Young and Profiting with Hala Taha - YAPLive: NFT Investing, Scams and Regulations with Brandon Hoffman, Christa Laser, Mitch Jackson, and Jerome Bethea (JB the Wizard)

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Starting point is 00:00:53 Welcome to the show. I'm your host, Halla Taha, and on Young and Profiting Podcast, we investigate a new topic each week and interview some of the brightest minds in the world. My goal is to turn their wisdom into actionable advice that you can use in your everyday life, no matter your age, profession or industry. There's no fluff on this podcast, and that's on purpose. I'm here to uncover value from my guests by doing the proper research and asking the

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Starting point is 00:01:52 I'm your host, Halita, and we are live today on Clubhouse in the Human Behavior Club. Today's episode is being recorded for Young and Profiting Podcast, and we have recruited an expert guest panel to discuss NFTs for investors, and everything you need to know when it comes to investing in NFTs. This is part three of a three-part series and in this

Starting point is 00:02:10 episode we'll be covering how to acquire cryptocurrency, how to choose a great NFT investment, and how to avoid scams. The regulations you need to be aware of, and how to keep your assets and information safe. In this last episode of our NFT series, we have brought different experts to talk about a specific NFT topic here in the Human Behavior Club on Clubhouse, the number one club. So make sure you go ahead and give the club a follow now so you don't miss out on more of these amazing events. A few weeks back, we covered NFT basics and last week, we covered NFTs for creators and artists. This week we're jumping into our most anticipated section of all and that's NFTs for investing. I'm here with a panel

Starting point is 00:02:50 of experts including Brandon Hoffman. He's a senior leader at Samsung, NFT investor at Samsung next and a thought later. We have Krista laser. She's a professor of intellectual property law and innovation at Cleveland Marshall College of Law with an expertise on the IP law issues surrounding NFTs. We also have Mitch Jackson. He's a trial lawyer and entrepreneur who helps clients that are finding themselves at the intersection between law, business, and technology with the Metaverse and Web 3. And last but not least, we have JV, the wizard back again, and NFT consultant and the CEO and founder of Futuring with the wizard. So everyone here is how it's going to work. I have a guided interview with panelists for the first 45 minutes and then we're going to

Starting point is 00:03:32 open it up for Q&A for the last 20 minutes. And before we start the panel I'm just going to set the stage. With the NFT marketplace growing to almost 41 billion dollars in 2021, many people want to jump into the market by either creating and selling their own NFTs, which we covered last week, or buying and selling them, which we're covering today. And as it stands now, many collectors treat this space like the stock market. You pick out an NFT that could appreciate in value,

Starting point is 00:03:58 you buy and hold for a certain amount of time, and then you sell it, hopefully for a much higher price than when you bought it. Most of the time, we hear about NFTs selling at an extremely high rate with the most valuable NFT being sold for $91.8 million. Seeing these high prices makes people think that this market is only for the wealthy, but currently over 50% of NFT sales are below $200. So this is a market that you can jump into right now.

Starting point is 00:04:23 So this brings me to my first question of the night. Let's talk about the first step when it comes to investing in NFTs and that's actually finding them. Where can we go browse and research NFTs?

Starting point is 00:04:34 Let's kick it off to JB or OG of the night. Where do you go to browse and research NFTs? I am so happy to hit this off because I want to put this and everyone's mind first and foremost. I am not backed by this company, but this is it. Looks rare.

Starting point is 00:04:52 Hello, OKS, rare. And I almost say this period. And here's the reason why. There are other places that people tend to look, which I'm sure people will mention, so I won't. But this place is a great marketplace for NFTs. It actually offers you the ability to stake and earn their coins and as well as when there are entities

Starting point is 00:05:11 that are sold and purchased here, you get rewards for doing that. Whereas other collection places you kind of don't. So I won't mention those other ones, but I'm sure somebody else here will, so it looks rare for a theory and based NFTs. And now we've got some Solana based NFTs and I would go to Alpha Art or Solana Art or Magic Eden. Okay, there are other blockchains like Abelange, BNB, Polygon, which I think somebody here will talk about, maybe Charles.

Starting point is 00:05:39 But point is, looks rare for ETH, Alpha Art, Solana Art, and Magic Eden for Solana NFTs. That's where to go. That was some very specific great information. Now, Brandon, I know you do a lot of NFT investing in research. I'd love to hear your thoughts in terms of where you go to find

Starting point is 00:05:56 NFTs that you're interested in. On one hand, you know, the day job as a venture investor is a bit different, obviously. So I'm not really speaking on behalf of my capacity at Samsung Next or the projects I'm investing in, which are startups that might be tied to NFTs or might even have NFTs. But personally, I mean, for me, to be honest, in terms of discovery for new projects, really is coming in discord and Twitter. I think at this point, a lot of the network effects just sort of take hold in terms of certain

Starting point is 00:06:31 projects in the ecosystem at large just by being in a few projects pretty deeply, communities, for better or worse, it kind of becomes an echo chamber. My feeds are pretty much dominated by NFTs, but what's great about that is just any given moment kind of scrolling down. I'm often seeing either a new take on a project I'm already familiar with. So keeping an eye on a few and might get a sense of the moment or some type of catalyst or reason why I should pull the trigger and enter those, or I'll completely come across something new that people are talking about, maybe it is going to mint or just did or it's moving quickly or some whales quote unquote have entered and sort of bought a significant amount of a project which might be something that could help it take off. So really it's sort of organic from you know, from Twitter and Discord communities.

Starting point is 00:07:26 In terms of a platform that I take a look at, I like NFT go, actually know the founder, have it invested or anything in there, but just a fan of the team there and really like the website for some of the analytics and kind of look at the projects from a more data driven standpoint. Yeah, it seems like a lot of these NFT research platforms

Starting point is 00:07:46 are really starting to pop up. So there's lots of different websites where you can search different NFTs and see their pricing and rarity and all that kind of good stuff. And like you said, the social media aspect is really where it's at. I mean, even LinkedIn now is talking all about NFTs

Starting point is 00:08:00 and social audio, especially. I feel like it's super hot, like Twitter spaces, clubhouse. Right now we're having an NFT conversation. So I think those are some really great points. Let's talk about what are the signs that make an NFT look like it could be a good investment. Why don't we start with JB and Mitch or Christa? I know you guys are experts in terms of the law,

Starting point is 00:08:24 but I'd love to hear your thoughts as well. So Mitch, I'll throw to you after. Sure, so this is a great question. So some of the signs that an NFT is a good investment, that's where I would go off of what Brandon's talking about. So if you hear about one and you can go into their discord, so let's say you're browsing on one of these platforms like Lookswear, you see something

Starting point is 00:08:44 while that looks like a really cool NFT If your brain starts to think about hey, that's gonna be a lot of money Kind of stop right there and let's start doing some research So what we want to do is go to their discord, which is a platform you can look up and the way you'll probably get to their Their discord is through a link that's on their Twitter profile somehow, okay? So once we get into their discord that's where their community is and then you can see how their community is talking. Do you feel welcomed when you go there? After that you can start clicking on the official link section and then you're gonna be able to get to their website if they have one yet, some don't, but you're gonna be able to look at their road map,

Starting point is 00:09:22 which means what are their plans, what are their ideas, right? And to me, some of the things I start to notice is not necessarily who is on their team, because you might not recognize the names. Sometimes people are concerned whether the team is doxternat, which means do you know them, are they KYC'd? I don't find that to be an indicator at all, either if it's going to be good investment or not. But I want to look at, are they doing something that's creative, something that's different on the road map? Are they just doing what everybody else says, or do they have some unique proposition for this particular project that makes you feel like they're going to be there for a long time.

Starting point is 00:10:05 And so those are some indicators that I look at. So their team, their roadmap, does it seem like they're offering something that's unique to the NFT space. I take a look at how many people are in their discord, and does that match with their Twitter followers to some degree. If there's a lot of hype in the discord, but not a lot of logic, then I kind of slow it on a pullback a little bit because that's not really a good sign, right? So those are the some of the things that I look for. Can I just clarify something when you say not a lot of logic, do you mean there's not a lot of like meaning behind the project, but it just seems like a lot of hype?

Starting point is 00:10:43 Yeah, no, like I'll go ahead and name a product. I don't want to, there's a great project that has almost no logic to it. But what I mean by that is if you go into a server and you say, hey, what's this project about? And people say, when Lambo, this is going to the moon and no one is answering any direct questions, like, what is projects so great. What do you mean the artist's fire? If that keeps happening that's a no go. Yeah and I've witnessed a lot of that. Mitch I'd love to hear your thoughts on this. Well just following up on what Brandon had to say imagine putting money into an NFT project NFT drop and what just happened at the beginning of today's

Starting point is 00:11:25 social audio show resulted in you not being able to do a transaction, resulted in tens or hundreds of thousands of dollars in losses just because there was a technical glitch. If you don't know who to hold responsible, if you don't know who to reach out to for reimbursement and by the way, this just happened over the last couple of days to somebody that's a big player in the space to the tune of $600,000, $700,000. So it happens. Brandon, we take things one step further, especially when we're consulting with our clients. What we do is we dive into two services, one's called Lexus Nexus and the other one's Thompson Rutgers. Lexus Nexus is a service that we can click into through our law firm. Consumers can click into it too. It's a global service that gives you access, which is a couple of clicks to global databases to check on the status

Starting point is 00:12:13 of any person or any company regarding issues of fraud, identification, who's involved, business locations, where are they claiming to be located, what's their venue versus where are they actually registered? I find that to be kind of a big deal in Web 3 transactions. Whether or not there are any felonies, what type of asset and funding, whether there's any civil or criminal litigation. Thompson Rutgers, also at ThompsonRutters.com.

