The Breakdown - Trump NFTs Sell Out In Hours

Starting point is 00:00:00 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by nexo.io, Circle, and Cracken, and produced and distributed by CoinDesk. What's going on, guys? It is Friday, December 16th, and today we are talking about the hottest new NFT collection, which, of course, comes from former U.S. President Donald Trump. Before we get into that, however, if you are enjoying The Breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us in the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. I'm excited to also share that this week the podcast is brought to you by Galaxy and the Galaxy Brains podcast. Transparency is more important than ever in crypto. If you're here, it's obvious how important it is to you to find reliable information.

Starting point is 00:00:59 For more shows like this, for more shows like The Breakdown, check out the Galaxy Brains podcast. To tell you a little more, here's the host Alex Thorne, Galaxy Head of Research. Listen each week as we take you inside the biggest stories and projects in Bitcoin and Crypto. Whether it's breaking down market volatility or analyzing the latest technical developments, Galaxy Brains has you covered. Come for the latest market insights from our in-house trading professionals and renowned experts from across the industry. stay for the occasional rap from yours truly. Check it out at galaxy.com slash research. All right, folks. Well, today we are catching up, as I said, on the Trump NFTs, but also on a bunch of other non-FTX crypto news. Now, this first story is something that probably, in a different time, would be hailed as another reflection of crypto mainstreaming.

Starting point is 00:01:52 Yes, Donald Trump, the Donald, has an NFT collection. On Wednesday, former President Trump, posted, America needs a superhero. I will be making a major announcement tomorrow. Thank you. What might this major announcement be? Would it be something about his campaign or plans for the future? Indeed, it was not. Instead, on Thursday, Trump announced the release of a series of 45,000 digital trading NFTs bearing his likeness in a series of costumes and settings. The tokens are minted on Polygon and cost $99 each. They were available for purchase with either ether or plain old USD. Now, like I said, each digital card features an image of Trump in some fantasy setting, ranging from posing like Superman ripping off his shirt to reveal a large T-symbol emblazoned on his

Starting point is 00:02:34 chest, to Trump riding on a red, white, and blue elephant, which is, of course, the symbol of the US GOP. When purchasing the tokens, customers were asked how many they would like to purchase, with a prompt promoting a guaranteed ticket to a gala dinner with Trump for purchasing 45NFTs at once, at a total cost of $4,455. What's more, each NFT automatically entered its bearer into a sweepstakes to receive experiences with Trump that included a Zoom call, a dinner in Miami, or a cocktail hour at Mar-a-Lago. Now, this is quite an about-face for former President Trump. Remember, in 2019, Trump claimed that he was not a fan of cryptocurrency, as his

Starting point is 00:03:10 Treasury Secretary Steve Mnuchin made multiple attempts to hamstring the industry during his tenure. That year, he tweeted, I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated crypto assets can facilitate unlawful behavior, including drug trade and other illegal activity. Similarly, Facebook Libra's virtual currency will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new banking charter and become subject to all banking regulations, just like other banks, both national and

Starting point is 00:03:40 international. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the world, and it will always stay that way. It is called the United States dollar. Now those tweets were, of course, in response to Libra, which, as I've said before, was really the starting gun in American politics for politicians to start paying attention to cryptocurrencies in general, but specifically stablecoins and other things that might undermine the U.S. dollar. Well, whatever the case and whatever he actually believed back then, his tone has now apparently changed. He posted to promote the product, Get your cards now. Only $99 each. Would make a great Christmas gift.

Starting point is 00:04:20 don't wait, they will be gone, I believe, very quickly. Now in a short video attached to that post, Trump says, each card comes with an automatic chance to win amazing prizes, like dinner with me. I don't know if it's an amazing prize, but it's what we have. He also referred to himself as, quote, hopefully your favorite president of all time, better than Lincoln, better than Washington. Well, it seems that Trump was right, the NFTs were gone very, very quickly. They sold out within a day and generated about $4.5 million in primary sales.

