00:00.000 --> 00:25.480 Okay, everyone, I think we are now all set. 00:25.480 --> 00:33.720 This is session 6 of META-511 Non-Fungible Tokens and the Metaverse. 00:33.720 --> 00:37.160 And today, the session sounds a little bit more general. 00:37.160 --> 00:40.000 It's called Key Considerations in the NFT space. 00:40.000 --> 00:44.040 And I'll get into what that means in a little bit. 00:44.040 --> 00:54.800 Before I do that, I'd like to acknowledge that the last 24, 48, 72 hours in the general 00:54.800 --> 00:58.240 crypto space, I think, has been quite dramatic. 00:58.240 --> 01:06.160 I assume almost everyone here knows, but in case we have non-crypto folks here who don't 01:06.160 --> 01:12.000 over the last couple of days, FTX, which is one of the largest exchanges in the world, 01:12.000 --> 01:18.680 and has failed to meet redemptions withdraws. 01:18.680 --> 01:23.080 And this is causing understandably a lot of turbulence in the market, a lot of anxiety 01:23.080 --> 01:25.520 of what it might mean. 01:25.520 --> 01:33.880 And it looks like there's no immediate end in sight to this situation. 01:33.880 --> 01:41.080 What I wanted to just say for a second, what I wanted to share with you what I've said 01:41.080 --> 01:47.360 on my Twitter feed, first of all, I'm sure some people, a lot of people, maybe some people 01:47.360 --> 01:50.920 here, have been hurt by this. 01:50.920 --> 01:55.400 And I feel very badly for anyone who has been hurt by this. 01:55.400 --> 02:01.960 You should be able to trust that an exchange that has your tokens or your money can give 02:01.960 --> 02:05.520 them back to you when you want to. 02:05.520 --> 02:09.320 But sadly, that often in crypto has not happened. 02:09.320 --> 02:16.680 Unfortunately, the natural keys, not your coins, stay of crypto has often been this way. 02:16.680 --> 02:27.960 But what I wanted to share is it might feel very bleak. 02:27.960 --> 02:30.520 And this has happened many times before in crypto. 02:30.520 --> 02:33.640 And as many times as anyone who's been in the field for a very long time has been through 02:33.640 --> 02:38.400 multiple of these cycles and has been hit at various points through these cycles. 02:38.400 --> 02:51.040 So if you're just regular, sad, and don't talk to your non-crypto friends, it will pass. 02:51.040 --> 02:54.400 If you're seriously sad, please do seek help. 02:54.400 --> 03:00.000 This is, crypto is important, money is important, of course, all these things are important. 03:00.000 --> 03:03.920 But they're not as important as your health as you're well-being, your family, and 03:03.920 --> 03:08.880 a lot of people are really in shock today. 03:08.880 --> 03:13.880 And for a lot of people, this might be the first time that this has happened to them. 03:13.880 --> 03:17.640 And so do take care of yourself. 03:17.640 --> 03:26.800 In the end, you look back at these things over time and they feel very different than 03:26.800 --> 03:30.040 a point of when they do while they're happening. 03:30.040 --> 03:34.760 I have had things like this happen to me multiple times over the last decade. 03:34.760 --> 03:41.600 And when you're in it, it is extraordinarily stressful, painful, maybe emotionally painful. 03:41.600 --> 03:46.640 And over time, then it feels very different. 03:46.640 --> 03:54.360 And there, in the fullness of times, I mean, it's just become really interesting stories, 03:54.360 --> 03:59.880 which sounds crazy at the moment to think about it, the moment you're just saying, my 03:59.880 --> 04:00.880 own disaster. 04:00.880 --> 04:07.400 But I'm here to say that it's not like that. 04:07.400 --> 04:10.560 The vast majority of cases, it's not like that. 04:10.560 --> 04:18.800 And just like when everything is going super super well, it's never as good as it seems. 04:18.800 --> 04:24.840 When things are going badly as they are now, it's never as bad as it seems. 04:24.840 --> 04:33.880 And so do take care of yourself, don't let yourself take it too hard. 04:33.880 --> 04:38.800 Whatever has happened in this case has probably more or less happened and is probably out 04:38.800 --> 04:42.760 of your control in the case of FTX. 04:42.760 --> 04:49.840 And so do me, do me, be kind to yourself, be kind to yourself, be kind to your family. 04:49.840 --> 05:01.620 And as I said, it's never as good as it seemspol as it seems Brund Time is probably a good 05:01.620 --> 05:16.700 life- Executioners are something that we9 arcade time for and letters are a good model for 05:16.700 --> 05:17.700 you. 05:17.700 --> 05:22.660 seems perfect, there's some reversion to the meme in your happiness and in your life, 05:22.660 --> 05:27.660 and when everything seems terrible, the same is actually true. 05:27.660 --> 05:34.620 So I didn't want to share that, so I shared it on Twitter. 05:34.620 --> 05:40.620 It is some of us are hardened now. 05:40.620 --> 05:43.620 We've been through this many times. 05:43.620 --> 05:50.620 So to the degree that is helpful for people who are going through it for the first time, 05:50.620 --> 05:58.620 now would like to be helpful and find a friend, talk to a friend, talk to a fellow, 05:58.620 --> 06:03.620 get off Crypto Twitter, that's possibly a good idea. 06:03.620 --> 06:08.620 Be kind to yourself. 06:08.620 --> 06:16.620 Okay, now today's session is another framework session. 06:16.620 --> 06:17.620 What do I mean? 06:17.620 --> 06:25.620 These are topics that we are going to dive into in-depth with a lot of the guests. 06:25.620 --> 06:35.620 We are going to bring guests without who are specialists in these topics. 06:35.620 --> 06:44.620 And maybe on something that today is a slide, we'll spend a whole hour. 06:44.620 --> 06:49.620 So just like we did in a couple of the more recent sessions, 06:49.620 --> 06:55.620 and particularly for folks who are newer to this field, 06:55.620 --> 07:00.620 I want to make sure we have the same basic frameworks among all of us. 07:00.620 --> 07:15.620 And then, and then we will go into the individual sessions and dig into this in much more detail. 07:15.620 --> 07:28.620 So my guess is as many of the prior sessions, this is going to be more fairly basic for the advanced folks today. 07:28.620 --> 07:35.620 And we'll get into the advanced topics in sessions, but for folks who may be not as deep into the space, 07:35.620 --> 07:36.620 it'll be helpful. 07:36.620 --> 07:39.620 It's a level setting. 07:39.620 --> 07:42.620 It's a level-setting session. 07:42.620 --> 07:47.620 So, let me, that's the same. 07:47.620 --> 07:49.620 I want to talk about pre-topics today. 07:49.620 --> 07:55.620 This topic of collectibles, this question of aesthetics and versus rarity, 07:55.620 --> 08:04.620 which is often discussed in the space, a little bit of NFT-5, which is a play on the word DeFi, 08:04.620 --> 08:13.620 or DeFi being decentralized finance, and a variety of crypto services that are effectively financial services, 08:13.620 --> 08:19.620 but they're running as on-chain protocols, not as centralized companies. 