WEBVTT - Money Is Just a Meme 0:00:14.200 --> 0:00:17.880 Hello, and welcome to What Goes Up, a weekly markets podcast. 0:00:18.000 --> 0:00:20.480 My name is Mike Reagan. I'm a senior editor at 0:00:20.480 --> 0:00:25.880 Bloomberg Nambodna Hi across Acid reporter at Bloomberg. This week 0:00:25.920 --> 0:00:28.760 on the show, well as any listeners who stick around 0:00:28.760 --> 0:00:32.600 long enough for our craziest things in market segments. No, 0:00:33.479 --> 0:00:36.080 we're kind of fascinated with n f t s these days, 0:00:36.440 --> 0:00:38.559 you know, the non fungible tokens that are some of 0:00:38.600 --> 0:00:42.319 the hottest investments in the cryptocurrency markets these days. We're 0:00:42.320 --> 0:00:44.519 gonna take a deep dive into n f t s 0:00:44.600 --> 0:00:47.080 and all sorts of other hot topics on the blockchain 0:00:47.240 --> 0:00:50.160 this week with the CEO of a company that's involved 0:00:50.240 --> 0:00:54.120 in cryptocurrency investing. Now, you know, Vildana, I don't know 0:00:54.160 --> 0:00:57.600 if you've noticed, um that I'm not necessarily the youngest 0:00:57.640 --> 0:01:01.280 hippest guy in the world. Have you picked up on that? Yeah, 0:01:01.360 --> 0:01:05.039 I think everybody has. Okay, I'm sorry to break it 0:01:05.080 --> 0:01:07.480 to you. The cats out of the back. So one 0:01:07.480 --> 0:01:09.840 of the hazards of being not so young and not 0:01:09.920 --> 0:01:12.160 so hip is that you don't it's tend not to 0:01:12.240 --> 0:01:14.720 like new things. You know, You're like, what's wrong with 0:01:14.760 --> 0:01:17.440 these old things. I like the old things, and that was, 0:01:17.800 --> 0:01:20.400 do you still have an iPhone too? I actually have 0:01:20.440 --> 0:01:22.840 a twelve. I've upgraded to the twelve recently, but only 0:01:22.840 --> 0:01:26.680 because because my old iPhone one or whatever it was, 0:01:26.720 --> 0:01:29.480 that it was just stopped working. So I do. I 0:01:29.520 --> 0:01:31.880 am hip on the iPhones. But I'll tell you what, 0:01:32.319 --> 0:01:34.440 when you're not too young and not so hip, guy, 0:01:34.480 --> 0:01:35.880 you tend to have a lot of friends who are 0:01:35.880 --> 0:01:39.039 not so young and not so hip. And I've been 0:01:39.120 --> 0:01:42.920 fascinating any party I go to. Lately, the subject of 0:01:43.040 --> 0:01:45.960 n f T has come up, and people get, like 0:01:46.080 --> 0:01:48.360 I rationally angry at them, like why are these things 0:01:48.360 --> 0:01:51.840 worth anything? They're just j pegs, you know, And I 0:01:51.920 --> 0:01:55.800 find myself being the voice of reason that trying to explain, well, 0:01:56.120 --> 0:01:58.880 you know, look at a Babe Ruth baseball card. What's 0:01:58.880 --> 0:02:01.600 the intrinsic value of the cardboard that's printed on? You know, 0:02:01.600 --> 0:02:04.840 it's all the it's all the scarcity value, the originality 0:02:04.920 --> 0:02:08.200 value of the item. Anyway, That's that's my way of 0:02:08.280 --> 0:02:10.400 explaining it. But we do have a guest this week 0:02:10.440 --> 0:02:12.399 who I think we'll do a better job than me 0:02:12.560 --> 0:02:16.480 in explaining hopefully, hopefully, Yeah, you can only go up 0:02:16.520 --> 0:02:20.919 from here, right, Yeah, so I think he'll he'll give 0:02:21.000 --> 0:02:23.480 us sort of the bookcase at least on some segments 0:02:23.520 --> 0:02:25.240 of the n f T market. So we're happy to 0:02:25.280 --> 0:02:27.720 have him on the show for the first time. He 0:02:28.040 --> 0:02:32.120 is the CEO of Ether Capital Corps, let's say, publicly 0:02:32.200 --> 0:02:37.520 listed company on Toronto's Neo Exchange. His name is Brian Massov. Brian, 0:02:37.560 --> 0:02:40.440 welcome to the show. Thanks for having me, and hope 0:02:40.480 --> 0:02:43.160 to join in on correcting some of the way you 0:02:43.160 --> 0:02:44.720 look at the n f T s as an old 0:02:44.760 --> 0:02:47.200 person who gets angry. Sorry, I don't know if I'm 0:02:47.200 --> 0:02:49.400 allowed to say that, but hopefully you're not angry by 0:02:49.520 --> 0:02:51.400 n f T s And yeah, let's dive into why 0:02:51.480 --> 0:02:54.120 why they might be potentially very valuable. I have an 0:02:54.160 --> 0:02:56.600 old person who gets angry very easily. It's true. That's 0:02:56.600 --> 0:03:00.480 absolutely right. But I'm coming around to these new fangled investments. 