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302: The Next Crypto Revolution?

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Catch the full episode: https://www.wealthformula.com/podcast/302-the-next-crypto-revolution/

Buck: Welcome back to the show, everyone. Today, my guest on Wealth Formula podcast is Matt Fortnow. Now, Matt is an entrepreneur. He’s a producer, a lawyer writer, a tech expert. And he’s been involved in creating the official NFTs for iconic brands such as the Three Stooges. He’s the author of The NFT Handbook: How to Create, Sell and Buy Non-Fungible Tokens. Matt, welcome to Wealth Formula Podcast. 

Matt: Thank you. It’s great to be here. 

Buck: So, Matt, I got to tell you, this is a very timely podcast. Of course, this is an interesting time because until very recently, obviously we’re just seeing cryptocurrency and Bitcoin values going up and up. And so just like in 2017, it got everybody’s attention. And then now maybe we’re kind of in a little cycle here. But in the meantime, one of the things that has really come up in this cycle is the concept of NFTs and everybody’s talking about NFTs. Now, I always start with something very basic. How would you describe NFTs to a group of doctors, other kinds of professionals and business owners who have no idea what they are? 

Matt: Okay, think of an NFT as digital collectible on the blockchain. Now, we should go a little deeper into what the blockchain is. The blockchain is the technology that’s the foundation of all cryptocurrencies. So you can think of it as an NFT, like a cryptocurrency. Whereas Bitcoin has about 18 some odd million coins in circulation, an NFT has a supply of just one. So that’s what makes it unique. And that’s where the NF comes from. Non fungible. So whereas dollars are fungible, I can exchange five for five ones, NFTs are non fungible, like diamonds. Each one is unique with respect to color, cut, clarity and size, et cetera. So the blockchain also verifies the author of the creator of the NFT and its scarcity on the blockchain, and also the NFT’s provides the list of owners, from the original trader to the current owner. It’s all visible and transparent on the blockchain. 

Buck: Let’s talk about the types of things that currently are very popular creations on the blockchain as NFT’s. 

Matt: Well, certainly digital art and digital collectibles are very popular. There’s also digital land, which is digital real estate in the virtual worlds, the meta versus in game items. So an item that you use in a video game is a popular NFT. NFTs can also be made ENS domain names, and there are several other functions and utilities for NFTs as well. 

Buck: Let me ask you this. I have tried to kind of get my head around NFTs for some time, and I get it. When it comes to gamers who are on they’re spending half their day or most of their day online, and they want a sword that looks really cool and they get something online for that or other types of situations where people are spending an enormous amount of time online, where something actually, there may be less of a distinction between the virtual world and the real world, but when it comes to things like art, is it just a generational thing at this point, if you have art, people often like to show art or they collect cars, they like to have a physical thing. Who are these appealing to, demographic wise? 

Matt: Well, demographic wise, it’s people who are into cryptocurrencies generally. So there’s a lot of cryptocurrency whales out there that have invested in NFT arts. And the great advantage of NFT art is whereas in the past, any digital file, like an image, for example, you could just transfer around the Internet, you can email it, you can post it on social media. And there’s really no way to monetize any digital art. But with an NFT, the NFT can guarantee that the certain owner, the person who created the art, is the actual creator just by looking up on the blockchain. So you can actually create now an original digital piece of artwork that can’t be copied. So, of course, you can copy the actual digital file, but the NFT itself cannot be copied the same way you cannot copy a Bitcoin. 

Buck: What’s the value of that if you have a digital art, is it a way to just protect intellectual property the same way a Copyright or something like that would be? 

Matt: The value of Picasso painting could be millions or tens of millions of dollars, because he’s an established artist. So similarly, one of the most popular artists established himself as a digital artist. For over ten years, he’s been making digital art every day and it’s built a community. And it never really intended to monetize on his digital arts. But when the NFT technology became available, it was an opportunity for him to monetize that. And because of the community he’s built up and his reputation, that’s what gives the value to his art. And one of his pieces, his 1st $5,000 Everyday Collage, sold for $69 million. 

Buck: Wow, that’s amazing. And then when you have access to that NFT, is it just that you own it? Is there a way to express that you own it? 

Matt: I mean, there’s a space to express how you own your NFT. So first people can go to your OpenSea  profile. Now, OpenSea is the largest marketplace, which is on the Ethereum network. And you can go to anyone’s profile and see what NFTs they have there. There are other places where you can display your NFTs. A lot of people are building museums and galleries in the Metaverse to display their NFTs. And there’s also large screens in your house. You can display your NFTs as well. 

Buck: You mentioned Metaverse because ultimately that’s what this is about, right? It’s about a universe that’s in this virtual world. For those people who have heard that word thrown around Metaverse. Now that we know what an NFT is, can you tell us a little bit more exactly what Metaverse is? How popular is it already and where is it headed? 