08:19.620 --> 08:28.620 So, Uniswap is a DeFi exchange, compound is a DeFi lender, a small editorial note. 08:28.620 --> 08:38.620 A nice thing about DeFi services is you can see, transparently, what's happening all the way through, 08:38.620 --> 08:44.620 which apparently has not been the case for the centralized crypto services, 08:44.620 --> 08:50.620 which have truly performed very poorly during this fair market. 08:50.620 --> 09:00.620 So, the theory that the value and the interesting thing and the magic of crypto assets and crypto currencies 09:00.620 --> 09:07.620 of blockchain is the on-chain part, not a centralized company wrapped around your on-chain balances, 09:07.620 --> 09:15.620 un-beated, undefeated. This is what it's all about for better or for worse. 09:15.620 --> 09:22.620 So, we'll talk a little bit about how NFTs may or may not interact with DeFi. 09:22.620 --> 09:26.620 So, let's talk about collectibles. 09:26.620 --> 09:36.620 And collectibles is one of these concepts that is thrown around a lot in the space. 09:36.620 --> 09:48.620 Mostly as a criticism, mostly its people saying, you mostly hear this concept from people from outside the space 09:48.620 --> 09:59.620 saying, well, this stuff's not really art. It's collectibles. 09:59.620 --> 10:09.620 And they mean that primarily in a negative way. Sometimes in a neutral, it's really meant in a positive way. 10:09.620 --> 10:18.620 And it's interesting to think, is that true? Is that accurate? Or is it accurate? 10:18.620 --> 10:22.620 And I thought it was something like, okay, what are collectibles? 10:22.620 --> 10:30.620 One of the things that are unambiguously collectibles that nobody really questions that they are collectibles. 10:30.620 --> 10:37.620 How many, many things? Humans love to collect things. 10:37.620 --> 10:43.620 Different humans love to collect different types of things. 10:43.620 --> 10:53.620 But it does seem to be some type of innate human desire. What are like things that are real people collect? 10:53.620 --> 11:00.620 Well, those are stamps. I'm a stamp collector. I'm a coin collector. 11:00.620 --> 11:07.620 I'm a baseball card collector. I'm a football card collector. I'm a comic book collector. 11:07.620 --> 11:14.620 I'm a Beanie baby collector. It's always an example. Everyone always mentions beanie because it all comes to this. 11:14.620 --> 11:20.620 I'm a collectible wine collector. 11:20.620 --> 11:25.620 And wine's interesting because there's two categories of wine, right? There's collectible grade wine. 11:25.620 --> 11:31.620 I mean, not collectible grade wine. There's the kind of cheap and cheerful wine that you buy from the supermarket 11:31.620 --> 11:34.620 and you'll have tonight for dinner. 11:34.620 --> 11:38.620 That wine, even if you collect, it's not going to make any difference like it's not. 11:38.620 --> 11:45.620 It's not actually collectible wine. And then there's wine that is, that ages well and is limited supply and is high quality. 11:45.620 --> 11:52.620 It is collectible. Classic cars are collectible. 11:52.620 --> 11:57.620 Comic books are collectible. 11:57.620 --> 12:05.620 But also things from the fashion world. Certain handbags are collectibles. 12:05.620 --> 12:09.620 Certain watches are collectibles. 12:09.620 --> 12:17.620 Genstones, jewelry. All of these are broadly in the category of collectibles. 12:17.620 --> 12:28.620 And many of these things, many of them, have long-term established value. 12:28.620 --> 12:42.620 So, stamps have been something that people collected a decade ago and 50 years ago and 100 years ago. 12:42.620 --> 12:48.620 It's not going likely to change. 12:48.620 --> 12:57.620 Genstones have been collected for millennia. 12:57.620 --> 13:19.620 And in categories of collectibles, where it has become established that the categories important and people care about it, 13:19.620 --> 13:28.620 they tend to trade on rarity. Stamps are a great example. They are. 13:28.620 --> 13:41.620 A very large number of stamps involved. Some of them are very pretty. Some of them are beautiful. 13:41.620 --> 13:50.620 But a typical run of stamps is gigantic. 13:50.620 --> 13:55.620 There might be millions. The United States, they have the stamps. It's the American flag. 13:55.620 --> 14:03.620 I don't think it's even millions. It might be hundreds of millions that have been printed of that stamp. 14:03.620 --> 14:12.620 That might be an aesthetically appealing stamp. It might be more aesthetically appealing than a rare stamp, but it does not generate collectible value. 14:12.620 --> 14:17.620 Because the supply is very large. 14:17.620 --> 14:24.620 And so, even if 100,000, 100,000 people say, oh, yeah, what one of those things? 14:24.620 --> 14:40.620 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. 14:40.620 --> 14:46.620 And also how much of it there is. 14:46.620 --> 14:56.620 So, you know, people who haven't taken a microeconomic class sometimes, you know, get a little confused on this. 14:56.620 --> 15:01.620 Things might be extremely valuable, and you have a low price. 15:01.620 --> 15:10.620 For example, air. Oxygen is extremely valuable. Without it, we'd all be dead in a couple minutes. 15:10.620 --> 15:16.620 And demand for oxygen is off the charts. 15:16.620 --> 15:20.620 But oxygen is also extremely plentiful. 15:20.620 --> 15:23.620 It's available all around us. 15:23.620 --> 15:30.620 And therefore, it trades for free. 15:30.620 --> 15:46.620 The primary driver of established collectible category value tends to be a bread. 15:46.620 --> 16:02.620 You have to, for their to be value, there has to be some shortage in quotes, air quotes of supply. 16:02.620 --> 16:10.620 And I think also it becomes a little bit reflexive. 16:10.620 --> 16:24.620 The price itself becomes in some cases, part of the value of the rarity, somehow independently of the rarity. 16:24.620 --> 16:27.620 What are we, but let's just work through an example. 16:27.620 --> 16:30.620 We'll stay with an example that's like you're going to be very neutral to people. 16:30.620 --> 16:36.620 Stamps. 16:36.620 --> 16:41.620 If there are this, not a ton of people in the world want to go at stamps, right? 16:41.620 --> 16:46.620 But of the very rare stamps, there's really quite not that many of them at all. 16:46.620 --> 16:56.620 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. 16:56.620 --> 17:05.620 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. 17:05.620 --> 17:09.620 And you know, the other ones in a museum somewhere in the UK, right? 17:09.620 --> 17:15.620 Another one is with some other person, and you now own one of them. 17:15.620 --> 17:17.620 And then you maybe pay a lot of money for it. 17:17.620 --> 17:20.620 To a thousand dollars for it, making these numbers up. 17:20.620 --> 17:22.620 All these examples are made up. 17:22.620 --> 17:34.620 And then you see a story that says, wow, someone paid $200,000 for this rare Victorian stamp. 17:34.620 --> 17:42.620 And somehow even the price itself gets embedded into the rarity, into the status. 17:42.620 --> 17:47.620 Now, this reflexivity causes booms and busts and bubbles, right? 17:47.620 --> 17:52.620 So it's not in and of itself a good or a bad thing. 17:52.620 --> 17:54.620 It's a neutral thing. 