0:03:00.480 --> 0:03:03.119 But before we delve into that, I'm I just want 0:03:03.120 --> 0:03:06.840 to sort of have you, uh introduced us to eat Capital. 0:03:06.919 --> 0:03:09.040 What the company is all about, how you got involved 0:03:09.040 --> 0:03:11.800 with it, um, what the sort of mission and revenue 0:03:11.800 --> 0:03:14.280 stream is of the company. You know, what's it all about? 0:03:14.560 --> 0:03:17.320 So either Capital was put together in early two thousand 0:03:17.400 --> 0:03:20.560 and eighteen, and everyone looked around and said that during 0:03:20.600 --> 0:03:23.519 the bull run of seen crypto assets were going crazy. 0:03:23.560 --> 0:03:26.680 Bitcoin's going from a few thousand dollars up to twenty dollars. 0:03:26.720 --> 0:03:28.880 The I C omnia is going on, and it was 0:03:28.919 --> 0:03:31.200 really hard to find an access point in the capital 0:03:31.240 --> 0:03:33.519 markets to invest in the asset class and follow a 0:03:33.520 --> 0:03:36.800 group of people around the table who really understood the space. 0:03:37.120 --> 0:03:39.600 And so Either Capital had a very focused thesis the 0:03:39.640 --> 0:03:42.040 group of people around Ethereum and what was going to 0:03:42.120 --> 0:03:44.720 happen that there would be this smart contract platform that 0:03:44.720 --> 0:03:46.680 would be a very important piece of the Internet. And 0:03:46.720 --> 0:03:48.760 so it was put together to be an access point 0:03:49.080 --> 0:03:51.720 in the capital markets to a group of investors who said, 0:03:51.960 --> 0:03:54.320 I don't quite understand the space, but there seems to 0:03:54.400 --> 0:03:57.280 be something happening there, and I want exposure to it. 0:03:57.560 --> 0:03:59.840 And it's funny because that's basically the same conversations. That's 0:03:59.840 --> 0:04:01.680 how being around n f T s now right, there's 0:04:01.840 --> 0:04:03.680 there's something happening there. There's a lot of hype, but 0:04:03.720 --> 0:04:06.360 it's hard to find where's the real meat on the bone? 0:04:06.400 --> 0:04:09.160 What is going to last two years, five years, ten years? 0:04:09.400 --> 0:04:12.720 That comes from all this mania. So either capital invests 0:04:12.880 --> 0:04:19.640 in ethereum focused protocols and tokens in infrastructure. We're a 0:04:19.680 --> 0:04:23.440 group of crypto natives and traditional finance and venture capitalists 0:04:23.440 --> 0:04:26.039 who make up management in the board, and we're passionate 0:04:26.080 --> 0:04:29.000 about the stuff. We're passionate about the space. We I mean, 0:04:29.120 --> 0:04:33.920 I I've been in crypto since kind of late. This 0:04:34.000 --> 0:04:36.000 is my life. I don't have normal friends anymore. I 0:04:36.040 --> 0:04:39.800 don't have regular conversations. It's it's crypt seven on Twitter, 0:04:39.920 --> 0:04:44.440 on Discord, various chat groups. So very excited to you know, 0:04:44.520 --> 0:04:46.599 come here and shed some of what I'm seeing with 0:04:46.640 --> 0:04:50.000 your listeners. It's funny to be at boil stay out. 0:04:50.080 --> 0:04:52.760 So there's certain class of investors who are like, yeah, yeah, crypto, 0:04:52.760 --> 0:04:54.839 it's exciting. Just tell me what I need a stock, Toby, 0:04:54.960 --> 0:04:56.840 I need a stock divide, and that that's kind of 0:04:56.880 --> 0:04:58.560 the niche fill with a with a company like this 0:04:58.640 --> 0:05:00.840 to some degree, I guess, I mean, I think it's 0:05:00.839 --> 0:05:02.920 great if you look at kind of where we're at 0:05:02.920 --> 0:05:06.240 in terms of exposure points in the capital markets, there's 0:05:06.279 --> 0:05:08.480 a number of different ways that now you can get 0:05:08.560 --> 0:05:12.440 proxies to crypto, whether it's through mining companies or e 0:05:12.560 --> 0:05:14.599 t f s or closed funds that are listed in 0:05:14.600 --> 0:05:17.160 the US. There's avenues for people to get exposure who 0:05:17.200 --> 0:05:20.560 aren't yet comfortable going and buying the asset direct and 0:05:20.640 --> 0:05:23.680 either custodying it themselves or holding it on a platform 0:05:23.760 --> 0:05:27.040 that's not registered as kind of the traditional securities dealer. 