Starting point is 00:04:46 So, as you might expect with such a controversial progenitor, there are a lot of takes on this one. First, let's pick out the obvious dismissive ones. These came in many cases from Trump's existing political opponents on the left. And they weren't all unentertaining. Jeff Teedrich, who's literally just the Trump commentator, says, Oh, my effing God, Trump's major announcement is digital trading cards featuring his own big, dumb, stupid pumpkin face.

Starting point is 00:05:10 And holy shod, he's selling them for a hundred bucks, I shit you not. I wish I was making this up, and the rubs are going to eat this right up. Billy Baldwin, an actor and minor Baldwin brother, writes, Lincoln, four score and seven years ago. Kennedy, ask not what your country can do for you. Reagan, Mr. Gorbachev, tear down this wall. Trump. Buy my Trump superhero trading cards. And then there was baked Alaska who pled guilty to unlawfully protesting at the U.S. Capitol. I can't believe I'm going to jail for an NFT salesman. And then, of course, there was MSNBC who were literally right-clicking and saving Trump's NFTs live on air. But of course, in this case, just as in other NFT collections,

Starting point is 00:05:47 The right-click Save As misses the point. Certainly one part of these is their collectability among the people who care about Trump and his ecosystem. But the other part is the set of experiences that they potentially give you access to. Eric Wall wrote, Wait a minute. These NFTs give you access to a community. A dinner with Trump. Golfing with Trump.

Starting point is 00:06:05 Zoom calls. One-on-one meetings. Autographs. These aren't baseball cards. This is a SIMPDAO. Now, earlier in the year, Eric had explained his concept of a SIMPDAO is basically a crypto-organized Dow or decentralized organization that was devoted to simps or some group that had an over-affection for a particular person or affinity or whatever. So basically what he's

Starting point is 00:06:27 arguing is that this is effectively not just a digital collectible, but something that brings people closer to a person that they love in former President Trump. And of course, the point here is that there are a hell of a lot of people who would only be interested in this type of digital collectible because someone like Trump does it and because of the stuff it comes with. Sure enough, Joe, Joe Louvano, three tweets, My dad is retired and he is asking me to help set up a metamask so he can collect these. Now, there are also interesting political fundraising implications here as well. I believe that NFTs will be a part of political fundraising going forward, like them or not.

Starting point is 00:07:00 B. Seeth writes, 45,000 Trump digital trading cards sold, with $99 per mint, he's generated over $4.4 million in primary sales. And this gets me to my point, which is I think that these actually really kind of perfectly encapsulate NFTs right now. These Trump NFTs are a digital collectible, but they're also an access token for people to get experiences. There's a lot of controversy around them. They're enabling a type of fundraising that many think is grift. And they also had a launch that was full of technical issues. But at the end of the day, they had demand and they had product market fit.

Starting point is 00:07:30 But NFTs are not the only trend that Trump is a part of. In an ecosystem where innovation is the norm, it's the basics that are in the spotlight. Nexo is a company that has never put the safety of clients' funds in question. With over 50 global licenses, $775 million in insurance, and a real-time audit of custodial assets, Nexo sets an example for security standards in the industry. Apart from keeping their 5 million clients safe, Nexo has kept building. They've just announced their non-custodial smart wallet. Visit nexo.io.

Starting point is 00:08:06 That's nexo.io and sign up today. This episode is brought to you by Circle, the sole issuer of USDC, and a leader in crypto that's held to a higher sales. standard. USDA is a fast, safe, and efficient way to send money around the globe. USDC is always redeemable one-to-one for U.S. dollars and has over $45 billion in circulation as of October 13, 2022. Plus, Circle posts weekly reserve reports and monthly attestations of reserve capital, letting users know that USDA is safe, transparent, and compliant with regulations. Just go to circle.com backslash transparency to see why USDC is a trusted

Starting point is 00:08:45 stablecoin. As one of the largest, longest-lasting, and most secure exchanges, Cracken sets the example for transparency and trust while delivering on their mission to empower people with new ways to connect and transact. Millions of people around the world count on the Cracken mobile app as the easiest, safest, and most flexible way to start building their crypto portfolio. Cracken's industry-leading security keeps your funds and information safe, and their award-winning client engagement teams are available for support 24-7. Download the Cracken app on Google Play or the Apple App Store, or visit crackin.com slash breakdown to join. Of course, another big trend right now is the attempt to move people off of mainstream

