NFT – No fungible idea??

Tracey: [00:00:20] Welcome to the crypto curious podcast designed to help you navigate the dynamic world of cryptocurrency. Hello, my name is Tracey, and as always, I'm joined by my pals, Blake and Craig. Hey, guys, hey, going, 

Blake: [00:00:32] Hey, Trace, pretty well. Great to be here again. 

Craig: [00:00:34] Hey, Trace, very excited for this one. 

Tracey: [00:00:37] Yes, I know you are today. We are covering a topic that I know Craig, for one, is very excited about, and that is NF Tease. This is a weird and wonderful world, and there's a lot to unpack and explain, and we'll start with the number one burning question What the hell is an NFT? The actual definition is a nonfungible token. And if you're thinking I have no fungible idea, then that's OK. That's why we're here today, guys. What do you think? 

Craig: [00:01:10] Yeah, NFTs have a real buzz around them right now. People are paying hundreds of thousands of dollars for internet pictures for JPEGs, essentially sometimes with just a word in a box or a pixelated punk. People are trading in like Pokemon cards. Some people are making tens of thousands of dollars, but also some people are probably losing tens of thousands of dollars. So it's a really crazy space. 

Blake: [00:01:33] Yeah, and that's pretty strange to watch. I was not a believer when I first heard about them, mainly because I didn't really. I don't think I really understood what they are and what their technology means. What did you think about them trace? And do you want to tell us about your your first NFT? 

Tracey: [00:01:49] Well, to be honest, I didn't even know I was engaging with NFTs when I was first engaging with enlistees, which was about three years ago. I was given the tip about something called Z Run, which was a digital horse racing platform. So, yeah, almost three years ago to this Christmas, I jumped online and open seas and started to buy a few of these digital racehorses. So I got myself a stable and yes, started purchasing these virtual horses, which was fun and a little bit of a gambler at heart. And then, yeah, at the time, I didn't even know that these were actual NFTs and then fast-forward to, you know, twenty twenty one and these are being mentioned by, you know, Hamish and Andy. And Z Run is an Australian start-up, which is is doing exceptionally well right now. They've even just recently partnered with Victoria Racing, and they ran a virtual Melbourne Cup race. So, you know, that's pretty amazing. 

Blake: [00:02:50] Groups like the NBA have started creating digital playing cards, and I think we're going to see, you know, more sporting clubs and and different sports embrace this technology to create digital products. 

Craig: [00:03:04] Yeah, there's a lot of hype. You know, we've got the gaming, we've got the cards, but you know, it's also branching out to music.

Tracey: [00:03:12] Yeah, I think there's definitely a lot of things that we can touch on there. But for now, let's explain exactly what an NFT is and what it actually means.

Craig: [00:03:21] NFT stands for non-fungible token, which means it's unique token on the blockchain that is non-fungible, meaning it has its own unique characteristics and the ownership can be verified and recorded. Now this is different to bitcoin because bitcoins are not uniquely identifiable. Every bitcoin is the same and interchangeable. Also, bitcoin's a fractional meaning you can sell a portion of a bitcoin rather than one for one. You're not really supposed to cut up an NFT into fractional parts you meant to sell the whole NFT. Yeah, NFTs rose to popularity through online art. Now, if you think about traditional art, the reason the Mona Lisa in the Louvre in Paris is worth so much is because that's the original. Now there are copies on postcards, magnets, calendars, but that's not the original painted by da Vinci in the Louvre. With the use of NFTs, we are able to verify and confirm the ownership and legitimacy of digital artwork using the blockchain.

