Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast.
Speaker 1: My name is Mike Reagan. I'm a senior editor at
Speaker 1: Bloomberg Nambodna Hi across Acid reporter at Bloomberg. This week
Speaker 1: on the show, well as any listeners who stick around
Speaker 1: long enough for our craziest things in market segments. No,
Speaker 1: we're kind of fascinated with n f t s these days,
Speaker 1: you know, the non fungible tokens that are some of
Speaker 1: the hottest investments in the cryptocurrency markets these days. We're
Speaker 1: gonna take a deep dive into n f t s
Speaker 1: and all sorts of other hot topics on the blockchain
Speaker 1: this week with the CEO of a company that's involved
Speaker 1: in cryptocurrency investing. Now, you know, Vildana, I don't know
Speaker 1: if you've noticed, um that I'm not necessarily the youngest
Speaker 1: hippest guy in the world. Have you picked up on that? Yeah,
Speaker 1: I think everybody has. Okay, I'm sorry to break it
Speaker 1: to you. The cats out of the back. So one
Speaker 1: of the hazards of being not so young and not
Speaker 1: so hip is that you don't it's tend not to
Speaker 1: like new things. You know, You're like, what's wrong with
Speaker 1: these old things. I like the old things, and that was,
Speaker 1: do you still have an iPhone too? I actually have
Speaker 1: a twelve. I've upgraded to the twelve recently, but only
Speaker 1: because because my old iPhone one or whatever it was,
Speaker 1: that it was just stopped working. So I do. I
Speaker 1: am hip on the iPhones. But I'll tell you what,
Speaker 1: when you're not too young and not so hip, guy,
Speaker 1: you tend to have a lot of friends who are
Speaker 1: not so young and not so hip. And I've been
Speaker 1: fascinating any party I go to. Lately, the subject of
Speaker 1: n f T has come up, and people get, like
Speaker 1: I rationally angry at them, like why are these things
Speaker 1: worth anything? They're just j pegs, you know, And I
Speaker 1: find myself being the voice of reason that trying to explain, well,
Speaker 1: you know, look at a Babe Ruth baseball card. What's
Speaker 1: the intrinsic value of the cardboard that's printed on? You know,
Speaker 1: it's all the it's all the scarcity value, the originality
Speaker 1: value of the item. Anyway, That's that's my way of
Speaker 1: explaining it. But we do have a guest this week
Speaker 1: who I think we'll do a better job than me
Speaker 1: in explaining hopefully, hopefully, Yeah, you can only go up
Speaker 1: from here, right, Yeah, so I think he'll he'll give
Speaker 1: us sort of the bookcase at least on some segments
Speaker 1: of the n f T market. So we're happy to
Speaker 1: have him on the show for the first time. He
Speaker 1: is the CEO of Ether Capital Corps, let's say, publicly
Speaker 1: listed company on Toronto's Neo Exchange. His name is Brian Massov. Brian,
Speaker 1: welcome to the show. Thanks for having me, and hope
Speaker 1: to join in on correcting some of the way you
Speaker 1: look at the n f T s as an old
Speaker 1: person who gets angry. Sorry, I don't know if I'm
Speaker 1: allowed to say that, but hopefully you're not angry by
Speaker 1: n f T s And yeah, let's dive into why
Speaker 1: why they might be potentially very valuable. I have an
Speaker 1: old person who gets angry very easily. It's true. That's
Speaker 1: absolutely right. But I'm coming around to these new fangled investments.
Speaker 1: But before we delve into that, I'm I just want
Speaker 1: to sort of have you, uh introduced us to eat Capital.
Speaker 1: What the company is all about, how you got involved
Speaker 1: with it, um, what the sort of mission and revenue
Speaker 1: stream is of the company. You know, what's it all about?
Speaker 1: So either Capital was put together in early two thousand
Speaker 1: and eighteen, and everyone looked around and said that during
Speaker 1: the bull run of seen crypto assets were going crazy.
Speaker 1: Bitcoin's going from a few thousand dollars up to twenty dollars.
Speaker 1: The I C omnia is going on, and it was
Speaker 1: really hard to find an access point in the capital
Speaker 1: markets to invest in the asset class and follow a
Speaker 1: group of people around the table who really understood the space.
Speaker 1: And so Either Capital had a very focused thesis the
Speaker 1: group of people around Ethereum and what was going to
Speaker 1: happen that there would be this smart contract platform that
Speaker 1: would be a very important piece of the Internet. And
Speaker 1: so it was put together to be an access point
Speaker 1: in the capital markets to a group of investors who said,
Speaker 1: I don't quite understand the space, but there seems to
Speaker 1: be something happening there, and I want exposure to it.
Speaker 1: And it's funny because that's basically the same conversations. That's
Speaker 1: how being around n f T s now right, there's
Speaker 1: there's something happening there. There's a lot of hype, but
Speaker 1: it's hard to find where's the real meat on the bone?
Speaker 1: What is going to last two years, five years, ten years?
Speaker 1: That comes from all this mania. So either capital invests
Speaker 1: in ethereum focused protocols and tokens in infrastructure. We're a
Speaker 1: group of crypto natives and traditional finance and venture capitalists
Speaker 1: who make up management in the board, and we're passionate
Speaker 1: about the stuff. We're passionate about the space. We I mean,
Speaker 1: I I've been in crypto since kind of late. This
Speaker 1: is my life. I don't have normal friends anymore. I
Speaker 1: don't have regular conversations. It's it's crypt seven on Twitter,
Speaker 1: on Discord, various chat groups. So very excited to you know,
Speaker 1: come here and shed some of what I'm seeing with
Speaker 1: your listeners. It's funny to be at boil stay out.