0:05:27.440 --> 0:05:29.960 So you know, the space is improving. There's more access 0:05:30.000 --> 0:05:32.800 points now than ever, and you know that that's that's 0:05:32.839 --> 0:05:34.800 great for everyone. That's great for the space. It's great 0:05:34.800 --> 0:05:38.120 for that new set of investors who weren't comfortable from 0:05:38.520 --> 0:05:42.440 two thousand and nine up until kind of twenty who 0:05:42.839 --> 0:05:44.760 might have said, I want exposure to this space, I 0:05:44.800 --> 0:05:47.160 just don't know how to do it um and so 0:05:47.160 --> 0:05:49.480 they sat on the sidelines because they had no other choice. 0:05:49.520 --> 0:05:51.640 So I think that it's all it's all good for 0:05:51.680 --> 0:05:53.359 the space. But now we have this new part of 0:05:53.360 --> 0:05:55.039 the space, the n f T S, the n f 0:05:55.080 --> 0:05:57.480 T part, as you're saying, and people are wondering, well, 0:05:57.520 --> 0:05:59.200 how do I invest in that? Do I even want 0:05:59.240 --> 0:06:03.039 to invest in that? So so right I'm hoping we 0:06:03.120 --> 0:06:04.520 get to n f T s in a little bit. 0:06:04.560 --> 0:06:06.839 But I know that you had sent us a list 0:06:07.000 --> 0:06:10.440 of some of them most frequently asked questions you get 0:06:10.520 --> 0:06:13.920 from people, especially retail investors, and one of them was 0:06:14.200 --> 0:06:17.839 what are the real world problems crypto is trying to solve? 0:06:17.880 --> 0:06:20.040 And I feel like maybe that's something you guys were 0:06:20.040 --> 0:06:22.680 also thinking about before you started the firm. So what 0:06:22.680 --> 0:06:24.440 what sort of answer do you give them when when 0:06:24.480 --> 0:06:28.080 people ask you that? It's kind of a two pronged question, 0:06:28.200 --> 0:06:32.040 because I think most people are looking for an everyday 0:06:32.160 --> 0:06:34.640 use case that they can latch onto and say, ah, 0:06:34.680 --> 0:06:36.560 now I understand what this thing is going to be. 0:06:37.320 --> 0:06:41.040 And it's kind of hard to look at that right 0:06:41.040 --> 0:06:44.080 now because it's still very much in this experimental phase. 0:06:44.400 --> 0:06:46.919 So we know that one thing that crypto assets do 0:06:47.080 --> 0:06:50.839 is they create an investment opportunity or a network that 0:06:51.000 --> 0:06:54.799 is uncorrelated to traditional assets or over time hopefully becomes 0:06:54.920 --> 0:06:58.800 uncorrelated to traditional assets. It's outside of the monetary policy 0:06:58.839 --> 0:07:03.400 of any political agenda, a specific jurisdiction. When I look 0:07:03.440 --> 0:07:08.400 at what bitcoin did, Justin Drake, who's an ethereum researcher, 0:07:08.480 --> 0:07:11.760 describes um what bitcoin did is it came along and said, 0:07:12.720 --> 0:07:15.160 gold has this really interesting monetary policy. It has a 0:07:15.240 --> 0:07:18.320 very few unique attributes to it. There's a fixed amount 0:07:18.800 --> 0:07:21.600 it has to be extracted from the Earth's crust. It 0:07:21.640 --> 0:07:24.720 gets mined and extracted at a very specific rate um. 0:07:24.760 --> 0:07:26.520 But the problem with gold, of course, is that it's 0:07:26.520 --> 0:07:29.200 physical and it's not digital, so it can only go 0:07:29.360 --> 0:07:31.600 so far. And in the world of digital assets and 0:07:31.840 --> 0:07:37.600 digital transforming of or or or sharing information, gold doesn't 0:07:37.600 --> 0:07:39.800 really work in that world. So Bitcoin comes along and says, 0:07:39.840 --> 0:07:42.360 can you replicate that same kind of monetary policy but 