Blake: [00:04:18] Well, maybe just to summarise on that, you know, NFTs mean that people can create art that's verifiable. You know, you can copy someone's photograph online and use it for all sorts of purposes. People do that every day, but it's not the original, so it loses a sense of its value because you can't prove its scarcity. Now NFT, you can prove that it's the original and that it's actually scarce. And then therefore you can attribute real value to it. And the technology overall is a game changer, and I think it's important to touch on the philosophy. The reason that it's so important is that until now, we have not had the opportunity to create something truly. Unique and on replicable on the internet, and this has far reaching implications for the digital world. Now you can not only prove that you created sync, but you can own sync in the digital world. I gave an example of digital collectable baseball cards, but this can extend to music research papers, capital raising and even verifying your identity. And we'll explore this with a little bit more context later on. But you know what I think is the most important point is now people can flex and be flamboyant with their wealth online. Since the beginning of culture, humans have been able to publicly display their wealth from clothing to art, too expensive property and rare collectable items. However, this hasn't been technically possible to do on the internet because people can just right click and copy and paste. And because we haven't been able to prove or verify something's authenticity or scarcity, however, now we have the technology to do this, and it's going to be fascinating to see how it flourishes and evolves over the next decade. 

Tracey: [00:06:06] That's amazing. I mean, we've gone from talking about art and collectables, and you've touched on things. They're like putting research on there and capital raising in your own identity. I think, you know, the possibilities are endless, which is pretty amazing. But if we go back a moment to art, which is all which is kind of where this is all started, and we probably should talk about the two different types of arts and collectables. And I'll get get you, Craig, to maybe drill down into the, you know, the one of the cons and maybe the collectables and how that set out.

Craig: [00:06:35] Yeah, I went to an art show a few months ago where I saw physical art, but you know, they had a little sign that said, buy it as an NFT with a QR code. So these real life artists are, you know, really keen to get involved in this space. And I think the main reason is the unsold royalties. Now think about real life if I paint a picture and Tracy buys it and Tracy wants to sell it to black. I have no way of knowing what's going on after I give it to Tracy. She could sell it for 10 times more than what the time it took me to paint it. Now, with NFT keys, I can actually code into the smart contract and say, Tracy, you can resell this to Blake, but I will get a 10 percent royalty on your sale. Now, this has massive implications for artists. Not only are they earning each time it's resold, but now they're beneficiaries like their children or their grandchildren can earn when it gets resold. So it's really interesting to see how it plays out. 

Tracey: [00:07:33] I'm just really interested to get this painting, but I'm sorry. I just saying that I'm just thinking about all the all the kids are all the people at uni that told their parents that they were going to be artists and all the parents. That was saying there's no money in being an artist, and now you can turn around and say, Well, hey, there's going to be money being an artist now. 

Craig: [00:07:53] Yeah, it's it's brilliant. But yeah, that's sort of that's sort of one type of art, a one of a kind NFT art. This is mostly where artists, like I mentioned in the exhibition show, they have a bit of a following and this selling one of a kind digital pieces to people or their community. Now that's one type. The second type is collectables, and this is the really interesting ones for the everyday NFT collector. So, CryptoPunks, they were a collection of 10000 pixelated punks. Now, literally punks with mohawks, cigarettes, and they're all pixelated. They actually came out for free a few years ago and fear was starting up. Now they all have their own unique traits. Some have hats, somehow different clothes. Some are even aliens. And they were one of the first NFT pieces on a theorem. And now they are going for hundreds of thousands, if not millions, of dollars. It's not just because of the art, it's also the community and being in a club. CryptoPunks is a status symbol in crypto right now. I actually saw a poll on Twitter that said, you know, it said, What would you rather a Lambo or a crypto punk? And more people voted for crypto because it's seen as more of a.

Tracey: [00:09:09] Did you start that poll? Was that you started that blog? 

Craig: [00:09:11] No, I didn't start that, Paul. But yeah, so that's one reason it's sort of a wealth status symbol, but it's also the community and being in a club. Now, one of the biggest NFT projects it's could be the second or third biggest is called board a yacht club. Now these are just pictures of bored apes. They look bored. Some of them have sailor hats on. Some of them have suits on and they in you actually get exclusive perks from owning one. They actually had a festival called Eight Fest in New York, where you had to prove you owned a board ape to get access to events parties. So it's actually translating now to real world use. 

Blake: [00:09:51] Craig, I could just imagine all the nerds at the Board Yacht Club party that 

Craig: [00:09:58] I know it's too funny. 

