The end of summer had me on a bit of a writing hiatus. Between the online blockchain course (more work than I expected, but useful nonetheless), back-to-school and some involuntary travel due to Hurricane Ida, I’ve been remiss in sharing with you more crypto info. I am delighted to be writing this crypto missive where we last left off: NFTs.
I’ve spent the past few weeks reading and thinking about this space and believe the target audience for this newsletter might gravitate more towards NFTs than cryptocurrencies. The NFT world is booming: folks are calling the summer of 2021 the “NFT Summer” because of the explosion of activity in this sector. Sales on OpenSea, a peer-to-peer marketplace, increased two thousand and four hundred fold in a year, from under a million in August 2020 to more than $2 billion in August 2021. That’s bonkers!
Let’s begin with understanding what they are. The term NFT is essentially fancy crypto jargon for a one-of-a-kind token. The word “fungible” means something that is not unique, like a dollar bill. A unique token, a non-fungible token, lives on a blockchain and tracks something distinctive and scarce containing computerized code that verifies it is the only asset with that specific digital identity. NFTs can be anything valuable or collectible- like art, music, video, fashion, gaming prizes and more. It’s hard to understand, however, thinking about how my kids straddle the physical and digital world helped me wrap my head around this more.
Our children’s lives today are increasingly moving from the offline physical world to the online world, a hybrid so to speak. It’s easy to picture them buying digital fashion and sharing looks with their friends on their social platforms. Thanks to cryptography, if they purchase a fashion NFT, it’s theirs to keep or sell as they wish. And, to further adoption practices, it is even justifiably better for the environment than the waste fast-fashion creates.
One of the things I like about this new paradigm is how value flows to creators and fans— and less so to intermediaries. For example, people in Philippines are earning money playing games like Axie Infinity (this model is called ‘play to earn’) and are able to support themselves where otherwise salaries are limited. Of late, regulators are starting to take notice too- and more on regulation below. NFTs in gaming circles allow players ownership of their assets instead of giving the value to the game developers. Through blockchain technology, players can save in-game purchases and re-sell them, creating a whole new and vibrant ecosystem.
Similarly, let’s look at the music industry: NFTs allow musicians to release music and create collaborative and unique pieces to share with their fans. This is great for both fans and artists alike.
This post dives deeper into the Cryptoart craze. No doubt, this fast-emerging sector is disrupting the art industry for artists, dealers, and buyers alike. And the news cycle is full of grabby headlines— just last week, someone earned $1.23m by holding a Cryptopunk NFT for 26 minutes! But, it’s kind of confusing and my goal is to help demystify that to some degree. My own quest to delve into NFT art included spending a few weeks trying to “win” an NFT by Damien Hirst (‘win’— meaning buy), exploring the interesting and attractive offering by Metagolden, where you buy an NFT along side a piece of unique gold jewelry, and wondering about owning a fraction of a Picasso. Ultimately, I landed on purchasing an NFT of a dancing and trumpeting Eames-like elephant. Allow me to explain a bit more…
The collection is by artist Christopher Florentino, who named this NFT collection after each of NYC’s boroughs. In addition, a portion of the proceeds from the drop benefits TUSK, a foundation that works to preserve the lives of elephants that are too often hunted for their tusks. I wanted to dip my toe into the Cryptoart space one way or another and thought to myself: I love both NYC and elephants. And, I thought Staten Island was a good call because once I swam around it with a friend. Let’s just say— it was pretty random!
I got pretty bogged down by the complicated buying process. First, you need to select a crypto wallet and I wasn’t sure which one to go with, as there are a few. A friend of mine who’s well-versed in crypto explained that the myriad of crypto wallets is similar to the browser wars of the 1990’s. At first, it was unclear if Netscape, Yahoo!, Nexus, or exactly who would win the battle of giving you access to the internet. The same goes for crypto wallets in 2021- we shall see. Once I selected Trust Wallet, I felt a panic to quickly complete the transaction, and in doing so, didn’t realize I had bought a re-sale on the secondary market. Now, that is not particularly a bad thing, but in hindsight I wish I had bought the initial drop, or the “primary sale.” Actually, I wish I had the sound mind not to panic, period!
At the same time, a good friend joined me in purchasing her first NFT and didn’t realize she had resold it at a loss hours later. She texted me later: “Note to self: don’t buy and sell NFTs while multitasking on your phone.” While it was funny, the truth is the best and probably only way to learn is by having some skin in the game. I guarantee that she’ll be seated and focused for her next NFT purchase!
So, if you are a beginner like me, my advice is to spend cautiously and calmly just to get your feet wet. Two resources for drops are: Opensea and Nifty Gateway. While the sector is booming, there are still traps. I just read about an NFT scam called Raccoon Secret Society—so do your homework and don’t rush. Also, I believe that you should choose something that resonates with you. Finally, look at the ability of the artist to move and inspire a sizable audience; check their Twitter account and Instagram page to get a feel for that. This beginner is currently deciding if she should try to sell her NFT or hang on to it— still undecided. If you’re already an expert at this, by all means, please reach out and share your insights!
As I did in my last post, here’s a short section entitled:
>>Crypto + Geopolitical News
Infrastructure Bill- You know the $3.5 trillion bi-partisan infrastructure bill from mid- August? At the eleventh hour, the budgetary committee realized there was a gap in funding and went after the crypto industry. The head scratcher was that the bill was vaguely asking blockchain miners to report who was buying what— something that is fundamentally impossible due to cryptographic principles. My thought while reading about this was: “Wait, why is crypto part of an infrastructure bill to begin with?” In turn, the industry formed a pretty powerful coalition to fight back but, nevertheless, the bill passed and this means more work for the crypto industry once the bill goes into effect.
Crypto Regulation- Coinbase has been asking the SEC for guidance on how to structure their new lending product in order to fall under legal regulatory policy. Oddly, the SEC has refused to give any guidance here and asked Coinbase to provide the names of all the people who signed up via e-mail to be notified when the product finally launches. I’m no expert here, but it does feel like we are headed into a Crypto Regulatory Moment and I am sure crypto companies and consumers alike hope we can get clarity as soon as possible. It will be interesting to watch!
Bitcoin as Legal Tender: September 7th marked Day 1 for El Salvador making Bitcoin legal tender. Markets fluctuated as a result and I read articles from both crypto alarmists and those who remained unfazed- encouraging folks to #buythedip as Bitcoin fell. From what I can tell, the market fluctuation could have to do as much with uncertainty with certain political tactics of President Bukele rather than a stumbling belief in Bitcoin itself. No doubt, it marks a pretty remarkable moment in history for cryptocurrencies.
Thanks so much for reading and for sharing. I really appreciate your efforts in helping Crypto Peacock reach more readers!
Up next: DAO’s
XO, Susan