Starting point is 00:12:38 The first website was LexusNexis.com. These are two platforms that we'll take with Brandon just did. We'll look at the community, we'll look at the engagement, we'll look at their true interaction, but then we'll take it to the next level. We'll peel back those layers of the onion and we'll be able to provide our clients with good objective research because what I found with Web3, especially because of FOMO, is just because everybody is excited about something, crowd or herd mentality does not result in objective determination of facts.

Starting point is 00:13:12 So we like to take a step back, peel back the layers of the young in just a little bit more, and find out exactly who's behind the drop, who's behind that NFT, and then we can appropriately counsel our clients as to the risk and benefits of moving forward with the transaction. So that's the next level that we usually recommend our clients take. Mitch, I think that's brilliant. I think you brought up some really good points. It kind of brought up something that I hear a lot about and that's understanding if the

Starting point is 00:13:41 NFT is on chainchain or off-chain. So I'd love to know if anybody wants to speak to that, just flash your mic, helping us understand what it means when it's on-chain or off-chain. Christa. Well, I think this on-chain versus off-chain is usually in my mind, not necessarily an indicator of whether something's a good investment or bad investment

Starting point is 00:14:04 because so much of the NFT space stores the assets. So it's very common for the blockchain to only indicate a signal of ownership, but to not actually have the contents of the NFT that you're purchasing on the chain itself. Typically, they'll use a URL to point you to often a centralized location where you can download a copy of the NFT that you're purchasing. But so I wouldn't say that it's necessarily a poor investment if the NFT is hosted off chain. But you just need to be mindful that those URLs can break.

Starting point is 00:14:44 They're sent to centralized servers. They can be taken down, which I think we'll talk about a little bit when we talk about intellectual property. And I might add a few other points to what Mitch raised earlier about making sure that people are reliable. Mitch makes a great point about actually investigating the people selling the product.

Starting point is 00:15:03 But you can also rule out many sellers as disreputable in part because of the promises they make. If you're seeing ads promising that the NFT value is going to go up to a certain level, you know that's not a reliable seller, because nobody can make those kinds of promises. If you see ads where somebody is using other people's intellectual property assets without permission,

Starting point is 00:15:31 you know that's not a reliable seller, because reputable businesses don't do that to other people's assets. So for example, somebody sent me a screenshot of an advertisement that they saw for an NFT sale. It had a photograph of GaryVee in it. And it says GaryVee predicts a 10 plus ETH floor this month on some revives NFT. And red flags all over the place, right? Because they're using somebody's assets without permission. They're using GaryVee name and likeness without permission. And they're predicting a floor that they can't guarantee.

Starting point is 00:16:07 And the other thing to keep in mind is, you know, are these artists that are selling it? Are these people that have been working in the digital art space and trying to create? Or is this somebody that's a fly by night person trying to take advantage of the fact that they can use lower quality artwork and make money off of it.

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Starting point is 00:19:01 he's been so much more energetic, and he's getting older, he's a senior dog, but now we've been going on longer walks and he's much more playful. He's to be pretty sluggish and sleeping all the time, but I've definitely noticed a major improvement since I started feeding him Nom Nom. In the best part, they offer a money back guarantee. If your dog's tail isn't wagging within 30 days, they'll refund your first order. No fillers, no nonsense, just nom nom. Go right now for 50% off your no risk two week trial at trinom.com-shap. That's trinom.nom.com-shap for 50% off trinom.com-shap. So let's talk about utility really quick because when it comes to investing, you know,

Starting point is 00:19:47 utility is a huge, huge component of thinking if an NFT is going to grow in value or not. It's all about the utility, right? So Brandon, I'd love to hear your thoughts in terms of a good investment and good utility in an NFT. Yeah. I mean, it definitely can vary on one extreme as an example, again, my day job in the world of venture capital. I was able to get an allocation into the UGLABS venture around UGLABS. This is the parent company, effectively creator of the Board

Starting point is 00:20:20 API Club NFT collection. They also acquired IP, crypto punks and MeeBits from Lover Labs, but this was an equity deal and to remain as authentic as possible, they required every individual and every firm and fund to have an eight and be actually an owner and in the community, so you could effectively say that was a gate of sorts. And so, you know, just again, by chance, I had minted a mutant ape last summer, never thought I would use it, you know,

Starting point is 00:20:55 as directly in my day job and represent Samsung for a deal. And so this ape actually is commemorated on a poster with 36 other apes, you know, sort of the investor syndicate. So, you know, sort of fun in came full circle of personal NFT, lab me access behind a gate adventure deal. But then it could be something, you know, much, much more commonplace. So, for instance, I'm into atom bombs from the hundreds as effectively streetwear clothing and you know on their site in partnership, I think with Shopify and leveraging some of their tools on their site. They actually allowed certain merch, you know certain t-shirts that now I own. I only could have bought them by

Starting point is 00:21:45 I only could have bought them by connecting my wallet to their website and effectively proving that I had at least one of their atom bomb squad and if tees in my wallet. So that's something technically of less significance, but interestingly enough, the fact that it was exclusive in that sense almost, what is the impetus for me to buy that shirt and merge from them? So it's sort of reinforcing in that sense, but I mean those are just a couple anecdotal, but kind of interesting real life utility that I've experienced from NFTs. I'd love to stick on this topic of what it makes an NFT a good investment. So JB, we haven't heard from you yet. I'm sure you've got some great gems in terms of what you look for. Sure, well, it makes it a great investment. When it comes to these utilities, that's really, really fun.

Starting point is 00:22:33 There are some and I'll go ahead and name them MF first, for example. They don't have any utility and that's almost their point. And if that's very fascinating, but if you look at the founder who is owner of a holder of a crypto pong, which is one of the, you know, it's pretty valuable nowadays, the community is what the value is there. And the founder or the creator of it really encourages MFers, who's floor is about 5E, I think right now I haven't technically. It encourages them to make their own derivative projects. So if you were to purchase that particular NFT,

Starting point is 00:23:07 think about the idea that you're part of a community who is excited to see you then further create based off of that original NFT. So that's a form of a utility without being a utility. Another thing that can make a different kind of utility and NFT that you might be looking for that could be fun is a Very popular one that Mitch Probably cringes that is when they're offering this passive income situation

Starting point is 00:23:33 So that can be hairy can we not you want to make sure probably with Mitch that it's a okay situation if they're saying they're offering that But that's very attractive to a lot of people Another one is that if they have, like I said before, a road map that seems fun or exciting to you and something that is also relevant, when you start to notice that they are fulfilling on their promises or sticking to their timelines early on, that is a very good sign.

Starting point is 00:24:01 And as long as they stick to that road map, that is what helps people to feel safe about the NFT that they purchased and as long as they feel safe they're not selling it. If they're not selling it the floor price which means the lowest dollar amount let's call it the entry point for you to get into that community or into that NFT purchase or that it would be that's going to stay the same or increase most likely. There's a market that goes up and down just like any other investment from Pokemon cards to stocks, to NFTs is the same thing,

Starting point is 00:24:31 because it's all human behavior. But those are some things that you wanna look out for when it comes to these NFTs. So the roadmap that is exciting to you, utility that's exciting to you, or happy free, whether it's passive income or entry into a club, a little bit like Brandon's situation,

Starting point is 00:24:47 access to different things like merch that might be exciting to you, and to see if the community feels like they're excited about also excited about what's happening. All these are good indicators that it might hold its value. Okay, so those are some things we're looking for. Thanks so much, J.V., and you brought up something right when you started talking about some of the community members actually making their own art a derivative of the original artwork.

Starting point is 00:25:14 And actually there's some big IP and copyright related concerns to this. So, Christa, I'd love to hear from you. What's the problem with everybody creating their own artwork under these NFTs? Yeah, thanks so much for that question. So many people don't realize that when they purchase an NFT, they usually only get the right to ownership of that particular copy. They're not actually getting copyright in the work. So copyright is the right that every artist has to control others' uses of the work. So they might be able to prohibit others from doing things like reproducing the work, just preparing derivatives of the work. So this means if you take the artwork and

Starting point is 00:25:59 you're making it into something else. So for example, if somebody took a photograph of a bear and made that an NFT, and then somebody took that photograph, they purchased the NFT, but they didn't get any copyright when they purchased it. And then they go add a bunch of rainbow stripes or colors on the fur of the bear. That would be changing the original work

Starting point is 00:26:24 and turning it into something else, but they're using the original work as that baseline. That's considered a derivative work. Another way to think about a derivative work is also if you're making merchandise or changing the form of the work. So if you have an NFT and then you turn it into a product, then you're also creating a type of derivative work out of that as well. And so when you change the form or you change the content of the work,

Starting point is 00:26:48 that new work is a derivative. You need to have a copyright license, an artist, in order to make that derivative work. Now, some NFT collections will include a license that allows whoever owns the NFT to prepare a derivative work, but not all of them do. So if you want to be able to make those kinds of derivative works from your NFT, you have to make sure that the license being given includes the right to do that, includes the right to make certain types of merchandise, includes the right to make changes to the artwork, to add things to the artwork, and to sell the derivative works that you're making. If

Starting point is 00:27:29 it doesn't have that right written into the licensing language of the NFT or if there's as it's common for most NFT, no licensing language listed, then the default rules supply. The artist retains the copyright, the purchaser has no right to even make a single post or reproduction of that NFT. What are the things that we can do to look at an NFT and make sure that the copyright is in order and we own the copyright to

Starting point is 00:27:57 the artwork. Is there any way to tell JB and Kristen? Yeah, this is all something so scary. So I don't want to scare anybody away from investing in NFTs. But one really super simple, easy thing to do is literally just talk to the founders of the project, ask them some of these questions.