0:07:42.440 --> 0:07:45.920 in a digital environment? But Bitcoin kind of stops there, 0:07:46.440 --> 0:07:48.520 and that's kind of what bitcoin does. You can you 0:07:48.560 --> 0:07:50.120 can send it, you can receive it, but it can't 0:07:50.120 --> 0:07:53.120 do much more than that. Ethereum comes along and says, well, 0:07:53.120 --> 0:07:55.640 what if you kind of create this clearing house for 0:07:55.680 --> 0:07:58.720 the world. The first thing that Ethereum really does is say, 0:07:58.760 --> 0:08:02.280 what if the world has a clearinghouse that no one company, 0:08:02.280 --> 0:08:05.760 no one party controls, and anyone can record their activity, 0:08:05.800 --> 0:08:10.080 their information, their token, tokenize their dollar, whatever activity they 0:08:10.120 --> 0:08:13.720 want to perform can be recorded into this global ledger, 0:08:14.040 --> 0:08:17.880 this global settlement layer and just pay a little transaction fee. So, 0:08:17.920 --> 0:08:20.920 even though that's still kind of abstract, right, people are wondering, well, 0:08:21.000 --> 0:08:23.080 what do I do with that? Who cares? So what? 0:08:23.480 --> 0:08:25.880 I think? We're still scratching the surface of how people 0:08:25.880 --> 0:08:27.800 are going to use this, and we're starting to see 0:08:27.880 --> 0:08:31.000 use cases emerge. You're starting to see decentralized finance come around. 0:08:31.040 --> 0:08:33.559 You're starting to see n f t S digital art 0:08:33.720 --> 0:08:37.680 right that exists on a blockchain. That's becoming a recent trend. 0:08:38.120 --> 0:08:40.880 Um Visa about six months ago said that they're going 0:08:40.920 --> 0:08:43.880 to test token izing U S dollars and moving them 0:08:43.920 --> 0:08:47.240 across the Ethereum network for settlement between their their data centers. 0:08:47.240 --> 0:08:49.640 So there's all sorts of of use cases that may 0:08:49.679 --> 0:08:52.839 seem legit, like what Visa does that has a kind 0:08:52.840 --> 0:08:54.920 of nexus to the real world, but then there's this 0:08:55.000 --> 0:08:58.480 digitally native set of uses that we are not used 0:08:58.520 --> 0:09:01.200 to in our brand new And the second prong to this, 0:09:01.320 --> 0:09:03.520 which is much short, I promise I would say, is 0:09:03.559 --> 0:09:07.640 that it's kind of like looking at the Internet in 0:09:07.679 --> 0:09:11.120 the mid nineties and saying, well, okay, fine, I can 0:09:11.120 --> 0:09:13.640 only send an email if all my friends have an 0:09:13.640 --> 0:09:16.520 email account. How how valuable is this thing going to be? 0:09:16.920 --> 0:09:20.160 The things that really became valuable. We're not just taking 0:09:20.200 --> 0:09:22.440 what existed in the physical world and saying, now I 0:09:22.440 --> 0:09:25.400 can replicate this in this digital environment. It was all 0:09:25.440 --> 0:09:28.000 these use cases that no one imagined yet. So the 0:09:28.080 --> 0:09:31.120 early Internet, you know, had people taking their newspapers, their 0:09:31.120 --> 0:09:34.360 magazines and just copying and pasting the content. And what 0:09:34.559 --> 0:09:37.240 really was valuable about the Internet was saying, well, if 0:09:37.280 --> 0:09:40.679 something is digitally native, and it's built from the ground up, 0:09:40.679 --> 0:09:44.800 respecting kind of the protocol design and the flexibility that 0:09:44.840 --> 0:09:47.600 this new architecture allows, well, then all of a sudden, 0:09:47.640 --> 0:09:50.360 it's not just about putting your newspaper up on some 0:09:50.400 --> 0:09:53.080 web page. It can become interactive in a way that 0:09:53.120 --> 0:09:57.640 the world had never seen before. Right social media, Instagram, broadcasting, Twitter. 