620
So that's the case of a corporate counterparty.

249
00:27:50,620 --> 00:28:03,620
And supply and branding and fashion ability being kept within good parameters

250
00:28:03,620 --> 00:28:07,620
are very long period of time. It's actually quite impressive.

251
00:28:07,620 --> 00:28:10,620
It keeps saying a corporate counterparty.

252
00:28:10,620 --> 00:28:14,620
Wait, how does it relate to the catabor?

253
00:28:14,620 --> 00:28:19,620
In the other categories, the categories that I think are more stable,

254
00:28:19,620 --> 00:28:21,620
there's not a corporate counterparty.

255
00:28:21,620 --> 00:28:25,620
In stamps, you're not buying stamps from the one stamp manufacturer

256
00:28:25,620 --> 00:28:32,620
who will also make lots of money if you buy a lot of stamps for them.

257
00:28:32,620 --> 00:28:43,620
Stamp production over time and across countries and across eras is sort of decentralized.

258
00:28:43,620 --> 00:28:46,620
There have been many countries, many regimes, many governments,

259
00:28:46,620 --> 00:28:51,620
since we've invented sending a letter, and they produced a bunch of stamps

260
00:28:51,620 --> 00:28:55,620
and they produced them not in order to sell collectibles to people.

261
00:28:55,620 --> 00:28:58,620
They produced them for a different purpose, and then some of them got destroyed

262
00:28:58,620 --> 00:29:03,620
above the bottom of the bottom of the bottom. All of a sudden,

263
00:29:03,620 --> 00:29:06,620
you end up with a rarity structure in stamps.

264
00:29:06,620 --> 00:29:15,620
It's very extreme, right? The typical stamp is collectability worthless.

265
00:29:15,620 --> 00:29:22,620
But certain stamps are extremely valuable, and they're likely to remain extremely valuable,

266
00:29:22,620 --> 00:29:28,620
because they're not going to make more of those stamps, right?

267
00:29:28,620 --> 00:29:31,620
You can't change the supply dynamics there.

268
00:29:31,620 --> 00:29:36,620
And other things that have been stamps are 150 years older than they are, right?

269
00:29:36,620 --> 00:29:39,620
Coins are millennial.

270
00:29:39,620 --> 00:29:42,620
There is a...

271
00:29:42,620 --> 00:29:51,620
Well, function in fairly stable market in rare coins, both modern year and older year.

272
00:29:51,620 --> 00:29:56,620
And you don't have a centralized corporate counterparty.

273
00:29:56,620 --> 00:29:59,620
It's weird, right? It's like thinking about crypto.

274
00:29:59,620 --> 00:30:04,620
But it's true. There's no one who is going to now...

275
00:30:04,620 --> 00:30:07,620
So I say, oh, coins are super valuable.

276
00:30:07,620 --> 00:30:12,620
Let's go mint another 1 million Roman-era coins.

277
00:30:12,620 --> 00:30:16,620
You can't do that. You can't go back in time. The supplies fixed there.

278
00:30:16,620 --> 00:30:22,620
Other might be occasionally discovery. Maybe someone discovers a huge stash of supply dynamics change,

279
00:30:22,620 --> 00:30:25,620
but it's not common. It's not, it's rare.

280
00:30:25,620 --> 00:30:29,620
So...

281
00:30:29,620 --> 00:30:35,620
Rearity is important in collectibles.

282
00:30:35,620 --> 00:30:45,620
Of course, rearity is important in collectibles contingent on the overall category being interesting.

283
00:30:45,620 --> 00:30:52,620
And, you know, most of the categories here are interesting for...

284
00:30:52,620 --> 00:30:59,620
kind of fundamental purposes. Coins are shiny, gemstones are shiny, some work in bands are shiny.

285
00:30:59,620 --> 00:31:04,620
Lines drinkable, like you can drink in rare lines, you can taste it.

286
00:31:04,620 --> 00:31:12,620
Right? And some have to form the social construction that they're important,

287
00:31:12,620 --> 00:31:20,620
that the people come to agree as a group that something has cultural symbolic value,

288
00:31:20,620 --> 00:31:27,620
and therefore it's desirable to own it.

289
00:31:27,620 --> 00:31:33,620
The rearity by itself doesn't mean anything.

290
00:31:33,620 --> 00:31:40,620
I could draw on five pieces of paper, five special 6529,

291
00:31:40,620 --> 00:31:44,620
and then we should pursue a rare by the guns, and then we'll say I'm using it in the journal.

292
00:31:44,620 --> 00:31:51,620
Right? So, Rearity is important, contingent on the category being important.

293
00:31:51,620 --> 00:31:58,620
And now with all of that, that's set up.

294
00:31:58,620 --> 00:32:00,620
Let's ask suggestions.

295
00:32:00,620 --> 00:32:08,620
On the left is, I believe, the most valuable baseball card in the world, the homeless wiger.

296
00:32:08,620 --> 00:32:12,620
The homeless wiger baseball card is unambiguously a collectible.

297
00:32:12,620 --> 00:32:17,620
It is a collectible in the positive sense that it is a collectible, people collected,

298
00:32:17,620 --> 00:32:22,620
and spent lots of money for it. I don't remember offhand, maybe,

299
00:32:22,620 --> 00:32:29,620
balancing as can Google it and put it in the chat, but I think they trade at five, six million dollars, something like that.

300
00:32:29,620 --> 00:32:35,620
And it's also collectible in the sense that it is not fine art, which is, you know,

301
00:32:35,620 --> 00:32:45,620
the discussion that people tend to have in the NFT world is it collectibles or is it finer?

302
00:32:45,620 --> 00:32:49,620
Nobody, I think, will argue that the homeless wiger card is fine art.

303
00:32:49,620 --> 00:32:51,620
But they'll say it's a collectible.

304
00:32:51,620 --> 00:32:58,620
On the right is the first rare pepe card. You've seen it before in the prior sessions.