Starting point is 00:28:18 Four dates, they're pretty clear about what you can use, what you can't use. You don't use the logo part, but you can do certain things with the image, et cetera, et cetera. So I think a really simple way to do is if you like an NFT, you've done all the checks, right? You like the Discord community, you're checking out the roadmap.

Starting point is 00:28:35 In your mind, you know, are do you plan on doing something derivative with the project or not? Do you plan on doing something creative with NFT or not? Or if there is a concern, like they were just speaking about, that if one person does and the whole project

Starting point is 00:28:51 gets in trouble about it, then I think it could still be very helpful to talk with the founders, bring that question up in the Discord community. Hey, what kind of rights do we have to make some derivatives? Is this something that you guys are okay with? And a lot of the people, remember,

Starting point is 00:29:08 this NFT space is global, right? You really need to know the laws of your country, even your state sometimes. And so I think it's like 70% of Americans don't even know about NFTs and 90% of Japanese people don't, but Philippines, Vietnam, Thailand, I think they have just the highest percentage of adoption right now.

Starting point is 00:29:27 So you wanna educate yourself as to what country are you dealing with? Do you live in that sort of thing? Ask the owners of the project, hey, what are the rights, what are we able to do? You could take a screenshot of that, they say it's okay if you, you know, stuff like that. But that's the best way to protect yourself, if you like,

Starting point is 00:29:45 from a perspective of if you're a person or you're a noob, someone is new to this industry and you just want to get in and you want to enjoy it, but you want to do your research, ask them the question, hey, what's okay to do? Does that make sense? Yeah, I think that's really great advice, especially the fact that, NFTs is space where it's a community. There's usually a discord. You can talk to the leaders. There's back and forth.

Starting point is 00:30:09 It's not like a stock that you buy on an app and you literally can never talk to anyone at that company. It's totally different. It's a community experience. So I think that's a great point. Christa, I'd love to hear from you and mention, especially since you guys are lawyers. Yeah, great.

Starting point is 00:30:23 So I think asking the founders what you're allowed to do with the project is, in fact, one way to figure out what your rights are in part, because licenses can be granted based on very limited information. So typically, many of these NFTs don't have an explicit legal license that tells you what your rights are.

Starting point is 00:30:45 They won't have a license attached to the NFT that says something like you are allowed to do XYZ with the work. Usually they're totally silent on the topic. And so if you go reach out to the person selling the NFT and they say, look, you can do this or that with the NFT that you purchase, that might serve as the terms of a license. Now you would have to accept those terms, but if there's offer and if there's acceptance, if you buy the NFT based on that representation made by them,

Starting point is 00:31:15 you might be able to assert that their statement to you of what you could do with it was in fact a legally valid license. Of course, it's a lot cleaner if you actually purchase an NFT that has licensing language that links to a license or states exactly what you can and can't do with the project in the data for the NFT itself. It's a lot safer to actually have that explicit legal language written down. Yeah, and I can imagine in the future as this matures as a space that that will be required. You know, people would look for

Starting point is 00:31:52 that automatically and see what's inside the license. Mitch over to you. Absolutely. Absolutely. Hollow. That's exactly what's going to happen is as as we develop as a customer, mature, then the agreements in the contracts just to kind of piggyback off of what Chris has said as a purchaser and investor,

Starting point is 00:32:08 dealing with the platform. Let's say you don't know the founders, the promoters, but you're dealing with the platform, you're making an investment. Look at the TOS agreement. Look at the terms of service agreement of the platform, because oftentimes that will dictate and or limit what your rights and remedies are should something happen. Good or bad to you or to anybody within the community.

Starting point is 00:32:30 So definitely understand the TOS agreement. One thing we do is we've had some creators come to us that wanted to create some big an upt drops. It had to do with let's just say very famous Hollywood photographs that a lot of people here might recognize, especially if you're my age. And the question is, can we use these photographs to create an NFT product, right? A big, you know, 8,000 unit product? And what we're asking our clients to do is go back to the source of the photograph. Where did you get this photograph? Did you have permission? Did you take this photograph? Do you have all rights and ownership interests in this photograph?

Starting point is 00:33:09 Do you have a license that allows you to do the things that you want to do? And what we're recommending our clients do, and I think this is really smart, everybody, is that we're getting them to get in agreement with the provider of the photo, the provider of the artwork, that confirms in writing that what they're being given,

Starting point is 00:33:28 that third party artist, what they're being given by that third party artist, they have the right to use. And if something happens, if in fact that third party contractor doesn't have the right to produce that photograph for the NFT production, they agree to indemnify to reimburse our clients should there be litigation down the road. So following up on what Christa mentioned and what Hala just suggested is going to be

Starting point is 00:33:55 happening is we do see contracts being used, traditional contracts to identify and delineate and confirm the understanding between all the parties just for the reasons that we're talking about today. Super important. We'll be right back after a quick break from our sponsors. Hear that sound, young and profitors. You should know that sound by now, but in case you don't, that's the sound of another sale on Shopify.

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Starting point is 00:38:28 Like this is all just starting to come to the surface, especially for mainstream. Like nobody really was, I've been studying this for a few months. And it's like this didn't really come up until recently. So I'd love to talk about trademark issues because I recently heard that Nike sued and FT, and FT that featured their sneakers. I'd love to talk about trademark issues because I recently heard that Nike sued an NFT that featured their sneakers. So this is another topic related to IP issues that I'd love for you guys to kind of unpacked for us.

Starting point is 00:38:53 Why don't we start with Christa? I think with trademark rights, you have to realize that even if you are selling an NFT or investing in an NFT where you might have a copyright license to that particular artwork, there might be other legal rights that are implicated, there might be other causes of action. And so with this example, with Nike, people were making NFTs go on it, but they didn't get authorization from Nike. And so if you have any situation

Starting point is 00:39:26 where something that's being sold has the product that in a way that makes it so that consumers believe that that company is the source or sponsor or somehow affiliated with the company that's selling the product in a way that is not accurate. So for example, in this situation, if you include a Nike logo on your NFT and you haven't actually partnered with Nike,

Starting point is 00:39:53 then that could mislead consumers. That could create a problem where consumers have the mistaken belief that Nike is somehow associated with that product. And so, or with that NFT project. And so if you're investing in an NFT that has logos of companies that are not actually selling the NFT, you need to be mindful, hey, that project might not have the legal right to include that logo. That project might not have the legal right to use the name of some company in the description of the product.

Starting point is 00:40:26 So this can happen a lot with luxury brands because people want to associate themselves with luxury brands. So you could imagine, for example, if somebody made a bunch of digital artwork animals wearing designer clothing and those designer labels were shown in the NFT, that could create a trademark problem because people might believe that those designer brands are associated with that NFT. And in fact, we see many designer brands getting involved in the NFT space and kind of taking ownership over their brand in the digital marketplace. And so you have to be mindful, don't infringe in other people's rights, whether it's taking somebody else's artwork or using somebody else's logo or the

Starting point is 00:41:06 other one is using somebody's name or likeness. If you make an NFT of a person without their authorization, you can run into a right of publicity problem. So there's all kinds of legal rights that can be implicated even if you get a copyright license. Awesome. Okay, so one last question related to IP and we did talk about it briefly, but I really want to make sure everybody understands this. DMCA takedowns is a concern that a lot of people have and basically

Starting point is 00:41:30 what that means is that the NFT asset is stored on a centralized database and could just be deleted. It could be hosted somewhere and you know if somebody stops paying for that service it could just disappear. So Chris I know you know about this, so I'll pass it to you first and anybody who wants to chip in, just flash your mic. Thanks a lot. So, the DMCA, the Digital Millennium Copyright Act, was an act that makes it so that platforms

Starting point is 00:41:57 are encouraged to remove content when there's a complaint about a potential copyright violation. So this means that if you are hosting your image file or other file associated with your NFT on a centralized database, this could get removed if somebody makes a complaint that there's a copyright violation. Now the thing will actually get taken down just from the complaint. It doesn't have to be something that's verified in a court of law. There's a back and forth transaction that happens with a takedown and

Starting point is 00:42:30 a counter notice, but there will be a period of time where that asset is no longer accessible while this is being disputed. And in fact, it can remain down if people follow certain rules for the pend dependency of a potential copyright lawsuit, which could take years. If something has an NFT where the image is associated with a centralized database or a centralized image site, then be aware that if there's a potential copyright issue, that could be taken down, that could be removed. You might not have access to that download. Now, you'll still have ownership over the NFT, but it'll be a lot harder to

Starting point is 00:43:09 resell it if there's a broken link. If you have to say to the person, well, I'm going to sell you ownership over it, the link doesn't work anymore, but here's the copy that I downloaded, you know, and that could be an issue for resale. Along those same lines, you know, if somebody doesn't pay and a monthly fee to a server farm, if a company decides to go out of business, in good faith. If somebody can't pay the bills and goes bankrupt and they let their servers go down, nobody's been anything wrong,

Starting point is 00:43:37 other than a business has changed direction. That might affect your ability to have access to the NFT that you purchased as Christa mentioned. So great question. It's something that everybody just needs to pay attention to. Try to figure out where are your digital

Starting point is 00:43:53 assets being stored? What type of backup technology is being used to secure their long term safety? And what can you do today to protect your rights moving forward in the future? Great stuff, guys. Thank you so much. Okay. Next questions are for Brandon and and what can you do today to protect your rights moving forward in the future? Great stuff, guys.