17:54.620 --> 18:03.620 But what ends up being the case is that ultimately, 18:03.620 --> 18:14.620 ultimately, I think, I think this might be controversial and it might cause people to react. 18:14.620 --> 18:26.620 But a huge amount of what drives collectable of us is status issue. 18:26.620 --> 18:36.620 And I said, oh, no, no, no, I really like stamps and the stamps are super interesting, and this is a very special stamp. 18:36.620 --> 18:39.620 And now I own the special stamp. 18:39.620 --> 18:42.620 Okay, cool, there's all two. 18:42.620 --> 18:48.620 And I think when you're a stamp expert, you don't think you're collecting that special stamp for status purposes. 18:48.620 --> 18:55.620 Just like when I'm pouring through out blocks curated for a rare piece of genital art. 18:55.620 --> 19:02.620 And genuinely don't think I'm doing it for status purposes. 19:02.620 --> 19:07.620 What I think I'm doing it for is for the intellectual challenge to find something interesting, 19:07.620 --> 19:14.620 to find something special, to put it in the museum to complete the collection, all these things, right? 19:14.620 --> 19:27.620 But the underlying driver, the underlying psychological driver, has to somehow biologically be status related, right? 19:27.620 --> 19:31.620 Like birds. 19:31.620 --> 19:39.620 Oh, sorry, some species of birds decorate their nests. 19:39.620 --> 19:48.620 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. 19:48.620 --> 19:57.620 They like sparkly and colorful things. 19:57.620 --> 20:00.620 And what I think is going on is, I know, look, I have a special nest. 20:00.620 --> 20:02.620 I have nice and valuable things in my nest. 20:02.620 --> 20:14.620 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. 20:14.620 --> 20:23.620 I'm perhaps more likely to attract the mate to my nest. 20:23.620 --> 20:25.620 And it's a sign of fitness, right? 20:25.620 --> 20:32.620 I was able to find these nice and sparkly things and bring them there. 20:32.620 --> 20:35.620 Maybe it means I'm a good hunter or something, gatherer food. 20:35.620 --> 20:38.620 By the way, the bird's not thinking any of these things, right? 20:38.620 --> 20:43.620 The bird itself is just thinking, oh, look, sparkly thing. 20:43.620 --> 20:45.620 I'd like this in my nest. 20:45.620 --> 20:48.620 And then the bird's partner might be like, oh, well, that's pretty cool. 20:48.620 --> 20:49.620 It's sparkly. 20:49.620 --> 20:57.620 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. 20:57.620 --> 21:04.620 And we don't 100% know why we're doing the things we're doing, right? 21:04.620 --> 21:09.620 We're highly biologically driven. We're highly evolutionarily driven. 21:09.620 --> 21:12.620 But I think it comes from a similar place. 21:12.620 --> 21:17.620 And I think it is a very deep human tendency. 21:17.620 --> 21:35.620 Because we say collectible behavior across category, across demographic, across societies, across centuries, across quote unquote asset classes. 21:35.620 --> 21:40.620 And so there's something very deeply human about collecting. 21:40.620 --> 21:45.620 Collectibles, for me, are not a dirty word. 21:45.620 --> 21:52.620 They're not an interesting thing, a boring thing. 21:52.620 --> 22:11.620 No, someone who is super into restoring classic cars and finding the one of whatever 20 old Mercedes Benz from the 1930s that, 22:11.620 --> 22:21.620 and finding the original parts and making that car complete. 22:21.620 --> 22:36.620 That is a nice behavior, arguably a noble behavior, a human behavior, and a negative behavior. 22:36.620 --> 22:44.620 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. 22:44.620 --> 22:49.620 It's a fad, it's a bubble, and that absolutely happens. 22:49.620 --> 22:54.620 The Beanie babies were very popular and very valuable, and then they were not. 22:54.620 --> 23:03.620 Certain baseball and football courts in the 90s and 2000s were very popular and very valuable, and then they were up. 23:03.620 --> 23:07.620 Usually, not always, but usually. 23:07.620 --> 23:17.620 These bubbles occurred in corporate backed collectibles. 23:17.620 --> 23:25.620 Usually the model does something like this. Something starts organically normally. People start buying, they think it's good. 23:25.620 --> 23:32.620 It hits the spirit of that era for whatever reason. 23:32.620 --> 23:38.620 It usually starts off with a very good scenario. The beginnings always organic. 23:38.620 --> 23:42.620 The people say, oh, yeah, I like this. I want to own one of these things. 23:42.620 --> 23:48.620 And then because people want to own one of these things, I don't know what this is. 23:48.620 --> 23:51.620 They buy them, and there's no things different. 23:51.620 --> 23:56.620 Where it is with different statuses. 23:56.620 --> 24:02.620 Oh, I want one of these more interesting ones. I want purple one, blue one, red one. 24:02.620 --> 24:08.620 And then because lots of people might want it, when the price goes up and people tell, that's interesting. 24:08.620 --> 24:14.620 Someone's made money, and any babies. And now it attracts certain people who might say, 24:14.620 --> 24:18.620 oh, this is also interesting. It's a speculative opportunity. 24:18.620 --> 24:29.620 And then more people come in, now the manufacturer, a counterparty in financial terms, 24:29.620 --> 24:41.620 the person who's controlling the supply in financial terms, says, oh, this is very exciting. 24:41.620 --> 24:44.620 They might even think of it in a completely innocent way. 24:44.620 --> 24:52.620 Or they could be in a state of the world. People are really into our many babies. 24:52.620 --> 25:00.620 They are valuable, important, symbolically interesting to people. 25:00.620 --> 25:08.620 Let's make more. And it works first. 25:08.620 --> 25:14.620 Everyone wins. More people come into the community. 25:14.620 --> 25:17.620 The price and the rare one goes up some more. 25:17.620 --> 25:22.620 The manufacturer is making lots of money. They hire people. They do more marketing. 25:22.620 --> 25:28.620 They open stores, they put ads and relevant publications. 25:28.620 --> 25:33.620 So this continues to work. And now everyone's really happy. 25:33.620 --> 25:41.620 And usually what happens in this model, because supply is not constrained. 25:41.620 --> 25:50.620 Supply tends to overshoot. And all this cycle works in reverse. 25:50.620 --> 25:55.620 I don't like it prices aren't going up. This is not great. 25:55.620 --> 26:00.620 In fact, really follow. But, you know, let me take some of my money out of this. 26:00.620 --> 26:08.620 And then the cycle goes in reverse. 26:08.620 --> 26:12.620 And then a few years later, everyone's looking at each other. 26:12.620 --> 26:16.620 And people outside are the space of looking at it. 26:16.620 --> 26:19.620 My God, what happened to people? 26:19.620 --> 26:28.620 They lose their minds. Like, how are they paying so much money for this thing that looks like nothing. 26:28.620 --> 26:34.620 And I believe, and this is not like some grand unifying theory like quantum physics or something, 26:34.620 --> 26:43.620 but I do believe, there are generally patterns for when it plays out that way. 26:43.620 --> 26:47.620 And counter patterns. Now, it doesn't have to play out that way. 26:47.620 --> 26:50.620 Even if you have a corporate counterparty. 