Speaker 1: So there's certain class of investors who are like, yeah, yeah, crypto,
Speaker 1: it's exciting. Just tell me what I need a stock, Toby,
Speaker 1: I need a stock divide, and that that's kind of
Speaker 1: the niche fill with a with a company like this
Speaker 1: to some degree, I guess, I mean, I think it's
Speaker 1: great if you look at kind of where we're at
Speaker 1: in terms of exposure points in the capital markets, there's
Speaker 1: a number of different ways that now you can get
Speaker 1: proxies to crypto, whether it's through mining companies or e
Speaker 1: t f s or closed funds that are listed in
Speaker 1: the US. There's avenues for people to get exposure who
Speaker 1: aren't yet comfortable going and buying the asset direct and
Speaker 1: either custodying it themselves or holding it on a platform
Speaker 1: that's not registered as kind of the traditional securities dealer.
Speaker 1: So you know, the space is improving. There's more access
Speaker 1: points now than ever, and you know that that's that's
Speaker 1: great for everyone. That's great for the space. It's great
Speaker 1: for that new set of investors who weren't comfortable from
Speaker 1: two thousand and nine up until kind of twenty who
Speaker 1: might have said, I want exposure to this space, I
Speaker 1: just don't know how to do it um and so
Speaker 1: they sat on the sidelines because they had no other choice.
Speaker 1: So I think that it's all it's all good for
Speaker 1: the space. But now we have this new part of
Speaker 1: the space, the n f T S, the n f
Speaker 1: T part, as you're saying, and people are wondering, well,
Speaker 1: how do I invest in that? Do I even want
Speaker 1: to invest in that? So so right I'm hoping we
Speaker 1: get to n f T s in a little bit.
Speaker 1: But I know that you had sent us a list
Speaker 1: of some of them most frequently asked questions you get
Speaker 1: from people, especially retail investors, and one of them was
Speaker 1: what are the real world problems crypto is trying to solve?
Speaker 1: And I feel like maybe that's something you guys were
Speaker 1: also thinking about before you started the firm. So what
Speaker 1: what sort of answer do you give them when when
Speaker 1: people ask you that? It's kind of a two pronged question,
Speaker 1: because I think most people are looking for an everyday
Speaker 1: use case that they can latch onto and say, ah,
Speaker 1: now I understand what this thing is going to be.
Speaker 1: And it's kind of hard to look at that right
Speaker 1: now because it's still very much in this experimental phase.
Speaker 1: So we know that one thing that crypto assets do
Speaker 1: is they create an investment opportunity or a network that
Speaker 1: is uncorrelated to traditional assets or over time hopefully becomes
Speaker 1: uncorrelated to traditional assets. It's outside of the monetary policy
Speaker 1: of any political agenda, a specific jurisdiction. When I look
Speaker 1: at what bitcoin did, Justin Drake, who's an ethereum researcher,
Speaker 1: describes um what bitcoin did is it came along and said,
Speaker 1: gold has this really interesting monetary policy. It has a
Speaker 1: very few unique attributes to it. There's a fixed amount
Speaker 1: it has to be extracted from the Earth's crust. It
Speaker 1: gets mined and extracted at a very specific rate um.
Speaker 1: But the problem with gold, of course, is that it's
Speaker 1: physical and it's not digital, so it can only go
Speaker 1: so far. And in the world of digital assets and
Speaker 1: digital transforming of or or or sharing information, gold doesn't
Speaker 1: really work in that world. So Bitcoin comes along and says,
Speaker 1: can you replicate that same kind of monetary policy but
Speaker 1: in a digital environment? But Bitcoin kind of stops there,
Speaker 1: and that's kind of what bitcoin does. You can you
Speaker 1: can send it, you can receive it, but it can't
Speaker 1: do much more than that. Ethereum comes along and says, well,
Speaker 1: what if you kind of create this clearing house for
Speaker 1: the world. The first thing that Ethereum really does is say,
Speaker 1: what if the world has a clearinghouse that no one company,
Speaker 1: no one party controls, and anyone can record their activity,
Speaker 1: their information, their token, tokenize their dollar, whatever activity they
Speaker 1: want to perform can be recorded into this global ledger,
Speaker 1: this global settlement layer and just pay a little transaction fee. So,
Speaker 1: even though that's still kind of abstract, right, people are wondering, well,
Speaker 1: what do I do with that? Who cares? So what?
Speaker 1: I think? We're still scratching the surface of how people
Speaker 1: are going to use this, and we're starting to see
Speaker 1: use cases emerge. You're starting to see decentralized finance come around.
Speaker 1: You're starting to see n f t S digital art
Speaker 1: right that exists on a blockchain. That's becoming a recent trend.
Speaker 1: Um Visa about six months ago said that they're going
Speaker 1: to test token izing U S dollars and moving them
Speaker 1: across the Ethereum network for settlement between their their data centers.
Speaker 1: So there's all sorts of of use cases that may
Speaker 1: seem legit, like what Visa does that has a kind
Speaker 1: of nexus to the real world, but then there's this
Speaker 1: digitally native set of uses that we are not used
Speaker 1: to in our brand new And the second prong to this,
Speaker 1: which is much short, I promise I would say, is
Speaker 1: that it's kind of like looking at the Internet in
Speaker 1: the mid nineties and saying, well, okay, fine, I can
Speaker 1: only send an email if all my friends have an
Speaker 1: email account. How how valuable is this thing going to be?