Starting point is 00:44:06 Thank you so much. Okay, next questions are for Brandon and JB. I would love for you guys to walk us through how you go about buying an NFT. Now, we covered this a bit in part two so we can kind of do it at a high level. But walk us through how we can buy an NFT, like how we actually get cryptocurrency in the first place,

Starting point is 00:44:27 where we buy NFTs, where do we store them? How does that all work? I'm going to kick it over to Brandon and then we can go to JB for any additional thoughts. Yeah, now this is a great question. I mean, it sort of depends one in which type of NFTs, collector or user is interested in, and how far they want to go down this conversion

Starting point is 00:44:51 of Fiat to crypto. Reason I say that, if you're a sports collector of memorabilia and sports cards, perhaps, a lot of folks initially went down this path and journey by way of NBA Topshop. So that's created by Dapper Labs. It's on flow, which is their own blockchain. But more interestingly, I mean, they have made it an attempt to deliver the Web 3 benefits

Starting point is 00:45:19 if you will, of NFTs and decentralization, but with a Web II experience, fairly straightforward, literally just going on a website, you aren't actually dealing with a wallet, a metamask kind of extension of any sort, and you're not even going the step of Fiat to crypto and then using crypto to buy NFTs. So I have hundreds of moments and technically never even had to have crypto in my possession could use Fiat or a credit card effectively. So you might see more and more of that come about. MetaMask is even attempting to work with folks like wire and, you know, visa mastercard. And so you may start to see some of these steps, hopefully, and the friction

Starting point is 00:46:05 be removed. But on the other end of that spectrum, I mean, personally, for me, there's a few steps, but I am wiring money from my bank account to my coinbase account. From coinbase, I'm taking the Fiat cash effectively there and buying Ethereum predominantly, maybe Solana or other cryptocurrencies, but Ethereum. And moving that then to my Metamask, sending that to my address, Metamask address for Ethereum blockchain. Once it's in the wallet and Metamask, I'm going to, out of respect for JB, I'll say, looks rare. So I'll go to looks rare and look for a project that maybe I want to purchase, maybe I'm buying a

Starting point is 00:46:51 mutinate or a clone from artifact. And at that point, you go through the transaction, you'll verify with the wallet. In that case, Meta Mask. And at that point, you have custody of the NFT. Amazing. I'm gonna kick it over to JV in a second. But I did wanna mention that coinbase is one of my sponsors. And if you go to coinbase.com slash, yeah. Anybody who's listening right now can get $10 in free Bitcoin, which is pretty cool.

Starting point is 00:47:19 So if you guys want some free Bitcoin, go to coinbase.com slash, yeah. So JV, I'd hear from you in terms of anything you want to add when it comes to just purchasing an NFT in the process to do that. Yeah, Brandon hit it all

Starting point is 00:47:33 perfectly. So the only I'll just say that. Smooth that a little bit or say it twice for anyone in the years. So everything Brandon said just go and rewind and do it again. Once you have that in some kind of crypto form, so he brought it through from the wiring to the coinbie, so whatever you need to do to get that crypto, right?

Starting point is 00:47:50 Which means Ethereum or Solon or whatever type of currency is required to purchase the NFT you're looking for. Meta Mask, there are several other wallets that also hold NFTs. Wallet is an interesting term to use, but it's a thing that will hold your crypto and your NFTs. There are wallets that do not hold NFTs, okay? So one of the wallets, I very much recommend, is just like Brendan said, is Metamask, which when you go to Chrome, you will go to extensions and search for Metamask. You want to make sure that it's not some kind of scam Metamask.

Starting point is 00:48:27 So make sure it has a lot of ratings. That it is, I guess we would say verified actually a Metamask wallet, Metamask extension, and download that to your Chrome browser, if you're using Chrome. When you have it in your Chrome browser, you're going to set up a password. It's going to give you lots of secret words to write down, not to screenshot or anything, but to write down on pen and paper.

Starting point is 00:48:50 This is safety practices here to make sure that prevention from getting hacked later. So write it down on pen and paper. Now you've got this meta-mask wall on your Chrome browser extension on the internet, on your laptop or whatever you're working on. Then when you go to the website that you have found from an official link section in the official Discord, helping to prevent any scams right now, you're going to get to the correct website,

Starting point is 00:49:15 and there we'll ask you to connect your Metamask wallet, whatever wallet you have. You'll click Connect, and at that point, you simply have to press the button, which will be a Mint button, and then you simply have to press the button, which will be a mint button and then You'll have to approve the transaction It will basically take the amount of cryptocurrency from that metamask wallet and it will basically swap you and put that NFT Into that metamask wallet

Starting point is 00:49:38 All of the safety precautions. I just outlined however you really want to pay attention to Which will probably get into a bit later, but that's the overall general picture. Everything Brandon said and we just went a little bit deeper practically about how to get that metamass when you're Chrome extension, connect it by clicking connect your wallet. It'll say that on the website and then it'll say mint or purchase here or anything like that. That's the process. Yeah, and I have to say, I went through the process of buying an NFT lately. I was an ambassador for this NFT called BAPES Business 8. And it was difficult and it was glitchy and it was hard. And I have to imagine that it's going to get way easier.

Starting point is 00:50:22 The same way that you can like pull up an app and just go on Robinhood and buy stock in two seconds. I think that's what NFTs are going to be like in the future. But the thing is, is if you get it now, you probably have a huge advantage because just the learning curve to buy an NFT is so high that you're eligible for these opportunities that so many people aren't just because they're never going to take time to learn it and go through it and go through the glitches.

Starting point is 00:50:49 But then again, it's also super risky because things glitch don't work. I hear all the time about people losing the money in their wallet. And it's all very sketchy right now to be honest in terms of the status of everything. I can't wait until it's a little bit

Starting point is 00:51:02 more stable. So let me hand it over to Mitch and then let's talk about security and keeping your assets safe. I was just applauding the sketchy comment, you know, an interesting time. We're in the wild west, but it's also a time, I think, for opportunity. I think those of us that, like you said, we're struggling through, we're figuring it out. I'm doing it from the legal side of things. I think we're positioning ourselves for massive success, you know, at the end of 2022, 2023 and beyond.

Starting point is 00:51:27 I'd really like to hear JB and Brandon's thoughts on using cold wallets or hard wallets that we can separate from our browsers. I think that's really a good idea. We also recommend to our clients to set up separate bank accounts that are linked to their wallets, so that their primary personal and business bank accounts aren't in any way connected to their either metamask wallet or any other wallet that they're using digitally and that they set up separate accounts,

Starting point is 00:51:53 they transfer the funds over that they need to use without particular transaction or investment. And that way worst case scenario, they can limit their financial exposure to any hacking or losses. What do you guys think about hardwaters or coldwaters? The niche is hitting the nail on the head. In this aspect, I would certainly say you almost cannot be too careful. So I love what Mitch is saying regarding having a different

Starting point is 00:52:19 account, a different bank account connected to that particular wallet. That's excellent, okay? The cold wallet simply means that you can put your crypto or as well as your NFTs onto less, I guess the best way to say it is think about an external hard drive. I don't know if that's common, it's depending on your background,

Starting point is 00:52:38 but basically I don't know a disc, something that is not connected to the internet because if it's connected there, then it's accessible by other people as well. And that can be pretty scary. And that's some of the things that you hear about. But oh my goodness, everything makes sense regarding those different accounts. That's such a, I love all of that.

Starting point is 00:52:56 So we want to do that for safety, pay attention where you're clicking, store your stuff off of the internet, basically on this external hard drive, which is the thing that we're calling the cold wallet. Brandon, you want to go further into the cold wallet idea? And I'd love to understand, so is a hot wallet like Metamask or something? Yeah, that's right. Okay. So hot and cold,

Starting point is 00:53:19 J.B. I think that's a great analogy. I mean, frankly, cold, an external drive is a great way to think about it, effectively disconnected. So therefore, not going to be as vulnerable. I mean, it's not something that someone would be able to access remotely, obviously. And frankly, even just human error, right?

Starting point is 00:53:37 I mean, so having it out of your hot wallet, which yeah, would be a metamask, let's say, which effectively is connected. And moreover, you're using this wallet pretty frequently, when you're going to various sites that allow you to do so or project kind of pages, or even within Discord, there are bots and things effectively apps within the Discord platform designed to be able to

Starting point is 00:54:02 verify your wallet. And the reason it's doing that a lot of times, so again, it's looking for an NFT perhaps, or something in there, could be a fungible token or to verify. The role that you'll play, the access you'll have to some of the channels within the server. And that's what makes it tough, admittedly, sometimes. The most secure way would be to keep most all of it out of your hot wallet

Starting point is 00:54:27 and tucked away externally on, let's say, a ledger. These external cold wallets, but sometimes, in terms of using it for the utility, which we talked about earlier, sometimes there are issues with that. Maybe the project or some of the things on the back end are not set up for you to be able to be granted access because it is kind of offline, if you will, that's in your cold wallet. Sometimes there's even concerns, you know, maybe it's things like air drops or things like generating yield, you know, and again, sometimes, you know, those are

Starting point is 00:55:00 things that are kind of issues, at's at least that people will have, and I think that's sometimes why might have a bit more in the hot wallet. And or maybe you're one who's trading. I mean, so maybe your hold time and duration, for some of these things, maybe you're not even planning to really hold it for very long. So therefore you're bodied in your hot wallet,

Starting point is 00:55:24 you're keeping it in your hot wallet, because maybe you put it right back on sale, on a marketplace such as Luxfrere. Maybe had a higher price to try to lock those gains. But yeah, I mean, in short, the hot wallet is the one that's linked up online. That's your browser like the Metamass ledger, which is called external and offline.