26:50.620 --> 27:04.620 The Birkenbag has managed to remain popular, rare and collectible for several decades. 27:04.620 --> 27:06.620 This is a very impressive achievement. 27:06.620 --> 27:12.620 This is an achievement of both marketing. 27:12.620 --> 27:21.620 Both staying in tune with a customer segment over decades through changing fashions. 27:21.620 --> 27:24.620 It's really impressive. 27:24.620 --> 27:27.620 And managing supply. 27:27.620 --> 27:33.620 If the Birken bags, if there were millions and tens of millions of Birken bags, 27:33.620 --> 27:35.620 they'd say, oh, look, everyone's a Birkenbag. 27:35.620 --> 27:42.620 Back here, let's make, let's fill all the demand. Let's make more money. 27:42.620 --> 27:45.620 It is almost certainly the case that don't want a Birkenbag today. 27:45.620 --> 27:50.620 So that's the case of a corporate counterparty. 27:50.620 --> 28:03.620 And supply and branding and fashion ability being kept within good parameters 28:03.620 --> 28:07.620 are very long period of time. It's actually quite impressive. 28:07.620 --> 28:10.620 It keeps saying a corporate counterparty. 28:10.620 --> 28:14.620 Wait, how does it relate to the catabor? 28:14.620 --> 28:19.620 In the other categories, the categories that I think are more stable, 28:19.620 --> 28:21.620 there's not a corporate counterparty. 28:21.620 --> 28:25.620 In stamps, you're not buying stamps from the one stamp manufacturer 28:25.620 --> 28:32.620 who will also make lots of money if you buy a lot of stamps for them. 28:32.620 --> 28:43.620 Stamp production over time and across countries and across eras is sort of decentralized. 28:43.620 --> 28:46.620 There have been many countries, many regimes, many governments, 28:46.620 --> 28:51.620 since we've invented sending a letter, and they produced a bunch of stamps 28:51.620 --> 28:55.620 and they produced them not in order to sell collectibles to people. 28:55.620 --> 28:58.620 They produced them for a different purpose, and then some of them got destroyed 28:58.620 --> 29:03.620 above the bottom of the bottom of the bottom. All of a sudden, 29:03.620 --> 29:06.620 you end up with a rarity structure in stamps. 29:06.620 --> 29:15.620 It's very extreme, right? The typical stamp is collectability worthless. 29:15.620 --> 29:22.620 But certain stamps are extremely valuable, and they're likely to remain extremely valuable, 29:22.620 --> 29:28.620 because they're not going to make more of those stamps, right? 29:28.620 --> 29:31.620 You can't change the supply dynamics there. 29:31.620 --> 29:36.620 And other things that have been stamps are 150 years older than they are, right? 29:36.620 --> 29:39.620 Coins are millennial. 29:39.620 --> 29:42.620 There is a... 29:42.620 --> 29:51.620 Well, function in fairly stable market in rare coins, both modern year and older year. 29:51.620 --> 29:56.620 And you don't have a centralized corporate counterparty. 29:56.620 --> 29:59.620 It's weird, right? It's like thinking about crypto. 29:59.620 --> 30:04.620 But it's true. There's no one who is going to now... 30:04.620 --> 30:07.620 So I say, oh, coins are super valuable. 30:07.620 --> 30:12.620 Let's go mint another 1 million Roman-era coins. 30:12.620 --> 30:16.620 You can't do that. You can't go back in time. The supplies fixed there. 30:16.620 --> 30:22.620 Other might be occasionally discovery. Maybe someone discovers a huge stash of supply dynamics change, 30:22.620 --> 30:25.620 but it's not common. It's not, it's rare. 30:25.620 --> 30:29.620 So... 30:29.620 --> 30:35.620 Rearity is important in collectibles. 30:35.620 --> 30:45.620 Of course, rearity is important in collectibles contingent on the overall category being interesting. 30:45.620 --> 30:52.620 And, you know, most of the categories here are interesting for... 30:52.620 --> 30:59.620 kind of fundamental purposes. Coins are shiny, gemstones are shiny, some work in bands are shiny. 30:59.620 --> 31:04.620 Lines drinkable, like you can drink in rare lines, you can taste it. 31:04.620 --> 31:12.620 Right? And some have to form the social construction that they're important, 31:12.620 --> 31:20.620 that the people come to agree as a group that something has cultural symbolic value, 31:20.620 --> 31:27.620 and therefore it's desirable to own it. 31:27.620 --> 31:33.620 The rearity by itself doesn't mean anything. 31:33.620 --> 31:40.620 I could draw on five pieces of paper, five special 6529, 31:40.620 --> 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. 31:44.620 --> 31:51.620 Right? So, Rearity is important, contingent on the category being important. 31:51.620 --> 31:58.620 And now with all of that, that's set up. 31:58.620 --> 32:00.620 Let's ask suggestions. 32:00.620 --> 32:08.620 On the left is, I believe, the most valuable baseball card in the world, the homeless wiger. 32:08.620 --> 32:12.620 The homeless wiger baseball card is unambiguously a collectible. 32:12.620 --> 32:17.620 It is a collectible in the positive sense that it is a collectible, people collected, 32:17.620 --> 32:22.620 and spent lots of money for it. I don't remember offhand, maybe, 32:22.620 --> 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. 32:29.620 --> 32:35.620 And it's also collectible in the sense that it is not fine art, which is, you know, 32:35.620 --> 32:45.620 the discussion that people tend to have in the NFT world is it collectibles or is it finer? 32:45.620 --> 32:49.620 Nobody, I think, will argue that the homeless wiger card is fine art. 32:49.620 --> 32:51.620 But they'll say it's a collectible. 32:51.620 --> 32:58.620 On the right is the first rare pepe card. You've seen it before in the prior sessions. 32:58.620 --> 33:06.620 It looks kind of like a baseball or football card. 33:06.620 --> 33:13.620 Is it a collectible for sure? It's a collectible. Is it also? I don't know. 33:13.620 --> 33:18.620 I think people would argue. I think a lot of folks would look at this, 33:18.620 --> 33:22.620 like in particular, if you're not in the NFT world, saying, oh, of course, it's not fine art. 33:22.620 --> 33:23.620 It's a collectible. 33:23.620 --> 33:24.620 It's an as looking collectible. 33:24.620 --> 33:28.620 Main is a collectible that resonates with a certain community, but it's a collectible. 33:28.620 --> 33:30.620 It's not art. Okay. 33:30.620 --> 33:34.620 Hold that thought. 33:34.620 --> 33:38.620 What about this? 33:38.620 --> 33:46.620 On the left is an unambiguously important piece of fine art. 33:46.620 --> 33:56.620 And from 1984 on the right is a derivative of that piece of fine art, a pepe basket. 33:56.620 --> 34:10.620 If this same exact same image had been made by Luca the artist and sold as a painting, 34:10.620 --> 34:16.620 I don't think anyone would question whether it's fine art. 34:16.620 --> 34:19.620 It has, of course, derivative art. It's on the chart. 34:19.620 --> 34:22.620 It's remixing culture, all those things. 34:22.620 --> 34:27.620 But no one would say it's a collectible. It's art. 34:27.620 --> 34:31.620 But it's AA up. There's a lot of them. It's an addition. 