0:09:57.960 --> 0:10:01.800 These were things that didn't have an uh an existing 0:10:01.840 --> 0:10:04.840 structure prior to the Internet. And so I think people 0:10:04.880 --> 0:10:06.880 who are looking for the how do I copy and 0:10:06.880 --> 0:10:09.840 paste an old model just into this environment. There will 0:10:09.880 --> 0:10:11.600 be some of that that goes on, and there's probably 0:10:11.640 --> 0:10:14.600 some you know, nine to ten improvements in there, but 0:10:14.640 --> 0:10:17.000 it's the zero to ones. It's those brand new use 0:10:17.040 --> 0:10:19.800 cases that you know, Peter tele talks about that that's 0:10:19.840 --> 0:10:30.720 what's really exciting here. I want to rewind a little bit. 0:10:30.720 --> 0:10:33.439 I'm glad you brought up that notion of crypto being 0:10:33.440 --> 0:10:36.320 an uncorrelated asset. This is kind of a perennial debate 0:10:36.880 --> 0:10:40.720 here in crypto markets um, because at least looking at 0:10:40.720 --> 0:10:43.160 the big ones, if you look at ethereum and Bitcoin, 0:10:43.520 --> 0:10:46.800 there are sort of long stretches of time where they 0:10:46.800 --> 0:10:49.520 do appear to be uncorrelated, to say that the SMP five. 0:10:50.520 --> 0:10:52.200 But then you have a week like this where the 0:10:52.920 --> 0:10:55.719 get kind of a macro shock with the China ever 0:10:55.800 --> 0:10:58.439 Grand or ever grand a situation. I don't think anyone 0:10:58.480 --> 0:11:00.760 knows which one is right, but you get this shock 0:11:01.200 --> 0:11:03.680 at this sort of risk off move in markets, and 0:11:03.720 --> 0:11:07.319 crypto does seem to sort of tighten up that correlation 0:11:07.679 --> 0:11:11.800 with everything else um. And I imagine, you know, as 0:11:11.840 --> 0:11:14.760 more companies like yours come onto the public markets, as 0:11:14.800 --> 0:11:18.320 more companies like micro Strategy and Testlina hold more crypto 0:11:18.400 --> 0:11:21.200 on on their balance sheets, that there's the risk of 0:11:21.200 --> 0:11:25.880 that those correlations tightening tightening up. Even more so, is 0:11:25.880 --> 0:11:30.360 that sort of promise of crypto being uncorrelated uh dying 0:11:30.400 --> 0:11:32.360 a slow death? Or am I looking at it wrong? 0:11:32.440 --> 0:11:34.920 You know what? How do you look at that that concept? 0:11:35.800 --> 0:11:38.280 I think that these assets over time will become more 0:11:38.320 --> 0:11:41.520 and more uncorrelated. Certainly. I think one of the things 0:11:41.520 --> 0:11:43.719 that you've seen in the last year or year and 0:11:43.720 --> 0:11:46.200 a half, you know, since COVID is we've realized the 0:11:46.240 --> 0:11:48.839 world is more interconnected and all these markets are more 0:11:48.880 --> 0:11:52.760 interconnected than everyone even imagined. And it didn't matter if 0:11:52.760 --> 0:11:54.960 it was the OPEC crisis, it didn't matter if it 0:11:55.040 --> 0:11:58.000 was what just happened in the last week. People are 0:11:58.080 --> 0:12:02.000 looking for safe havens in these extreme moments of volatility, 0:12:02.080 --> 0:12:03.960 and the question is where the safe haven is going 0:12:03.960 --> 0:12:05.920 to be? What? What is the safe haven these days? 0:12:06.000 --> 0:12:08.640 Is that the US dollar? Is it? Crypto is it? 0:12:09.040 --> 0:12:11.320 You know what? Where is that money gonna go? And 0:12:11.360 --> 0:12:14.000 markets don't like uncertainty. I think that we've seen that, 0:12:14.080 --> 0:12:17.679 you know before crypto. In crypto, people don't like uncertainty. 0:12:17.720 --> 0:12:21.880 So this notion that crypto is this uncorrelated asset, I 0:12:21.960 --> 0:12:25.280 think is something that will be more and more true 0:12:25.320 --> 0:12:28.000 as time goes on, as it continues to prove itself 0:12:28.520 --> 0:12:32.640 to be robust uh in in volatile times. I think 0:12:32.679 --> 0:12:38.480 it was very important that in the March of market crash, 0:12:38.720 --> 0:12:41.280 bit quin ether and you know, all the crypto markets, 0:12:41.320 --> 0:12:45.120 despite them having this drop and basically a twenty four period, 0:12:45.760 --> 0:12:48.640 which is extreme. By the way, everything you know I got, 0:12:48.679 --> 0:12:50.000 I got a lot of text. It was not a 0:12:50.000 --> 0:12:52.400 happy day, certainly from my phone blowing up and with 0:12:52.440 --> 0:12:55.040 my friends. But you know what you did get to 0:12:55.040 --> 0:12:58.160 see is that the space didn't die. The asset class 0:12:58.200 --> 0:13:00.960 did not go to zero, and in fact, not only 0:13:01.000 --> 0:13:02.920 did it not go to zero, it woke up this 0:13:02.960 --> 0:13:06.280 new group of investors who had written off this idea 0:13:06.320 --> 0:13:10.080 of bitcoin or ethereum or cryptoassets and said, there's this 0:13:10.120 --> 0:13:13.600 pending inflation that everyone's concerned about. What are the alternatives? 