Starting point is 00:55:44 I mean, the one thing I would say was security as well. A lot of it is probably even more the human air. You know, you just really got to be careful, very, very careful. You know, it's unfortunate, but somewhat expected. You know, in that this is a space with a lot of hype and interest, a lot of new entrants. There are incentives at play, there's money at that stake. And so there's all sorts of scams and schemes out there, right?

Starting point is 00:56:15 Fake projects, fake websites. And the reason that they put those up is, again, for you to effectively connect your wallet in one way or another, and click in approval to connect it and engage maybe with a contract essentially on their site. And that's where you could really be exploited and you could lose potentially what's in your hot wallet. So really it is just a matter of double triple checking,

Starting point is 00:56:41 be very patient. If anything, you're better off probably missing something because you were extra cautious, even if you missed some of the upside, then moving hastily and, uh, and losing everything. So. And now a quick break from our sponsors. Hey, yeah, fam. As you may know, I've been a full-time entrepreneur for three years now.

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Starting point is 00:59:29 I know that when I was first starting my Meta Mask, it gives you this like password and it's like write it down, don't lose this. Like gives you all the warnings. I did everything wrong. I wrote it down on a piece of paper. I took a screenshot, I emailed myself, I put it in my phone, I did all the wrong things. And it down on a piece of paper. I took a screenshot. I emailed myself. I put it in my phone.

Starting point is 00:59:45 I did all the wrong things. And then I lost a piece of paper that I wrote it on. So thank God I took a screenshot. So I'm curious to know, like, how are we supposed to store these passwords? Like, they're so hard to remember. And it's so easy to lose a piece of paper. It just seems insane to me that like, your code is something you can't store on any of your digital devices.

Starting point is 01:00:07 You've got to write it down on a piece of paper and then, you know, hope that you don't lose this piece of paper. It just seems so risky. I'd love to hear your thoughts. JBS saw you on flash your mic. Yeah, I had flashed it because you need to burn that wallet and open a new one like a meeting thing. I mean, there's nothing in it

Starting point is 01:00:25 important. Never use it again. But yeah, I think I don't know. Think about it like if you're you're holding cash. I mean, the thing that never changes is people, right? There's this technology, but humans are behind it. So our behaviors are never going to change. So if you're walking away from an ATM machine with a couple of hundreds in your hand and you're in a busy neighborhood, you might get bumped and somebody might want to take that paper out of your hand, right? And so we have to remember that aspect of it. So when it comes to these wallets, you do want to write them down in paper, put them someplace, you know, in a safe, because here's what happens.

Starting point is 01:01:05 Okay. If you take a screen shot, that goes to Google or that goes to Apple. All of that is completely accessible by Google Apple and everybody else who enjoys hacking people every single day with whatever the apps are, which I can name several, to co-enfind people's photos. Right. And if they get that password that you just have to take a screenshot of, or type into your phone, somehow you've given access to millions and millions and millions of people who need or want or literally just having fun with people by doing that nice things to them to get that, right? So the thing that you want to think about is like your phone is not private. You know, whether it be photos that you're taking, which we see all kinds of people's photos being exploited, right? This is about human behavior again. So we don't say phones are bad.

Starting point is 01:01:51 You know, we do say pay attention to the photos you're taking because it's probably everyone is seeing those photos and everyone is reading your email messages and so is Google and people even listening to your conversations. So knowing that, think about that when you're dealing with your wallets and your bank account, and it is your responsibility. So a lot of times we think about Visa or a bank, what that does for us is we are able to say,

Starting point is 01:02:18 hey, can you please help me because this thing happened and they're like, yes, you've got this kind of insurance. Well, when it comes to this space, you are the bank. So you are the one responsible for it. And there's pros and cons to that. The pro with being early, like you were mentioning, is that there is such a barrier to entry at this point that you are able to get in on things, that people have no idea how to get in on. So by the time they learn, you've already been in for a long time, right? So all of that being said to Leach or Wallet and then write it down on paper because if you take that screenshot, you'd be given an access to everybody

Starting point is 01:02:53 who's very good at the internet and hacking. 30 second follow-up just to what J.B. said, listen, I've been practicing for 35 years and I got to tell everybody I'm more excited today about all of the opportunities we have as business owners and creators and entrepreneurs because of Web 3, because of the metaverse. So much so. My son's in the audience, by the way,

Starting point is 01:03:13 Hala Garrett-Jackson's down in the second row, everybody. Say hi to Garrett. He's in his last couple of weeks at the University of Southern California, graduating from the Marshall School of Business. Garrett, I'm glad you're here, my man. It's good to see you But what I was going to say is with everything that I've experienced over the last 35 years and I've represented every sign type of client that you can think of

Starting point is 01:03:33 I have seen more wrongdoing more fraud more misrepresentation more sketchy more sketchy conduct in the last year and a half in the web through the environment than I've ever seen in my life. Okay? And what I expect to see happening, and I was on a show with Peter D. Mannis, who's a pretty well-known doctor, scientist, technology guy, they're mining asteroids.

Starting point is 01:03:57 You know, he's like one of the most brilliant guys on the planet. And I think what we're expecting to see is technology and AI, you know, checking for your past races, Hala, that are out there, as JB mentioned. It's this isn't even a human being. This is technology that's going to find what you're putting out there and it's going to use it to access your Metamask wallet or it's going to use it to get you to click on a link. And so I want everyone to just

Starting point is 01:04:27 be extra careful right now with all of the upsides and with all of the benefits. Right now I've never seen so many digital foxes. Negotiate their way into the digital handhouses and everybody needs to be super careful.

Starting point is 01:04:41 So double down on what you have just said because it's super important. I love this conversation. This is my favorite session of the NFT event so far. I think it was so much, so much great information. So this is a really good segue to the bad side of NFT investing. So scams, rug, poles, they're rampant everywhere. So I'd love to discuss some of the different scams that people should be on the lookout for. Brandon, let's start with you. What are the most popular kind of scams that are out there right now? Yeah, I think it's fake websites. There are ton of fake websites popping up constantly. I get too many of them in my DMs on Twitter, definitely Discord. And what they are is, you know, they will be saying, so for instance, Board APYOT Club did the ape coin, right?

Starting point is 01:05:31 So they dropped a fungible token. And you'll see all of these fake sites that seem very similar. Obviously, a slightly different domain. And if you go there, it'll look very similar. What they are wanting you to do is claim your tokens, right, which is technically something you do need to do, but you need to do from the correct website. And again, if you go to one of these and you're like, oh, I have an app, right, I have a muting app, and I didn't claim my tokens yet. And I just quickly click one of the, you know, links that maybe I'm seeing floating around Twitter or that was message to me.

Starting point is 01:06:07 And again, if I authenticate right and click with my wallet, they will likely take that ape and maybe everything else in the wallet. That's one example. And a similar kind of approach with like anticipated drops. So another big one, I'm a Murakami fan and the Flowers project is pretty highly anticipated. I think there was 4.8 million or so emails on the public email kind of lottery on their website. So clearly a lot of anticipation, but they have been having issues with a bunch of fake sites. They'll say, oh, this NFT project dropped. Kind of like a surprise here. Go here. It's minting now.

Starting point is 01:06:46 And again, if you were waiting for that, and then you see this, and you abruptly want to get in on it, and you click this site, and you click Authenticate, and you're ready to mint. And you think you're going to participate in this drop. You could lose everything. Again, just a matter of a slight difference kind of in the domain and the actual sight that you were taken to.

Starting point is 01:07:07 So. Super interesting. Thank you so much, Brandon. I see Christa flashing her mic. I just want to add one point to this. And then I unfortunately have to jump off the call, but look forward to hearing everybody's points later. Another potential scam can arise when people use images that they don't have any agreement with the artist to use.

Starting point is 01:07:28 So I'm a member of a group where a lot of artists will complain about somebody minting an NFT of their artwork without getting permission from the artist. Because many people that mint NFTs are not aware of copyright law, they're not aware that the artist has a right to prohibit people from making copies of their work without permission. So be mindful that the person actually owns the rights to what they're minting. And thanks again for having me on El Jempo.

Starting point is 01:07:54 Thank you so much, Christa. It was such a pleasure. You were super valuable. Thank you so much. So I'd love to talk about rug polls. I have no idea what rug polls are. And if somebody could explain that JV, do you want to explain what a rug poll is to us?

Starting point is 01:08:09 Sure, I'll explain the rug poll. And can I say exactly what Brandon said with a little more spell out as well? Sure, sure. OK, so 100%. So if you are, I'll say it just slowly exactly what he said. If you are in discord and you receive DMs, you receive messages saying we're minting now. If you receive any DMs from the group from somebody that has a name from

Starting point is 01:08:35 the group, you want to go back into that community and go to official links or look at their announcements. The normal code of conduct from all of these NFT projects on servers is no one is going to ever DM you first. That's like a normal way that this world conducts itself. And if you do see it being to help you or to answer your question in those DMs, the private messages, it is 99% not legit.