Tracey: [00:09:59] Oh, my gosh. Look, before you go any further, I've got a bit of a titbit to add here with the CryptoPunks just a couple of weeks ago, the date right now the the highest selling NFT was actually a crypto pack, which sold 28th of October for five hundred and thirty million dollars. So when we scratched the surface a little bit further, they noticed that it was actually the person who owned it, selling it to themselves. So obviously the blockchain is open so you can see what's happened. So we're not sure what that was, but it may have been a publicity stunt, but whatever it was, it did bring a lot of attention to the crypto punk, so it looks like it's gone from one wallet to the other. So he sold himself a crypto punk for five hundred and thirty million dollars. So it was that you too. 

Craig: [00:10:43] Craig O'Neil No, not mine.

Blake: [00:10:45] Sorry, it might be a really good point to premise all this with why people, you know, want to collect these things. And you know, throughout the period of time, people have collect all sorts of things, from coins to Barbie dolls to Pokemon cards. And people do it, you know, because of the community, because it's rare, because it's fun and it's like a hobby. And this can now extend to the digital world. And I think because it's the first iteration of what we've done traditionally for so long in the digital world, that's probably why it's gained so much traction over the last 12 to 18 months. 

Tracey: [00:11:22] Yeah, yeah, you're right. Everyone's always collected something some way or another, and this is just another aspect. And and there's another really big aspect of NFT space, and that's gaming, which is huge. So like, do you want to talk a little bit more about this side of things?

Blake: [00:11:36] Yeah, gaming is such a massive industry, right? There's billions of people playing every day. However, traditionally gaming has been siloed to individual games. For example, you can earn and buy things in-game and then take them out of that particular game and and sell them or, you know, use them within other games. But now, with the advent of this technology, where you can transfer an NFT, for example, a sword NFT that you earn to one game and then use it in another game or even a love potion, you know that you've spent a lot of time collecting and earning, and you know it really opens up the world of these. These opens up the possibilities in these digital worlds, or these metaverse is in a way that they previously haven't. And, you know, and if teams allow people to buy trade, move these valuable items between different games in different metaverse, it's no longer, you know, the gaming companies that are collecting all the revenue from the sale of these items. Now people can, you know, trust loosely or, you know, on these platforms on these marketplaces, sell these NFTs to one another and generate revenue from their hard work. And the implications of this are huge. And what we're starting to see is, you know, people in the Philippines playing, you know, these pay to play, all these pay to earn games called, for example, Axie Infinity is one of them where they can spend their days mining and earning things in these games and making a living off them because they can then sell them and transfer them and use them for all sorts of things. And it's just fascinating to watch how the technology's evolving. 

Craig: [00:13:23] Yeah, that's right. Like, it's pretty crazy. How if you think about the traditional games like Sims over in Skype, where used to buy swords, or you could buy a house on Sims. Now with these play to games, you could buy a sword on Axie Infinity and then resell the sword for these crypto tokens. And then you can sell the crypto tokens for Dollars and, you know, go on holiday. So it's it's the implications are just, you know, it's really fascinating to watch. But another way that NFTs are being used is what you mentioned before, Blake is sports now sporting cards in the 90s or 2000s. These are really, you know, a big deal for some sports fans. Now think about if you bought a Michael Jordan rookie card, you could probably now so that for a couple of thousand now with the NBA, they have actually brought out their own digital cards with iconic moments on them. And these are collectables to basketball fans. And it's and you know, for these companies, it's turning into another revenue stream. 

Tracey: [00:14:26] Yeah. Look, I think, you know, you've touched on gaming and in sports, and I think we can't go any further without also mentioning music because in the same vein, this is a complete game changer for how musicians are going to earn their revenue. They no longer need the big record companies who take, you know, 50 per cent of their profits, you know, and there's people getting involved already. Like Grimes, Kings of Leon, like Slipknot, did it just on the weekend, right? They need X amount of money to release their next album. They did a small concert somewhere they sold 50000. And if? He's of that concept to people that were paid squillions because they released a brand new track during it. And that's just a whole other revenue stream a way for them to make money. 