305
00:32:58,620 --> 00:33:06,620
It looks kind of like a baseball or football card.

306
00:33:06,620 --> 00:33:13,620
Is it a collectible for sure? It's a collectible. Is it also? I don't know.

307
00:33:13,620 --> 00:33:18,620
I think people would argue. I think a lot of folks would look at this,

308
00:33:18,620 --> 00:33:22,620
like in particular, if you're not in the NFT world, saying, oh, of course, it's not fine art.

309
00:33:22,620 --> 00:33:23,620
It's a collectible.

310
00:33:23,620 --> 00:33:24,620
It's an as looking collectible.

311
00:33:24,620 --> 00:33:28,620
Main is a collectible that resonates with a certain community, but it's a collectible.

312
00:33:28,620 --> 00:33:30,620
It's not art. Okay.

313
00:33:30,620 --> 00:33:34,620
Hold that thought.

314
00:33:34,620 --> 00:33:38,620
What about this?

315
00:33:38,620 --> 00:33:46,620
On the left is an unambiguously important piece of fine art.

316
00:33:46,620 --> 00:33:56,620
And from 1984 on the right is a derivative of that piece of fine art, a pepe basket.

317
00:33:56,620 --> 00:34:10,620
If this same exact same image had been made by Luca the artist and sold as a painting,

318
00:34:10,620 --> 00:34:16,620
I don't think anyone would question whether it's fine art.

319
00:34:16,620 --> 00:34:19,620
It has, of course, derivative art. It's on the chart.

320
00:34:19,620 --> 00:34:22,620
It's remixing culture, all those things.

321
00:34:22,620 --> 00:34:27,620
But no one would say it's a collectible. It's art.

322
00:34:27,620 --> 00:34:31,620
But it's AA up. There's a lot of them. It's an addition.

323
00:34:31,620 --> 00:34:33,620
They don't think that actually would make a difference.

324
00:34:33,620 --> 00:34:39,620
I don't think that would make a difference. I think if people said someone painted that

325
00:34:39,620 --> 00:34:45,620
in the fine art print of an addition of a hundred of them,

326
00:34:45,620 --> 00:34:54,620
the artist said, look, I'm referencing John-Michel's work and updating it for the modern era.

327
00:34:54,620 --> 00:34:56,620
And here's what it means to me.

328
00:34:56,620 --> 00:35:01,620
All of these things are very clear. The artist is actually doing it, right?

329
00:35:01,620 --> 00:35:07,620
I don't think anyone would argue that if this was on a piece of paper, it's art.

330
00:35:07,620 --> 00:35:10,620
An example of how important art is, it's important art.

331
00:35:10,620 --> 00:35:16,620
Okay? It's art and the only thing that saves a collectible.

332
00:35:16,620 --> 00:35:22,620
And then, okay, if that, someone is made effectively a derivative art addition

333
00:35:22,620 --> 00:35:29,620
and minted it within the Rare Puppy series. Are you collectibles at art?

334
00:35:29,620 --> 00:35:37,620
Obviously, the series as a whole has strong collectible tendencies.

335
00:35:37,620 --> 00:35:44,620
That is sets and cards and additions, all those things. But, individual pieces.

336
00:35:44,620 --> 00:35:49,620
Many of them, to me, are definitely art.

337
00:35:49,620 --> 00:35:56,620
What about this one?

338
00:35:56,620 --> 00:36:01,620
We've discussed this before.

339
00:36:01,620 --> 00:36:04,620
It's the usual example.

340
00:36:04,620 --> 00:36:06,620
It's the usual question.

341
00:36:06,620 --> 00:36:11,620
It's what art known by the session will drop tomorrow.

342
00:36:11,620 --> 00:36:16,620
Art known, and a whole interview with the Mar-R-O-L-E-R,

343
00:36:16,620 --> 00:36:19,620
is it art, is it collectibles?

344
00:36:19,620 --> 00:36:30,620
The creators, or artists, even the term is loaded.

345
00:36:30,620 --> 00:36:37,620
Collectibles are likely made of by a creator. Art is likely made by an artist.

346
00:36:37,620 --> 00:36:40,620
It doesn't really matter to them.

347
00:36:40,620 --> 00:36:43,620
I think art comes as a little bit of both.

348
00:36:43,620 --> 00:36:49,620
What they say is the thing you need to look at is actually the whole project, including the website.

349
00:36:49,620 --> 00:36:59,620
To me, this is, of course, it has a collectible nature, but it is art.

350
00:36:59,620 --> 00:37:11,620
That does that mean that the 11,000th GFP project is art?

351
00:37:11,620 --> 00:37:13,620
No, probably not.

352
00:37:13,620 --> 00:37:26,620
It's probably someone trying to leverage off the value that accrued to something unique and interested.

353
00:37:26,620 --> 00:37:29,620
It's a good purpose.

354
00:37:29,620 --> 00:37:37,620
And, okay, low effort in many cases, like attempts are replicated in its collectible nature.

355
00:37:37,620 --> 00:37:43,620
It's not a clear answer to the point. It's a certain amount of clear answer across PFPs.

356
00:37:43,620 --> 00:37:48,620
And it constantly reminds me of this discussion.

357
00:37:48,620 --> 00:37:53,620
And it's a cliche that I'm putting this slide up.

358
00:37:53,620 --> 00:37:54,620
But it's also true.

359
00:37:54,620 --> 00:38:03,620
Now, the question with the soup cans of an anti-warhol in general wasn't if he was making collectibles.

360
00:38:03,620 --> 00:38:09,620
The question with Pop Art was, well, this is actually art.

361
00:38:09,620 --> 00:38:23,620
He was picking up a variety of images, a variety of thought processes

362
00:38:23,620 --> 00:38:35,620
from popular culture from products and commercial products

363
00:38:35,620 --> 00:38:39,620
and reinterpreting.