34:31.620 --> 34:33.620 They don't think that actually would make a difference. 34:33.620 --> 34:39.620 I don't think that would make a difference. I think if people said someone painted that 34:39.620 --> 34:45.620 in the fine art print of an addition of a hundred of them, 34:45.620 --> 34:54.620 the artist said, look, I'm referencing John-Michel's work and updating it for the modern era. 34:54.620 --> 34:56.620 And here's what it means to me. 34:56.620 --> 35:01.620 All of these things are very clear. The artist is actually doing it, right? 35:01.620 --> 35:07.620 I don't think anyone would argue that if this was on a piece of paper, it's art. 35:07.620 --> 35:10.620 An example of how important art is, it's important art. 35:10.620 --> 35:16.620 Okay? It's art and the only thing that saves a collectible. 35:16.620 --> 35:22.620 And then, okay, if that, someone is made effectively a derivative art addition 35:22.620 --> 35:29.620 and minted it within the Rare Puppy series. Are you collectibles at art? 35:29.620 --> 35:37.620 Obviously, the series as a whole has strong collectible tendencies. 35:37.620 --> 35:44.620 That is sets and cards and additions, all those things. But, individual pieces. 35:44.620 --> 35:49.620 Many of them, to me, are definitely art. 35:49.620 --> 35:56.620 What about this one? 35:56.620 --> 36:01.620 We've discussed this before. 36:01.620 --> 36:04.620 It's the usual example. 36:04.620 --> 36:06.620 It's the usual question. 36:06.620 --> 36:11.620 It's what art known by the session will drop tomorrow. 36:11.620 --> 36:16.620 Art known, and a whole interview with the Mar-R-O-L-E-R, 36:16.620 --> 36:19.620 is it art, is it collectibles? 36:19.620 --> 36:30.620 The creators, or artists, even the term is loaded. 36:30.620 --> 36:37.620 Collectibles are likely made of by a creator. Art is likely made by an artist. 36:37.620 --> 36:40.620 It doesn't really matter to them. 36:40.620 --> 36:43.620 I think art comes as a little bit of both. 36:43.620 --> 36:49.620 What they say is the thing you need to look at is actually the whole project, including the website. 36:49.620 --> 36:59.620 To me, this is, of course, it has a collectible nature, but it is art. 36:59.620 --> 37:11.620 That does that mean that the 11,000th GFP project is art? 37:11.620 --> 37:13.620 No, probably not. 37:13.620 --> 37:26.620 It's probably someone trying to leverage off the value that accrued to something unique and interested. 37:26.620 --> 37:29.620 It's a good purpose. 37:29.620 --> 37:37.620 And, okay, low effort in many cases, like attempts are replicated in its collectible nature. 37:37.620 --> 37:43.620 It's not a clear answer to the point. It's a certain amount of clear answer across PFPs. 37:43.620 --> 37:48.620 And it constantly reminds me of this discussion. 37:48.620 --> 37:53.620 And it's a cliche that I'm putting this slide up. 37:53.620 --> 37:54.620 But it's also true. 37:54.620 --> 38:03.620 Now, the question with the soup cans of an anti-warhol in general wasn't if he was making collectibles. 38:03.620 --> 38:09.620 The question with Pop Art was, well, this is actually art. 38:09.620 --> 38:23.620 He was picking up a variety of images, a variety of thought processes 38:23.620 --> 38:35.620 from popular culture from products and commercial products 38:35.620 --> 38:39.620 and reinterpreting. 38:39.620 --> 38:50.620 And a lot of people then, for a long time, and even some people now, 38:50.620 --> 38:54.620 I spoke to someone, you know, 38:54.620 --> 38:58.620 and said, yeah, I don't like wheelhalls to commercial company. 38:58.620 --> 39:14.620 A lot of people then did not consider it fine art, objected to it. 39:14.620 --> 39:24.620 And today, I think consensus opinion is that it's art. 39:24.620 --> 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. 39:38.620 --> 39:47.620 It's absolutely absurd question. 39:47.620 --> 39:54.620 So the reason the soup cans are here are not because we discussed 60 years ago 39:54.620 --> 39:57.620 whether soup cans were collectibles or soup cans were fine art. 39:57.620 --> 40:01.620 We actually discussed it in the years of popular art, we could find out. 40:01.620 --> 40:05.620 But it was the same class of discussion. 40:05.620 --> 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 40:18.620 --> 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. 40:35.620 --> 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. 40:54.620 --> 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. 41:11.620 --> 41:18.620 And so to the degree that this is now solvable in collectibles. 41:18.620 --> 41:26.620 It's a positive, it's a good usage case for NFTs. It is a perfectly appropriate human activity. 41:26.620 --> 41:30.620 It's a human activity that they've been for a very long time. 41:30.620 --> 41:37.620 In many different ways, and we will absolutely do it in the NFT space. 41:37.620 --> 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. 42:02.620 --> 42:10.620 And I want to set up a small panel to discuss this exact topic in a video. 42:10.620 --> 42:15.620 Where does, where does aesthetics matter, and where does rarity matter? 42:15.620 --> 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. 42:31.620 --> 42:43.620 And the less collectible like it is, the less rarity matters, and by extension the more aesthetics matters. 42:43.620 --> 42:55.620 And so PFPs that are for sure the most collectible like of the projects in this space. 42:55.620 --> 43:05.620 Rarity matters a lot. It is in fact the dominant driver of value in PFPs. 43:05.620 --> 43:17.620 On the other side of the spectrum, I am a artist, I am a photographer, I create wonderful work. 43:17.620 --> 43:25.620 Rarity typically is a useful metric, they are all one of ones. 43:25.620 --> 43:30.620 They are all equally rare, they don't have any structured rarity traits. 43:30.620 --> 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. 43:42.620 --> 43:48.620 There is no collectible aspect there, there is no rarity aspect there. 43:48.620 --> 43:55.620 People will judge them, select them, assign value to them. 43:55.620 --> 43:59.620 Based on aesthetics and by aesthetics I am taking the very broad sense of aesthetics. 43:59.620 --> 44:02.620 I don't just mean like it is pretty. 44:02.620 --> 44:12.620 In aesthetics and meaning and the qualitative aspects. 44:12.620 --> 44:17.620 And I think generative art falls somewhat in the middle. 44:17.620 --> 44:23.620 In generative art you have collections, you have structured collections as we tell you, one of one of those. 44:23.620 --> 44:27.620 But up to 1000 or 400 or 400 or whatever. 44:27.620 --> 44:32.620 And those collections have traits. 44:32.620 --> 44:42.620 And in many collections, if not most collections, they are explicitly organized by the artist to have a rare destruction. 44:42.620 --> 44:46.620 And you can see this by the ones that are explicitly organized, not to have a rare destruction. 44:46.620 --> 44:51.620 Incomplete controls by Tyler Holmes have no rarity structure, there is no traits. 