Speaker 1: The things that really became valuable. We're not just taking
Speaker 1: what existed in the physical world and saying, now I
Speaker 1: can replicate this in this digital environment. It was all
Speaker 1: these use cases that no one imagined yet. So the
Speaker 1: early Internet, you know, had people taking their newspapers, their
Speaker 1: magazines and just copying and pasting the content. And what
Speaker 1: really was valuable about the Internet was saying, well, if
Speaker 1: something is digitally native, and it's built from the ground up,
Speaker 1: respecting kind of the protocol design and the flexibility that
Speaker 1: this new architecture allows, well, then all of a sudden,
Speaker 1: it's not just about putting your newspaper up on some
Speaker 1: web page. It can become interactive in a way that
Speaker 1: the world had never seen before. Right social media, Instagram, broadcasting, Twitter.
Speaker 1: These were things that didn't have an uh an existing
Speaker 1: structure prior to the Internet. And so I think people
Speaker 1: who are looking for the how do I copy and
Speaker 1: paste an old model just into this environment. There will
Speaker 1: be some of that that goes on, and there's probably
Speaker 1: some you know, nine to ten improvements in there, but
Speaker 1: it's the zero to ones. It's those brand new use
Speaker 1: cases that you know, Peter tele talks about that that's
Speaker 1: what's really exciting here. I want to rewind a little bit.
Speaker 1: I'm glad you brought up that notion of crypto being
Speaker 1: an uncorrelated asset. This is kind of a perennial debate
Speaker 1: here in crypto markets um, because at least looking at
Speaker 1: the big ones, if you look at ethereum and Bitcoin,
Speaker 1: there are sort of long stretches of time where they
Speaker 1: do appear to be uncorrelated, to say that the SMP five.
Speaker 1: But then you have a week like this where the
Speaker 1: get kind of a macro shock with the China ever
Speaker 1: Grand or ever grand a situation. I don't think anyone
Speaker 1: knows which one is right, but you get this shock
Speaker 1: at this sort of risk off move in markets, and
Speaker 1: crypto does seem to sort of tighten up that correlation
Speaker 1: with everything else um. And I imagine, you know, as
Speaker 1: more companies like yours come onto the public markets, as
Speaker 1: more companies like micro Strategy and Testlina hold more crypto
Speaker 1: on on their balance sheets, that there's the risk of
Speaker 1: that those correlations tightening tightening up. Even more so, is
Speaker 1: that sort of promise of crypto being uncorrelated uh dying
Speaker 1: a slow death? Or am I looking at it wrong?
Speaker 1: You know what? How do you look at that that concept?
Speaker 1: I think that these assets over time will become more
Speaker 1: and more uncorrelated. Certainly. I think one of the things
Speaker 1: that you've seen in the last year or year and
Speaker 1: a half, you know, since COVID is we've realized the
Speaker 1: world is more interconnected and all these markets are more
Speaker 1: interconnected than everyone even imagined. And it didn't matter if
Speaker 1: it was the OPEC crisis, it didn't matter if it
Speaker 1: was what just happened in the last week. People are
Speaker 1: looking for safe havens in these extreme moments of volatility,
Speaker 1: and the question is where the safe haven is going
Speaker 1: to be? What? What is the safe haven these days?
Speaker 1: Is that the US dollar? Is it? Crypto is it?
Speaker 1: You know what? Where is that money gonna go? And
Speaker 1: markets don't like uncertainty. I think that we've seen that,
Speaker 1: you know before crypto. In crypto, people don't like uncertainty.
Speaker 1: So this notion that crypto is this uncorrelated asset, I
Speaker 1: think is something that will be more and more true
Speaker 1: as time goes on, as it continues to prove itself
Speaker 1: to be robust uh in in volatile times. I think
Speaker 1: it was very important that in the March of market crash,
Speaker 1: bit quin ether and you know, all the crypto markets,
Speaker 1: despite them having this drop and basically a twenty four period,
Speaker 1: which is extreme. By the way, everything you know I got,
Speaker 1: I got a lot of text. It was not a
Speaker 1: happy day, certainly from my phone blowing up and with
Speaker 1: my friends. But you know what you did get to
Speaker 1: see is that the space didn't die. The asset class
Speaker 1: did not go to zero, and in fact, not only
Speaker 1: did it not go to zero, it woke up this
Speaker 1: new group of investors who had written off this idea
Speaker 1: of bitcoin or ethereum or cryptoassets and said, there's this
Speaker 1: pending inflation that everyone's concerned about. What are the alternatives?
Speaker 1: I mean, so there's gold, fine, but maybe some of
Speaker 1: that spills off into bitcoin. And so you have these
Speaker 1: new investors who before did not want to participate in
Speaker 1: this environment and say, maybe crypto is a place that
Speaker 1: has a partner portfolio, doesn't matter if it's big or small.
Speaker 1: But maybe this is going to become a legit asset class.