Craig: [00:15:09] Yeah. Well, it's like, you know, sit countries would sell out in two minutes. Now, Signal can earn money if they sell out in two minutes. But you know, Tracy resells to Blake for double the price. Slipknot can earn a royalty of that, too, so 

Blake: [00:15:21] it might be a really important point to make is that piracy has been a massive issue in the music industry. People can just rip and, you know, replicate music very easily. And, you know, there's no money. It all goes back to the artist. Whereas NFTs can't be duplicated or copied, they're unique and verifiable and in that sense might retain some more money for for the artists. 

Tracey: [00:15:47] And I think it builds on that community to give you more interaction with the artist that you're involved in to and builds that community out a bit further. Moving on, why don't we talk about which NFT that we have bought? Have you guys want to chat or do you guys want to chat about what NFTs you're currently holding? 

Blake: [00:16:03] I just own one NFT and it's called an acce, and it basically looks like a little Pokemon, and it's used to play the Axie Infinity games. You next, you need three axes to be able to play. So I've only put one and don't know which other ones to select because there's thousands of them. But yeah, I'll be definitely getting a couple more over the coming week so I can start playing. 

Tracey: [00:16:27] Me and Craig, I mean, Craig, we're looking at getting an XY ship at some point a couple of months ago, which we probably should have done if we had known at the time. We didn't follow through. What have you got, Craig? I know you've got actually. You know what? Don't tell us everything you've got. Just pick your top three everything. 

Craig: [00:16:45] Well, my first NFT, I actually minted, which we'll get into later. What minted means, but I'm minted a digi genotype on Solana, and these are pretty much just like pictures of these. I smile had a ferro hat and he had a basketball shirt on and I actually sold. It was actually turned out to be way rarer than I thought, and I saw the sea 

Tracey: [00:17:07] bird one was this

Craig: [00:17:08] year. Yeah, yeah, the Larry Bird, one year Larry Bird and I sold it for two Chape. So like to. I was a bit upset about it. But you know it is what it is now. I just have random like, have a few French bulldogs. I have a few apes on a Etherium, so yeah, I'm just planning to hold them. I might get involved with the Z Ren horses if anyone's keen. But yeah, 

Blake: [00:17:32] it sounds like you have a bit of a gallery going there, Craig. Nice, nice work, actually. 

Tracey: [00:17:39] Now that you mention the gallery, that's that's a whole other tangent, but you can actually go into some of these other metaverse or lands like Decentraland and buy a plot and have your own gallery to hang your 50s. 

Blake: [00:17:52] It's fascinating how these digital worlds are evolving and you to allow people to do stuff like that. Another example that we thought we should cover is around research. You know this over the last couple of weeks, we've here had some media come about where a guy has used an NFT to raise capital, to do independent research, and the all the proceeds from the research paper would be distributed to the person who bought the NFT. And in this sense, he got the money through the sale of the NFT to do the research and then the beneficiary, it gets all the proceeds. So it's creating these new business models that just previously weren't present or were very difficult to administer. 

Tracey: [00:18:35] Yeah, that's really awesome. And in the same vein as research, we can look at charities. So Jack Dorsey's first ever tweet was sold as an NFT, and that went earlier in the year for two point nine million dollars. And he actually donated the proceeds of that to a COVID relief fund, which I thought was pretty cool. And another one worth mentioning, and I don't know all the details, so it might not be completely correct here. But a group did it a bunch of NFT collectables, which were a little koala's that they call drop bears and they were cool looking little critter cartoons and all the proceeds to that went to the poor little koala bears that got hurt in the bushfires. So that was so that was pretty cool. 

Blake: [00:19:23] I think I think it was just some of the proceeds. But yeah, no, it was definitely, definitely fascinating, so interesting.

Tracey: [00:19:29] And the possibilities really are endless. Craig, you mentioned before minting an NFT, do you want to explain a little bit further on that? 

