Bankless - SotN #38: The State of NFTs, with Andrew Steinwold (Past, Current, and Future)

Episode Date: March 17, 2021

Andrew Steinwold is a respected voice in the NFT space and is managing partner of Sfermion, an NFT-native investment firm. We unpack the recent NFT boom and digest the innovation, successes, failures, and lessons in the space as we reflect and move forward. ------ 📣REGISTER FOR COINDESK CONSENSUS 2021 AND SAVE $20 W/ BANKLESS: http://bankless.cc/consensus2021  ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  ------ GO BANKLESS WITH THESE SPONSOR TOOLS: ⭐️ AAVE - BORROW OR LEND YOUR ASSETS https://bankless.cc/aave  🚀 GEMINI - MOST TRUSTED EXCHANGE AND ONRAMP https://bankless.cc/go-gemini  💳 MONOLITH - GET THE HOLY GRAIL OF BANKLESS VISA CARDS https://bankless.cc/monolith  📈 KWENTA - DERIVATIVES TRADING WITH INFINITE LIQUIDITY https://bankless.cc/kwenta  ------ SotN #38: The State of NFTs, with Andrew Steinwold (Past, Current, and Future) When Andrew was last on Bankless for 'The Bull Case for NFTs' in September 2020, the Nation was introduced to NFTs as an ocean of opportunity for democratizing value. The landscape for NFTs has changed drastically in the last 6 months, but Andrew's approach has remained generally similar. Andrew updates us on his expectations on the future of NFTs in the context of the current boom. He addresses the notion of the 'NFT Bubble' and the blurred distinction between memes and value. We dive into Proof-of-Work vs. Proof-of-Stake and what makes for a genuine NFT – in terms of both content and distribution. Through the trials of this cycle, we have found many NFT-specific insights and lessons. Andrew explores the successes and failures of experimentation in this space. We highlight Cryptopunks, which boasts an organic release, being the first of its kind, and mass community adoption. ------ RESOURCES: The Bull Case for NFTs https://newsletter.banklesshq.com/p/the-bull-case-for-nfts-jake-burkhman  Andrew on Twitter https://twitter.com/AndrewSteinwold?s=20  Zima Red - Andrew's Podcast https://andrewsteinwold.substack.com/  Sfermion https://www.sfermion.io/   ------ THIS WEEK ON BANKLESS 🗞️ Weekly Rollup (3/12): https://shows.banklesshq.com/p/rollup-march-2  🧢 Weekly Action Recap (3/13): https://newsletter.banklesshq.com/p/weekly-action-recap-683  🛠️ Trading Synthetic Stocks (3/9): https://newsletter.banklesshq.com/p/how-to-trade-synthetic-stocks  🏴 State of the Nation | 3LAU (3/9): https://youtu.be/5KY9W3Ybmdc  ✏️ The Digital Culture Revolution: https://newsletter.banklesshq.com/p/defi-options-strategies-for-traders  ⚫ The Case for $100 SUSHI: https://newsletter.banklesshq.com/p/the-case-for-100-sushi  🐦 Follow Bankless on Twitter: https://twitter.com/BanklessHQ  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Everyone, Bankless Nation, welcome to another episode of State of the Nation. We are super excited to have you here on the docket today. We are talking about the state of NFTs. They've been everywhere lately. They've been hype lately. They've made major newspaper publications lately. Everyone is talking about NFTs. And we brought on Andrew Steinwald, who is going to give us the state of NFTs.

Andrew is a guy who predicted NFTs before they were a thing. So we're going to dig into that. David, how you do you do? today, man. Absolutely fantastic. Still trying to get my head wrapped around NFTs. And I think the whole industry is, we all are, because so much has changed in the past like two to three months. And a lot of bankless content around NFTs lately has been going to the artist, going to the people that weren't about crypto, that weren't about Ethereum, but discovered NFTs and they were like, wow, this is really cool. And so we wanted to go to the artist and say, hey, why are NFTs cool? What do what do NFTs mean to you?

Now this is the opposite. We are going to the guy who would, was paying attention to NFTs before everyone else was, before they were hyped up. And so I would call him, he's at my personal expert on NFTs. And so he was also one of our two guests on the Bankless episode, The Bull Case for NFTs, which I think we did back in September of 2020. And he made some very bold predictions that I thought were crazy back then. One of them being that NFTs will be like, I think either 100 to a thousand X times larger than Defi.

And I was like, blasphemy. But now I can actually start to see it. Now I can actually start to see it. It especially felt like blasphemy, like something way off the beaten path right after DFI summer. Right after DFI summer. When we were talking about, defy had this explosive, you know, three or four months. And here's Andrew coming on talking about how big NFTs were going to be. And I remember Andrew and Jake talking about a trillion dollar market cap, market opportunity.

It seems a lot more likely now. So we are going to dig into that. Guys, if this is your first state of the nation, these usually come out on Tuesday. days where we're broadcasting it live on Monday today because we needed to accommodate schedules, but we generally release it every Tuesday. This will also be on the podcast as well. David, before we get in, we should do a couple of announcements. First of all, we've got the one confirmation podcast that just premiered today. This is one of those podcasts. I feel like it's 90 minutes of listening time, but there's like a million dollars in value inside of those 90 minutes. It's one

of those podcasts with investors where you're like, wow, this entire mental model is so beneficial to how I invest in the future that like the dividends of listening to it and absorbing the material are more than worth your time. There were a number of, I guess, I guess phrases from that podcast, but the theme of the episode was authenticity, authentic projects, authentic founders, authentic data, authentic data even. And there's this beautiful thing. throughlining that throughout. What else you want to say about that podcast to tease people and get people interested in it? Right. So my biggest takeaway was that with Ethereum, with open blockchains, where all information about the state of things is equally accessible by the

whole world, no longer is investing about how much better information can you get, because everyone can get the same information. Now it's about how much better can you interpret or digest that information. And so that is a new, that's a different paradigm that we now have to account for when we think about investing in this space. Someone, you know, made the quip during that episode. I won't say who, if you'll have to stay tuned to find that out that Bitcoin is money for the institutions. Ether is money for the people. That was hot. Which really stuck out on me. So listen to that episode. Definitely a hot episode. Speaking of hot episodes, we have Drake returning to the podcast. Drake returns. The Justin Drake, of course, Ethereum researcher. And this time, this is kind of a follow-up. It's a sister episode to his previous crypto-economics episode, which really focused more on the cryptography side of crypto-economics and was insanely bullish for all sorts of interesting technical reasons. I learned so much during that episode. But this is almost the follow-up sister episode where we're actually talking about the economic piece, the importance of ether as an asset in the future. Justin

Drake calls this ultrasound money, David, why should folks be excited about ultrasound money? There is, I think that Ethereum history will be divided amongst many other ways to divide up something. But in one way, this way, Ethereum history will be before this episode drops, and then it will be different after this episode drops. Wow, that's hype. This is the best podcast. You're not overselling it? I'm not overselling it. This is the best podcast that I think has come out of the bankless podcast ever so far. And you're totally right. There's the economics side, the cryptography side.