44:51.620 --> 44:56.620 You cannot decide which one is more rare than the other one. 44:56.620 --> 45:01.620 Elevated deconstruction by Luxbridge, again there is no rarity structure. 45:01.620 --> 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. 45:11.620 --> 45:15.620 But many collections do have a rarity structure. 45:15.620 --> 45:21.620 And sometimes the rarity structure overlaps with the aesthetic structure. 45:21.620 --> 45:26.620 In more simple collections this tends to be true. 45:26.620 --> 45:34.620 Oh look, this is the trait that it's gold, it's gold colored. 45:34.620 --> 45:36.620 It looks nicer, people like gold colored things. 45:36.620 --> 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. 45:41.620 --> 45:50.620 And so you link the rarity with also something that is visually appealing. 45:50.620 --> 45:59.620 And so in kind of a simple mode of generative collecting, if you have a collection that structures that way, 45:59.620 --> 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. 46:11.620 --> 46:15.620 And the gold also looks good as a contest. 46:15.620 --> 46:20.620 And you ask someone in advance, which one do you want? 46:20.620 --> 46:25.620 Well, if you're interested in the financial value, the one that other people are likely to want also, 46:25.620 --> 46:31.620 taking into account the laws of supply and demand, 46:31.620 --> 46:38.620 it is likely that you should take the hold on if you choose to do so. 46:38.620 --> 46:51.620 Because the work gets more complex, it becomes more like a one of one, this stuff matters much less. 46:51.620 --> 46:54.620 We'll come to that in a second. 46:54.620 --> 46:58.620 The punks trade primarily on road. 46:58.620 --> 47:02.620 They trade second barely on aesthetics. 47:02.620 --> 47:11.620 Air punks that are meant are viewed to be more aesthetic than others. 47:11.620 --> 47:15.620 But it doesn't overwhelm their rarity. 47:15.620 --> 47:27.620 A very aesthetic hoodie punk generically will trade for, I don't know, three, four, hundred ETH. 47:27.620 --> 47:33.620 And whatever the least aesthetic alien is will trade for several thousand. 47:33.620 --> 47:39.620 And so there's just aesthetics do not overwhelm the rarity structure. 47:39.620 --> 47:42.620 But even here, there's questions. 47:42.620 --> 47:49.620 Generally people would say the aliens are the rarest and most valuable. 47:49.620 --> 47:54.620 But here is this human, 47:54.620 --> 47:58.620 which has seven traits, and it's the only one that has seven traits. 47:58.620 --> 48:05.620 And statistically, this is rarer than the alien. 48:05.620 --> 48:12.620 This is owned by gentlemen named seed phrase. 48:12.620 --> 48:17.620 Is this rarer? Is it more valuable? 48:17.620 --> 48:21.620 Which would you rather have one of these? 48:21.620 --> 48:23.620 Or one of these? 48:23.620 --> 48:32.620 This is a one of one seven traits, but one of six thousand male punks. 48:32.620 --> 48:36.620 These were one of nine aliens, but there's only nine aliens. 48:36.620 --> 48:39.620 And when you see an alien, it's obvious it's an alien. 48:39.620 --> 48:45.620 And I'm not saying this because it is, there's anything particularly meaningful in this discussion. 48:45.620 --> 48:52.620 But even rarity is, and these are all, of course, very valuable punks because of their rarity. 48:52.620 --> 48:55.620 But even there, people don't agree. 48:55.620 --> 49:01.620 They might not coalesce on the same theories. 49:01.620 --> 49:09.620 But PFP collections are primarily rarity driven. 49:09.620 --> 49:15.620 In complex generative collections, the rarity starts to matter much less. 49:15.620 --> 49:21.620 This is the tool that is a cadence of the title. 49:21.620 --> 49:27.620 It is believed to be one of the most valuable things. 49:27.620 --> 49:32.620 It is not in the slightest bit rare. 49:32.620 --> 49:34.620 On the right are the rarity scores. 49:34.620 --> 49:47.620 And in generative art, people are very, very advanced, sophisticated, and picky on rarity. 49:47.620 --> 49:51.620 As you can see here, this is from a site called Artical. 49:51.620 --> 49:54.620 There are multiple rarity scores. 49:54.620 --> 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. 50:04.620 --> 50:07.620 But it's one of the few most valuable for those. 50:07.620 --> 50:08.620 Why? 50:08.620 --> 50:10.620 Oh, it's beautiful. 50:10.620 --> 50:16.620 And also, it looks like a tool, which is a form of emergent, nomadic, hell. 50:16.620 --> 50:20.620 So it's not statistically rare by the set. 50:20.620 --> 50:26.620 But it's considered one of the more peaceful ones, and certainly one of the more med ones. 50:26.620 --> 50:29.620 And so it's aesthetically rare. 50:29.620 --> 50:34.620 And this is how one of one's trade as well. 50:34.620 --> 50:38.620 Like, you know, it won't say there's all this powerful work of art, right? 50:38.620 --> 50:45.620 Powerful works of art are aesthetically rare. 50:45.620 --> 50:52.620 And so, it's very powerful, very valuable, because it's rare that you can produce something like 50:52.620 --> 50:53.620 credit cards. 50:53.620 --> 50:54.620 It's not easy. 50:54.620 --> 50:56.620 It's not something that anyone can do. 50:56.620 --> 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. 51:04.620 --> 51:15.620 So, even within generative art, you can imagine a spectrum. 51:15.620 --> 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, 51:33.620 --> 51:36.620 the more it is going to matter. 51:36.620 --> 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, 51:47.620 --> 51:52.620 and the more the aesthetics is going to matter. 51:52.620 --> 51:59.620 It's how the generative community looks at these. 51:59.620 --> 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, 52:19.620 --> 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, 52:39.620 --> 52:40.620 and see what they think. 52:40.620 --> 52:43.620 And there's no right answer, right? 52:43.620 --> 52:46.620 The answer is going to be both. 52:46.620 --> 52:52.620 And even one of ones are not immune from supply dynamics. 52:52.620 --> 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. 53:00.620 --> 53:12.620 And as a one of one, it will be viewed as valuable. 53:12.620 --> 53:18.620 But if that same piece was released by X-copy as an addition of one of a thousand, 53:18.620 --> 53:21.620 the individual unit price would be lower. 53:21.620 --> 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, 53:26.620 --> 53:28.620 because each one of them. 53:28.620 --> 53:32.620 And since a thousand people can own them, it's easier to get a hold of one. 53:32.620 --> 53:35.620 There's more likely to be someone to sell it to you. 53:35.620 --> 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. 53:43.620 --> 53:47.620 So when there's a thousand, there's always a marginal seller. 53:47.620 --> 53:50.620 Supply and demand matters. 53:50.620 --> 53:51.620 Supply matters. 53:51.620 --> 53:53.620 Rarity does matter in fact. 53:53.620 --> 54:01.620 Now, rarity might be created through the structure of the collection of piece of art, or it could emerge aesthetically, 54:01.620 --> 54:11.620 or it could be created by how an artist organizes their lifetime of work. 54:11.620 --> 54:24.620 But it does play a role, again, contingent on the collection or the work or the artist's mattering. 