364
00:38:39,620 --> 00:38:50,620
And a lot of people then, for a long time, and even some people now,

365
00:38:50,620 --> 00:38:54,620
I spoke to someone, you know,

366
00:38:54,620 --> 00:38:58,620
and said, yeah, I don't like wheelhalls to commercial company.

367
00:38:58,620 --> 00:39:14,620
A lot of people then did not consider it fine art, objected to it.

368
00:39:14,620 --> 00:39:24,620
And today, I think consensus opinion is that it's art.

369
00:39:24,620 --> 00:39:38,620
It is for sure, in my view, art, I think it's like an absurd question to think about whether this is fine art or not.

370
00:39:38,620 --> 00:39:47,620
It's absolutely absurd question.

371
00:39:47,620 --> 00:39:54,620
So the reason the soup cans are here are not because we discussed 60 years ago

372
00:39:54,620 --> 00:39:57,620
whether soup cans were collectibles or soup cans were fine art.

373
00:39:57,620 --> 00:40:01,620
We actually discussed it in the years of popular art, we could find out.

374
00:40:01,620 --> 00:40:05,620
But it was the same class of discussion.

375
00:40:05,620 --> 00:40:18,620
And I think the same thing will happen here, I think, in 20, 30, 40, 50 years, no one's going to dispute or a large majority of people won't dispute that the crypto punks

376
00:40:18,620 --> 00:40:35,620
that are very heavy art elements and also that you're like silly project of the cool camels that people spend three days on is not in fact art at all.

377
00:40:35,620 --> 00:40:54,620
But I want to emphasize, I don't think there's anything wrong with collectibles, I don't think there's anything wrong with collectability, I don't think there's anything inappropriate with NFTs being used as a transportation technology to transport collectibles.

378
00:40:54,620 --> 00:41:11,620
It is in fact an excellent case for collectibles. Just like we've heard, or you'll hear a lot tomorrow of ARTNOME about fraud and provenance fraud in the art world, there's also nation collectibles.

379
00:41:11,620 --> 00:41:18,620
And so to the degree that this is now solvable in collectibles.

380
00:41:18,620 --> 00:41:26,620
It's a positive, it's a good usage case for NFTs. It is a perfectly appropriate human activity.

381
00:41:26,620 --> 00:41:30,620
It's a human activity that they've been for a very long time.

382
00:41:30,620 --> 00:41:37,620
In many different ways, and we will absolutely do it in the NFT space.

383
00:41:37,620 --> 00:42:02,620
Now, we'll go to a related, but not exactly related topic, which is a topic that causes a lot of discussions in the space.

384
00:42:02,620 --> 00:42:10,620
And I want to set up a small panel to discuss this exact topic in a video.

385
00:42:10,620 --> 00:42:15,620
Where does, where does aesthetics matter, and where does rarity matter?

386
00:42:15,620 --> 00:42:31,620
And my mental model for this is the following, that the more collectible like in project is an NFT is, the more rarity matters.

387
00:42:31,620 --> 00:42:43,620
And the less collectible like it is, the less rarity matters, and by extension the more aesthetics matters.

388
00:42:43,620 --> 00:42:55,620
And so PFPs that are for sure the most collectible like of the projects in this space.

389
00:42:55,620 --> 00:43:05,620
Rarity matters a lot. It is in fact the dominant driver of value in PFPs.

390
00:43:05,620 --> 00:43:17,620
On the other side of the spectrum, I am a artist, I am a photographer, I create wonderful work.

391
00:43:17,620 --> 00:43:25,620
Rarity typically is a useful metric, they are all one of ones.

392
00:43:25,620 --> 00:43:30,620
They are all equally rare, they don't have any structured rarity traits.

393
00:43:30,620 --> 00:43:42,620
And so if I am an artist and I shoot 100 by mid to 100 photographs over the next 10 years of different subjects.

394
00:43:42,620 --> 00:43:48,620
There is no collectible aspect there, there is no rarity aspect there.

395
00:43:48,620 --> 00:43:55,620
People will judge them, select them, assign value to them.

396
00:43:55,620 --> 00:43:59,620
Based on aesthetics and by aesthetics I am taking the very broad sense of aesthetics.

397
00:43:59,620 --> 00:44:02,620
I don't just mean like it is pretty.

398
00:44:02,620 --> 00:44:12,620
In aesthetics and meaning and the qualitative aspects.

399
00:44:12,620 --> 00:44:17,620
And I think generative art falls somewhat in the middle.

400
00:44:17,620 --> 00:44:23,620
In generative art you have collections, you have structured collections as we tell you, one of one of those.

401
00:44:23,620 --> 00:44:27,620
But up to 1000 or 400 or 400 or whatever.

402
00:44:27,620 --> 00:44:32,620
And those collections have traits.

403
00:44:32,620 --> 00:44:42,620
And in many collections, if not most collections, they are explicitly organized by the artist to have a rare destruction.

404
00:44:42,620 --> 00:44:46,620
And you can see this by the ones that are explicitly organized, not to have a rare destruction.

405
00:44:46,620 --> 00:44:51,620
Incomplete controls by Tyler Holmes have no rarity structure, there is no traits.

406
00:44:51,620 --> 00:44:56,620
You cannot decide which one is more rare than the other one.

407
00:44:56,620 --> 00:45:01,620
Elevated deconstruction by Luxbridge, again there is no rarity structure.

408
00:45:01,620 --> 00:45:11,620
There is no way to say which one of those 200 is more rare than the other one from a statistical basis.

409
00:45:11,620 --> 00:45:15,620
But many collections do have a rarity structure.

410
00:45:15,620 --> 00:45:21,620
And sometimes the rarity structure overlaps with the aesthetic structure.

411
00:45:21,620 --> 00:45:26,620
In more simple collections this tends to be true.

412
00:45:26,620 --> 00:45:34,620
Oh look, this is the trait that it's gold, it's gold colored.

413
00:45:34,620 --> 00:45:36,620
It looks nicer, people like gold colored things.

414
00:45:36,620 --> 00:45:41,620
There's only 10 of them, 10 out of the 1000 are gold and there's a bunch of those other ones.