And then there's the cryptography side. And then there's the economic side in crypto economics. And Justin Drake has figured out the best meme for ether, the asset, ever. And I think it will be the meme that lasts until the end of time. Wait, wait, better than triple point asset? Better than triple point asset. I'm sorry to say. You're really hyped in this up, David.

Like, I just recorded it, but you listened to it and you edited it. So you got some extra hours and you're still feeling like this is going to be a fantastic episode coming away from this. That's the number one episode. Yeah. This episode will pivot the trajectory of Ethereum for the rest of time. Oh, my God. All right. Well, now I want to listen to this episode.

See how good it is. It comes next Monday, guys. So, of course, and you get that early, early release date if you are a bankless premium subscriber. So you can find out how to subscribe the bankless premium member by clicking the link in the show notes. right, David, let's start with the question I ask you every single state of the nation. What is the state of the nation today, sir? The state of the nation is reflecting. We are reflecting as to all of the crazy stuff that has happened over the last weeks and months,

particularly with NFTs. Every time some new wave comes in Ethereum, it's always an experimental wave. Defy summer, massive summer-long experiment in token issuance and yield and protocol design. And now, most more so recently, in the last two months, we've had a new wave of NFTs, which have also been experiments. No one knows what they're doing in DFI. No one knows what they're doing in Ethereum. We're all figuring it out together. And now that this NFT mania has kind of gone on for two months now, I'm actually going to ask Andrew if he actually does agree that this is a mania. Maybe that's not the right word. But a lot of experiments have happened in the last two months. Now it's time to reflect. What have we learned? Where has the trajectory gone?

differently than we expected or the same that we expected. We're just integrating new information. We are reflecting on the recent experiments of NFTs. That's a, yeah, well-timed episode, I think, because this is all going to be about sort of a summary of capturing the state of NFTs today with Andrew. And we'll get to that in a second. One last thing before we cut to sponsors is CoinDesk is having a consensus event. That is their annual conference in May. You've got like 11 hours, I think from the time that we're recording, we're going live to get that at early bird discount. Ray Dalio will be there. Why is Ray Dalio there?

Why is Ray Dalio there? Is he interested in crypto? Hasn't been in the past, but why is he attending a crypto conference? I'm definitely not going to miss that event. So if you want it at a discount, use the bankless clode. Click the link in your show notes. With that, David, we should thank the sponsors that made this episode possible. Alve is a borrowing and lending protocol on a thing.

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Also, he publishes the Metaverse, which is one of my favorite newslet letters that cover the NFT space. It's absolutely been dropping Alpha since the early days. He's also podcast episode leader on Zima Red. Actually, Zima Red is the name of your newsletter. Andrew, sorry. It's about the Metaverse, I should say. Andrew, it is so awesome to have you.

It's been a few months, actually. But like the first episode we had you on, we wanted you to articulate the bull case for NFTs, and that was back in September. Well, my friend, it seems like we are in a bull market. for NFTs. Do you feel sort of validated with your your NFT thesis because you were talking about NFTs before they were a thing, before they were cool, before they were doing 70 million dollar art piece sales? How are you feeling right now? Do you feel validated? Yeah. So I'm feeling personally, I feel a bit weak because I just had a surgery last Wednesday. So that's why my voice, I, you know,

seem a bit pale in the week. But besides that, in terms of like mentally, I'm on top of the world. I think it's incredible that to see the thesis play out in real time is amazing. And to kind of be writing about this and talking about it for quite some time now and to see it catch on to the wider mainstream audience is super, super amazing. I think it's incredible that people are getting, it's almost like a Trojan horse for crypto because people are like, oh, I like art. I like gaming. I like collectibles, whatever. And those kind of simple use cases can bring people into crypto so they can learn about Bitcoin. They can learn about Ethereum.

They can learn about defy. and then they get access to this wider world that is just so revolutionary. So it's awesome, to be honest. It's very busy. But no, I'm very happy to see it play out. And I still think, yes, we are in a frenzied period right now. I still think that this is like, just like Defi, we are in the very, very, very early stages of this. That's going to be a multi-year kind of decade, multi-decade kind of thesis play out for this asset class.

Andrew, can I share something with you? this is something I saw on Twitter just this past weekend. This is search terms for NFTs, defy and ETH, NFTs in blue. And what you're seeing, if you guys are listening to the podcast, can't see this on YouTube, is NFTs are absolutely like far higher in terms of search terms than both defy and Eith at this point. And it looks like that trend started happening earlier this year. But when you're just talking about, this is mainstream's way to get access into crypto.

It's kind of a gateway into crypto. This is the data that we see. It's like playing out. People are searching for NFTs before they know anything about Defi, before they know anything about Ethereum or the underlying platform that's on, before they know anything about crypto. The thesis is playing out marvelously. Are you surprised at how quickly this happened?

I know you've been bullish on NFTs. We had a conversation. You said this would be bigger. than defy. This would be a trillion-dollar plus market, right? We had that conversation in September, but you didn't, I don't think you put a timeline on it. Are you surprised that this happened so quickly? Yeah, you know, 100%. Like, in no way did I anticipate Mark Cuban and Chamath to be going on CNBC in Bloomberg talking about NFTs in 2021. I figured that would happen in like 2024 or three, four years down the line. But like it is blown all my expectations completely out of the water from where we are

today. Like when I first set up the fund, it's a fund fully focused on NFTs, we were at one to two million dollars in monthly trade volumes, right? And $2 million was a big, it was a major month for us. And then, you know, to fast forward to today, to see in February, we had $175 million in one month. That is like, no, nowhere on the horizon. I thought it was going to take years. Okay, give us those numbers again. Sorry, we were dealing with an audio. So 175, million this month. Is that what you said? So in February, the monthly trade volume was 175 million. When I first started, which was September of 2019, so it was kind of a while back, but one and two million dollars per month. But even in August of 2020, so pretty, pretty recently, it was

$2.5 million per month was like the trade volume we were looking at. So it's just, you know, the past December, January, February has just been wild. How do you account for this growth? Like, what's happening? Yeah, so it's kind of layers of different factors. But first of all, traditional finance, we're in a massive bull cycle, right? You know, stocks that are all-time highs, crypto, we're in a massive bull cycle. Cryptos at all-time highs. Crypto wealthy, they're not really, you know, if they want to offload their ether, BDC position well within the money,

they're not thinking, okay, I'm going to go buy a Rolex and buy a house. Like, they probably already have those things. They're like, I'm going to go flex and I want to buy a punk, you know, a crypto punk. I'm going to change my avatar to a crypto punk. And, you know, like I wrote like I wrote, like I wrote for you guys. It's like the new Rolex is like a crypto punk. And I think that to have these assets that are part status symbol and part financial asset is really, really appealing to a lot of people. And then so that's kind of like macro and crypto micro, but then also looking at the use cases in general, they're super appealing to everyone.

