Non-fungible token, Ethereum 06 September 2021 What Are Non Fungible Tokens
Now in the world of financial services and economics, i often refer to the prevalence of tlas whats, a tla. A three letter acronym and weve got another one to discuss, which has been very prominent in recent weeks and months and ross muller. A research analyst at skybound capital joins me for this one and ross. You are going to be discussing with me the evolution of one of the newest tlas, the newest three letter acronyms and its nft, so to start at the very beginning ross good morning and what is an nft yeah thanks, matt and good morning to the listeners and Yourself um, so an nft is a non tangible token and there are one of a kind digital asset that represents real world items like art, real estate in game assets or even music. The key to nfts is that they allow you to prove authenticity and prove ownership. As well as create digital scarcity, i often get asked what is a non tangible part of it. The way i like to remember it is us dollar, cash is fungible and even gold and bitcoin is functional. It has a set price and its all the same. A house and artwork, however, is non fungible. No house is the same and theyre all different values and therefore not tradeable on a lacto like basis and if these are digital representations of these non fungible atoms. Similarly, a one of a kind trading card is a non tangible, so so ross whats the history here, because i i think you mentioned artwork there that there is great history in collectibles, uh, weve, seen antiques and paintings and all kinds of things over generations.
Uh increasing in value and uh the value of a collectible item um. It has certainly increased over time. So what has led to this point? What is the history that has led us to these digital collectibles yeah? So interesting enough? The concept of entity has been around since december 2012 with the inception of what they called colored coins. Interestingly enough uh, this was a project run by vitalik, buterin hes, the creator of ethereum, and he had a hand in building this on the bitcoin blockchain. It was conceived from the idea of issuing real world assets like real estate on a blockchain, but as we know, there were quite a few limitations of the bitcoins scripting language and these were inadequate to sustain the application. A few years later, i have a company called a counterparty in 2014, built an open source protocol on the bitcoin blockchain. It included several projects with its own assets, including a card meme trading game. They later spells of genius game. Creators became the first um to issue an in game asset on a blockchain by a counterparty by 2016 memes, as collectibles were issued with the recognizable green frog, red pepper, using a counterpartys online protocol as well, and how big is the market? To date, i mean ive noticed certainly in in the sporting world, particularly amongst certain sports in in america. Uh certain key moments in key games have been essentially converted, uh into nfts, which then become tradable on their own, but but how big is the market right now? So theres a few metrics that you would want to watch out for in a sense theres, not one standard, uh, ultimately, look at so protocol, which is the engine slash token running that specific blockchain, its roughly 35 billion market cap.
So those would be your engines, your thetas, your xc infinities. If we look at by volume since inception, it would be xc infinity, which is an nft based game of roughly 1.2 billion dollars, followed by crypto punks collection of about 1.1 billion dollars. If we look by top sales, it would be crypto banks, more specifically crypto bank number, 7804, recently sold for 7.5 million dollars and and the various marketplaces that that exist are they springing up? Are they becoming more popular yeah, so the biggest marketplace is actually open. C, its about 4.9 billion dollars worth from inception and trading volume, and they pretty much take any type of nft in the basis of artwork or mpeg and movie files. So rare is another one that mainly sells sports playing cards. They have about 155 five sport clubs signed up to their platform. Super rare is a place for the more astute art collector with artwork. That are a little more, shall i say, palatable and traditional to the to the crypto punks and apache penguins. What are the barriers here ross? Are there barriers to entry? Can? Can anybody with a a creative bent uh get into one of these marketplaces? So this is probably the most asked question in a way, and this is why its probably been most successful is because the barriers to entry are so small. You just need to be as an artist familiar with the platforms. Have your digital artwork digitized or your traditional artwork digitized.