415
00:45:41,620 --> 00:45:50,620
And so you link the rarity with also something that is visually appealing.

416
00:45:50,620 --> 00:45:59,620
And so in kind of a simple mode of generative collecting, if you have a collection that structures that way,

417
00:45:59,620 --> 00:46:11,620
let's say the things could be anyone of seven colors and there's 10 that are gold and all the other colors are 100 each.

418
00:46:11,620 --> 00:46:15,620
And the gold also looks good as a contest.

419
00:46:15,620 --> 00:46:20,620
And you ask someone in advance, which one do you want?

420
00:46:20,620 --> 00:46:25,620
Well, if you're interested in the financial value, the one that other people are likely to want also,

421
00:46:25,620 --> 00:46:31,620
taking into account the laws of supply and demand,

422
00:46:31,620 --> 00:46:38,620
it is likely that you should take the hold on if you choose to do so.

423
00:46:38,620 --> 00:46:51,620
Because the work gets more complex, it becomes more like a one of one, this stuff matters much less.

424
00:46:51,620 --> 00:46:54,620
We'll come to that in a second.

425
00:46:54,620 --> 00:46:58,620
The punks trade primarily on road.

426
00:46:58,620 --> 00:47:02,620
They trade second barely on aesthetics.

427
00:47:02,620 --> 00:47:11,620
Air punks that are meant are viewed to be more aesthetic than others.

428
00:47:11,620 --> 00:47:15,620
But it doesn't overwhelm their rarity.

429
00:47:15,620 --> 00:47:27,620
A very aesthetic hoodie punk generically will trade for, I don't know, three, four, hundred ETH.

430
00:47:27,620 --> 00:47:33,620
And whatever the least aesthetic alien is will trade for several thousand.

431
00:47:33,620 --> 00:47:39,620
And so there's just aesthetics do not overwhelm the rarity structure.

432
00:47:39,620 --> 00:47:42,620
But even here, there's questions.

433
00:47:42,620 --> 00:47:49,620
Generally people would say the aliens are the rarest and most valuable.

434
00:47:49,620 --> 00:47:54,620
But here is this human,

435
00:47:54,620 --> 00:47:58,620
which has seven traits, and it's the only one that has seven traits.

436
00:47:58,620 --> 00:48:05,620
And statistically, this is rarer than the alien.

437
00:48:05,620 --> 00:48:12,620
This is owned by gentlemen named seed phrase.

438
00:48:12,620 --> 00:48:17,620
Is this rarer? Is it more valuable?

439
00:48:17,620 --> 00:48:21,620
Which would you rather have one of these?

440
00:48:21,620 --> 00:48:23,620
Or one of these?

441
00:48:23,620 --> 00:48:32,620
This is a one of one seven traits, but one of six thousand male punks.

442
00:48:32,620 --> 00:48:36,620
These were one of nine aliens, but there's only nine aliens.

443
00:48:36,620 --> 00:48:39,620
And when you see an alien, it's obvious it's an alien.

444
00:48:39,620 --> 00:48:45,620
And I'm not saying this because it is, there's anything particularly meaningful in this discussion.

445
00:48:45,620 --> 00:48:52,620
But even rarity is, and these are all, of course, very valuable punks because of their rarity.

446
00:48:52,620 --> 00:48:55,620
But even there, people don't agree.

447
00:48:55,620 --> 00:49:01,620
They might not coalesce on the same theories.

448
00:49:01,620 --> 00:49:09,620
But PFP collections are primarily rarity driven.

449
00:49:09,620 --> 00:49:15,620
In complex generative collections, the rarity starts to matter much less.

450
00:49:15,620 --> 00:49:21,620
This is the tool that is a cadence of the title.

451
00:49:21,620 --> 00:49:27,620
It is believed to be one of the most valuable things.

452
00:49:27,620 --> 00:49:32,620
It is not in the slightest bit rare.

453
00:49:32,620 --> 00:49:34,620
On the right are the rarity scores.

454
00:49:34,620 --> 00:49:47,620
And in generative art, people are very, very advanced, sophisticated, and picky on rarity.

455
00:49:47,620 --> 00:49:51,620
As you can see here, this is from a site called Artical.

456
00:49:51,620 --> 00:49:54,620
There are multiple rarity scores.

457
00:49:54,620 --> 00:50:04,620
In any case, whatever rate is score, any way you score the tool for the ends of 313, it's not very rare.

458
00:50:04,620 --> 00:50:07,620
But it's one of the few most valuable for those.

459
00:50:07,620 --> 00:50:08,620
Why?

460
00:50:08,620 --> 00:50:10,620
Oh, it's beautiful.

461
00:50:10,620 --> 00:50:16,620
And also, it looks like a tool, which is a form of emergent, nomadic, hell.

462
00:50:16,620 --> 00:50:20,620
So it's not statistically rare by the set.

463
00:50:20,620 --> 00:50:26,620
But it's considered one of the more peaceful ones, and certainly one of the more med ones.

464
00:50:26,620 --> 00:50:29,620
And so it's aesthetically rare.

465
00:50:29,620 --> 00:50:34,620
And this is how one of one's trade as well.

466
00:50:34,620 --> 00:50:38,620
Like, you know, it won't say there's all this powerful work of art, right?

467
00:50:38,620 --> 00:50:45,620
Powerful works of art are aesthetically rare.

468
00:50:45,620 --> 00:50:52,620
And so, it's very powerful, very valuable, because it's rare that you can produce something like

469
00:50:52,620 --> 00:50:53,620
credit cards.

470
00:50:53,620 --> 00:50:54,620
It's not easy.

471
00:50:54,620 --> 00:50:56,620
It's not something that anyone can do.

472
00:50:56,620 --> 00:51:04,620
It's not like there are thousands of people doing that on a daily basis, and we just happen to like the causes.

473
00:51:04,620 --> 00:51:15,620
So, even within generative art, you can imagine a spectrum.