So, you know, and I always do like the mom test. So I'm always like, hey, mom, like, I've been talking to her about Bitcoin since like 2013. And she's like, I have no idea what you're talking about. but I say, hey, Mom, I can play a video game. I can earn money. Or mom, there's these collectible cards and they're like on the internet. And you can trade them and make money and stuff like that. And she's like, oh, okay, like I get that.

It's understandable. Like there's art and it's online. It's digital. Right. And she's like, I get that. So I think the use cases are so appealing towards a broader audience, not just this kind of crypto-native crowd, which is really important for bringing on more people.

Mom does not care about Austrian economics. If I know one thing about mom or, or monetary theory, eyes glaze over, right? But definitely the NFT use case with artists that mainstream knows in real life, this is appealing. But you mentioned something in there about kind of the status symbol and the newly crypto wealthy. Is that, are those the folks that are buying these like beaples for $70 million and these crypto punks and Jack Dorsey's, you know, was a $2.5 million tweet as an NFT?

Is this coming from inside of crypto, all of this funding, all of this cash? Is that where it's coming from or some also coming from outside? Definitely the curators and the artists and the creators are coming from outside crypto. That much is clear to see. But the demand, is that still mostly inside of crypto? Yeah, so there's certain levels. So in the higher end, you're talking to hundreds of thousands to millions, that buy range, that price range, it's mostly crypto natives. And when you're talking to the lower range, you know, anywhere from like 20 bucks to, you know, a couple thousand.

That's more of the kind of the newer people that don't have exposure. And what's interesting is that as these people, basically the more time you get involved in the space that hire your conviction, that's pretty much the same as in crypto. And then you start to put down, you know, higher dollar amounts. So maybe the new person starts with NBA Top Shot and you spend 200 bucks on some packs and they get excited. And maybe they can sell those for like $1,000 at say. and they're like, oh, what else is in this ecosystem? They go to OpenC, they check out like crypto parks. They check out all this kind of stuff.

And then they get just farther along the rabbit hole and eventually end up like, you know, farming like whatever defect protocol like a couple months down line. So yeah, that's the progression that I kind of see happening. And in terms of the buyers, it's kind of how I bifurcate them now. It's like crypto, you know, wealthy are the high dollar amounts. And then the new people are just kind of dip in their toes in now, but getting involved quite quickly. So, Andrew, you've had your own mental models about how this NFT space will develop and progress.

And I want to get your gut take on the last two to three months of NFT progression and ask you, does that, has what's happened in the last two to three months matched, what you predicted would happen, or also what has really kind of changed the game or what was really something that's out of left field that you didn't see coming. So what would you say that you got right and you predicted and what was out of left field or out of blue or something that you didn't predict? Okay. So what I think I got correct was that the reasons behind people getting involved in this market were accurate. They're multifaceted because NEPs themselves are quite a diverse market. You have collectibles, game assets, virtual land, art, other, which is like all these other different categories. So you can be a gamer, you can be a collector, you can be an artist, like whatever.

there's all these different appealing reasons to get involved. And so that's been correct in the sense that it's very multifaceted. And yeah, it just goes back to being appealing to a broader audience versus crypto, which is often more focused on, you know, financial related applications or like trading or, you know, purely kind of making money, which like an artist, of course, wants to make money. But I don't see them like necessarily diving into defy head first. I think they're going to get there, but it's going to take some time. Okay, so and then what I got completely wrong was the time frame on which this would happen.

I think like you guys asked me in your podcast. I think it said, uh, no, how long will it take to reach a $20 market? I think I said 10 years. Yeah. Yeah. Yeah. Yeah. And like, and like I really did believe.

I know I was like, maybe it's a little bit, a little bit too long, but probably, right? And now it's like, you know, the total lifetime trade volume. I think yesterday was at 450 mil. Yeah. 430 mil. So, you know, that's just, that's just crazy, right? So trends happen. So these are like monetizable memes, essentially.

Every single NFT is like, has some sort of virality, it can have some sort of virality to it. And because it's on the internet and memeable and has a financial aspect to it, these things can grow way crazier than I anticipated. And which is both good and bad. I think it's good in the sense that it'll help the wider adoption of the space. but it's also not great in the sense that I don't want people to look at NFTs as purely financial assets because they're not. I think people should be, if they want to buy a piece of art, they should truly love the art.

They want to buy a collectible that you truly love the soccer player that they're buying the collectible from or whatever, right? I don't want this to just be a pure financial game because if that's the case, then that's not really fulfilling the mission of the NFT space. Andrew, there may be more to dig into here, but I just want to ask kind of your gut take. David in the intro used the term mania. And then he corrected himself. And it was like, well, I wonder if Andrew would characterize what's going on as a mania. That's what I'm curious about, too. Would you characterize what's going on right now in the NFT world as a mania?

Yeah, I think that it's highly speculative right now. But I think with every new technological paradigm, we've seen this with crypto. We've seen this with defy. We've seen this with dot-com bubble. Speculative cycles are completely normal and actually end up being kind of healthy for an emergent technologies because they bring in capital, they bring in talent, they bring in all this kind of added oomph to this space and make it really accelerate a couple years ahead of where it probably would have been normally. So I think that we are definitely in a mania, but that being said, I think that it's

totally normal and okay. And really, yeah, we've seen it happen before. It'll happen again and some other new thing, whenever that might happen. And I think it's okay. I think overall, Yeah. So I will kind of step back slightly. One thing I don't like is that low effort assets being produced by people that have learned about the space like yesterday. And we see that a lot from famous people. And I understand like if you're the biggest fan of like Rob Grownkowski, then totally. Like you can go splurge on the stuff. But like you need to be thinking longer term. And I get it's if it's a first NFT and you just love the guy, then like totally go at it. But like I just don't right now, you know, at Paris Hilton. to start following me on Twitter, right? So it's like, it's like, you know, sure, she's awesome, whatever. But like, I'm concerned about what is, what are her intentions in space. I feel like they're thinking more short-term cash grab versus, not to call anyone out, Andrew, but like Lindsay Lohan, I don't know. Yeah. I'm putting the most effort into the NFT shop in here. Do you see XXB.

Behind them? Zero XB one bought her NFT for something like 30 ether and burned it and just like send it right to the burn address. So, you know, that kind of, that kind of like, kind of funny. I think it's, it's crazy, like the most absurd move ever. But I respect it a little bit. But like, that's what like we kind of feel about it. Like we don't want these movie stars just coming in and making NFTs and making all this money. We want crypto natives, people that have been in the space for a while that truly care and know about the space and, you know, have the same ideals and values as us to make stuff and then be successful. That's what I want.