Starting point is 01:09:05 You can tell it Twitter, discord any sort of these personal messages saying, exactly what Brandon said, that's where you're gonna see them though, they're gonna be DMs to you and that's a no go. Okay, don't click on the link, don't get curious about it. Literally delete it, don't even read it, DM'd. Okay, I just needed to say that again for safety for people

Starting point is 01:09:27 So we're in what was the question? How do we run calls? Ruggles. I lovely ruggles So ruggles means like if you're standing on a rug and somebody were to yank it out from under you and you just you hit the ground Okay, so here's the systems you purchase an NFT and hit the ground. Okay, so here's the systems. You purchase an NFT and I'm laughing because it's happened. You purchase an NFT and all of a sudden the disc, not all of a sudden, but all of a sudden the discord community shuts down. You don't hear from them ever again. What that, that's a rug pull. That means that they just sold however many NFTs to whom ever they sold them to, they got their money. That would be a cash grab and then they disappear.

Starting point is 01:10:03 They got their money, that would be a cash grab, and then they disappear. That is a rug pull, and that sucks when it happens, it does happen. And sometimes people think that doxing or KYC people will keep that from happening. It doesn't. It's happened with people who are doxed and KYC. So the main question is, how do you ensure or as best as you can, how can you make sure that when you purchase an NFT, the founders, the owners, the people who are saying they're going to do all of these things on the roadmap that they're actually going to fulfill on their promises?

Starting point is 01:10:36 It's going to be everything that we already covered. Doing your homework, checking out the Twitter, going into the Discord, checking out the community, asking questions, as much as you can, like Mitch was talking about, that you could know who the founders are, that's super helpful if they are findable. If they're not, it doesn't mean that they're not legit. It just means do some further research,

Starting point is 01:10:56 make sure that there's legitimate as they can be. But that's a rug poll. Those are some of the methods is how to prevent yourself from being pulled on. You know, a great example of a rug pull, J.B., happened on March 24th, where two defendants were charged with a NFT fraud and money laundering by the U.S. Attorney's Office

Starting point is 01:11:16 in the Southern District of New York. Millions of dollars were stolen from investors after they put an NFT drop. It was the Frosty's website drop. I don't know if you guys remember that. The Frosty purchasers were told they'd be eligible for holder rewards, giveaways, early access to a metaverse game, and exclusive mint passes

Starting point is 01:11:39 upcoming Frosty events. And it was all bullshit. And what happened was the attorney general went after these two guys and they filed charges against them traditional in real life charges. One count of wire fraud, a violation of 18 USC 1349,

Starting point is 01:11:58 which carries a maximum sentence of 20 years and one count of conspiracy to commit wandering and violation of a similar code section. So these are serious cases and what these two knuckleheads thought they were going to get away with was because they didn't think anybody knew who they were. They were using elious names. They thought they were going to be able to take the money and run. The fact the story is even better than that. But what the press release from the Attorney General's Office points out is that they were actually easily able to identify who these people are, everything's documented, and they're

Starting point is 01:12:36 both looking at, like I said, 20 years each in prison, millions and millions of dollars in fines. But what happened is just before they were arrested and charged Guess what they were planning on doing they are already in the process of doing another huge multi-million dollar NFT drop So this can this can be a small problem You know that we're someone's just having some fun or it could be a huge criminal fraud Which I'll tell you right now, what's happening is these people

Starting point is 01:13:06 are starting to be prosecuted. What's happened is the local and federal law enforcement are getting up to speed on who the bad players are. They're monitoring them right now, as I speak, and you're gonna see a lot of prosecution is going down between now and the end of the year. So we wanna play by the rules. We wanna encourage good, strong, ethical behavior.

Starting point is 01:13:27 And as consumers, we want to make sure that we know using what we talked about earlier, certain specific due diligence steps to identify who we're dealing with. We're dealing at an arms length transaction. We understand reasonably what the risk is. And then, and only then, do you want to do you want to invest your money? So I just wanted to bring up that case because I think it's kind of interesting. Super interesting. Thank you so much, Mitch. And guys, we are going to get into Q&A. I'm going to ask one question about

Starting point is 01:13:53 regulations so that we can get everybody's input on how government is starting to regulate this space. And then we're going to do just a handful of questions. So we've got a couple people who are coming up on stage now. If you have a question, just raise your hand. If you're too shoddy, come on stage, which I encourage you to do because this is a podcast, just type your question in the chat and I'll read it out loud for you. But go ahead and raise your hand if you're not feeling too nervous. So let's talk about regulation.

Starting point is 01:14:19 A lot of governments now are actually intervening to regulate the industry. I'd love to hear from you guys that you think this is a good thing or a bad thing and also some of the things that are coming up right now and some of the latest news stories and what we need to know in terms of regulation, Mitch, I think I'm gonna kick it over to you first. I love this question. So here's the thing, whether we like it or not

Starting point is 01:14:40 and I don't have an opinion one way or the other, I'm just reporting the facts objectively, we had a big panel a couple of weeks ago, the night after President Biden signed the executive order, which went out to every single major governmental agency to review what's going on in the web three space, to review what's going on with cryptocurrency, not telling anybody what they need to do, but basically saying, listen, take a look at this issue, take a look what's going on in your department, every department has a specific specialty, and report back to us within six months, within 12 months, within 18 months, depending on the agency, what you think we

Starting point is 01:15:20 need to do to keep consumers safe. In the conversation that I was a part of, we had lawyers from both sides of the aisle, we had lawyers that were conservative and liberal, we had lawyers that are all in on digital currency and lawyers that wouldn't touch you with a 10 foot pole. I thought what was really interesting for those of us that actually took the time to read the executive order

Starting point is 01:15:44 is that it's very well-written. It's fair and impartial. It's the type of order that actually is looking for input from everyone else as to what we should do next. So I know we don't like in a decentralized Web 3 world, any type of government intervention. I get that. The reality is it's going to happen. The reality is the governments want to maintain control over their currency and they want to generate revenue through tax-based rules and regulations. So what I thought was interesting in all the other professionals on this panel, what we thought was interesting is if you read the EO the executive order, I think what you're going to find is it says this, look at this issue, tell us what's going

Starting point is 01:16:29 on in your sector and report back to us what you think we ought to do. That's the kind of leadership that I like because it actually invites fair, impartial, objective responses that allow us to at least create something that we can all understand what the rules of regulations are when we're playing in the same sandbox. I know there are people that feel completely contrary to that. I encourage you read the EO and then really give thought to what you want to see happen next. So I think it's happening.

Starting point is 01:16:59 I think it's probably a good thing, but you know, it's going to take time and anytime you mix the term government regulation in with speedy, fair and impartial results, I think that's a, uh, that's a can of worms. It's a recipe for disaster. So I don't know what's going to happen in the future, but I think right now we're on

Starting point is 01:17:19 the right path. What is everybody else thing? God, Jimmy. Exactly what Mitch said. When I first saw this question, it was like my stomach turns, right? Because any intervention by the government and that in this regard to me is like an absolute no-go, never good. I don't know when they actually ever care about your safety sort of thing. But what Mitch just said, I don't feel like I already followed him, but

Starting point is 01:17:45 I would give him another follow, right? I would vote for Mitch right now, because the way he said that was so beautifully spoken, and this is crazy for me to say this, but hearing Mitch just now, I hear what Mitch just said, you know, with them saying, hey, look, this is going on, take a look and report back, because what Mitch is saying is, is a hundred percent true. Look, they want to control their currency. They want to know how to tax people. And that's not necessarily a bad thing.

Starting point is 01:18:11 They just want to know what's going on. So to that degree, I would say that Michigan calm me down like nine notches. That's pretty remarkable. What I would say to people in this space, though, people who are interested in investing in it, it's the main thing I'm always going to come back to, is do your own research, and here's what I mean by that. The part that I would caution is when an investor, or a potential investor, or a potential person

Starting point is 01:18:37 who's interested in the NFT space, thinks or believes that as long as a particular, let's say, NFT project has gone through related something, jumped through their hoops that they're in okay investment. So my caution would be, look, let's say that there's regulations and let's say they do KT, I would, my caution to the potential investors say, don't stop there, don't let the government invest for you, if that makes sense. So let's say it goes so far, and they want to go through all these KYCs. The thing that I would say to one part is it's not before his, you still need to do your

Starting point is 01:19:14 own research. It doesn't mean it's a good project. It doesn't mean it's okay, and it doesn't mean that you're safe. And on the other end, do I think it's coming? Yes, exactly. Everything makes sense. I completely hear that. Do I think it's a good Yes, exactly. Everything Mitch said, I completely hear that. Do I think it's a good thing to hear that it's happening in South Korea, Iran,

Starting point is 01:19:31 and Dubai. And then here I find out a little bit weird, like that doesn't seem very American, if you like. But at the same time, like Mitch is saying, what are they supposed to do? And this is happening in their country except figure out how to do it and I think to go about doing this in a way this is report back as opposed to clamp down make it illegal is kind of a really like you said a pretty good form of leadership if this makes sense. Yeah and I have to say that it seems like if the government is going to be more involved than buying NFTs just seems like it probably will be more secure and you'll actually be buying what you're supposed to be buying. So from a investor standpoint,

Starting point is 01:20:11 I like the fact personally that things are potentially going to get regulated, but I think for tax purposes, it might really stink, right? So Brandon, I'd love to hear thoughts in terms of the pros and cons of regulation. I mean, I love the points that have been stated so far. The only thing I would really add, and sorry, back of what you just said, think that a lot of folks in the community, whether they're builders, collectors, or investors, want to see the benefits of Web 3 brought to the mass market, and let's say over the next decade or so.