Craig: [00:19:38] There's two ways to get an NFT. One is minting. So minting is essentially when a project starts up, they open their website where you can jump in and connect your wallet and get one of the first NFT before they hit the open market. Now, minting is when you interact with the smart contract and the. Project gives you the tools to create the NFT using their artwork. Now, after you've minted the NFT, you now own this NFT. Sometimes you can get royalties from this NFT. And yet normally these mints really popular. Like, think of it, a real life example is when Kanye drops a sneaker, there's, you know, a thousand people lining up at the sneaker store, and this is sort of the same deal with NFT minting. Now, the second way is actually buying it from a secondary market called OpenSea. OpenSea is like the eBay for Ethereum NFT. It has a bunch of listings from all different sellers. And you can buy directly from them, and all you need is an aethereal wallet. We actually touch on this a little bit in the Ethereum episodes if you're not sure what that means. Go back and have a listen. But OpenSea allows you to buy and sell with no middle party. 

Tracey: [00:20:52] Yeah, opensea is where I started buying my racehorses all those years ago. Open seas is huge in the NFT marketplace, and it's where most people are trading all of their NFTs. The trading volume on open seas just for August alone was three billion, and looking at it now, they have done almost 10 billion in volume just this year alone. So that's pretty. That's pretty amazing stuff. But let's talk about now why some of these NFTs are worth, you know, hundreds and thousands and millions of dollars, and some are only worth a fraction of that. 

Blake: [00:21:29] It all comes down to how rare these NFTs are and how desirable they are. Some have collectable qualities to them, and some are extremely scarce, which increases their price, whereas other ones, there's that literally thousands of them and they're not particularly special or don't have any real hype around them. So those ones are generally worth a lot less. 

Craig: [00:21:51] Yeah, so that's a good point. Like when you touched on scarcity. So, for example, the crypto punks, the alien CryptoPunks are rare. There's only nine aliens in the ten thousand collection. Now you can actually go on a website called Rarity Tools, where you can see how rare your NFT is and you know how scarce a trait that they have is now. If you bring this back to the real world, if we look at Michael Jordan sneakers, I mean, they're probably cost one hundred and fifty bucks. You can get them from Foot Locker. But if you got Michael Jordan match worn sneakers in his first college game when he was 18. That would be worth a whole lot more because that is scarcity. There's only one pair. You can't get that again. So, yeah, it's really cool to see it translate into digital world.

Tracey: [00:22:38] Yeah, that's a that's a really good example there. And I'm going to give you another example of something weird and wacky in this world, but I picked up something called loot maybe six weeks ago when someone said, Hey, just jump on this thing here. And what what this NFT effectively is is a black square box with a few words in there. And this means nothing to me. But apparently these words are all synonymous with activities in a game that is yet to be built. And you know, a couple of these words were hammer and something about a diamond, I don't even know. So I purchased these for the same amount as, you know, you know, filling up my car with fuel and I was sitting there in my OpenSea account, didn't think much of them. And then, you know, I had little. Bingbing noticed someone would like to buy your black square with words in it for, you know, one Ethereum, which is mind blowing. And then in the end, I won't even tell you how much I end up selling one of them for so that that to me. I didn't know what it was, and you know, someone else out there sees the rarity. Possibly a maybe I shouldn't have sold it for that. You know, this rarity in that. So the eyes in the beholder? 

Craig: [00:23:54] Well, you did say you're a gambler at heart, Tracey. 

Tracey: [00:23:56] So I did say that. Yeah, I didn't say that. Those who know me know me well, and I think that story leads us into the pros and cons into this world. So who's taking the cons today? 