I know a lot of other people want that as well. Because these people's fans, like Rob Grankowski, his fans aren't crypto people. His fans are NFL consumers, right? And so to the typical NFL consumer, when they see something new that they didn't know existed before, they're like, oh, this is a new thing that I didn't know existed before. Let me get in on this, not realizing that they're actually getting in on an experiment, right? Not actually realizing that this is something not just new to them, but new to the whole entire world that we are all trying to figure out together. And just because Rob Grancowski is issuing an NFT, doesn't mean that it is a finished product, right, or even the best product that it could be. People aren't used to like this frontier that is. crypto. And so they are thinking perhaps that it's more legitimate that it actually is or they just don't really know what they're getting into. Yeah, I think if you're a fan of him or if you think that if you're confident that you know, you'll make money an asset, then sure. Like it's your money. You go go do whatever you want. But yeah, I just really like I want to see a follow through from

ideally if Brockowski was like, hey guys, like I'm going to now start my own NFT series and this is blah blah and like really put some, you know, effort like, you know, not even money like. just thought-wise into what he was doing, then I'd be like, great. That's awesome. I'm happy. But again, I just think about, are you happy holding on to an asset, this specific NFT, two to three years down the line? And I do think, obviously, I'm very biased, but NFTs are going to be massive.

So in theory, Rob Graham-Covsky's first NFT would have some sort of value, but what about the second or third or is fourth? You know, it's like, who knows? And you know the difference, Andrew is like when when Blah was on our podcast. and he's kind of been in this from the early days, and he was talking about issuing his own NFTs, and then he was listing out all of the various ways he was going to add value to the purchasers of those NFTs.

And he went through, and he knew many of these, the folks who bought his NFT by name. He was talking about backstage access, collaborations with him, right? It was very clear that he was looking to build a community and kind of grow from there. And I don't get that sense from, some of the other, you know, creators of NFTs who are entering, you know, in a less intentional way. That, I think, if you guys listen to the, listen to the Blau conversation, you'll definitely see the difference there.

And in any mania, you know, people buy at the top. Like, they buy at the wrong point in time. And so lots of, lots of wealth can be made or at the late stages of mania lost. And I wanted to ask about that, Andrew. So, We are in some kind of a mania. The question is always like, well, you know, what stage of the mania are we in? And how long will it last? Do you have any takes on that? Yeah, so I could be completely incorrect because if I could call the tops and bottoms of markets, I would be like a billionaire. Right.

So I think that NFTs will be highly correlated with the broader crypto markets because a lot of these assets are denominated in ether. So, yeah, I really think it's dependent on Bitcoin and Ethereum and what they do. And also, it's one interesting. fact about NFTs is that they're pretty illiquid comparatively to regular crypto. And so it's, it's easy to form bubbles. It's hard to pop the bubbles. It's easy because there's such a limited supply and these are unique goods. So if someone, you know, someone famous or some really cool product launches with like 100 out of T's, there's a thousand buyers, like the prices can get really crazy

quite quickly. And then on the other hand, if you want to quickly exit your position, it's very difficult because these are not, you know, you can't just go in uniswap or some exchange and get market And so that's one very interesting aspect. And I kind of liken it to the financial crisis of 07-08, where real estate prices and pretty much only gone up ever since then and took a massive macro event in order to reduce the home prices across the board because these assets are less liquid. And in my opinion, that's kind of how I see NFT is playing out in this kind of cycle, where until crypto kind of has some major correction, I don't see the NFT,

main or hype cycle being diminished by that much. I think that's going to take a large macro event in order to kind of dampen the spirits and dampen the dampen the fund. So I guess back to the question of how long will the crypto market cycle last, right? Which is kind of the other speculative point here. Yeah, what do you guys think on that? I have a guess, but what do you guys think? Nine months. Nine months. Oh, wow. I think that's fast. I think that's fast. And months to a year. David's probably over. I'm nine to, nine to 18 or not, yeah, nine to 18 months.

I'm shorter than both you guys. What is your reasoning? This, well, four year cycles plus a little bit more because of lengthening cycles. And that's like kind of just the napkin math that I have. I do think that quote unquote, this time is different in the sense that like this is crypto's mainstreaming cycle. And so I am inclined to extend how long this cycle goes. you know, Bitcoin can keep on pumping as long as the Fed keeps on printing, right? And so kind of

it's like, no, it's actually not crypto cycles. It's, it's a modern monetary policy. It's up to them to determine how long this cycle goes. And I think that that could make it go for a lot longer than previous cycles. My framing is like 2021 is 2017, right? And so we're in March of 2017. And it's going to play out roughly similar. So nine months on us, maybe a bit more. maybe a bit less. Yeah, I could go with David's estimate. Yeah, what's your take? So you think it would be shorter, Andrew? Yeah, I think you guys both have very sound and logical reasons for your estimates. Mine is pretty similar in the sense, but I just think it's going to be shorter. But I'm always very optimistic, at the same time, very pessimistic. It's very weird. Always competing forces,

but I think it's got to be six months, roughly, just because the pace of the acceleration has been faster than what I thought. But then, but then going back to 2017, when we were in April of 2017, I thought that I was like, oh my gosh, we are in the biggest bull market I've ever seen in my life because I was like, I bought Ethereum and now I was going crazy, but you know, it's like, so yeah, and I don't know. These things always go way harder and faster than I thought than I, you know, think. And then also, Damon, you mentioned the Fed and the correlation between, like, how can Bitcoin or Ethereum have a large correction if the Fed's printing at every single, like, up the traditional market does, yeah, it's going to be really interesting play out.

Like we've never had a more bullish setup for cryptocurrencies ever. So it's, we'll see. I also feel like there's this, there's this element of differences this market cycle, too. It's like, defy already had a defy summer, right? And it had that lasted three, four months. And now it's kind of recovering. This could be like NFTs sort of defy summer event. And then that could cool down, but it could like the, the crypto bull market writ large could

continue even after these sub sort of markets, which is interesting to observe. I had one last question on kind of mania. What can we learn from the previous? Because NFTs did have sort of a mania type event, like a micromania, if you will, in 2017. And I'm curious what we can learn from the projects there. So we had Cryptokitties, which almost marked the top of the last mania. And we had assets like Cryptopunks, for instance, right? And then we had all of these other assets that probably no one even remembers in the NFT side of things. And it seems to be the case that some of these things died away while others persisted. And in fact, became more valuable this cycle.

At least Cryptopunks certainly did. I'm not sure if CryptoKitties has recovered. Is there anything we can glean from the last market cycle and kind of fit into this market cycle? So if people are buying NFTs, for example, and their high-quality NFTs, even if there is some sort of crash in that, NFT market, is there some historical case for it for holding for the long run until the next time around when these things pump in the next cycle? Yeah, I think you can just look at the projects that were around in 2017, early 2018. You know, let's go with Decentralands, Cryptovoxels, CryptoKitties, Cryptoponks, etc.

These are all high-quality projects with motivated people behind them and well-thought-out kind of narratives and kind of token economics for in case of crypto punks and stuff like that. And you can see that they are now, you know, the top projects in the space now. CryptoKitties is obviously not the main focus of Dapper anymore. Now they're focusing on their kind of flow and top shot and whatnot and they're killing it. But you can still see CryptoKitties have a ton of kind of collectible value still. And so I think it just proves that if you are a team building in the FTC space and you are thoughtful and you're thinking long term, you can build kind of the next cryptocities.

or the next crypto punks or whatever. And but you have to do it in the right way. You have to be playing long-term games with long-term people. That's like the famous quote. And that is a thousand percent true in the NFT space where like narrative and story play such a large role because these assets are subjective in value, a lot of them are, versus something like DeFi, which you can actually kind of value on like a legitimate, not legitimate, but more accurate basis than you can like a piece of art, right?