54:24.620 --> 54:30.620 If they don't matter, it doesn't matter what they're rare, right? It doesn't matter at all. 54:30.620 --> 54:43.620 Okay. Let's switch topics. Let's put another chunk of ideas into the framework, which is NFT-Fi. 54:43.620 --> 54:51.620 Can't say I love the acronym, but I think it's what we've got for now. 54:51.620 --> 54:53.620 I don't think we'll figure out for a better one. 54:53.620 --> 55:05.620 Which is how do, I don't like my second sentence there, I'm going to skip to this. 55:05.620 --> 55:10.620 How do they become, how do NFTs become composable? 55:10.620 --> 55:18.620 When decentralized finance, protocols, or in some cases here, there are protocols and services. 55:18.620 --> 55:23.620 And the reality is that they can become because they're tokens. 55:23.620 --> 55:29.620 Right? So what are the types of things that people think about here? Well, a simple one is workplaces. 55:29.620 --> 55:35.620 I'm going to sell you an NFT, you're going to buy it. There's a variety of workplaces. 55:35.620 --> 55:42.620 But some of them are now working on, to this opposite example, 55:42.620 --> 55:55.620 or there's pools of NFTs and you can be an LP like you are in Uniswap. 55:55.620 --> 56:05.620 People have fractionalization platforms. In fractionalization platforms, you put in your non-fungible NFT. 56:05.620 --> 56:13.620 You can put the tool in it. It gets wrapped in a smart contract. 56:13.620 --> 56:22.620 And it will sell, it will create, fungible ERC-20 tokens, not ERC-21 tokens. 56:22.620 --> 56:29.620 Tokens of that non-fungible token. 56:29.620 --> 56:36.620 It is a form of, it's called fractionalization of the space I take for regulatory reasons. 56:36.620 --> 56:40.620 It's what we would call securitization of the financial. 56:40.620 --> 56:45.620 It takes something that turns to a functional security. 56:45.620 --> 56:54.620 It's a very tricky topic for actualization NFTs. Both from the user experience, 56:54.620 --> 57:00.620 not the technical user experience of wrapping it in rationalizing, that's actually easy. 57:00.620 --> 57:13.620 But the experience of what does it mean to own that fractional shard of a non-fungible token. 57:13.620 --> 57:20.620 I will tell you for me, and I think for many, it doesn't feel the same. 57:20.620 --> 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. 57:41.620 --> 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. 57:53.620 --> 58:05.620 And the general feeling you had was owning a fungible token, which is fine. 58:05.620 --> 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. 58:13.620 --> 58:21.620 And what the possible exception for me of Bitcoin owning any other fungible token is truly bereft of emotional value. 58:21.620 --> 58:25.620 So you just look at the price, like price going up, it's a price going down, is that? 58:25.620 --> 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. 58:29.620 --> 58:35.620 Which, okay, fine, this is not that hugely interesting. 58:35.620 --> 58:53.620 The part that is interesting about owning an NFT is some sense of uniqueness of non-fungibility of identity. 58:53.620 --> 58:59.620 And that gets lost in fractionalization. Having said that, there are very obviously useful cases for fractionalization. 58:59.620 --> 59:03.620 Something important you want to sell, part of it, you don't want to sell all of it. 59:03.620 --> 59:07.620 And so fractionalization, I think, is an important part of the toolkit. 59:07.620 --> 59:16.620 There is a second problem that it's unclear under which circumstances this is allowed in the United States. 59:16.620 --> 59:26.620 I think it is highly likely that some forms of fractionalization create security. 59:26.620 --> 59:35.620 That's why this is, that's why it's often called securitization in a different context. 59:35.620 --> 59:46.620 And so this, I think, has also hindered fractionalization. 59:46.620 --> 59:52.620 I think it has also had fewer people testing ideas. 59:52.620 --> 59:55.620 It worries me, for one. 59:55.620 --> 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. 00:07.620 --> 00:12.620 Now, I'm not saying it actually is securitization, I'm not saying it'll be trea securit. 00:12.620 --> 00:16.620 And plenty of people have done fractionalization, it's been totally fine. 00:16.620 --> 00:18.620 It's just not 100%. 00:18.620 --> 00:22.620 It's a little bit in the gray zone, I think, right on to it. 00:22.620 --> 00:27.620 Another bucket, that's the bucket that people tend to really care about. 00:27.620 --> 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. 00:49.620 --> 00:54.620 And that, are using as collateral. 00:54.620 --> 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. 01:11.620 --> 01:19.620 Or machinelessly, without a loan application, often with other people lending against it. 01:19.620 --> 01:25.620 And your punk is there as collateral. 01:25.620 --> 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. 01:42.620 --> 01:51.620 The major true hindrances in this model tend to be valuation. 01:51.620 --> 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. 02:02.620 --> 02:07.620 Ever reply to the earth knows about your Bitcoin from time to time. 02:07.620 --> 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. 02:23.620 --> 02:29.620 And it gets worse as you get into less structured sets of NFTs. 02:29.620 --> 02:43.620 So there's a lot of work listed being put into financializing. 02:43.620 --> 02:57.620 Into financializing NFTs. A lot of people want to make them into collateral. 02:57.620 --> 03:03.620 I think at an intellectual level, this is important. 03:03.620 --> 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. 03:13.620 --> 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. 03:27.620 --> 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. 03:43.620 --> 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. 03:53.620 --> 04:01.620 Generally, generally leverage, nothing has killed more people in crypto than leverage. 04:01.620 --> 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. 04:14.620 --> 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. 04:26.620 --> 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. 04:35.620 --> 04:46.620 If you borrow against punk, what was C. Francis punk, and then the lender forehoses on you. 04:46.620 --> 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. 04:52.620 --> 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. 05:04.620 --> 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. 05:19.620 --> 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. 05:37.620 --> 05:45.620 And then they're going to be sad, I think, because there'll be no way back in many cases. 05:45.620 --> 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 06:10.620 --> 06:20.620 Fedensas or phone support apes or what have you and have them pay royalties with every trade. 06:20.620 --> 06:23.620 This is not possible. 06:23.620 --> 06:25.620 It cannot happen. 06:25.620 --> 06:29.620 Because market makers trade all day long. 06:29.620 --> 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. 