474
00:51:15,620 --> 00:51:33,620
The more the trait structure reflects the final piece, the more it is going to trade a little bit more of a collectible,

475
00:51:33,620 --> 00:51:36,620
the more it is going to matter.

476
00:51:36,620 --> 00:51:47,620
The less relationship there is between the underlying traits and how the piece looks, the less the traits are going to matter,

477
00:51:47,620 --> 00:51:52,620
and the more the aesthetics is going to matter.

478
00:51:52,620 --> 00:51:59,620
It's how the generative community looks at these.

479
00:51:59,620 --> 00:52:19,620
And, you know, one of the things I want to do is bring a couple of collectors who are considered to be very good at aesthetics,

480
00:52:19,620 --> 00:52:39,620
collecting and generative art, and others who are meant to be good at rarity-based collecting, and have them shut about it,

481
00:52:39,620 --> 00:52:40,620
and see what they think.

482
00:52:40,620 --> 00:52:43,620
And there's no right answer, right?

483
00:52:43,620 --> 00:52:46,620
The answer is going to be both.

484
00:52:46,620 --> 00:52:52,620
And even one of ones are not immune from supply dynamics.

485
00:52:52,620 --> 00:53:00,620
You can let's say there's a wonderful one of one, some are not capable, and I like one, and it's a one of one.

486
00:53:00,620 --> 00:53:12,620
And as a one of one, it will be viewed as valuable.

487
00:53:12,620 --> 00:53:18,620
But if that same piece was released by X-copy as an addition of one of a thousand,

488
00:53:18,620 --> 00:53:21,620
the individual unit price would be lower.

489
00:53:21,620 --> 00:53:26,620
The total price would be higher, I don't know, but the individual unit price would be lower for each one of a thousand,

490
00:53:26,620 --> 00:53:28,620
because each one of them.

491
00:53:28,620 --> 00:53:32,620
And since a thousand people can own them, it's easier to get a hold of one.

492
00:53:32,620 --> 00:53:35,620
There's more likely to be someone to sell it to you.

493
00:53:35,620 --> 00:53:43,620
Today, when there's only one of them, there's not even a coded market price, because I'm a old seller.

494
00:53:43,620 --> 00:53:47,620
So when there's a thousand, there's always a marginal seller.

495
00:53:47,620 --> 00:53:50,620
Supply and demand matters.

496
00:53:50,620 --> 00:53:51,620
Supply matters.

497
00:53:51,620 --> 00:53:53,620
Rarity does matter in fact.

498
00:53:53,620 --> 00:54:01,620
Now, rarity might be created through the structure of the collection of piece of art, or it could emerge aesthetically,

499
00:54:01,620 --> 00:54:11,620
or it could be created by how an artist organizes their lifetime of work.

500
00:54:11,620 --> 00:54:24,620
But it does play a role, again, contingent on the collection or the work or the artist's mattering.

501
00:54:24,620 --> 00:54:30,620
If they don't matter, it doesn't matter what they're rare, right? It doesn't matter at all.

502
00:54:30,620 --> 00:54:43,620
Okay. Let's switch topics. Let's put another chunk of ideas into the framework, which is NFT-Fi.

503
00:54:43,620 --> 00:54:51,620
Can't say I love the acronym, but I think it's what we've got for now.

504
00:54:51,620 --> 00:54:53,620
I don't think we'll figure out for a better one.

505
00:54:53,620 --> 00:55:05,620
Which is how do, I don't like my second sentence there, I'm going to skip to this.

506
00:55:05,620 --> 00:55:10,620
How do they become, how do NFTs become composable?

507
00:55:10,620 --> 00:55:18,620
When decentralized finance, protocols, or in some cases here, there are protocols and services.

508
00:55:18,620 --> 00:55:23,620
And the reality is that they can become because they're tokens.

509
00:55:23,620 --> 00:55:29,620
Right? So what are the types of things that people think about here? Well, a simple one is workplaces.

510
00:55:29,620 --> 00:55:35,620
I'm going to sell you an NFT, you're going to buy it. There's a variety of workplaces.

511
00:55:35,620 --> 00:55:42,620
But some of them are now working on, to this opposite example,

512
00:55:42,620 --> 00:55:55,620
or there's pools of NFTs and you can be an LP like you are in Uniswap.

513
00:55:55,620 --> 00:56:05,620
People have fractionalization platforms. In fractionalization platforms, you put in your non-fungible NFT.

514
00:56:05,620 --> 00:56:13,620
You can put the tool in it. It gets wrapped in a smart contract.

515
00:56:13,620 --> 00:56:22,620
And it will sell, it will create, fungible ERC-20 tokens, not ERC-21 tokens.

516
00:56:22,620 --> 00:56:29,620
Tokens of that non-fungible token.

517
00:56:29,620 --> 00:56:36,620
It is a form of, it's called fractionalization of the space I take for regulatory reasons.

518
00:56:36,620 --> 00:56:40,620
It's what we would call securitization of the financial.

519
00:56:40,620 --> 00:56:45,620
It takes something that turns to a functional security.

520
00:56:45,620 --> 00:56:54,620
It's a very tricky topic for actualization NFTs. Both from the user experience,

521
00:56:54,620 --> 00:57:00,620
not the technical user experience of wrapping it in rationalizing, that's actually easy.

522
00:57:00,620 --> 00:57:13,620
But the experience of what does it mean to own that fractional shard of a non-fungible token.

523
00:57:13,620 --> 00:57:20,620
I will tell you for me, and I think for many, it doesn't feel the same.

524
00:57:20,620 --> 00:57:41,620
Owning a NFT feels like one type of thing. Owning a one of 10,000 fungible tokens of that same NFT feels different.

525
00:57:41,620 --> 00:57:53,620
And oddly, it just feels boring. It left me flat. I do everything to always try things, see how it feels, see what I think about it.

526
00:57:53,620 --> 00:58:05,620
And the general feeling you had was owning a fungible token, which is fine.