So I think it goes back to just being thought about. full about what you're creating and thinking in terms of years and not months. There's a couple subjects that you brought up just there that I want to get into. I do want to get into the subject of Cryptopunks and the question around the Cryptopunks premium, does it exist or does it not? And I also want to get into the subject matter around flow, which brings up to the question of what really is an NFT. So those are two really awesome subjects.

We're going to get to those right after we get back from a quick break to talk about some of these fantastic sponsors that make this show possible. Guys, we've entered a bull market. Now is the time to start building your crypto empire, and you should do it on Gemini. Gemini is the world's most trusted cryptocurrency exchange. It's available in 50 countries, supports more than 30 crypto assets, including defy tokens, like Dai, Ave, Uni, and WiFI. I love their defy token support. You can buy crypto safely and securely on Gemina's mobile app or their exchange.

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the legacy and the crypto worlds because the money that you hold in your monolith wallet has the power of defy behind it. Swapping assets on uniswap or earning yield in defy is at your fingertips. But with monolith, so are the groceries at your grocery store or the coffee at your coffee shop. Go to monolith dot XYZ to sign up and get your monolith visa card today. And we're back with Andrew Steinwald. Andrew, I want to start the conversation here with with Cryptopunks because I think there can be a claim made about Cryptopunks and how it kind of stands out from the crowd. And mainly on nature of its genesis, which kind of reminds me, not perfectly, but of Bitcoin's genesis, right? Like, no one knew Cryptopunks were going to become this valuable. No one knew that they

were that special. There was this kind of credible neutrality about its genesis. And there's been even content written about Cryptopunks talking about the Cryptopunk investment thesis, which really makes Cryptopunk stand out. So do you agree that Cryptopunks are unique from other NFTs and if you do what would the features of Cryptopunks really why do Cryptopunks really stand out from the crowd? Yeah. Okay. So I think Cryptopunks is a collectible and the value drivers around collectibles is all about the narrative, the story around the assets and Cryptopunks have a great story. They were the first NFTs on Ethereum, but recently, you know, Ethereum just kind of came out and said, no, we were on Mainnet in 2015. So there's kind of

some debate on that like just happened in the past week. But you know, they're the first NFTs on Ethereum. They're made by two geniuses in Brooklyn. They had a fair launch where, meaning that the developers kept a thought, there's total 10,000 of them only. So hard cap supply. The developers had a fair, they did a fair launch, meaning that they kept a thousand for themselves. 9,000 were actually claimable for free, just by anyone. So I think all these different factors kind of appeal to, especially like kind of Bitcoiners and people within Crypto because they're like, oh, this is kind of like Bitcoin-esque in its creation and launch. Therefore, you know, I think it's pretty great, great buy.

I'm going to basically make a play on an NFTs on Ethereum. Basically, if you think NFTs on Ethereum, we're going to be big and popular, then I think crypto points make a ton of sense. That being said, like, that being first is very, very important and collectibles and just like the storyline. And so with Ethereum popping up, which is like this, like, it's like this like 3D or, no, it's like 2D world with like these hexes and you can actually like acquire these. these different tokens for like one ether each.

And anyways, now, now that says, not that, that, that for me is like kind of throws a lot of things in question because it's like, okay, well, if they weren't really the first, if now, Ethereum is the first, like what does that do to the storyline? But I still think that the, the story is still, in the narrative is still very strong with crypto punts. Therefore, I do see them occurring more value in the future. I just think that there's only 10,000 of them. There's a lot of people looking crypto that want them.

They turn into the status in a little. Do you know what? Listening to you guys described this is like it, it goes back to one of the, earlier points you're making, Andrea, how this is so much of this is just pure meme investing. Like the way you just described the narrative here, that is the narrative to invest in. And when you're buying a crypto punk, you're investing in like whether that that meme has enough sticking power, virality, like enough substance to actually propagate and be believed by a greater number of people. And like if it does, then you want to buy and hold. And if it,

If it doesn't, then it's a bad investment. This is like pure meme investing in a way, even that like buying ether or buying Bitcoin is not. Because at least on the other side of this, I suppose with Bitcoin and Ether, you get kind of liquidity. Whereas like the meme reinforces liquidity and liquidity actually has value because that's a most saleable good thing. It has a monetary premium in and of itself.

Is that what we're doing here with these collectibles, NFTs? Is it basically like we're directly investing in memes here? Yeah, well, I would argue that Bitcoin's like even more of a meme investment because it's literally like they're just saying like, hey, this thing is value. You can't see it. There's no visual aspect to it. So it's even lesser than punks. And it just like has value because we think it is value, blah, blah, blah. And so that's like the ultimate meme. I'd argue a little bit against that in the sense that Ethereum is highly functional and there's many things you can do and build on top of it. So I kind of separate that a little bit. But still, you know, there's a large amount of like meme involved in that. And then I think, and NFTs are, I think I mentioned it before, like monetizable memes where, yeah, it's just like, there's this almost new form of social media in the sense that social media today is used for like marketing purposes. In marketing yourself, you show off your car, show off your steak dinner, you show off your traveling to like this island resort or whatever and you're taking stories, Instagram stories

and whatever. And you're basically just like marketing and you're kind of like showing off and you're implying like I'm so wealthy or I'm so cool, whatever. And with NFTs, it's just taking that to like level 10. because you're buying some good that is a quasi-financial asset, but also at the same time, it has some sort of status. I think Gabby DeZone called NFTs store of status assets, where you can buy this punk and it like retains a certain amount of status, and it just so happens to be valuable because

other people think it's valuable. So it's like there's all these weird, interesting dynamics that just make NFTs, monetizable memes, which in some sense is like this next evolution in social media. because it's just like cutting to the chase. Instead of implying I'm so cool and wealthy, it's just like, hey, look, you see on the blockchain, I've spent this much, and I have these NFTs, therefore I'm cool, something like that.

So, yeah, really, really interesting dynamics that are very, like, human mixed with, like, qualitative and quantitative, which I think is very, very appealing and interesting. I think what also has set the crypto puns apart from the rest of NFTs is that they have this really high floor price, and that starts to give it this value that other NFTs don't have, where one of the reasons why this NFT mania or why Beeple is selling his stuff for $69 million

is because these things are super illiquid. But when Cryptopunks have such a high floor price, they are actually turning that on its head because Cryptopunks are extremely liquid. And they are, these NFTs that have this high floor price, which means that there's always this guarantee, there's always going to be a buyer. where there isn't always going to be a buyer for like these more unique one-of-one NFTs. And I think that's kind of like how you kind of know your NFT has or an FT set or collection or whatever crypto punks are has really hit escape velocity is that, you know,

NFTs can be extremely highly valued if you find the right buyer. But NFTs that have hit escape velocity will always have a buyer no matter what. And I think that's what's unique and sets crypto punks apart from the rest. Yeah, I 100% agree with that. Secondary market liquidity is like one of the biggest indicating factors on a NFT success 100%. Because that's also why like myself personally and as a fund, like I don't really get involved too deeply in the art space. Because as you mentioned, like to find one of one of one buyer for one specific piece of art is quite difficult. But in something like Cryptopunks where, you know, it's essentially always liquid.