0:13:13.640 --> 0:13:16.400 I mean, so there's gold, fine, but maybe some of 0:13:16.400 --> 0:13:18.440 that spills off into bitcoin. And so you have these 0:13:18.760 --> 0:13:21.880 new investors who before did not want to participate in 0:13:21.880 --> 0:13:24.840 this environment and say, maybe crypto is a place that 0:13:25.080 --> 0:13:28.280 has a partner portfolio, doesn't matter if it's big or small. 0:13:28.320 --> 0:13:31.400 But maybe this is going to become a legit asset class. 0:13:31.440 --> 0:13:33.600 So I think that it's still going to be volatile 0:13:33.679 --> 0:13:36.119 for the foreseeable future. It's still going to be correlated 0:13:36.160 --> 0:13:38.760 in times like this, and over time that volatility will 0:13:38.840 --> 0:13:41.440 drop and people will be less scared, uh and the 0:13:41.520 --> 0:13:44.559 swings will be less wild. So it's it's there. It's 0:13:44.559 --> 0:13:46.880 going to take time. Though, when we talked about a 0:13:46.920 --> 0:13:49.240 week ago, I was I was impressed with sort of 0:13:49.280 --> 0:13:53.319 your bowl case for f and crypto punks or as 0:13:53.320 --> 0:13:57.120 I call them, cyberpunks as I incorrectly call him the cyberpunks, 0:13:57.120 --> 0:14:00.400 but crypto punks. I was suppressed with sort of your 0:14:00.920 --> 0:14:04.600 your rationale for why we should take these seriously? Um, 0:14:04.760 --> 0:14:06.960 so you know, give me some more ammunition at my 0:14:07.040 --> 0:14:09.800 cocktail parties with the angry old men that I associate 0:14:09.840 --> 0:14:12.120 with when they say, it's just a JPEG, it's not 0:14:12.120 --> 0:14:14.480 worth anything. What's what's your book case here for? For 0:14:14.480 --> 0:14:18.440 this whole asset class? So I think it's helpful for 0:14:18.679 --> 0:14:22.760 listeners to understand the mechanics behind the specific project as 0:14:22.800 --> 0:14:26.680 we dive in and then discuss how they're going to 0:14:26.720 --> 0:14:29.560 be used in these new systems, because then there's just 0:14:29.600 --> 0:14:33.480 more context there. So in two thousand and seventeen, Larva 0:14:33.600 --> 0:14:38.760 Labs basically publishes ten thousand unique characters that have various 0:14:38.840 --> 0:14:43.440 combinations of attributes as JPEG's. Actually I think that they're 0:14:43.480 --> 0:14:46.280 technically either SVG files or PNG s. I'm not sure, 0:14:46.320 --> 0:14:48.600 but someone's super techy out there is gonna jump on 0:14:48.640 --> 0:14:51.640 me if I call it a jpeg. But they publish it, 0:14:51.680 --> 0:14:54.760 and whether it's it's a male cryptopun courts female, or 0:14:54.800 --> 0:14:57.960 it has wild white hair or three D glasses or 0:14:58.040 --> 0:15:01.600 maybe a handlebar mustache, there's all these different attributes and 0:15:01.640 --> 0:15:04.320 different combinations of these attributes, and they put it up 0:15:04.320 --> 0:15:06.520 on this website and they're completely free. All you have 0:15:06.640 --> 0:15:09.040 to do is pay the four dollar gas fee and 0:15:09.080 --> 0:15:11.200 you could claim one to your address. You would claim 0:15:11.240 --> 0:15:15.360 the ownership over that picture. And most people wrote this 0:15:15.400 --> 0:15:17.600 off and said, well that that's kind of an interesting idea, 0:15:17.680 --> 0:15:20.480 but yeah, I'm not interested in paying the four dollars 0:15:20.520 --> 0:15:24.440 for this jpeg. Forget it. And what ends up happening 0:15:24.520 --> 0:15:26.080 is there's enough people go this is kind of an 0:15:26.080 --> 0:15:30.800 interesting idea. How would you um create