Starting point is 00:09:30 social media to alternative networks. The big announcement for these NFTs happened not on Twitter, but on Trump's own truth social. Over in Crypto land, of course, the more general interest in social networks is around decentralized social networks that don't have figureheads like Trump. Recently, there has been a huge amount of discussion about the Twitter files, which are a series of dumps of information about actions taken by Twitter and Twitter executives in the pre-Elon Musk era. The Twitter files are probably worth their own show at some point. Dmitri Kofinas from Hidden Forces has been following it. He wrote the Twitter files part three de-platforming the president. In my opinion, this story is about one, unaccountable private power, two, unregulated

Starting point is 00:10:08 collusion between government personnel and a private corporation, and three, the lack of process around how to manage that power in the service of truth and safety. Later in a separate related discussion, he writes, in my opinion, the relevant questions one should ask here are, one, should private companies have this much power without public oversight? And if not, two, how do we want these platforms to be governed? Anyway, it sounds like a big picture power shift to me. However, one outcome of all these Twitter files is that they've increased interest again in decentralized social network alternatives. Former Twitter CEO Jack Dorsey wrote about this as well, saying, there's a lot of conversation around the Twitter files. Here's my take and thoughts on how

Starting point is 00:10:43 to fix the issues identified. I'll start with the principles I've come to believe based on everything I've learned and experienced through my past actions as a Twitter co-founder and lead. One, social media must be resilient to corporate and government control. Two, only the original author may remove content they produce. Three, moderation is best implemented by algorithmic choice. Now he goes on to explain this more in a longer blog post, writing, the biggest mistake I made was continuing to invest in building tools for us to manage the public conversation versus building tools for the people using Twitter to easily manage it for themselves. This burned the company with too much power and opened us to significant outside pressure, such as advertising budgets.

Starting point is 00:11:19 I generally think companies have become far too powerful, and that became completely clear to me with our suspension of Trump's account. As I've said before, we did the right thing for the public company business at the time, but the wrong thing for the internet and society. Now getting on to his three principles, he says, the only way I know of to truly live up to these three principles is a free and open protocol for social media that is not owned by a single company or group of companies and is resilient to corporate and government influence. The problem today is that we have companies who own both the protocol and discovery of content, which ultimately puts one person in charge of what's available and seen or not. This is by definition a single point of failure,

Starting point is 00:11:55 no matter how great the person, and over time will fracture the public conversation and may lead to more control by governments and corporations around the world. Jack then goes on to say that there are a bunch of teams working on this right now. He says as far as the free and open social media protocol goes, there are many competing projects. Blue Sky is one with the AT protocol. Mastodon another, Matrix yet another, and there will be many more. One will have a chance of becoming a standard like HTTP or SMTP. This isn't about a decentralized Twitter. This is a focused and urgent push for a foundational, core technology standard to make social media a native part of the internet. To accelerate open internet and protocol work, I'm going to open a new

Starting point is 00:12:30 category of start small grants, open internet development. It will start with a focus on giving cash and equity grants to engineering teams working on social media and private communications protocols, Bitcoin, and a web-only mobile OS. I'll make some grants next week, starting with $1 million a year to Signal. Please let me know other great candidates for this money. After Jack announced that he had committed recurring annual funding of a million dollars to signal, he was introduced to a protocol called Noster and decided to donate 14 Bitcoin worth roughly $245,000 to help fund further development. Now, at the same time this week, another blockchain-based messaging platform console also opened for beta testing. They're basically trying to take group messaging and evolve it to the basis for

Starting point is 00:13:08 a social networking platform. Now, as Jack pointed out, there are going to be tons of these efforts. There have been tons of these efforts in the past. What I've seen not work over and over again is trying to replace the dopamine value proposition of having everyone that you want, be in a single place, with a financial proposition through some sort of token or another. But at the same time, it's clearly a problem that people are going to try to solve. I think the best hope is that the next network that offers some really differentiated, valuable type of human communication paradigm that we didn't know we wanted, such as short-form messages like tweets, they do it in a way that is natively decentralized from the beginning. Now, staying on this theme of mainstreaming,