Starting point is 01:20:47 And I mean, frankly, I think realistically, winning if the mass market is going to, you know, partake in this experience, this Web 3, it's going to need to be a bit more, I think, monitored, a bit more regulated. I mean, we literally call it, I think, monitored, a bit more regulated. I mean, we literally call it the Wild West. It's a relatively small group, let's say, or small percentage at this point of people who have the,

Starting point is 01:21:16 either wherewithal to navigate the space and the confidence to do so, and or the risk appetite, right? They're sort of just willing to enter this Wild West, right? Because maybe they're gonna reap some rewards, but there is a high level of risk. There's a lot of uncertainty. I mean, again, we're talking about, you know,

Starting point is 01:21:32 a lot of scams is almost commonplace that there's jargon like rugged, you know? It's almost an expectation. You're gonna be duped, but, you know, to the point that you made, and let's just say, the broader mass market, consumers at large, I think they're going to need to have more confidence

Starting point is 01:21:50 that they can make a purchase. They can simply click something with a higher degree of confidence, and I think that's going to be somewhat regulated. Maybe it's not even down to the tax implications itself. It's not necessarily the anti-money laundering. And a lot of those things are important, they're relevant, especially to the financial services.

Starting point is 01:22:10 But it's almost more of a consumer protection, right? And that's sort of an advocacy that regulatory bodies do within commerce as we know it, and even the internet as we know it, web too, if you will. So I think in short know, in short, I think it's going to be necessary. It's not realistic to keep it as decentralized as it is now, you know, to the extreme.

Starting point is 01:22:35 If we want Web 3 to actually be pervasive in the mass market, so I think it's somewhat dependent to get there. The question is, will that happen? And maybe some participants don't want to see it make its way to the mass market, but I think those are the trade to get there. The question is, will that happen? And maybe some participants don't want to see it, make its way to the mass market. But I think those are the trade-offs there. Awesome.

Starting point is 01:22:50 Great answer. Everyone to the question of regulations. And now we're going to kick it over to our Q&A. If you have a question, just raise your hand. We'll bring you up on stage. And we're going to wrap this up. Bez, you are up first. How can we help you today?

Starting point is 01:23:03 Hey, great conversation, Hala. And I could go down so many rabbit holes, but let me just ask my quick question in regards to the Andy Warhol case. And I think maybe this is for major, anybody else who could answer it. I can't wrap my head around it because I thought they had a good case in that, you know, they were challenging the archaic guidelines and that they were saying, hey, our work is transformative and lasting. And I was like, I think they got a good case where I haven't read the link you provided with the decision, but, you know, from a layperson standpoint, I was like, okay, they got a good case. How did they decide that it wasn't fair use?

Starting point is 01:23:47 I'm just trying to wrap my head around that. You know, it's interesting, Baz, and it's good to see you, my friend, it's been too long. It's interesting, and we're talking about a very well-known photo of Prince. If you go to my Twitter feed, you'll see a picture, the original picture in black and white, and then Andy Warhol's artistic depiction of that photo

Starting point is 01:24:08 that was then used in published in a Vanity Fair. And the challenge with these things is, you don't know which direction the trial of fact, okay? In this case, the court, the appellate court, and the justice is, which way they're going to go on these things. And what I was getting to earlier with the IP lawyer that was kind enough to be joining us earlier this evening,

Starting point is 01:24:30 is this is an affirmative defense. And what I mean by that is you're only a ledge fair use after you've been sued. Okay, so the problem with people saying, well, it's fair use, so I have the right to use it. I get that argument. I get that argument. I like that argument, but that argument doesn't come up until you've been served with a copyright

Starting point is 01:24:52 probably, in this case, represented by some very expensive lawyers, probably with an attorney's fee's clause and statutory damages. If you want a chance and hell of defending yourself in these cases, you've got to get good counsel and you've got to elect the use. And then you have to support that argument with the evidence, with expert testimony, and over the course of several years, and literally hundreds of thousands of dollars, a jury, or a judge, or in this case, the appellate justices, they come to a decision. You're either going to really like that decision or your decision's going to ruin your life. And when you look at the Prince case,

Starting point is 01:25:33 and everyone, please read it, because I think it's applicable to everything we're talking about tonight, you never know which direction the court is going to come down on any one of these issues. And so what we tell our clients best is if you're in a gray area, fair use type of case or argument, I tell my clients normally the side with the best lawyer is going to win that argument.

Starting point is 01:25:56 And if you don't have the financial means or the ability to hire the best lawyer in these cases, you're probably not going to come out on top. So early in the decision making, in this case, NFT creation and drop, whether you're dealing with third party creators, you're artists that are bringing these projects and they're artwork into an NFT drop. What you wanna make sure is that you are so far away

Starting point is 01:26:18 from this great area of fair use, you're in the green zone. That's an original piece of art or it's a piece of art that we all know and love, whether it's a movie star or cartoon character, and we've got the licensing in writing, signed by the people that have the legal right to sign these documents so that we can use these items in our NFT drop. That's where I want my clients to play is in that big green playground. I don't want them over on the far left red playground, the red zone, and I certainly don't want them

Starting point is 01:26:51 anywhere in that gray area, Bez. So I haven't studied the courts rationale, but this is simply a reminder to our Web3 communities that you and I are both of, that we're all a part of, you know, understand that fair use is an affirmative defense. It's a, you don't want to be put yourself in a position where you have a have to assert it because if you're standing in that position, you've already lost. Okay, so that's my short answer, my friend. Thank you, thank you. Thanks so much, Fez. That was a great question. Next up and last for Q&A is James.

Starting point is 01:27:26 How can we help you today? Hey there. Thank you very much for inviting me up. And I also want to say thank you to all the panelists for the conversation. It's been great to hear you take on this new and emerging space. My question is actually referring back to the security notion about how we want to make

Starting point is 01:27:46 sure that a wallet and the recovery phrase is not exposed to bad actors and so forth. And I guess I'm a little surprised by the stance that I see all the time where people mentioned or it's literally in the instructions, don't take a screenshot, don't store this anywhere digitally, because as a software engineer and an IT professional, I'm cognizant of how to make sure information is stored securely, so using MFA, using extremely long passwords, things of that nature, and I guess it seems confusing to me

Starting point is 01:28:27 that there's so much information that is stored in a digital format that is highly sensitive, that it could cause greater harm if it were exposed, yet the idea of a crypto wallet and its recovery phrase being stored in someone's iCloud account is deemed as being like something you have to burn right away. So that's a really long-winded and winding question, but I'm curious for panelists' perspectives on this idea, why is it so necessary that the recovery phrase is only stored physically when there is so much information that is stored digitally,

Starting point is 01:29:06 that could lead to a greater degree of vulnerability. James, that's a great question. And you being an IT professional, it sounds like you definitely know what you're talking about. The way I speak about NFTs and the spaces, there's a culture to it. There's a way that we do things. There's a language we use,

Starting point is 01:29:24 all of these sort of things. We literally have this smartest minds on the planet, you know, in this space, right? And so, I mean, brilliant hackers, crypto hackers, you know, ethical hackers, you know, that's just what this space is, is who we are. And so, so there's that part. So one of the things we do is we are very careful when it comes to these secret recovery phrases, but your question is extremely logical in that. Wait a second, your password, you want to store offline, but you're money, you don't care if it's online, like that's a very logical question. Some of the ways I guess that would be, you know, no good doers, right?

Starting point is 01:30:09 Try to get in as by asking people their seed praises and just literally just logging in and walking out with their money. It's like asking somebody for the keys to their safe and then the person goes, okay, here's the key to my safe and then the person walks in, right? So the idea of storing your seat phrase off chain is for that reason.

Starting point is 01:30:28 When it comes to the, then why would you leave your digital assets basically on a hot wallet? Well, the way that's also adjusted by getting onto a cold wallet, and that's the form of basically having the handwritten seat phrases too. So the highest level of precaution

Starting point is 01:30:46 that we would take is righted by hand. Don't take a photo for the eye cloud. Number two, get it onto a cold ledger or a cold wallet. Don't keep it on the hot wallet. And as weird as this sounds as well, there is more of a mistrust for Web 2.0 and anyone centralized, then there is for other hackers or people in the Web 3.0 space, if that makes sense. I guess it makes sense, but I just like one of the things that really rings true for me and that I recommend to anybody who asks me about security in a digital context is use a password manager because you can then set passwords Which are extraordinarily long that you would never be able to remember where you're using symbols that are uncommon and so forth and

Starting point is 01:31:46 common and so forth. And on top of that using MFA, not SMS, but an actual code generator like Google Accentator, where you're ensuring that there are just multiple layers of abstraction that somebody would have to penetrate to be able to take somebody for what they're worth. And also just bank accounts, you know, that so much information like you're routing an account number and so forth is available in your Chase account. So if somebody got your username and password, you could get that information. And then that person would be vulnerable. So I hear what you're saying about a distrust of the Web 2.0 space and a desire for an elevated security posture. I'm still not convinced that the Web 2.0 space is so fundamentally insecure. I think it really, personally, it boils down to people not being conscientious about how they expose their information

Starting point is 01:32:38 and setting insecure passwords and not using MFA as an extra layer on top. But I definitely hear what you're saying. So I'll leave it there. You know, it's interesting, James, is human error, right? I see more financial fraud in wrong doing taking place by human beings being manipulated into clicking on the wrong link into doing something they normally wouldn't do because they're, you know, it's a

Starting point is 01:33:09 FOMO situation with wanting to close the deal and make that sale. A friend of mine who maybe people here know, and I'm not going to mention names, you know, you had a really high cybersecurity clearance as a civilian working for different governmental agencies, someone that knows all the tricks in the book to have someone or prevent himself from being hacked. And guess what? In one of those late night moments where something needed to be done yesterday didn't pick up on a sign that he admits

Starting point is 01:33:41 that he should have seen, and he lost some NFTs and his wallet and some other things went south. And I just see a lot of human beings making human error, which is actually a different issue. But if you're making a human error with clicking on links and things like this, people are going to be making human errors, James.