If you sell it a low enough price, people are going to buy it for sure. You might not make money on that, but that's just kind of a separate issue. But yeah, seeing the secondary market liquidity can tell you like a lot about a project. It's crazy to see because we talk about sort of propagation how early this might be. But basically if we look at something like crypto punks, right, that appeals to a small, relatively small, you know, geek crypto-native type demographic. But the reality is this usage of memes as monetary and status symbols to the world. like every single subculture is going to discover this, right? Like there's how many subcultures left have not even put a toe into NFTs as a social status symbol, right? Like almost all of them.

Like we have, there's 99% I would say of the rest of these different communities and subcultures that that will come to this and discover it in the way that kind of the geeks who are early have. And, you know, maybe crypto punks appeals to some of them, but probably not. They'll have their own things that they will memeify and NFTify as a result. Yeah, yeah, no, a thousand percent. Like, that's especially true with collectibles and art. I think that those are non-functional NFTs. So the narrative, the meme, the story is the driving force factor there.

And then on the functional side, which is more of like virtual land or game assets, the value and kind of the usability of these things is more looked at. Basically, the value is a function of the usability and the utility of the asset. So like, like, you know, my sword does 10 damage, your sword does 100 damage, your sword should be more valuable in theory. A virtual land parcel, it's like you actually want to be able to build something on that piece of a piece of land and experience that virtual world or whatever. So on the functional side, there's way more around the assets than just the me. It's way more like, okay, does this actually make quantitative sense? And then on the non-functional side, it's mostly all about qualitative and other kind of subjective factors.

So yeah, it really depends on what type of NFTs you're looking at, but 100% you're correct. Like every community on the internet, even off the internet that comes on the internet, will have their own kind of weird NFT memes and all sorts of interesting stuff. Can you tell us about some cool projects then, Andrew, right? So I know you're really big into kind of this idea of everything's moving into the metaverse, this whole new digital frontier, essentially. Tell us some projects that you're excited about. People have heard of Cryptopunks, people have heard of Beeple.

what's kind of up and coming and on your radar right now? Yeah, so in terms of up and coming, there's like just a rush of really, really incredible developers, creatives, you know, kind of founders that are now making companies that are focusing on the NFT sector, which is amazing. I'm really happy for that. I think that's kind of what, you know, this bubble is doing is to make people look at the space more closely and decide,

hey, you know what, I'm going to leave my job at like Google or whatever, and I'm going to dive in the space full time, which is, that's great for us. So those are all up and coming things and they range from like new art platforms to new, new games, new this, new like super diverse. And then I think the stuff that's great today is really a lot of things that either have been around for quite some time and have existing like rabid communities around them. You can always count on that. And then also even newer projects that have quickly grown communities that are very fanatical

themselves. And so, you know, the connecting kind of theme here is that the community is such a driving force for a lot of these projects because, and it's the same as in traditional crypto and defy, you know, Hashmax, for example, that launched about like a month or two ago. And the hash mask community is like really, really great. They're really smart. They're always chatting about the cool, like, codes and weird stuff that's going on in the background over, of her hash mask because each one is like has a message or a lot of them have messages and stuff like that. And so that's something to really kind of think about is you want to make a project that has, if it's a collectible side, so not much functionality, you want to make something that's a deep

experience and not just surface level. And then on the functional side, you want to create a great experience around the NFT. So instead of making the NFT very deep on the nonfunctional, the functional, it's like you want to make sure this NFT is a sword, but the experience around using that asset is very, very exciting. So in terms of specifics, virtual land platforms, sandbox, cryptoboxless, descentra, insomnia, all great. In terms of collectibles, cryptoponics, autoglyphs, hash masks, game assets. We have gaming, we have AXE, so rare, which I kind of count as kind of gaming. And then art, I mean, there's just like so many amazing art products.

The one that I'm really excited about recently is art blocks, which is like generative art on Ethereum. I think that that's like a super cool concept and it's kind of opening the doors for a lot of generative artists who have never been able to monetize quite effectively. And yeah, anyways, they're just like every day there's a cool new experiment or new product being launched. And that's so much different than the existing structures that it's it's very, very exciting. And it shows me, okay, wow, this is going to be even more diverse than these kind of four categories. I bucket them in there's going to be, you know, 10 categories in the future. So, yeah, it bodes well for the space. How do you find these things, Andrew?

Oh, man. So DMs, a lot of people just DME, what they're working on, cool things like that, intros from friends, discords. People always say, like, what is the resource that you can go to to start learning or finding out about this stuff? And there really isn't one. I wish there was, but it's very scattered right now. And a lot of it is network driven. So it's like, hey, this guy knows this guy who knows this guy and blah, blah, or just random. Like, I'll just get a DM and they're like, hey, I'm working on this thing. I'm like, okay, cool. And how do you know it's good if you receive a Rando DM. So if there isn't one single source, what that means is the source is your brain,

which means you need to be doing vetting. How do you vet and how do you analyze and how do you determine what's real and what's noise? Yeah. So it's really tough because it requires a lot of time. But really, let's say someone DMs me a project, I'll say, hey, send me over like a deck, send me over some website, some information. If it looks interesting, I'll say, okay, great, let's jump on a call. And then from there, if you really want to kind of go forward to the investment, I just try

to distill everything down to its fundamentals. So the team, the product, the token economics, the community, the market, the data, the risks. And you assess every project on those core fundamentals. And if it passes muster, you say, okay, great, this is a wonderful product. It fundamentally fits, you know, our values and what we think is great. So then you move on to, okay, we're going to make an investment. And then from there, it's a whole other kind of process. But yeah, it's really, for me, distillation, because the space is super new, super diverse, very subjective.

So it's what actually matters here. And that's what's important. We had a conversation with Devin Finser lately, and this probably leads into the next section that I think David's going to ask about with, you know, pertaining to flow. But as we kind of get into that, he kind of made this comment where he still feels like we're in the 56K days of in terms of NFTs, like because of some transactions per second limiters on networks like Ethereum, for instance. So it feels like the next unlock is going to be in. this multi-chain world, where we have various layer twos and maybe other layer ones that are allowing for lower value transactions to occur. What do you think of that take? Is that sort of how you see the world? The reason we're seeing big $69 million transactions with people and $2.5

million Jack Dorsey tweets is because we're in the days of scarce block space, essentially, so high-value transactions. But we are moving to this next unlock additional infrastructure being built to make block space for NFTs more plentiful and we'll get different use cases as a result of that. Do you think that's a good framing of what's happening right now on the infrastructure side? Yeah. So it's a really kind of good point to bring up where for me, at a high value NFT should be issued on Ethereum because that is the best chain to issue NFTs on without a doubt. but something like a game, you can't really have a great game, highly functional game on Ethereum main chain, main net, right? Because it's kind of, yeah, there's scalability issues, obviously.