527
00:58:05,620 --> 00:58:13,620
There's nothing wrong with owning fungible tokens, but there tends to be very little emotional value in owning a fungible token.

528
00:58:13,620 --> 00:58:21,620
And what the possible exception for me of Bitcoin owning any other fungible token is truly bereft of emotional value.

529
00:58:21,620 --> 00:58:25,620
So you just look at the price, like price going up, it's a price going down, is that?

530
00:58:25,620 --> 00:58:29,620
You feel a little bit when it's going up, you feel bad when it's going down, and you don't feel anything else.

531
00:58:29,620 --> 00:58:35,620
Which, okay, fine, this is not that hugely interesting.

532
00:58:35,620 --> 00:58:53,620
The part that is interesting about owning an NFT is some sense of uniqueness of non-fungibility of identity.

533
00:58:53,620 --> 00:58:59,620
And that gets lost in fractionalization. Having said that, there are very obviously useful cases for fractionalization.

534
00:58:59,620 --> 00:59:03,620
Something important you want to sell, part of it, you don't want to sell all of it.

535
00:59:03,620 --> 00:59:07,620
And so fractionalization, I think, is an important part of the toolkit.

536
00:59:07,620 --> 00:59:16,620
There is a second problem that it's unclear under which circumstances this is allowed in the United States.

537
00:59:16,620 --> 00:59:26,620
I think it is highly likely that some forms of fractionalization create security.

538
00:59:26,620 --> 00:59:35,620
That's why this is, that's why it's often called securitization in a different context.

539
00:59:35,620 --> 00:59:46,620
And so this, I think, has also hindered fractionalization.

540
00:59:46,620 --> 00:59:52,620
I think it has also had fewer people testing ideas.

541
00:59:52,620 --> 00:59:55,620
It worries me, for one.

542
00:59:55,620 --> 01:00:07,620
I think it's not feel hugely comfortable saying, here's one of my NFTs and I'll sell you one of 10,000 fungible tokens of it.

543
01:00:07,620 --> 01:00:12,620
Now, I'm not saying it actually is securitization, I'm not saying it'll be trea securit.

544
01:00:12,620 --> 01:00:16,620
And plenty of people have done fractionalization, it's been totally fine.

545
01:00:16,620 --> 01:00:18,620
It's just not 100%.

546
01:00:18,620 --> 01:00:22,620
It's a little bit in the gray zone, I think, right on to it.

547
01:00:22,620 --> 01:00:27,620
Another bucket, that's the bucket that people tend to really care about.

548
01:00:27,620 --> 01:00:49,620
That comes from the concept of, comes from the concept, I think, really the concept of DeFi, is people want to, in some way, shape or form, borrow against an NFT.

549
01:00:49,620 --> 01:00:54,620
And that, are using as collateral.

550
01:00:54,620 --> 01:01:11,620
And that is, more more than exists, you can take your NFT primarily in the more liquid collections, or you can take your punk, or your punk's worth 100 ETH, and you can borrow 3040 ETH against it.

551
01:01:11,620 --> 01:01:19,620
Or machinelessly, without a loan application, often with other people lending against it.

552
01:01:19,620 --> 01:01:25,620
And your punk is there as collateral.

553
01:01:25,620 --> 01:01:42,620
And if it is, if it is, if you don't make the payments, you'll lose your punk to the lenders, or you'll either have a punk or solid and get their ETH back.

554
01:01:42,620 --> 01:01:51,620
The major true hindrances in this model tend to be valuation.

555
01:01:51,620 --> 01:02:02,620
If you're borrowing against Bitcoin, it's very easy for the lender or the platform to know from time to time what the valuation is of your Bitcoin.

556
01:02:02,620 --> 01:02:07,620
Ever reply to the earth knows about your Bitcoin from time to time.

557
01:02:07,620 --> 01:02:23,620
The value of 486573 is sort of noble, but it's a harder question. The value of these 300 best for them is even harder to know from time to time.

558
01:02:23,620 --> 01:02:29,620
And it gets worse as you get into less structured sets of NFTs.

559
01:02:29,620 --> 01:02:43,620
So there's a lot of work listed being put into financializing.

560
01:02:43,620 --> 01:02:57,620
Into financializing NFTs. A lot of people want to make them into collateral.

561
01:02:57,620 --> 01:03:03,620
I think at an intellectual level, this is important.

562
01:03:03,620 --> 01:03:13,620
At a personal emotional level, it's a terrible idea and people are going to like cause all types of disasters to themselves because there's no free lunch.

563
01:03:13,620 --> 01:03:27,620
And if you use your NFT as collateral, you borrow money, well, you have to pay that money back. And if you don't pay that money back, someone, some days, will take your NFT.

564
01:03:27,620 --> 01:03:43,620
And most of the time, most of the time people are not doing it with the idea that they're going to lose their NFT. If they thought they're going to lose their NFT, they might sell.

565
01:03:43,620 --> 01:03:53,620
People are doing this as an all-out loser NFT. They want to keep their NFT and then all get the nice goodies that come from borrowing money and using it.

566
01:03:53,620 --> 01:04:01,620
Generally, generally leverage, nothing has killed more people in crypto than leverage.

567
01:04:01,620 --> 01:04:14,620
But if leverage is bad and problematic and painful in the functional world, it's kind of worse in NFTs because of the functional world.

568
01:04:14,620 --> 01:04:26,620
You can make it back and buy back your collateral. Okay, I lost my ETH because I was borrowing against it to buy Solon.

569
01:04:26,620 --> 01:04:35,620
Later, I earned some more money in my life. I can buy ETH again, maybe the price will be lower or higher, but I can get ETH again.

570
01:04:35,620 --> 01:04:46,620
If you borrow against punk, what was C. Francis punk, and then the lender forehoses on you.

571
01:04:46,620 --> 01:04:52,620
And then later you have the money you want to buy back, the lender of the new order might not sell back to you. It's gone.