a token that 0:15:30.880 --> 0:15:34.920 represents a specific thing versus something that's fungible. So for 0:15:35.000 --> 0:15:38.000 anyone who's not familiar, right, fungibility would just be I 0:15:38.080 --> 0:15:39.680 give you the five dollar bill. You don't care which 0:15:39.720 --> 0:15:41.480 five dollar bill I pull out of my pocket. You're 0:15:41.480 --> 0:15:43.200 happy that I give you a five dollar bill. In 0:15:43.240 --> 0:15:46.760 a non fungible token world, uh, the token represents a 0:15:46.800 --> 0:15:49.080 specific thing, so it's not just that you bought a 0:15:49.080 --> 0:15:53.160 house on this street. You care which house specifically you purchased. 0:15:53.480 --> 0:15:55.920 And so in the context of the crypto punks, you 0:15:55.960 --> 0:15:58.440 don't care that you have a claim on a crypto punk. 0:15:58.480 --> 0:16:00.400 You want to know that no, no no, no, I the 0:16:00.480 --> 0:16:03.640 specific crypto punk with the handlebar mustache and the three 0:16:03.720 --> 0:16:08.560 D glasses. And it spawns a bunch of research and 0:16:08.720 --> 0:16:11.960 a new token standard on ethereum. So it's it's a 0:16:12.000 --> 0:16:15.920 different tech standard basically, and that's called the e r 0:16:15.960 --> 0:16:19.640 c SE. It goes away, and it possibly just goes 0:16:19.680 --> 0:16:21.920 away because we're in this bear market, right this is 0:16:22.000 --> 0:16:25.120 kind of mid two thousand and seventeen, two eighteen, the 0:16:25.160 --> 0:16:27.720 price of crypto crashes, and so most people are kind 0:16:27.720 --> 0:16:30.280 of shying away from the space. Maybe some developers leave. 0:16:30.680 --> 0:16:33.760 The community shrinks a little bit, but n f t 0:16:33.880 --> 0:16:37.040 s are certainly not what they are today. And in 0:16:37.160 --> 0:16:43.000 the I would say mides um and people are waking 0:16:43.080 --> 0:16:45.960 up to this idea of of digitally native art, you know, 0:16:46.000 --> 0:16:47.680 that lives on a blockchain, and how could it be 0:16:47.720 --> 0:16:50.560 sold for this much? And around this point in time, 0:16:51.640 --> 0:16:54.520 everyone turns in the community back towards the crypto punks 0:16:54.520 --> 0:16:57.240 and says well, this is the first. Right, this is 0:16:57.240 --> 0:17:00.240 the first time anyone ever tried this experiment on ethereum. 0:17:00.320 --> 0:17:03.280 Its spawned the e r C seven twenty one token standard. 0:17:03.280 --> 0:17:05.720 There's only ten thousand. There can't ever be more of them. 0:17:06.080 --> 0:17:08.600 People turn around and say, well, crypto punks are the first, 0:17:09.160 --> 0:17:11.800 and in a in an environment where everyone is looking 0:17:11.800 --> 0:17:15.080 for scarcity, right as the US dollar is is hitting this, 0:17:15.359 --> 0:17:19.240 you know, pending inflation, people looking at gold. A lot 0:17:19.280 --> 0:17:21.480 of the criticisms that people have towards n f T 0:17:21.680 --> 0:17:23.640 s in a way you can catch them and say, 0:17:23.640 --> 0:17:26.000 how is that any different than your arguments towards bitcoin, 0:17:26.240 --> 0:17:27.920 And then they go no, no no, no, but bitcoin is different. 0:17:28.000 --> 0:17:30.920 You go why, and you start hearing them say well, 0:17:31.200 --> 0:17:33.679 there's a fixed amount of them. You go yeah, but 0:17:33.720 --> 0:17:36.680 you could create other bitcoins, right, you could create light coin, 0:17:36.800 --> 0:17:38.920 you could create dose coin, you could have feather coin. 0:17:39.320 --> 0:17:42.639 There's something sticky about being the first and representing a 0:17:42.680 --> 0:17:47.080 specific point in time culturally that a community rallies around 0:17:47.080 --> 0:17:50.600 in terms of consensus that they say this is this 0:17:50.680 --> 0:17:53.880 is the one. And so I also like to point 0:17:53.880 --> 0:17:55.920 out to people say that there's no intrinsic value, or 0:17:55.960 --> 0:17:58.640 there's you know, how are they how are they valued? 