Matt: Okay, the word Metaverse term is really thrown around a lot, but it’s not technically used accurately. The Metaverse technically is one unified virtual world. And right now we have a bunch of different virtual worlds, each of which is calling itself its own Metaverse. But they’re all not unified at this point. Unified world. If you think of the book ready, player one, the Oasis where everybody interacts within the Metaverse there. But each Metaverse, like, for example, Axii Infinity is a Metaverse, which is also what’s called a play to earn game where you can play and earn crypto and NFTs while playing. So the metaverse are really just virtual worlds. They’re better experienced with the virtual reality headset, but not necessary. 

Buck: You mentioned right now it’s thrown around. The Metaverse is that sort of like when you think about Cryptocurrencies now and various protocols, you’ve got some that are more popular than others. Obviously, you got your Bitcoin Ethereum and Salhana and all that. Is there a competition right now amongst the different metaerses where these NFTs go? 

Matt: Sure. Axie Infinity. I mean, 2 million people are playing Axie Infinity. That’s very popular. It’s a game. That’s a game. It’s also Metaverse. The sandbox is popular, the central land is popular. And these virtual real estate prices in the Metaverse have just been booming. It’s been like a real estate boom in the Metaverse. For example, I mean, Snoop Dogg recently bought a plot in one of the Metaverses, and then people have started buying the land continuous to this plot, the prices have skyrocketed. 

Buck: That’s fascinating stuff. Okay, so let me ask you this. Let’s go to some of the technical aspect of this, because with the NFTs, the different types of protocols that they’re built on, does it even matter? I mean, I know right now most NFTs are probably still built on Ethereum, but there’s other protocols. Does it matter how much of that is transferable from one protocol to another, et cetera? Does it make a difference? Is there some types of NFTs more valuable than the other based on the protocols, underlying protocols? 

Matt: Right. So the Ethereum is the most popular NFT blockchain. Now, the issue with Ethereum right now are the gas fees. You may have heard that term. The gas fees are the transaction fees. Anytime you want to mint an NFT or transfer an NFT or buy or sell an NFT, there’s a gas fee. And those gas fees have been very high because of the popularity and congestion on the Ethereum network. Now Solana is a separate blockchain, which is proof of stake, which is a different way of determining the validators for the transactions, much less energy required for proof of stake. Additionally, the gas fees are minimal on the salad of blockchain. So Solana is up and coming, although Ethereum20 is supposed to be coming out sometime in the relatively near future, which will be changing Ethereum from proof of work to proof of stake and also significantly reducing the gas fees there as well. 

Buck: Yeah. Does it make a difference from the NFT standpoint?

Matt: It does make a difference because OpenSea, the most popular marketplace, is the place where millions and millions of MFPs are sold and people have their collections there. So the collections I mean, at this point, you can’t really transfer NFTs from one blockchain to another. So you would have your Salona collection and separate from your Ethereum based collection. 

Buck: Theoretically, they’d be in different Metaverse ecosystems. Is that accurate? 

Matt: Yeah, you could say it like that. 

Buck: Yeah. Interesting. Let me ask you, obviously, in terms of this show, there’s a bunch of investors here and you hear about NFTs and how this is maybe we don’t understand it well, but nobody understood the Internet before. Internet was everywhere. And trying to understand how you get exposure to this market? How do you learn about it? If you’re an investor, what types of things would you recommend people do as learning resources and maybe to dip their feet into investments in this space? 

Matt: Okay. First thing I would recommend is to read my book because it’s complete, step by step guide of how to create your NFTs, Sell NFT’s and Buy and Collect NFTs. 

Buck: And again, that’s the The NFT Handbook: How to Create, Sell and Buy Non-Fungible Tokens available everywhere, I assume, like Amazon. 

Matt: Yeah. Amazon is on Audible if you just like to listen. So in addition to that, I would spend a lot of time in Discord. Discord is a popular community chat app where each NFT project has its own server and channels where you can ask questions to learn about the beverage projects. Now, you mentioned at the beginning of the show that the crypto is very volatile. Now, it’s been down the past few weeks and maybe turning around at this point, but also at the same time, the NFT’s have retained their value through all this volatility and drops. There’s been a lot of huge drops. Just within the past week, Ozzy Osbourne dropped his Crypto Bats. There’s a huge drop. The Alpha Kongs. Additionally, the Nut Boys, they had a huge drop this past week. So these NFT drops, what’s known as generative NFT drops, are great ways to invest. The only thing is to try to find the right projects because a lot of the projects don’t take off. There’s a lot of sniping that’s going on as well. If you like the short term trades, I’m more of a long term holder, and it’s just analyzing which projects would be the ones to get into. The way I do that, I spend a lot of time in the Discord. I see the size of Discord activity, the responsiveness of the mods. Additionally, you want to see who’s involved in the project, like, for example, the inbetweeners project. Justin Bieber is heavily involved in that project. So see what celebrities are involved in projects. See what they’re following, what they’re investing in. 

Buck: Where do you buy these? 

Matt: You can just search on OpenSea for these collections and you can buy the NFTs that are up for sale. Additionally, if you want to get in on the very beginning, you want to get in on the Mint of these projects. And that’s usually done on a separate website, the official minting site of these projects, and even get in earlier at a better price. You want to get on the white list for these major projects. However, there’s a lot of hurdles to jump through to get on the white list, such as, for example, inviting a certain number of people to the Discord server and leveling up to a certain level on a Discord server, which shows your participation in that server. So that could be time consuming. But even if you’re not on the white list, getting in on the initial drop is a good way to grab a good price. 