06:37.620 --> 06:42.620 There will be less, 06:42.620 --> 06:47.620 Training and less liquidity. 06:47.620 --> 06:55.620 And so this is actually, you know, I generally think we shouldn't be against royalties. 06:55.620 --> 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. 07:11.620 --> 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. 07:18.620 --> 07:19.620 You might not, you'll get a price. 07:19.620 --> 07:22.620 You might not like the price you'll get, but you'll get a price. 07:22.620 --> 07:30.620 There is value, I believe, and be able to say, look, I want to get a price for my Bored Ape. 07:30.620 --> 07:33.620 I might not like the price, but I need money now. 07:33.620 --> 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. 07:42.620 --> 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. 07:51.620 --> 07:56.620 Shouldn't be people who are willing to buy or sell board apes at any point in time. 07:56.620 --> 08:00.620 Shouldn't pay a royalty in every trade looking for the end user or the collector. 08:00.620 --> 08:03.620 The person who wants to go to a professor should pay a royalty. 08:03.620 --> 08:05.620 It's complicated. 08:05.620 --> 08:07.620 We'll see if people figure this out. 08:07.620 --> 08:08.620 It's complicated. 08:08.620 --> 08:11.620 A lot of people are working on it, but it's complicated. 08:11.620 --> 08:17.620 Um. 08:17.620 --> 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. 08:39.620 --> 08:48.620 And then I'm referring against them or using this collateral. 08:48.620 --> 08:54.620 It equals to feed data into the some of these usage cases. 08:54.620 --> 09:00.620 And then some of the things that I mean, that people working on, but I don't think are quite. 09:00.620 --> 09:10.620 Part of the ecosystem is immature. 09:10.620 --> 09:15.620 It's fairly new. 09:15.620 --> 09:17.620 It's not very high volume. 09:17.620 --> 09:21.620 They're unsolved technical problems. 09:21.620 --> 09:31.620 Um. 09:31.620 --> 09:34.620 Fungible tokens are more complicated. 09:34.620 --> 09:36.620 Not much more complicated. 09:36.620 --> 09:40.620 But I believe this ecosystem will be built up. 09:40.620 --> 09:43.620 I think it is going to happen. 09:43.620 --> 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. 09:51.620 --> 09:53.620 The upcoming weeks. 09:53.620 --> 09:57.620 I want to say we're also a little bit behind on our guests. 09:57.620 --> 09:59.620 Just purely from logistics. 09:59.620 --> 10:03.620 There's so much to do. And so, but we will get them all in. 10:03.620 --> 10:07.620 We are not going to, we're not going to leave any guests behind. 10:07.620 --> 10:09.620 It won't necessarily come. 10:09.620 --> 10:13.620 On the exact same week as they were. 10:13.620 --> 10:17.620 That everything would have otherwise happened. 10:17.620 --> 10:20.620 But we will get them all in. 10:20.620 --> 10:22.620 And. 10:22.620 --> 10:24.620 Um. 10:24.620 --> 10:29.620 It's going to be super interesting. So with that. 10:29.620 --> 10:35.620 I'm going to switch to Q&A, maybe take 10, 15 minutes of Q&A. 10:35.620 --> 10:39.620 Keep today's session at some type of reasonable time. 10:39.620 --> 10:41.620 Or longer. 10:41.620 --> 10:42.620 And plan. 10:42.620 --> 11:11.620 I think we should still take some Q&A. 11:11.620 --> 11:13.620 Okay, so. 11:13.620 --> 11:17.620 Is art restricted just the visual? No, of course not. 11:17.620 --> 11:19.620 Absolutely not. 11:19.620 --> 11:23.620 Who's making war hall NFTs? 11:23.620 --> 11:27.620 I don't think there's a lot of. 11:27.620 --> 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. 11:32.620 --> 11:35.620 The originals are in the mama. 11:35.620 --> 11:42.620 I think there was. 11:42.620 --> 11:45.620 There were. 11:45.620 --> 11:48.620 Certain four or five. 11:48.620 --> 11:51.620 NFTs made by the war hall state. 11:51.620 --> 11:53.620 The title is a digital work you did. 11:53.620 --> 11:58.620 And then that was that. I don't think anything else happened with war hall NFTs. 11:58.620 --> 12:05.620 Okay, should the link to us be shunned by all cryptos being priced in crypto such as Bitcoin and Ethereum? 12:05.620 --> 12:08.620 Well. 12:08.620 --> 12:11.620 No, I don't think. 12:11.620 --> 12:17.620 I think it is interesting that NFTs do primarily trade in. 12:17.620 --> 12:20.620 The nominations. 12:20.620 --> 12:29.620 But so long as people live their physical life in Fiat world. 12:29.620 --> 12:34.620 Any token in Fiat terms, no matter what. 12:34.620 --> 12:43.620 Because ultimately a lot of people will want to take their digital assets and convert them into various. 12:43.620 --> 12:52.620 Physical world use this case. 12:52.620 --> 12:56.620 And if you have to pay in Fiat, it does matter what the Fiat prices. 12:56.620 --> 13:00.620 My mental model for this question is. 13:00.620 --> 13:03.620 But there's two worlds. 13:03.620 --> 13:07.620 And one world will be Fiat denominator. One world may be. 13:07.620 --> 13:13.620 Crypto the one of the nominated. And that will happen if there is a. 13:13.620 --> 13:17.620 Kind of circular economy in that world. 13:17.620 --> 13:21.620 And to the degree that. 13:21.620 --> 13:24.620 Crypto unit of account. 13:24.620 --> 13:29.620 It's going to matter in a circular. 13:29.620 --> 13:38.620 More than it's going to matter in a 13:38.620 --> 13:43.620 Fiat economy. It's going to be hard for a Fiat economy to be. 13:43.620 --> 13:47.620 The nominated by. 13:47.620 --> 13:49.620 And crypto terms. 13:49.620 --> 13:54.620 I don't think that's any of that's particularly. 13:54.620 --> 13:56.620 Anything else. 13:56.620 --> 14:03.620 Okay, it doesn't seem like we have any more questions or at least no more were fed to me. 14:03.620 --> 14:05.620 And if someone. 14:05.620 --> 14:07.620 If he wants to. 14:07.620 --> 14:12.620 I think the Fiat and crypto systems will call just absolutely for a long time. 14:12.620 --> 14:15.620 And. 14:15.620 --> 14:18.620 In the immediate. 14:18.620 --> 14:27.620 Turn. 14:27.620 --> 14:29.620 The. 14:29.620 --> 14:32.620 The risk of the crypto system of the system. 14:32.620 --> 14:37.620 But I think the correct way to think about it is that they will exist. 14:37.620 --> 14:41.620 Together for a long time. 14:41.620 --> 14:45.620 Does all have a marketplace not right now. 14:45.620 --> 14:48.620 I'm still doesn't have. 14:48.620 --> 14:51.620 An NFT based. 14:51.620 --> 14:55.620 Community. 14:55.620 --> 14:58.620 I am a team based ecosystem. 14:58.620 --> 15:00.620 Because it's. 15:00.620 --> 15:04.620 Not yet sufficiently decentralized for my test. 15:04.620 --> 15:05.620 But I will change. 15:05.620 --> 15:07.620 I expect that in 2023. 15:07.620 --> 15:12.620 All right, I am going to wrap it up here. 15:12.620 --> 15:16.620 We have. 15:16.620 --> 15:19.620 And. 15:19.620 --> 15:21.620 George. 15:21.620 --> 15:25.620 As a conflict, so I will do the Q&A with. 15:25.620 --> 15:28.620 So super great session. 15:28.620 --> 15:31.620 Fabulous person. 15:31.620 --> 15:35.620 And I encourage you to watch if you have the time. 15:35.620 --> 15:42.620 Are able to join. 15:42.620 --> 15:45.620 Everyone, thank you very much again.