Speaker 1: So I think that it's still going to be volatile
Speaker 1: for the foreseeable future. It's still going to be correlated
Speaker 1: in times like this, and over time that volatility will
Speaker 1: drop and people will be less scared, uh and the
Speaker 1: swings will be less wild. So it's it's there. It's
Speaker 1: going to take time. Though, when we talked about a
Speaker 1: week ago, I was I was impressed with sort of
Speaker 1: your bowl case for f and crypto punks or as
Speaker 1: I call them, cyberpunks as I incorrectly call him the cyberpunks,
Speaker 1: but crypto punks. I was suppressed with sort of your
Speaker 1: your rationale for why we should take these seriously? Um,
Speaker 1: so you know, give me some more ammunition at my
Speaker 1: cocktail parties with the angry old men that I associate
Speaker 1: with when they say, it's just a JPEG, it's not
Speaker 1: worth anything. What's what's your book case here for? For
Speaker 1: this whole asset class? So I think it's helpful for
Speaker 1: listeners to understand the mechanics behind the specific project as
Speaker 1: we dive in and then discuss how they're going to
Speaker 1: be used in these new systems, because then there's just
Speaker 1: more context there. So in two thousand and seventeen, Larva
Speaker 1: Labs basically publishes ten thousand unique characters that have various
Speaker 1: combinations of attributes as JPEG's. Actually I think that they're
Speaker 1: technically either SVG files or PNG s. I'm not sure,
Speaker 1: but someone's super techy out there is gonna jump on
Speaker 1: me if I call it a jpeg. But they publish it,
Speaker 1: and whether it's it's a male cryptopun courts female, or
Speaker 1: it has wild white hair or three D glasses or
Speaker 1: maybe a handlebar mustache, there's all these different attributes and
Speaker 1: different combinations of these attributes, and they put it up
Speaker 1: on this website and they're completely free. All you have
Speaker 1: to do is pay the four dollar gas fee and
Speaker 1: you could claim one to your address. You would claim
Speaker 1: the ownership over that picture. And most people wrote this
Speaker 1: off and said, well that that's kind of an interesting idea,
Speaker 1: but yeah, I'm not interested in paying the four dollars
Speaker 1: for this jpeg. Forget it. And what ends up happening
Speaker 1: is there's enough people go this is kind of an
Speaker 1: interesting idea. How would you um create a token that
Speaker 1: represents a specific thing versus something that's fungible. So for
Speaker 1: anyone who's not familiar, right, fungibility would just be I
Speaker 1: give you the five dollar bill. You don't care which
Speaker 1: five dollar bill I pull out of my pocket. You're
Speaker 1: happy that I give you a five dollar bill. In
Speaker 1: a non fungible token world, uh, the token represents a
Speaker 1: specific thing, so it's not just that you bought a
Speaker 1: house on this street. You care which house specifically you purchased.
Speaker 1: And so in the context of the crypto punks, you
Speaker 1: don't care that you have a claim on a crypto punk.
Speaker 1: You want to know that no, no no, no, I the
Speaker 1: specific crypto punk with the handlebar mustache and the three
Speaker 1: D glasses. And it spawns a bunch of research and
Speaker 1: a new token standard on ethereum. So it's it's a
Speaker 1: different tech standard basically, and that's called the e r
Speaker 1: c SE. It goes away, and it possibly just goes
Speaker 1: away because we're in this bear market, right this is
Speaker 1: kind of mid two thousand and seventeen, two eighteen, the
Speaker 1: price of crypto crashes, and so most people are kind
Speaker 1: of shying away from the space. Maybe some developers leave.
Speaker 1: The community shrinks a little bit, but n f t
Speaker 1: s are certainly not what they are today. And in
Speaker 1: the I would say mides um and people are waking
Speaker 1: up to this idea of of digitally native art, you know,
Speaker 1: that lives on a blockchain, and how could it be
Speaker 1: sold for this much? And around this point in time,
Speaker 1: everyone turns in the community back towards the crypto punks
Speaker 1: and says well, this is the first. Right, this is
Speaker 1: the first time anyone ever tried this experiment on ethereum.
Speaker 1: Its spawned the e r C seven twenty one token standard.
Speaker 1: There's only ten thousand. There can't ever be more of them.
Speaker 1: People turn around and say, well, crypto punks are the first,
Speaker 1: and in a in an environment where everyone is looking
Speaker 1: for scarcity, right as the US dollar is is hitting this,
Speaker 1: you know, pending inflation, people looking at gold. A lot
Speaker 1: of the criticisms that people have towards n f T
Speaker 1: s in a way you can catch them and say,
Speaker 1: how is that any different than your arguments towards bitcoin,
Speaker 1: And then they go no, no no, no, but bitcoin is different.
Speaker 1: You go why, and you start hearing them say well,
Speaker 1: there's a fixed amount of them. You go yeah, but
Speaker 1: you could create other bitcoins, right, you could create light coin,
Speaker 1: you could create dose coin, you could have feather coin.
Speaker 1: There's something sticky about being the first and representing a
Speaker 1: specific point in time culturally that a community rallies around
Speaker 1: in terms of consensus that they say this is this
Speaker 1: is the one. And so I also like to point
Speaker 1: out to people say that there's no intrinsic value, or
Speaker 1: there's you know, how are they how are they valued?