0:17:59.280 --> 0:18:03.320 Look at something like Twitter. Twitter is not valuable because 0:18:03.400 --> 0:18:05.720 of the number of servers that they're running in the 0:18:05.800 --> 0:18:08.200 number of data centers that they have in the backups. No, 0:18:08.480 --> 0:18:11.840 it's valuable because you can't just replicate that same number 0:18:11.880 --> 0:18:14.240 of servers and data centers somewhere. It's valuable because there's 0:18:14.280 --> 0:18:17.480 social consensus and a network effect that has taken place 0:18:17.840 --> 0:18:20.239 around that set of standards that people go, we're all 0:18:20.280 --> 0:18:22.480 going to rally around this thing, and we think that 0:18:22.480 --> 0:18:26.000 that's the place to have our you know, three sentence communication, 0:18:26.080 --> 0:18:28.719 and that's where the value comes. It's the network effect, 0:18:28.960 --> 0:18:31.879 and that applies to bitcoin, and that also applies to 0:18:32.119 --> 0:18:37.720 crypto punks. So the crypto punks start getting bought up 0:18:37.920 --> 0:18:40.960 kind of in that latter half of twenty nine, sorry, 0:18:42.160 --> 0:18:45.520 and then have this huge explosion basically you know, throughout 0:18:45.520 --> 0:18:48.080 this year. And the reason that they're valuable is they're 0:18:48.080 --> 0:18:50.320 the first they the very first n f T project 0:18:50.400 --> 0:18:52.880 that exists in ethereum. They're kind of, in a way, 0:18:52.880 --> 0:18:56.040 the birth of this entire movement. So the people who 0:18:56.080 --> 0:18:58.080 criticize and say all of n f T s are 0:18:58.119 --> 0:19:01.000 are a bubble and they're not worth anything. I will 0:19:01.040 --> 0:19:03.679 agree that most n f T s probably won't be 0:19:03.680 --> 0:19:06.240 around in five years or hold any value five years 0:19:06.240 --> 0:19:11.200 from now, but crypto punk specifically, those are the opportunities 0:19:11.280 --> 0:19:14.760 to buy these works of art that some people would 0:19:14.800 --> 0:19:18.120 argue it as an art, but it's the opportunity to 0:19:18.119 --> 0:19:22.119 to buy into these very early historical pieces that have 0:19:22.480 --> 0:19:27.720 not only cultural significance, but they also represent um I think, 0:19:27.960 --> 0:19:33.119 a transition in the art world towards more utility, uh 0:19:33.359 --> 0:19:52.520 to what these pieces of art can do. So I 0:19:52.560 --> 0:19:55.159 was thinking of this column that Matt Levina Bloomberg Opinion 0:19:55.359 --> 0:19:58.760 wrote a couple of days ago, where he quoted somebody 0:19:58.760 --> 0:20:00.920 who said, you know, this f T that this person 0:20:00.920 --> 0:20:03.560 had bought brought this person joy. And so it got 0:20:03.600 --> 0:20:05.800 me thinking about, like, what are some of the reasons 0:20:05.800 --> 0:20:08.400 somebody might want to own an n f T besides 0:20:08.560 --> 0:20:13.040 just the collectibles aspect of it. And you know, it's 0:20:13.040 --> 0:20:15.560 not like if you buy a share of Ford, for instance, 0:20:15.560 --> 0:20:17.880 that sort of brings you join or joy or makes 0:20:17.880 --> 0:20:19.560 you happy, But like, what are some of the other 0:20:19.680 --> 0:20:23.080 reasons that somebody might be into n f T s 0:20:23.359 --> 0:20:29.160 besides just the collectible aspect. So I think that most 0:20:29.200 --> 0:20:32.040 of the purchasing of n f t s right now 0:20:32.119 --> 0:20:35.240 is on speculation. People are trying to catch the next 0:20:35.280 --> 0:20:37.919 pudgy penguin or board apiacht club that will have this 0:20:38.400 --> 0:20:41.960 huge explosion and in price and value. And there's something 0:20:42.000 --> 0:20:45.119 fun about it. It doesn't take itself too seriously. In fact, 0:20:45.400 --> 0:20:47.879 kind of the weirder and the more fun these n 0:20:47.920 --> 0:20:50.040 f t s can be by design, the more people 0:20:50.080 --> 0:20:53.200 seem to be interested in playing with them. But there's 0:20:53.240 --> 0:20:56.639 something else happening under the surface, which is that utility. 0:20:56.680 --> 0:20:59.560 And I think that's where I sit in my interest 0:20:59.600 --> 0:21:01.280