572
01:04:52,620 --> 01:05:04,620
It is all I don't care earlier than you're the customer for this type of thing, but a lot of people care. A lot of people have some type of identification with the specific entities that they are.

573
01:05:04,620 --> 01:05:19,620
And so the idea of, you know, we have a huge historical data set of both unsophisticated and sophisticated people in the crypto space getting trouble with leverage.

574
01:05:19,620 --> 01:05:37,620
And so once it becomes easy to pick up leverage in the NFT space, people are going to do it because they'll primarily be thinking about the exciting case, we'll make lots of money, not the unexciting case, we'll lose lots of money and their NFT.

575
01:05:37,620 --> 01:05:45,620
And then they're going to be sad, I think, because there'll be no way back in many cases.

576
01:05:45,620 --> 01:06:10,620
The other part that is the sophisticated driver of one side of the royalties debate is people saying like, well, look, you can't really have liquid markets with market makers who are going to make a market for

577
01:06:10,620 --> 01:06:20,620
Fedensas or phone support apes or what have you and have them pay royalties with every trade.

578
01:06:20,620 --> 01:06:23,620
This is not possible.

579
01:06:23,620 --> 01:06:25,620
It cannot happen.

580
01:06:25,620 --> 01:06:29,620
Because market makers trade all day long.

581
01:06:29,620 --> 01:06:37,620
If every time they have to pay a 5 or 10% royalty, they can't market make if they can't market make there will be.

582
01:06:37,620 --> 01:06:42,620
There will be less,

583
01:06:42,620 --> 01:06:47,620
Training and less liquidity.

584
01:06:47,620 --> 01:06:55,620
And so this is actually, you know, I generally think we shouldn't be against royalties.

585
01:06:55,620 --> 01:07:11,620
But to the degree that there's a valuable case for certain types of transactions being royalty free is if it's in NFT collections that liquidity is useful and meaningful to people.

586
01:07:11,620 --> 01:07:18,620
Liquidity mean like you can just like you can always sell your BTC and always sell your ETH and you'll get the price.

587
01:07:18,620 --> 01:07:19,620
You might not, you'll get a price.

588
01:07:19,620 --> 01:07:22,620
You might not like the price you'll get, but you'll get a price.

589
01:07:22,620 --> 01:07:30,620
There is value, I believe, and be able to say, look, I want to get a price for my Bored Ape.

590
01:07:30,620 --> 01:07:33,620
I might not like the price, but I need money now.

591
01:07:33,620 --> 01:07:42,620
And so that's useful if there's a good in there and that liquidity will not exist in a royalty based context.

592
01:07:42,620 --> 01:07:51,620
And so there's been some interesting attempts firms like the Ford protocol will try and separate out the market makers from the end users and say what the market makers.

593
01:07:51,620 --> 01:07:56,620
Shouldn't be people who are willing to buy or sell board apes at any point in time.

594
01:07:56,620 --> 01:08:00,620
Shouldn't pay a royalty in every trade looking for the end user or the collector.

595
01:08:00,620 --> 01:08:03,620
The person who wants to go to a professor should pay a royalty.

596
01:08:03,620 --> 01:08:05,620
It's complicated.

597
01:08:05,620 --> 01:08:07,620
We'll see if people figure this out.

598
01:08:07,620 --> 01:08:08,620
It's complicated.

599
01:08:08,620 --> 01:08:11,620
A lot of people are working on it, but it's complicated.

600
01:08:11,620 --> 01:08:17,620
Um.

601
01:08:17,620 --> 01:08:39,620
So I think in pulling this together, the main NFT file usage cases are, you know, buying and selling them share buying and selling them in a M type model, fractionalizing them.

602
01:08:39,620 --> 01:08:48,620
And then I'm referring against them or using this collateral.

603
01:08:48,620 --> 01:08:54,620
It equals to feed data into the some of these usage cases.

604
01:08:54,620 --> 01:09:00,620
And then some of the things that I mean, that people working on, but I don't think are quite.

605
01:09:00,620 --> 01:09:10,620
Part of the ecosystem is immature.

606
01:09:10,620 --> 01:09:15,620
It's fairly new.

607
01:09:15,620 --> 01:09:17,620
It's not very high volume.

608
01:09:17,620 --> 01:09:21,620
They're unsolved technical problems.

609
01:09:21,620 --> 01:09:31,620
Um.

610
01:09:31,620 --> 01:09:34,620
Fungible tokens are more complicated.

611
01:09:34,620 --> 01:09:36,620
Not much more complicated.

612
01:09:36,620 --> 01:09:40,620
But I believe this ecosystem will be built up.

613
01:09:40,620 --> 01:09:43,620
I think it is going to happen.

614
01:09:43,620 --> 01:09:51,620
I want to stop there for today. I think these are these worthy main concepts. I'd like you to have in mind for.

615
01:09:51,620 --> 01:09:53,620
The upcoming weeks.

616
01:09:53,620 --> 01:09:57,620
I want to say we're also a little bit behind on our guests.

617
01:09:57,620 --> 01:09:59,620
Just purely from logistics.

618
01:09:59,620 --> 01:10:03,620
There's so much to do. And so, but we will get them all in.

619
01:10:03,620 --> 01:10:07,620
We are not going to, we're not going to leave any guests behind.

620
01:10:07,620 --> 01:10:09,620
It won't necessarily come.

621
01:10:09,620 --> 01:10:13,620
On the exact same week as they were.

622
01:10:13,620 --> 01:10:17,620
That everything would have otherwise happened.

623
01:10:17,620 --> 01:10:20,620
But we will get them all in.

624
01:10:20,620 --> 01:10:22,620
And.

625
01:10:22,620 --> 01:10:24,620
Um.

626
01:10:24,620 --> 01:10:29,620
It's going to be super interesting. So with that.

627
01:10:29,620 --> 01:10:35,620
I'm going to switch to Q&A, maybe take 10, 15 minutes of Q&A.