You can then take this onto an open c. A super, rare and sign up is as easy as one two three connect, your digital wallets and list within one to two minutes, and this is whats breaking down. Those barriers and its giving these artists a place to showcase their art, and this has been the hugely successful reason for why its taken up so much volume and been so rapidly adopted yeah. It may be an unfair question to you, because you might not have the precise answer, but i almost want to interrogate the user side of this transaction is, is where are people consuming the tokens that they buy or is it? Is it satisfactory enough to them that they live on a digital device? So what what weve seen is the biggest one? If we speak from a lot of terms is a metamask is probably the most used wallet. People send their ethereum or their what they call with, which is another type of ethereum, its just a token that we use to transact on these platforms, and ultimately, people are using the ethereum network more so because it has the most widely accepted and most widely adopted. Smart contract system, another one thats recently been quite popular, is polygon, which is an indian based company and india have been quite prevalent in the space as well with regards to the sporting nfts. So if we look from that side, ethereum is definitely the most dominant blockchain cryptocurrency being used to transact.
I i have i have this vision of maybe having a massive uh very high definition screen mounted on a wall where i can, in the fullness of time, show off my my various nfts. Is that a realistic thought 100 and i think thats something that people maybe havent thought about? They just see a gif or an image that can be easily copied on the website. That youre on lets not forget that people have hanging pieces of the mona lisa at home, and so those are easily copied as well. But you definitely hit a point where you know we can actually showcase art and something that facebook is working on is a similar life project to zoom, but its a more metaverse type world, where its myself personalized and humanized in a digital world. And i can ultimately go in and buy skins for my company profile. If i had to be in a boardroom id see you opposite me wearing. You know normal. Maybe traditional work clothes, but maybe i could have a hat on or i could have an omani suit, and this is what we might see in the future is the ability to to almost pimp yourself in your new world, and you know almost have your same. Realistic sort of persona in the digital world and its not to say that we wont be building. You know, homes in the digital space, like a company called decentraland. They allow you to build your own worlds and why not come into my home with my nft hanging? In the background digitised in this world, so theres definitely cases that are being you know, researched and obviously people are trying and testing new things.
I think thats pretty cool so ross. Earlier in the podcast, you mentioned some pretty staggering numbers around trading volumes uh on the various platforms. Can you give us some some stats on recent sales in this space sure so people is probably the most widely known artist, thats people with a b for b and he recently sold his artwork for a whopping 69 million dollars. There have been other successes like the crypto tanks and the board api club last week on openc, which is the largest marketplace just about 195 million dollars in just one day of sales volume. They also finally topped the one billion in sales volume in one week, which is uh, i think quite remarkable for the space you know absolutely extraordinary. So, just in closing, why is sky barn and you in particular i know uh – is so interested uh in this particular space, so in a way not to describe the current art landscape, its obviously had a lot of innovation and spurred a lot of thoughts, but i Think 99 of these will be forgotten about, and the one percent will succeed and remain like most artwork. I guess, however, there are more real cases that scarborough is interested in. There is the define of t space called just liquidity, which allows you to stake your coins and earn an nft to gain access to the next pool. Theres an nft marketplace that allows musicians to manage their music and earn royalties from their music theres.
Also, nfts can be used for logistics, think about nfts being used for ticketing in qriket stadiums, but the one that skyline capital and randall management services are quite interested in is the management of our high sportsman profile sportsmen and ensuring there are key. This is something were currently investigating and researching a little bit further in to help our clients further their actual rp rights. So this is this is something of very big interest to us, yeah, fantastic it. It really is a fascinating space and one that is evolving by all accounts, almost every 24 hours, and just by some of the stats youve given us today on trading volumes in these marketplaces and individual sales by individual artists, it is a space that needs to be Taken very very seriously ross always great to catch up, and i know youre always at the cutting edge of these things, and it sometimes takes you a little longer to convince me of their authenticity. But this one really has grabbed our collective attention. So thanks once again for your time, the under the microscope, podcast is available on apple spotify and also the google podcast platform for android and all the past. Episodes of under the macroscope podcasts are available at our website www.skyboundcapital.com.