Speaker 1: Look at something like Twitter. Twitter is not valuable because
Speaker 1: of the number of servers that they're running in the
Speaker 1: number of data centers that they have in the backups. No,
Speaker 1: it's valuable because you can't just replicate that same number
Speaker 1: of servers and data centers somewhere. It's valuable because there's
Speaker 1: social consensus and a network effect that has taken place
Speaker 1: around that set of standards that people go, we're all
Speaker 1: going to rally around this thing, and we think that
Speaker 1: that's the place to have our you know, three sentence communication,
Speaker 1: and that's where the value comes. It's the network effect,
Speaker 1: and that applies to bitcoin, and that also applies to
Speaker 1: crypto punks. So the crypto punks start getting bought up
Speaker 1: kind of in that latter half of twenty nine, sorry,
Speaker 1: and then have this huge explosion basically you know, throughout
Speaker 1: this year. And the reason that they're valuable is they're
Speaker 1: the first they the very first n f T project
Speaker 1: that exists in ethereum. They're kind of, in a way,
Speaker 1: the birth of this entire movement. So the people who
Speaker 1: criticize and say all of n f T s are
Speaker 1: are a bubble and they're not worth anything. I will
Speaker 1: agree that most n f T s probably won't be
Speaker 1: around in five years or hold any value five years
Speaker 1: from now, but crypto punk specifically, those are the opportunities
Speaker 1: to buy these works of art that some people would
Speaker 1: argue it as an art, but it's the opportunity to
Speaker 1: to buy into these very early historical pieces that have
Speaker 1: not only cultural significance, but they also represent um I think,
Speaker 1: a transition in the art world towards more utility, uh
Speaker 1: to what these pieces of art can do. So I
Speaker 1: was thinking of this column that Matt Levina Bloomberg Opinion
Speaker 1: wrote a couple of days ago, where he quoted somebody
Speaker 1: who said, you know, this f T that this person
Speaker 1: had bought brought this person joy. And so it got
Speaker 1: me thinking about, like, what are some of the reasons
Speaker 1: somebody might want to own an n f T besides
Speaker 1: just the collectibles aspect of it. And you know, it's
Speaker 1: not like if you buy a share of Ford, for instance,
Speaker 1: that sort of brings you join or joy or makes
Speaker 1: you happy, But like, what are some of the other
Speaker 1: reasons that somebody might be into n f T s
Speaker 1: besides just the collectible aspect. So I think that most
Speaker 1: of the purchasing of n f t s right now
Speaker 1: is on speculation. People are trying to catch the next
Speaker 1: pudgy penguin or board apiacht club that will have this
Speaker 1: huge explosion and in price and value. And there's something
Speaker 1: fun about it. It doesn't take itself too seriously. In fact,
Speaker 1: kind of the weirder and the more fun these n
Speaker 1: f t s can be by design, the more people
Speaker 1: seem to be interested in playing with them. But there's
Speaker 1: something else happening under the surface, which is that utility.
Speaker 1: And I think that's where I sit in my interest
Speaker 1: in what n f t s are going to be.
Speaker 1: And there's two things here. The first is I think
Speaker 1: what you're seeing in the world also right now. Is
Speaker 1: that the controversial statement, but I'll just say it is.
Speaker 1: Money is just a meme, right, All money, in a
Speaker 1: way is just a meme. I call money memes, right
Speaker 1: the U. S. Dollar. What is the meme of the U. S. Dollar. Well,
Speaker 1: it's most powerful nation in the world, most successful economy,
Speaker 1: in the world's biggest army, most stability. You know, it
Speaker 1: represents certain things. And so if you think about this
Speaker 1: as an equation, I was saying this to a friend
Speaker 1: the other day that if you think that this is
Speaker 1: an equation where you have money on one side, an
Speaker 1: equal sign and then a meme word on the other side,
Speaker 1: what we're starting to see is that the equation goes
Speaker 1: into directions and that memes can also become money. And
Speaker 1: that's something that I don't think people had considered before,
Speaker 1: is that something can meme its way into being money.
Speaker 1: And you watch that kind of starting to happen with
Speaker 1: dog coin. Dos coin came out in I think late
Speaker 1: two thousand and thirteen. The last week or two the
Speaker 1: code gets published. Um, people get really excited by it.
Speaker 1: It's fun, it's not taking itself too seriously. And then
Speaker 1: it kind of goes away. And now there's this renewed
Speaker 1: interest in where people are going. Maybe this is going
Speaker 1: to be a transactional currency. I don't know why not.
Speaker 1: There's so there's so much of it. People seem to
Speaker 1: love it. It doesn't have the political agenda of any
Speaker 1: specific nation or group of people. It's kind of like
Speaker 1: the People's money, right, It's just it's just fun. Now.
Speaker 1: It doesn't mean that it will be money today, but
Speaker 1: it wouldn't surprise me. If toascoin became the way people
Speaker 1: paid to go see a movie or or I don't know,
Speaker 1: paid to buy their groceries with it. And so I
Speaker 1: think the idea that that money has kind of turned
Speaker 1: into a meme and memes can now turn into money
Speaker 1: unlocks this really interesting potential for n f t s.
Speaker 1: It Michael, when I was speaking to you, I think
Speaker 1: a week ago, when I was telling you about all
Speaker 1: this utility that n f t s can potentially have.
Speaker 1: One of the reasons people might be buying n f
Speaker 1: t s because they're starting to understand the potential actual
Speaker 1: utility of some of these assets. So crypto punks in particular,
Speaker 1: you know, if there's enough price discovery on these assets
Speaker 1: and there's high enough velocity and it has you know,
Speaker 1: the Lenda effects around long enough, potentially what happens is
Speaker 1: some new utility gets unlocked. And so we have to
Speaker 1: go beyond just looking at them as forms of art
Speaker 1: and say, well, what is the ven diagram then of
Speaker 1: this going to be, And that is that it unlocks
Speaker 1: things that don't really exist in the art world. So
Speaker 1: complete global access in liquidity is a new part of
Speaker 1: this equation, right, someone who lives in Asia. Someone who
Speaker 1: lives in South America can now participate in the financial aspect,
Speaker 1: or you could sell it to someone who lives in
Speaker 1: that part of the world. There's also cryptoeconomics that enters
Speaker 1: into the equation. Um there's also the programmability and the
Speaker 1: decentralized finance aspect of these um of these assets. And
Speaker 1: so there's all these kind of really interesting ways that
Speaker 1: n f T s I think are going to be
Speaker 1: used in the future that go beyond just you bought
Speaker 1: a picture. But Brian, but before we get to the
Speaker 1: crazy things, I do wanna touch on that idea you're
Speaker 1: talking about a defy and how n f T s
Speaker 1: kinda can get some added utility to them. You know,
Speaker 1: there's some project, was an eight or guerrilla that that
Speaker 1: spits off a banana every day that's as a separate
Speaker 1: n f T That's that's, you know, I think of
Speaker 1: as like a dividend. But my point is that it's
Speaker 1: actually a project. Did I miss this one? And it is.