628
01:10:35,620 --> 01:10:39,620
Keep today's session at some type of reasonable time.

629
01:10:39,620 --> 01:10:41,620
Or longer.

630
01:10:41,620 --> 01:10:42,620
And plan.

631
01:10:42,620 --> 01:11:11,620
I think we should still take some Q&A.

632
01:11:11,620 --> 01:11:13,620
Okay, so.

633
01:11:13,620 --> 01:11:17,620
Is art restricted just the visual? No, of course not.

634
01:11:17,620 --> 01:11:19,620
Absolutely not.

635
01:11:19,620 --> 01:11:23,620
Who's making war hall NFTs?

636
01:11:23,620 --> 01:11:27,620
I don't think there's a lot of.

637
01:11:27,620 --> 01:11:32,620
I wasn't showing those soup cans because I'm going to become in 10 of NFTs. They're not enough NFTs.

638
01:11:32,620 --> 01:11:35,620
The originals are in the mama.

639
01:11:35,620 --> 01:11:42,620
I think there was.

640
01:11:42,620 --> 01:11:45,620
There were.

641
01:11:45,620 --> 01:11:48,620
Certain four or five.

642
01:11:48,620 --> 01:11:51,620
NFTs made by the war hall state.

643
01:11:51,620 --> 01:11:53,620
The title is a digital work you did.

644
01:11:53,620 --> 01:11:58,620
And then that was that. I don't think anything else happened with war hall NFTs.

645
01:11:58,620 --> 01:12:05,620
Okay, should the link to us be shunned by all cryptos being priced in crypto such as Bitcoin and Ethereum?

646
01:12:05,620 --> 01:12:08,620
Well.

647
01:12:08,620 --> 01:12:11,620
No, I don't think.

648
01:12:11,620 --> 01:12:17,620
I think it is interesting that NFTs do primarily trade in.

649
01:12:17,620 --> 01:12:20,620
The nominations.

650
01:12:20,620 --> 01:12:29,620
But so long as people live their physical life in Fiat world.

651
01:12:29,620 --> 01:12:34,620
Any token in Fiat terms, no matter what.

652
01:12:34,620 --> 01:12:43,620
Because ultimately a lot of people will want to take their digital assets and convert them into various.

653
01:12:43,620 --> 01:12:52,620
Physical world use this case.

654
01:12:52,620 --> 01:12:56,620
And if you have to pay in Fiat, it does matter what the Fiat prices.

655
01:12:56,620 --> 01:13:00,620
My mental model for this question is.

656
01:13:00,620 --> 01:13:03,620
But there's two worlds.

657
01:13:03,620 --> 01:13:07,620
And one world will be Fiat denominator. One world may be.

658
01:13:07,620 --> 01:13:13,620
Crypto the one of the nominated. And that will happen if there is a.

659
01:13:13,620 --> 01:13:17,620
Kind of circular economy in that world.

660
01:13:17,620 --> 01:13:21,620
And to the degree that.

661
01:13:21,620 --> 01:13:24,620
Crypto unit of account.

662
01:13:24,620 --> 01:13:29,620
It's going to matter in a circular.

663
01:13:29,620 --> 01:13:38,620
More than it's going to matter in a

664
01:13:38,620 --> 01:13:43,620
Fiat economy. It's going to be hard for a Fiat economy to be.

665
01:13:43,620 --> 01:13:47,620
The nominated by.

666
01:13:47,620 --> 01:13:49,620
And crypto terms.

667
01:13:49,620 --> 01:13:54,620
I don't think that's any of that's particularly.

668
01:13:54,620 --> 01:13:56,620
Anything else.

669
01:13:56,620 --> 01:14:03,620
Okay, it doesn't seem like we have any more questions or at least no more were fed to me.

670
01:14:03,620 --> 01:14:05,620
And if someone.

671
01:14:05,620 --> 01:14:07,620
If he wants to.

672
01:14:07,620 --> 01:14:12,620
I think the Fiat and crypto systems will call just absolutely for a long time.

673
01:14:12,620 --> 01:14:15,620
And.

674
01:14:15,620 --> 01:14:18,620
In the immediate.

675
01:14:18,620 --> 01:14:27,620
Turn.

676
01:14:27,620 --> 01:14:29,620
The.

677
01:14:29,620 --> 01:14:32,620
The risk of the crypto system of the system.

678
01:14:32,620 --> 01:14:37,620
But I think the correct way to think about it is that they will exist.

679
01:14:37,620 --> 01:14:41,620
Together for a long time.

680
01:14:41,620 --> 01:14:45,620
Does all have a marketplace not right now.

681
01:14:45,620 --> 01:14:48,620
I'm still doesn't have.

682
01:14:48,620 --> 01:14:51,620
An NFT based.

683
01:14:51,620 --> 01:14:55,620
Community.

684
01:14:55,620 --> 01:14:58,620
I am a team based ecosystem.

685
01:14:58,620 --> 01:15:00,620
Because it's.

686
01:15:00,620 --> 01:15:04,620
Not yet sufficiently decentralized for my test.

687
01:15:04,620 --> 01:15:05,620
But I will change.

688
01:15:05,620 --> 01:15:07,620
I expect that in 2023.

689
01:15:07,620 --> 01:15:12,620
All right, I am going to wrap it up here.

690
01:15:12,620 --> 01:15:16,620
We have.

691
01:15:16,620 --> 01:15:19,620
And.

692
01:15:19,620 --> 01:15:21,620
George.

693
01:15:21,620 --> 01:15:25,620
As a conflict, so I will do the Q&A with.

694
01:15:25,620 --> 01:15:28,620
So super great session.

695
01:15:28,620 --> 01:15:31,620
Fabulous person.

696
01:15:31,620 --> 01:15:35,620
And I encourage you to watch if you have the time.

697
01:15:35,620 --> 01:15:42,620
Are able to join.

698
01:15:42,620 --> 01:15:45,620
Everyone, thank you very much again.