So I think I'm all for a multi-chain world. My number one thing is giving users true property rights. That's like my go-to. It's like, as long as the users, as long as the issuer of that NFT cannot delete your stuff, then I, then I'm fine, right? You know, and some people say flows, a little bit centralized and, you know, that's, you know, there's some argument there, but as long as flow cannot delete their stuff, user stuff, then I'm okay with it. And I do think that what we're seeing, luckily, and I think this is great, is a lot of teams are building kind of bridges to Ethereum. And so they're able to, you know, do their own thing in a maybe a highly scalable way, and then kind of port over to Ethereum, main net, whenever need be.

And so that's really important about, because I do think that I don't want there to be like the flow universe and the Ethereum universe and the polka dot universe or whatever. I want it to be all kind of this metaverse, right, all connected. And I think by building these bridges and building these kind of solutions that interact with each other is super, super important. And yeah, in terms of like where we are, oh my gosh, like, we are in the pre-Napster days of this revolution. Like, I don't even know what came before Napster, but like we still have iTunes and iTunes is going to be crazy, but that's still pretty old now. And then we're going to get the Spotify's. And even like, you know, a few years, we're going to have

some other thing that's not Spotify, it's going to be something else. And so we are just unbelievably early in all this. And I don't know exactly where it's going to go. But yeah, hopefully, hopefully I'm involved in still here. Andrew, you've unpacked it a little bit, but I want to keep going because there's a question of what actually makes an NFT an NFT, right? And you said that like if you initiate an NFT on flow, but flow can't delete your ownership of that, that makes you happy and that makes you satisfied. I would want to keep going and say that if you are able to take that NFT and achieve the maximum level of self-sovereign ownership over that NFT, then that's what makes me satisfied, right? Because there's a spectrum of self-sovereign ownership, right?

One thing I'm worried about is that these more centralized blockchains like Flow are going to receive adoption. In the same way we were talking earlier where like Gronk was issuing his NFTs, then people were like, oh, Gronk has this new product. I'll go buy it without understanding that they're really buying into an experiment. What I'm worried about is that people are going to be buying these flow blockchain NFTs and then they're going to be like, cool, I have an NFT. And then there are friends are going to be buying this Ethereum blockchain NFT. And then they're also going to be like, cool, I have my NFT. Except in my version of the world and version of the future, that Ethereum NFT will have superpowers because of the composability that you find on Ethereum. And a flow NFT is just kind of this item.

Kind of like in the way of say my Bitcoin is a pet rock, well, your NFT on flow is just kind of kind of this NFT on flow. Like what is it really? And so what I'm worried about is all these people that are putting in many, many, many thousands of dollars into NFTs on flow. They're going to be looking at all of the fun times as being happening because of composability in defy where all the NFTs on Ethereum have this like software hooks into, you know, AVE compound or you know, smart, generalized smart contracting stuff. What's your, what's your opinion on that? And maybe you can just take it from there. Yeah, okay. So I think it's tough because, you know, flow started what, like, like very recently, like what, a month or two ago. And so for all intents of purposes this year.

Right. Yeah. Ethereum has a five year, six year head start and is highly decentralized, highly secure, you know, very stable. Flow. So it's like, it's almost not fair to really compare them at this stage. I do think the flow team is really great at, uh, at, kind of getting users to build on their platform and getting, and making the best experience possible for developers, which I think is really important. But yeah, to me, it just comes down to if you can, if there's no way that the issuer of an NFT can delete or steal your stuff,

that's all what matters. So it's like, yeah, if a chain is centralized and in theory, you know, they could do that. So that's a big issue. But again, flow just started. So hopefully in a year from now, they're going to be much more decentralized. And I think that is their objective to open. over time become more decentralized.

And so I don't, you know, this is probably not great to say on the bank list, but I don't care like what chain wins. I just want there to be true property rights where no one can seize your stuff. Like that to me is all what matters. So it's like, for example, like EOS, like that's not, EOS to me, sure, it's like an NFT by name, but it's not truly an NFT. What you just said fits under the bankless narrative. Right.

Like if it's a bankless tool, it's a bankless tool. Correct. Yeah. And so, you know, we'll see how these different blockchains evolve. And maybe flow is going to head in a more centralized direction. I have no idea. And in that case, then their kind of status as being in a T's should not, should be revoked, you know, by the community. But, but again, that's not their objective.

Their objective is to, you know, keep going down the decentralized route and it's going to take some time. But yeah, to me, it doesn't matter what chain wins, just all about, you know, security and pocket rights and really, like, user rights. How do you think about that, right? So like there can be stronger guarantees of property rights across different platforms. So like what we just laid out is is a little bit like there's centralized and there's decentralized. But of course, there's also this space in between, whereas Bitcoin and Ethereum's goal is to be censorship resistant against sovereign state level actors, right? It was all the way to this extreme. Whereas, you know, something like flow might be not quite that, right?

Maybe the U.S. government could take it down, for instance, but maybe it's decently resistant against one entity or one set of token holders or something from being able to delete your NFTs, as you put it. Do you think there's room for this entire spectrum of the NFT space? And is a spectrum the way you even think of it, where you've got really strong property rights guarantees. And then you've got other property rights guarantees that aren't quite as strong, but still kind of exist. And then, you know, both of those are distinct from completely centralized system, like something like a fortnight right now. They have skins, right? But we

wouldn't call those skins and items NFTs because it's completely centralized. How do you see this? Yeah, it's pretty tough to make kind of like, it's pretty binary, my opinion. Like you can't just say like, we can't, we have some property rights. And like, We only can seize your stuff in certain instances, right? So in a perfect world, you know, we're using full World Warwick out Fortnite, all these big video games that are all completely on chain and everyone's secure and we're in the metaverse and everything's completely decentralized and safe and whatnot. It's like a perfect world.

I understand that it's probably not how things are going to evolve. I'm sure it'll be kind of bifurcated into certain sections where like, okay, the Fortnite of Ethereum has to exist on like this kind of side chain that's kind of a little more centralized. But also, you don't necessarily need, I mean, in the perfect world, you would, but you don't necessarily need, like, the strongest private rights for all your foreign inskins or whatever. But if you have, like, a piece of art that, you know, you bought for $69 million, I don't want there to be any sort of, like, fuzziness on, like, whether or not someone, even a state after it could seize this from me. I want to make sure that no matter what, I'm able to hold this stuff securely. So, yeah, I think that there is going to be a spectrum, but I don't think in reality that's, like, how it works. I think it's either like yes or no.

But that's just that's kind of how I see it. Andrew, I don't know if you've had, I know you just came out of surgery, so you probably haven't read my recent article, but I want to get your opinion on this. NFTs are a tool for disintermediating the emotional relationship between artists and fans. What do you think that does for human culture over the long term?