Buck: Help us understand. Like, right now, this is pretty early, I mean, early enough where people know what NFDS are and they’ve heard people talk about Metaverse. But I would say the majority of people who are like me, Gen Xers, most of us don’t really have a very good concept of this and where it’s headed. Tell us what’s the vision? I think that people who believe in these NFTs, we’re investing them in the Metaverse, say, ten years from now. What are we looking at? What kind of world is that? 

Matt: Okay, so with the Metaverse, I just say there’s still a lot of opportunities to purchase land in these meta verses. Like you’re saying, even though prices have risen dramatically, we’re still in the beginning stages and there’s a lot of room for growth. Now, where I see the future of NFT’s going is the utility that the NFT can provide. A lot of NFT projects provide access, for example, Gary Vaynerchuk’s v. Friends NFTs provide access to Gary himself and other events that Gary has. But even beyond that, NFTs that can provide utility. It seems like currently the NFT craze is similar to the beginning crypto craze with all the ICOs in 2017 and also the beginning, like Internet craze. All I had to say was.com and people would invest in it, but it’s the real utility that has a long lasting value. So, for example, a potential utility that NFT could provide is in the future, I believe all event tickets, for example, to a concert show, a sporting event ticket would be an NFT. And the advantage that provides is that a lot of these shows and sporting events, there’s scalpers buy up huge blocks of tickets and resell them multiple times the value. And the event promoter or the sports League, they don’t share in that increased value. And people have less opportunity to get these tickets. Whereas if the tickets were in N Ft, there would be an efficient market where everybody has a chance to bid and purchase these aftermarket tickets, which would be NFTs. And Additionally, the contract promoter or the sports lead could participate in a percentage of the resales of those NFTs. And on top of that, you have a collectible like a souvenir from the game, your NFT that you were there and say, for example, something historic happens at the game, then NFT may even have some value going forward. 

Buck: Right. Ends up in the hall of Fame. Right, right. That’s right. And that kind of brings me to the question of how do you see the NFT world, the distributed world, I guess, interacting with major corporations. And it’s a little hard to understand for me because NFT’s when I think of NFT and cryptocurrency, I think of distributed ledgers, not corporate America. I think about a lot of people owning and with NFTs, of course, you own the one thing. So in those situations you need partnerships with corporate America. And fundamentally, is that where this is headed? 

Matt: Well, I mean, some corporations now, like Adidas, is getting into the game with NFTs, and certainly the NBA is really raking it in with their NBA top shop collectible NFTs. So a lot of corporations now are looking at NFT as more as branding, community building, as more of a marketing play. But there’s still a lot of technology, especially with the Web three, which connects the blockchain to the Internet, to websites. So, for example, NFT could be used as a license for a particular software, like, for example, the Crypto Babies. So there’s a lot of utilities that haven’t really been explored in full that NFT could provide beyond just collectibles and branding and marketing. 

Buck: Do you see there being any effect on the traditional collectible markets, like art and music, those types of things? Do you see any negative impact on the way things are done right now with the physical collectibles? 

Matt: Yeah, I do see a negative impact on physical collectibles and under the traditional art market. But in fact, I think that’s a good thing because the authenticity of NFTs are easily verifiable. You just look on either Scan or another Block Explorer and say, okay, is that the author who created the NFT? Yes or no. And the complete provenance is right there on the blockchain. Whereas when you’re dealing with the physical art world, they have these so called connoisseurs who try to summon the presence of the artist to determine whether a painting is authentic or not. And it’s really rampant forgery. And in fact, you don’t really know if a painting is authentic or not. In the physical art world, there’s no way to guarantee that. So with respect to NFTs in the collectibles market, same thing goes a lot of doctored baseball cards and fake forged autographs on items, fake news game items. So there’s a lot of rampant and forgeries in the physical collectible world as well. So with NFTs, you know that the blockchain guarantees its authenticity. So I do see a negative effect on the physical collectible and art market, but in fact, I think that’s a good thing. 

Buck: Great. This is fascinating stuff, Matt. The book again is The NFT Handbook: How to Create, Sell and Buy Non-Fungible Tokens. Fortnow. Find the book everywhere, Amazon and read it, learn it. Don’t miss the bus on this. Also, Matt, there’s a website that you have which is blockchainguys.com. What kinds of stuff can we find there? 

Matt: Blockchainguys. That’s just the blockchain consultancy. So consulting on mostly blockchain issues. That was founded back in 2017. More recently, I also have PowerUp Nfts.com, that’s more of NFT consultancy. So whether you’re interested in blockchain or NFT, you can reach me there. 

Buck: Great. Matt, thanks so much for being a Wealth Formula podcast. Love to have you back again in the near future. 

Matt: Yeah. Thanks so much. This is great. 

Buck: We’ll be right back.