Speaker 1: I'll send you a link to it. Yeah, I forgot
Speaker 1: the name of people wanted bananas and then people buy
Speaker 1: the bananas. But I whatever, you know, because the rest
Speaker 1: I bringing up is every day we wake up to
Speaker 1: some new headline, news headline about regulators finally catching up
Speaker 1: with this whole industry, and you know, incorrect, There is
Speaker 1: no catching up. It moves way too fast. But sorry, sorry,
Speaker 1: that's keep going. No, that's that's a fair point. That's
Speaker 1: a fair point, and I agree, I totally with you.
Speaker 1: But I had always kind of thought of n f
Speaker 1: t s as vaguely regulator proof because I don't see
Speaker 1: an argument about how an n f T could be
Speaker 1: a security unless you start using it in yield farming
Speaker 1: and that sort of thing. And then and then maybe
Speaker 1: that crosses the line. But for the broad picture, you know,
Speaker 1: how are you thinking about the regulatory risks in the
Speaker 1: entire space, you know, and sort of how do you
Speaker 1: determine who the who the winners and losers are going
Speaker 1: to be as the regulation and scrutiny gets a little
Speaker 1: bit greater, and you know, and if if n f
Speaker 1: T s fit into your thinking of that at all,
Speaker 1: then then soap. But I'm just curious, you know, when
Speaker 1: you wake up and see a new headline about this regulator,
Speaker 1: that regulator, you know, issuing a subpoena or sending a
Speaker 1: wells notice or whatever it is. Um, how do you
Speaker 1: decide where who's gonna win and lose in an environment
Speaker 1: where the scrutiny is getting ratcheted up. I don't think
Speaker 1: it matters that much what regulators do. I ink what
Speaker 1: it does do is it will change how people interact
Speaker 1: with these assets and how they interact from specific jurisdictions.
Speaker 1: But I don't think the assets themselves are going to
Speaker 1: just disappear overnight. You can't regulate at the protocol level,
Speaker 1: meaning you can't change the code of bitcoin. You can't
Speaker 1: force I P addresses into transactions. Now you can do
Speaker 1: other things to try and extract IP addresses from transactions
Speaker 1: to look for nefarious activity. You saw this happen with
Speaker 1: you know, the Silk Road case in twenty fourteen, I
Speaker 1: think is when that was really going on. But what's
Speaker 1: going to get regulated here are the access points and
Speaker 1: the marketplaces, and that's fine and it'll play out. However,
Speaker 1: I'm not I'm not against those being regulated. I think
Speaker 1: you're right in that n f T s are probably
Speaker 1: fairly regulator proof, but it depends on the distribution mechanism
Speaker 1: of the n f T. As you're saying, kind of
Speaker 1: depends how the n f T gets used. So maybe
Speaker 1: the crypto punk specifically itself is not a security, but
Speaker 1: if you try and fractionalize it, you know, maybe then
Speaker 1: you've created a derivative. And maybe derivatives get caught up
Speaker 1: because it's held in a specific way and it gets
Speaker 1: trapped by securities law or the marketplace that's trading those derivatives,
Speaker 1: you know, would have to register as some type of marketplace.
Speaker 1: I don't know exactly how this is going to play out.
Speaker 1: I think overall it'll be good for the space and
Speaker 1: it will be great for investors long term because there'll
Speaker 1: be clarity around how to interact with these assets and
Speaker 1: these marketplaces. UM. I think this is a personal thesis,
Speaker 1: not a if cap anything. I think what you're gonna
Speaker 1: see as a bit of a bifurcation in this space
Speaker 1: where um, we're going to have these regulated versions of
Speaker 1: these assets that there's ky C and a m L
Speaker 1: applied to both sides of a transaction, or the wallets
Speaker 1: are fully ky seed, where you know, if you withdraw
Speaker 1: from coin base or any exchange, you know, they're going
Speaker 1: to have to know potentially, um, which who owns the
Speaker 1: wallet that the asset is withdrawn to UM, and that
Speaker 1: will only be able to interact with, you know, a
Speaker 1: certain other set of wallets potentially. But then I also
Speaker 1: see a whole other side of the world that is
Speaker 1: going to continue building UM these protocols in these assets
Speaker 1: in a way that may not be respectful of any
Speaker 1: specific jurisdictions mandates UM, and so there may be trading
Speaker 1: that takes place in very unregulated environments. Right you can
Speaker 1: look at something like unit swap or sushi swap UM.
Speaker 1: These are decentralized exchanges for anyone who who's not familiar
Speaker 1: where you don't k y C when you go there.