Starting point is 00:13:46 PayPal announced on Wednesday that it will integrate its buy, sell, and hold crypto services with the Metamask wallet in an attempt to broaden customers' options to transfer digital assets from their platforms. According to the press release, the partnership is intended to enable users to select their PayPal accounts as a payment option for purchasing Ether and Metamask. Lorenzo Santos, a product manager at ConsenSys, which owns Metamask, said, quote, This integration with PayPal will allow our U.S. users to not just buy crypto seamlessly through Metamask, but to also easily explore the Web3 ecosystem. PayPal launched its first crypto integrations in October 2020, but were heavily criticized

Starting point is 00:14:18 for launching without the ability to transfer outside of the PayPal ecosystem, essentially allowing the purchase of paper crypto rather than integrating with existing crypto networks. This has, of course, been a common thread whenever a new company that's outside of crypto comes in. Robin Hood had it. Fidelity has it now. It just almost always starts here. Now, response to the PayPal news has been mixed. Crypto Commander writes, why is everyone so pessimistic about this? I don't use MetaMask or PayPal either, but there are millions who do. Mass adoption is necessary and new retailers gain exposure this way. Come on, what else did we expect? I think, though, that the point is broader. One of the biggest barriers for

Starting point is 00:14:53 people interacting with crypto and Web3 applications is the need to build a whole new set of personalized infrastructure before you can even engage. Being able to easily buy crypto with an existing type of fiat account like PayPal could significantly lower those barriers to entry. It doesn't solve for use cases that get people to want to use crypto in the first place, but it certainly makes it easier and lowers the threshold for when those experiences exist. Now, to wrap up today, let's end on something that is slightly less bullish with a little look at mining. Tech Giant Microsoft will no longer allow customers to mine cryptocurrency using its online services products without permission.

Starting point is 00:15:27 The policy update which came into effect at the start of this month says, quote, neither customer nor those that access an online service through customer may use an online service to mine cryptocurrency without Microsoft's prior written approval. The company hasn't elaborated on the ban, but in an update to Azure, its cloud platform, Microsoft said that crypto mining was prohibited on all of its online ecosystems as part of actions that require to secure the partner ecosystem. Cloud services platforms have become increasingly hostile to hosting crypto infrastructure. Google has a similar policy in place banning mining without written authorization, and said that last year, most of the malicious actors used compromised cloud accounts to mine crypto.

Starting point is 00:16:01 Amazon's AWS also prohibits crypto mining for its 12-month free trial. Still, this isn't the worst news in mining world. The mining industry continues to be extremely, extremely difficult. Bitcoin miner CleanSpark has cut its hash rate outlook for next year by nearly 30%, citing delays in building a mining facility by one of its partners, Lancium. Investment Bank B. Riley, one of Core Scientific's top lenders has proposed a new $72 million financing plan to help the struggling Bitcoin miner avoid bankruptcy. In a statement they wrote, in our opinion, the vast majority of Core Scientific's issues are self-imposed and can be corrected in conjunction with an open, transparent discussion and ongoing participation with its creditors and equity holders.

Starting point is 00:16:40 Now, Core Scientific was the largest Bitcoin miner by computing power earlier this year, but warned that it was at risk of bankruptcy in October. In November, it reiterated that it may run out of money by the end of this year. Likewise, public minor argued. has had an extremely difficult time of it. This week's shares of Argo had trading halted by the UK Financial Conduct Authority after they disclosed a further decline in revenue for the month of November. Argo is based in London and its share prices down more than 90% on the year. In October, it warned that it might have to close soon after a $27 million fundraise fell through, and this is really just the story of mining everywhere you look this year. 2020 has seen fortunes reversed on the basis

Starting point is 00:17:16 of one declining prices, two increased energy costs, three more competition, and four debt repayments from debt taken on during the good times. The question now is just what type of industry consolidation this leads to. But that, I think, might be something to explore on a different show. For now, I want to say thanks again to my sponsors, nexus.io, circle, crackin, and galaxy brains. And thanks to you guys for listening. Until tomorrow, be safe and take care of each other. Peace.

The Breakdown - Trump NFTs Sell Out In Hours

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