And I know that's a really brainy question that has a lot of implications to it. So I kind of want to get your, your take on that. When we cut off the middlemen between fans and creators, what does that do for humanity in the long term? Where do you think that's a long-term trend going? That's super interesting. Can you dive? I want to hear more about your thesis on that. Can you dive deeper? So we recently had our conversation with Blow where he talked about how Spotify is great for distribution, but is terrible for data because he's not able to see who's listening to his music. And as soon as he

dropped his NFTs, he was able to get a list of 60 fans that collectively paid him, $12 million. So he knows he found 60 people that are, he's in direct contact with that, and one of them purchased the rights to, um, to artistic director for a song of his, right? So like Spotify was never able to provide or facilitate that sort of relationship between fan and creator, right? Now all of a sudden, uh, Blau has these, these, uh, are established connections directly to his fans that allowed him to have a tighter feedback loop between the, the value that he produces as an artist and what his fans want. And my thesis is that this is generalizable for all artists, all creations.

And I guess it's something similar to the Web 2 versus Web3 thesis as well, where all of a sudden the disintermediation is the status quo, and all of a sudden value creators and value consumers are direct, right? Is this something that you've thought about with NFTs? And where do you think that this trend is going? I haven't thought about that really, but I think it's really interesting. I think that we're like in a creative, a creator's renaissance where they suddenly have all the power to do whatever they would like, which I think is unbelievably important. And like the metaverse to me is about two things really.

It's about property rights and also optionality. So like within the metaverse or within this virtual world that we're all living in, you have the option. So like if he wants to use Spotify, he should be able to use Spotify. If he wants to go direct to his fans, he should be able to go direct to his fans. I think that there's a lot of tradeoffs between, like, ease for those things, because Blau is an OG. He's been in NFTs for a long time and crypto for a long time. So, like, he knows what to do. And he clearly has done it very well.

But then there's some new people who are like, listen, I don't know the first thing about NFTs. I want to start getting involved. But what do I do? What do I do? What do I start? And so in that instance, like a Spotify of NFTs type platform, which maybe is a little more centralized, but kind of can help people along the way. That makes a lot of sense to me. So it's like, I don't, I really, I think, I think this is where the spectrum comes in.

Because it's like, in that instance, like, it's the option to do whatever you please. And that's to me is the most important thing, what this is all about. Because when you have the right, the secure ownership of stuff, then you can choose, hey, I want to do it my way. I want to do it their way, whatever. Yeah, I think it's like the biggest force for good or one of the biggest force for goods in this whole revolution is like bringing power to the people. and that's across like, you know, being unbanks, you know, to suddenly be able to have your own kind of control over your financial destiny and over your own goods with NFTs. And, you know, I really do think that, yeah, I think it's like the biggest force multiplier for good

in the space for sure. Andrew, I don't think I was clear on something until just now until you mentioned it. So your concept of the metaverse and your thesis behind that, I was definitely thought that that was about humanities move from the analog world into this digital world where things are in virtual reality and there's and like virtual goods and we have like digital commerce everything is being digitized right zoomers are there millennials are getting there right older generations might not understand but we are all moving into the metaverse but you said two things that are super interesting to me and important property rights and optionality preserving those two things in the metaverse is

vitally important right well i guess what's the contract What if we don't preserve? What if humanity, this is another maybe brainy question, but what if humanity enters the metaverse, but we forget we don't have property rights in the metaverse? Someone else owns all of our property, big centralized digital companies. What if we enter the metaverse and we don't have optionality?

So there is only one virtual reality you can enter into, and by the way, it's owned 51% share by Mark Zuckerberg. It's like, is that the contrasting world here? Tell me about that. property rights and optionality in the metaverse. I mean, that's like the nightmare scenario that every movie and like book is about is like that there's one or a couple centralized entities that control, you know, control the platforms and kind of spaces that we use and exist in today.

I mean, we can see it play out now with like Facebook and kind of these other social platforms where, you know, Facebook is, I don't know if this is accurate, but probably Facebook is blamed for a lot of like, you know, revolutions and a lot of like misinformation and a lot of things that are not great happening because it's in their, in their, you know, personal, they're, they personally profit from that stuff happening. So that's not, that's not a great future. And if they're doing that now, they don't really mind. And like, they're destabilizing countries and like governments, then you have to imagine that like, if we're in like a world where, for example, like, okay, you have to work this metaverse job in order to get your salary.

You know what I mean? That's crazy. That would suck. But, but I want to be in a world where, you know, It has kind of American ideals, maybe like older American ideals. I don't know about today, but where like you can, you are free to do and own whatever you want and people can't tell you what to do. And your money is your money. Your stuff's your stuff. If you want to go work in the physical world, go do that. If you want to go work in the metaverse, go do that.

Yeah, it's just all about options and being able to exit. I think biology often talks about like the ability to exit is one of the most kind of sought after things to pursue. And I think he said that, like, we're at a level of regulatory capture in the United States where you can't easily exit systems, whether they be like, you know, your phone bill, your internet bill or whatever. Like, your optionality is limited to, like, two people. And they're both kind of in cahoots with each other and a little bit evil.

And that's, like, not a great future. So I think just being able to have the option, yeah, options to do whatever you please and be and have secure ownership of your stuff like that's all what matters um so yeah i think that makes sense as to why property rights are such an integral part of that thesis because if you don't have property rights you don't have freedom right yeah and also like all the stuff you do all the time money and effort you spend in the in the digital world is like for nothing you know so i think that that's also uh you know important andrew as we close here you were you were super predictive in our last episode, like incredible timing on all of that. What are your predictions now? So you made

some big bold predictions. Previously, this was in September. What do you think it now? Do you hold to those predictions? Do you accelerate the timeline? What's, what are your latest predictions here as we are, you know, March of 2021? Yeah, I got to see. I predict Paris Hilton is going to do an NFT soon because she's following me and a lot of other energy people. I think obviously my time frame to reach a trillion dollar market cap in a 10-year time frame is gone. It's going to be much shorter. I don't know when that will be.

I almost like don't even want to make a prediction now because I have no idea. But as long as we're in this environment, this macro environment of low rates, fed printing every single time the market has a hiccup and cryptos in a bull cycle. Like I think it can get a lot crazier from here, which will only accelerate all these trends and metaverse trends that are happening anyway. So I've got to make a prediction. It's going to be a lot bigger, faster than what I previously predicted. Awesome.

Well, that's good to hear, Andrew. Well, thank you so much for coming back on to the Bankless Show. We'll have you every single time that you want to come on because you are such a treasure trove of information. And so thank you for making the time. Thank you so much, guys. It's been awesome. Awesome, Andrew, bankless nation.

I think you'll, I think Andrew will be announcing some interesting things into the future. So definitely follow him on Twitter. Also, stay tuned to his Zima Red newsletter, which is just a fantastic place for big thought pieces on NFTs. Make sure you sign up for that. We will get that in the show notes as well. Of course, guys, risks and disclaimers. Heath is risky. NFTs are risky too, at least from a value perspective.

We may be in a mania, maybe not. You could lose what you put in, so be careful out there, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're joining us on the bankless journey. Thanks a lot.