Speaker 1: You don't deposit your funds in any custodial wallet that's
Speaker 1: being housed by a corporation. And people who wrote off
Speaker 1: that idea that decentralization can get to scale or a
Speaker 1: meaningful amount of traction. One stat that I like to
Speaker 1: point out is that in early twenty nineteen, I think
Speaker 1: it was early twenty nineteen, whenever unit swap kind of
Speaker 1: began UM, there was maybe a million dollars a day
Speaker 1: slashing round on unit swaps, so not a meaningful amount
Speaker 1: of volume. But in the summer of last year there
Speaker 1: was about three billion dollars a day. I think that
Speaker 1: was traded on Uni swap, and that's not insignificant. And
Speaker 1: at the same day, whenever I don't know, looked at
Speaker 1: the stat or it made its way around Twitter, coin
Speaker 1: base also traded about three billion dollars on the retail exchange,
Speaker 1: and so I looked at that and thought that is
Speaker 1: fantastic and wild and crazy to imagine that this decentralized
Speaker 1: protocol that basically has zero employees, zero regulatory oversight, zero registrations,
Speaker 1: compliance jurisdictions, offices, overheads, bank accounts, corporate registrations, was able
Speaker 1: to do the same volume as a company that has,
Speaker 1: you know, hundreds or thousands of employees. You have to
Speaker 1: imagine that that is that trend is not going to
Speaker 1: stop and that these protocols will become more robust. So
Speaker 1: the question really will become long term, how how does
Speaker 1: the regular lated world interact with the decentralized world if
Speaker 1: everything gets tried to be completely ky seed and pushed
Speaker 1: back into boxes that regulators are comfortable with. My view
Speaker 1: is that we've just kind of recreated ce FI centralized
Speaker 1: finance with a little bit of optimization in there. The
Speaker 1: real interesting stuff is happening in that decentralized, chaotic world
Speaker 1: that yeah, there's gonna be a lot of scams, and
Speaker 1: there's gonna be a lot of things that go wrong,
Speaker 1: but I think that there's going to be a lot
Speaker 1: of really interesting things that come of it, um. And
Speaker 1: so it'll be interesting to see how this, how this
Speaker 1: plays out, UM, and how people who live in heavily
Speaker 1: regulated jurisdictions will continue to get access to projects and
Speaker 1: protocols and marketplaces that have liquidity, that have important or
Speaker 1: meaningful assets that are going to play a big part
Speaker 1: of this future economy. Stand clear. Of the craziest things
Speaker 1: we saw in markets this week, we donna k y C.
Speaker 1: You know what that means. That means no, your customer,
Speaker 1: And if I know the customers of this podcast, I
Speaker 1: think one thing I know is they're ready for some
Speaker 1: crazy things that we saw in markets this week. How's
Speaker 1: that for a segue? Not bad? Huh, that's what a transition?
Speaker 1: Thank you? Really, I get to say he emailed me
Speaker 1: ahead of time and said, just f y I this
Speaker 1: is gonna happen. So try and think of a crazy
Speaker 1: thing you saw on the market. And I thought, well,
Speaker 1: I have something that will top anything else you guys
Speaker 1: have seen. And I'm curious when I when I dropped
Speaker 1: my probably when I dropped mine. I'm curious. I'm curious
Speaker 1: if you say something someone a guest has ever topped
Speaker 1: this go I'll go last, though. Alright, well, Brian goes last.
Speaker 1: With that set up, you gotta go last. I'll go first.
Speaker 1: Widen's real simple. I'm taking us back to traditional trad
Speaker 1: five markets with the return to the office of all
Speaker 1: the Wall Street banks and the money center banks in London,
Speaker 1: all the trading desks returning. I believe it was City
Speaker 1: Group in London, vill Donna. They're offering therapy puppies upon
Speaker 1: arrival to work. You have a puppy to play with
Speaker 1: two um sort of ease the stress of coming back
Speaker 1: to the office, which I find kind of adorable and
Speaker 1: kind of bizarre. But I will say my dog does
Speaker 1: not relieve stress. My dog creates stress, especially during podcasts
Speaker 1: and radio interviews and TV. You never know when he's
Speaker 1: gonna start yapping. So I don't know. I think I
Speaker 1: heard him early, already heard him. Yeah, someone wants a
Speaker 1: cat question. What about the cat people of the world.
Speaker 1: I don't know. More stress. I don't know. I don't
Speaker 1: know if it will see We'll see how the therapy
Speaker 1: puppies work out. I don't know if therapy cats would
Speaker 1: be such a good idea with the clause and the
Speaker 1: allergies and I don't know. Maybe that could be thermal
Speaker 1: therapy n FT pudgy penguins or something like that. I
Speaker 1: don't know, not a bad idea. My cat is up
Speaker 1: for a therapy cat petting. She she she's really great.
Speaker 1: Um my craziest thing also is in traditional uh in
Speaker 1: the in the traditional finance world. I want to give
Speaker 1: a shout out to Katie gray Felt who actually flagged
Speaker 1: this one for me, and she had flagged in e
Speaker 1: t F filing earlier in the week from black Rock
Speaker 1: and black Rock filed for a China tech e t F,
Speaker 1: which with everything happening with China and the sell off
Speaker 1: there and the regulatory crackdown, the timing is so interesting
Speaker 1: to me. So to me, this was one of the
Speaker 1: weirdest things that I mean, obviously there was a lot
Speaker 1: of weird stuff, but it is an odd time. I'm
Speaker 1: speechless on the timing. That's all right, good one, good one,
Speaker 1: all right, Brian, you build it up for us. Here
Speaker 1: hit us with your craziest thing. So it's an n
Speaker 1: f T story since that's the topic of today's episode basically,
Speaker 1: and that is an n f T project that started
Speaker 1: out with a website called j PEG's Auto Mart, so
Speaker 1: j spelled j a y space Peg Automart. I mean,
Speaker 1: it's all, you know, pushed together for the for the
Speaker 1: u r L. But it basically looks like a late
Speaker 1: nineties website circa you know, or Allah Geo Cities and
Speaker 1: angel Fire if anyone remembers those days, with streamers and
Speaker 1: terrible colors and terrible fonts, which I actually think that
Speaker 1: the aesthetic is incredible. And they were selling n f
Speaker 1: T s of two thousand and seven Kia Sedonas. And
Speaker 1: this began because someone found out that this is apparently
Speaker 1: one of the rarest cars in the world. It was
Speaker 1: not very it was not manufactured in any kind of
Speaker 1: high numbers, and so you could go on this website
Speaker 1: and there was actually some very interesting kind of crypto
Speaker 1: economic distribution mechanisms that they used in this n f
Speaker 1: T drop. But everyone was very excited about getting a
Speaker 1: two thousand and seven Kia Sedona n f T and uh,
Speaker 1: I look at this stuff and just go, this is amazing.