Blake: [00:24:10] Yeah, I'll take the cons because there are some key things that people should be aware of when they're collecting and purchasing these NFTs in. The first thing is liquidity. Often, you know, you can buy these things and and then get stuck with them, you know, you can't. No one wants to buy them and then they're worth nothing. So you have to be really careful of that. So it's not always, you know, the best thing to buy just to make a quick buck. You kind of want to be using these as collectables as well, and many of them go to zero. And you know, this is something that's probably not talked about because you hear about all the stories where people make lots of money. But there's also plenty of people that don't make a lot of money out of these, and they can be often inflated and overpriced. And it's hard to know because. Such a new technology, if you're paying too much or too little for these things because it is very early. So yeah, just a few things to watch out for

Tracey: [00:25:07] expanding on what Blake's just said there about copycats. I think Craig, you and I were talking about this, and you can expand on a bit more that there's with your crypto, CryptoPunks on your lines. People copy those because I see them popping up on OpenSea all the time. So people are just making exact copies and then newbies who don't know anything about this, who maybe just listen to a podcast like as hours jump on OpenSea, see a crypto punk there, go and buy it. And then it's not. It's not that, is it? 

Craig: [00:25:33] No, it's not. Like CryptoPunks is the original artwork. It's made by Lava Labs all those years ago. But, you know, a few months ago, that was what was it that was Covid punks, which is pretty much punks with the mask on. There was fast food punks, welcher punks that had McDonalds hats on. And you know, these are all just rip offs of the original punk. And you're right, Tracy, for the new, you know, the I actually bought a Covid punk and it was worth, you know, it's worth nothing. And you know, there's many other rip offs. So it's just important to check, you know, who's the artist behind this? You know, what's the community to make sure it's all official before you make a purchase? 

Tracey: [00:26:13] Yeah, yeah, exactly. All right, sorry. Onto the onto the pros Craig, which I'm sure you have many. 

Craig: [00:26:19] Yeah, I do agree with Blake on his cons, but there is obviously pros to this space and as you mentioned before, the play to earn NFT games now that's a real game changer. If you're a good gamer, like if you're a really good game on Axie Infinity, you can actually earn tokens and earn NFT assets you can sell for cash. Now I pride myself on being a good faithful player, and right now I'm just earning fake faithful coins that you know I can't really sell for money. So that's so fun. I think about it eventually. I hope FIFA start bringing in NFT capability into their game so I can start earning some money. So that's really cool. Yeah. If your thesis is that the world's going digital, you know, we've got Facebook doubling down the metaverse. We've got this. CryptoPunks is bored apes turning it, turning into status symbols. You can really capitalise on this trend by getting a pretty cool looking artist early or or core community, something that you like. You know, we're still quite early in the space, in the grand scheme of things and probably the last thing. I think the airdrops it's called. So when you buy a NFT from an artist, you might actually get airdrops for when they do their next piece of collection. So I actually bought this one off OpenSea, which was like a stick figure from this well-known artist. And now, since he's since, he's doing another collector, that collection was two thousand. Since he's doing his other collection, which is going to have 5000, he actually gives people who bought his previous collection a free piece of art. So I think that's pretty cool. 

Tracey: [00:27:58] Was this guy doing the stick figures? A 12 year old? Or is it like an actual artist? 

Craig: [00:28:03] Well, it could be, I'm not sure. 

Tracey: [00:28:04] But yeah, yeah, I was going to add in just there as well, which may be a bit of a con. But when you talked about airdrops, it made me think about the fact that a lot of really smart artists or people starting out in the community will airdrop their artwork to famous people who are big in the space like, you know, the Jenners and the acting creatures of the world. They, you know, their their collections are out there for everybody to see. So if you're an artist starting, you'll airdrop your collection or something to that person. So then the regular Joes are looking and saying, all you know, Kendall Jenner is holding that piece and then you'll think to go buy it. So that's a really smart way for them to to promote what they're doing when that person actually hasn't gone out and bought that piece. So. 

Craig: [00:28:48] Hmm. 

Tracey: [00:28:49] Well, let's leave it there for today. That was a pretty big show. And if you want to know more about and if tease or anything else that we've spoken about, then please send a question or email to podcast. I get Bambu Dot Io or follow us on social media. All those details are in the show notes below. And don't forget to write and review us in your podcast app, and that's it for another episode of crypto. Curious? Thanks so much for joining us. I'm Tracey.

Blake: [00:29:16] I'm Blake. 

Craig: [00:29:17] I'm Craig. Thanks for joining us.