Starting point is 01:34:01 They don't have the experience of you. So they'll be sharing these past raises and unsecured text messages or unsecured emails. And, you know, it's going to get picked up eventually by a bot, by an AI system, and it may be used against you. So why not just take that extra precaution? Why take the risk? If, you know, on the other side of the coin, I think I laugh because a lot of lawyers are hesitant to do business in a web 3 web 2 environment. And I joke with that, I said, you got to be kidding me, I walk by your desk, you've got that open document sitting on your desk, it's been there for three days, anybody, day or night, including the cleaning people, could walk by, look at it, read it, take pictures of it. There's no security in the real world like this.

Starting point is 01:34:47 In the real world, that's the way things happen. You're more secure using James, what you just said, the password protected tools and devices to exchange documents, and to do business, and to secure your passwords, but not everybody has your ability. I think that's where the problem is. That's a really good point, because I live with my mom

Starting point is 01:35:08 who is 69 years old, and if she sees some sort of banner or something like that, that it has exclamation points, and it's in all caps, it puts her into a state of alarm, and then people's defenses are diminished. So I think that really underpins a lot of what you and JB and the other panelists were talking about that when people are put in either to a state of FOMO or that they think like maybe somebody is offering assistance that they are more inclined to give up very sensitive information where otherwise if they were in their right mind

Starting point is 01:35:45 and not looking for some way to ease their anxiety, they would be more conscientious. So those are great points. Thank you. One more thing, and this is just literally the last sentence here, but there's a crypto hacking conference with some of the top minds in the space in the world. And they just quoted this thing thing I believe they were saying 70 or, it must have been 80% of hacking is human behavior. So that's exactly what Mitch was talking about, right? So just that's really fascinating too. So social engineering is the fastest way

Starting point is 01:36:19 to gain access to any system. It's not going to be the technology that fails. So yeah, thank you all for your opinions and your perspective. Really appreciate it. Thanks so much, James. And I do want to call out some interesting comments from the room chat that were really good. So VG says there's no identity tied to wallets.

Starting point is 01:36:37 So no way to recover, whereas with a bank account, if you're hacked, you can walk to the bank and prove your identity and recover your account to the extent possible based on the policies available. And then she said there's also no one in 100 number to call for customer service or bez said there's no one 800 number to call for customer service. And VG said that's the downside of decentralization. So I think those are all great, great points in response to James question as well. Well, I think in Web 1 and Web 2, we figured it out, right? So I think there's still a lot of promise for Web 3. So there's a lot of potential. So I'm just excited that we're still in the innovation early adopter stage and that, you know, it is the Wild Wild West. So hang on on. There's gonna be a bumpy ride. What a great way to end this session.

Starting point is 01:37:25 Thank you guys so much for your participation. J.B. Mitch, Christie Brandon, everybody who was a panelist today, did such a great job. So thank you so much for your contributions. We covered investing, we covered scams, rug pulls, regulations. We went through so much depth about IP

Starting point is 01:37:43 and trademark issues related to this space. It was a wonderful conversation. So again, it's going to be on Young & Profiting Podcast. You guys can subscribe to my podcast by clicking the link up top on the screen. Make sure you follow all the panelists who are here today. They did such a great job. Thanks again for your time, guys, and for staying a little bit over. I really appreciate your time.

Starting point is 01:38:01 And with that, this is Hala and friends signing off. Thank you so much everybody. Well thank you guys so much for listening to part three of our NFT series. This session was all about investing scams and regulations and of all three parts of the series covering NFTs. This was the episode that I learned the most and learned the most unique information. And so I really enjoyed it. It served as a great reminder of how NFTs are really pushing the envelope not only in tech and finance, but also in the legal space.

Starting point is 01:38:34 You've got to be really careful when investing in NFTs and exploring Web 3. There's definitely a world of opportunity for profit, creativity, and connecting with awesome communities. But there's also a lot of risk involved. It's a super new area. And so there's lots of risk from a copyright and trademark perspective, scams, rug, pulls, and so many other things that we need to consider.

Starting point is 01:38:56 And I think the most basic way to keep yourself safe in any investment situation is to only invest what you're willing to lose. There's still a lot that can go wrong in this space, so don't get in over your head financially and make sure you play it smart. Protect yourself and your assets by doing your due diligence. One of the major takeaways from this episode for me was that owning an NFT does not necessarily mean

Starting point is 01:39:17 you have a copyright. I see so many derivative artworks in this space and now I'm super curious about everyone's rights and ownership in relation to these artworks. So checking that license for rights is something I'm definitely going to keep in mind next time I'm looking to acquire an NFT. You've got to make sure you're covering all your bases before you take out that crypto wallet.

Starting point is 01:39:39 And as I shared, I had learned the hard way when it came to keeping my assets secure. So learn from my mistakes and don't let that happen to you. I know it feels totally circa early 2000s to write your password on a piece of paper and keep it in a drawer. But as my expert guest said, do what you have to do to make sure your assets are safe, even if it's not the most convenient and even if it feels super old school. And personally, after this conversation, I'm gonna invest in a cold wallet to add some extra security to my portfolio as well.

Starting point is 01:40:10 So I loved hosting this three-part clubhouse series. I hope you enjoyed listening as much as I enjoyed hosting. And considering how fast this space is moving, I know there's gonna be some future episodes covering what's new in NFTs, and so I can't wait for those. And while we're always talking about community and utilities running NFTs, I personally haven't minted my own NFT, but I do have a pretty awesome YAP community that I think you'll definitely want in on. My community is called YAP Society and it's powered by slick text. All you have to do to join is text YAP to 28046.

Starting point is 01:40:49 You'll be able to text me directly. We're gonna be releasing Ask Me Hala, anything shows, you'll be able to ask a question to me and then I'll read it on the show or you even get to say it on an upcoming episode. You'll get exclusive offers, discounts, you'll be voting on episode titles, upcoming guests, and just giving us feedback on the show.

Starting point is 01:41:09 So if you want to be a part of our YAHP Society text community, text YAHP to 28046 and that link to join the text community is also in the show notes. And by the way, the show notes always have a lot of resources, so make sure you always go check those out. And I love DMing with all my listeners on social. That's one of my favorite things is when somebody DMs me on Instagram and says, hey, I found you on the podcast. Now I have you on Instagram.

Starting point is 01:41:33 I love your show. I love to talk to you guys in my DM. So make sure you go find me on Instagram and Twitter at Yapathala. Say hello. I don't bite. I'd love to hear from you. You guys can also find me on LinkedIn. And my name Hala Taha, I'm really easy to find.

Starting point is 01:41:49 So let's keep learning and exploring the world of Web3s and NFTs together. And if this is your first time tuning in to the NFT series, make sure you go back, listen to part one and two. We had some amazing sessions. NFT part one was really all about the basics and Part Two was about minting an NFT if you're an artist. And so if you're interested in those topics, make sure you go back. All you got to do is just scroll back or check out the show notes for Part One and Part Two. And also take a couple minutes and drop us a five star review on your favorite

Starting point is 01:42:18 podcast platform. We always appreciate that. As always, thanks so much for listening to Young and Profiting Podcasts and shout out to my amazing EAP team. I love you all. And with that said, this is Hala signing off. Are you looking for ways to be happier, healthier, more productive and more creative? I'm Gretchen Rubin, the number one best-selling author of the Happiness Project. And every week we share ideas and practical solutions on the Happier with Gretchen Ruben Podcast. My co-host and Happiness Guinea Pig is my sister Elizabeth Kraft. That's me, Elizabeth Kraft, a TV writer and producer in Hollywood.

Starting point is 01:42:53 Join us as we explore fresh insights from cutting-edge science, ancient wisdom, pop culture, and our own experiences about cultivating happiness and good habits. Every week we offer a try this at home tip you can use to boost your happiness without spending a lot of time energy or money. Suggestions such as follow the one-minute rule. Choose a one-word theme for the year or design your summer. We also feature segments like know yourself better where we discuss questions like are you an over buyer or an under buyer? Morning person or night person, abundance lover or simplicity lover, and every episode includes a happiness hack, a quick easy shortcut to more happy. Listen and follow the podcast, Happier with Gretchen Rubin.

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Young and Profiting with Hala Taha - YAPLive: NFT Investing, Scams and Regulations with Brandon Hoffman, Christa Laser, Mitch Jackson, and Jerome Bethea (JB the Wizard)

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