Speaker 1: This is just so much fun. And uh, you know
Speaker 1: all my discord and chat groups, this is everyone talking
Speaker 1: about getting their minivans and have you have you made
Speaker 1: sure that you've got your keys yet and signed your
Speaker 1: least paperwork? So I encourage everyone to go to that
Speaker 1: website and kind of see what it was all about.
Speaker 1: I'm not sure that it will have staying power in
Speaker 1: the n f T world, but it definitely was the
Speaker 1: craziest and most fun thing I've seen, uh this week
Speaker 1: in in the crypto assets space. That is pretty awesome.
Speaker 1: Kia sedonas I can't even picture what it's a minivan.
Speaker 1: I guess you're right that they must be rare, because
Speaker 1: I don't think I've ever just written in one. And
Speaker 1: and I'll tell you an old guy like me, I've
Speaker 1: written a lot of minivans in my day, olda But
Speaker 1: here's a question. Was there really a difference between any minivan?
Speaker 1: I did the Dodge in the Chrysler. Did any of
Speaker 1: them really look any different? There? Like it didn't It
Speaker 1: didn't matter, It didn't matter. No one went over and said, oh,
Speaker 1: check out my Dodge. One it's like, no, it looks
Speaker 1: the same as all the other ones. Who cares You're
Speaker 1: in a minivan. Let's be real, you're in a mini vent.
Speaker 1: This is your life now. So but I think it
Speaker 1: ties back to your and I've written about this too,
Speaker 1: But that whole notion of the entertainment value of an
Speaker 1: ass that is something new and pretty fascinating. I think
Speaker 1: it's it's something new and and these things are very
Speaker 1: community driven. And this is a community made up by
Speaker 1: a bunch of programmers and researchers and tech misfits, and
Speaker 1: so the weirder and more funny something can be, those
Speaker 1: things become the flex. So in this world, you know,
Speaker 1: if you show up at let's say DevCon. DevCon is
Speaker 1: a conference that takes place every year minus the COVID year,
Speaker 1: the COVID years, whatever this is going to be um,
Speaker 1: a flex is not going to be showing up at
Speaker 1: DevCon in a Porsche or a Ferrari. You know that
Speaker 1: the to the Moon Lambeau meme had its place in time,
Speaker 1: but that's not really what this is about. Now. If
Speaker 1: someone were to show up at the next DevCon in
Speaker 1: a two thousand seven Kia Sedona, I'm telling you they
Speaker 1: will be. They will be the hero of that conference
Speaker 1: at DevCon. At DevCon in Japan, someone brought the shiba
Speaker 1: In Neu dog, the doge coin dog, and I think
Speaker 1: it was either the school dog that the picture and
Speaker 1: the meme was based on, or was the brother of
Speaker 1: the sister. I can't remember. Everyone lost their minds and
Speaker 1: had to walk out of the conference and get a
Speaker 1: picture with this dog. So there's something fun about the
Speaker 1: community and the culture that that intersects with these assets
Speaker 1: that I think is is really special to be a
Speaker 1: part of. Talk about a therapy puppy. There you go. Well,
Speaker 1: we'll have to check the prices of the actual real
Speaker 1: world Kia sedonas and see if they it'd be hilarious
Speaker 1: if they start going up in value as well, for
Speaker 1: for the same reason. Low two thousand's I've already I've
Speaker 1: already checked. I thought about trying to buy one, just
Speaker 1: just as a joke, but I didn't. That's hilarious. Well, listen, Brian,
Speaker 1: I could talk about this for hours, but I think
Speaker 1: we gotta leave it at that for this week. But
Speaker 1: hopefully we can get you back some day and uh
Speaker 1: and cover everything we've missed. Because there's as you said,
Speaker 1: there's so much going on in this space that it
Speaker 1: makes your head spin and trying to keep up with it.
Speaker 1: But Brian Massov, thank you so much for your time,
Speaker 1: thanks for having on the show, and hope to be
Speaker 1: back soon with more Kia Sedona like stories plus the
Speaker 1: legit stuff that's happening in the space What Goes Up.
Speaker 1: We'll be back next week and something. You can find
Speaker 1: us on the Bloomberg Terminal website and app or wherever
Speaker 1: you get your podcast. Would love it if you took
Speaker 1: the time to rate and review the show on Apple
Speaker 1: podcast so more listeners can find us. And you can
Speaker 1: find us on Twitter, follow me at Reaganonymous. Bildonna Hirich
Speaker 1: is at Bildonna Hirich. You can also follow Bloomberg Podcasts
Speaker 1: at podcasts. I thank you to Charlie Pelletta, Bloomberg Radio
Speaker 1: and the voice of the New York City Subway System.
Speaker 1: What Goes Up is produced by Tofur Foreheads. The head
Speaker 1: of Bloomberg Podcasts is Francesco Leavy. Thanks for listening. See
Speaker 1: you next time.