017 - Quick Hits - Mastercard "Crypto" Support | BTC & USD on ethereum backed/pegged/synthetic | Whats the big deal. with NFTs?

Speaker A: We uh, we are recording. I see Waveforms. Cool.

Speaker B: Waveforms. It's Tuesday, February 16, 2021. Welcome to DeFi Download. I'm John T. With me is the Curb. How's it going, Kirb? Good, good, good, good. Uh, every week we tackle the toughest questions in decentralized finance. Follow us at DefyDownload on Twitter. Toss us your defi questions. We'll uh, cover them on the show. So actually, actually use Twitter this week. Talk about at the beginning of every episode. But I think it's been a while since we actually kept to our word and focused on Twitter engagement for uh, content. So uh, throughout. Yeah, worked kind of got a little engagement. Do you remember the first couple weeks where that was like our whole thing? Remember Ross Campbell? He was our uh, biggest Twitter supporter in and question provider.

Speaker A: He was throwing us, he was throwing us questions every week.

Speaker B: Yeah. So overall this week it's not like it's been a slow week in DFI. Bitcoin is trying to get to like 50,000 and uh, new DFI projects are worth double digit billions of dollars. Um, but I think we've been doing a lot of the news and market stuff. So went back to Twitter. So we got two topics. Uh, I threw out two options. One was like the MasterCard news that came out last week just about MasterCard stating in somewhat vague terms that they're just kind of getting more into crypto and that merchants, um, and people will be able to start using crypto assets uh, pretty soon. So cool. Did uh, not get much hit on Twitter. So second vote was for the more popular option was talking through it, talking about NFTs, non fungible tokens and then got a comment from Daniel uh, uh, on there about also touching on uh, btc since I guess we talked about bitcoin last week but talking more about bitcoin in Defi and kind of the different flavors of bitcoin. Uh, what should we go for first? What do you feel prepared for?

Speaker A: Well, I think we can get through the MasterCard one pretty quick. Uh, they, they, they, they, to be clear, MasterCard, Visa, like all the big players have been talking seriously about crypto since 2016, 17, like since the last boom and, and you know, the last wave of hey, take this seriously. Uh, you know they filed, filed a bunch of patents, things like that. I think the big thing MasterCard announced is that they, so what they had talked about previously was setting up systems where people could pay using cryptocurrency, like at any terminal that accepts MasterCard. But what MasterCard was going to do was ultimately change it to Fiat and then send that fiat to the vendor so the vendor never has to touch the cryptocurrency. Uh, their latest announcement makes it sound more like now they're angling toward that currency, actually just cryptocurrency landing just as cryptocurrency in the vendor's account and then the vendor can do whatever they want with it. Um, that's exciting to us because any native use of cryptocurrency is a bonus for the system. Instead of the idea of just get it to fiat as fast as possible because, oh, you know, uh, which is sort of the tax sometimes, right?

Speaker B: Yeah, I took away the same thing. Like the merchant end was almost what was more interesting. So if like you're a merchant, like how close are we to a merchant? Just your, you know, people always use the coffee shop example. I'm a coffee shop. I decided I just want to hold everything in my crypto wallet, which can still be in US dollar denominated assets, but for accounting purposes and not having to pay a bank and being able to hold it in like high yield defi, um, primitive savings accounts that are earning you much higher yield than um, you would at a normal bank. Being able to accept, whether it's someone just using a regular credit card and it being converted into USDC or some other asset or someone paying natively in crypto, um, having that come directly to your account and not having to actually go through, um, you know, being converted back to Fiat is pretty cool. So we'll see how that actually manifests. I assume they'll probably need to be some enterprising projects to kind of go after, you know, some sort of point of sale. I don't know if that slides in beneath all these existing point of sale systems or some other new point of sale thing, uh, to convince projects. But you know, for someone who, like my Shangri La of payment in crypto is like having interest bearing crypto assets like Bitcoin and other things in some, something like aave, some lending protocol. And then I just take out dollars, uh, to pay for things with when I want them and then I just get around to paying that back, um, over time and that's like closer to that vision because then I don't have to sell my crypto, I don't to worry about capital gains, um, and I can pay back in dollars or pay back in whatever else I want, uh, over time. So overall, pretty cool. More bullish stuff, uh, for sure. Defi and crypto as A whole uh, other.

Speaker A: Definitely.

Speaker B: Yeah. I guess we'll hop into. Since we talked about Bitcoin last week, I think the NFT thing is going to be the weirder conversation so we'll save that for the last one. Um, I guess to put a bow on just kind of Bitcoin in Defi. We talked about it uh last week, just Bitcoin overall and then some of the stuff I'm working on with Badger is very focused on Bitcoin and Defi. It's more about other non native assets in Defi. So you have two same thing as dollars. You can think of Bitcoin and dollars as the same things or things that don't exist natively on Ethereum. And Defi for all intents and purposes is native to Ethereum. Other chains are trying to do defi. Um, I'm sure there are things that there that work but it's a very small fraction of uh, the overall quote unquote defi space. But your options for using Bitcoin in Defi very uh, widely um, the most common is WBTC which is actually um, what you would call a, like a backed Bitcoin on Ethereum, meaning that for every one Bitcoin on Ethereum, one WBTC on Ethereum there's one WBTC held in an address somewhere. Ah, WBTC is actually custody by Bitco. So there's a number of addresses that Bitco has and manages um, where they just hold a whole bunch of native Bitcoin. Um and they have their own security measures around that. And then what they do is they issue new WBTC tokens on Ethereum so you can actually work with uh, there's like a central party actually forget the name of what the group's called but it's you know a couple different well known vendors in the space. You can go through them if you're an institutional investor and actually mint uh, WBTC by sending them Bitcoin and then they trigger the BTC WBTC creation on um, Ethereum. And you at that point you're kind of at the mercy of that central group which is I think very well respected and trusted and Bitco's security which is a very well respected and secure location to store your crypto. So that's like one category, uh, you have um, which is like you know it's backed one to one similar to like usdc. USDC use the Circle consortium to uh, send assets into a bank account and then they mint usdc. Ah for you so it's one to one bank account to that asset, um, other things that in that category for Bitcoin are like renbtc, ah, uh, which is the same, exact same structure as wbtc, but they're working towards making that the storage of it be more decentralized where eventually it'll be kind of like a large multi sig controlled by a set of nodes to control the addresses that store all the bitcoin. Right now it's kind of managed by the team, so it's similarly centralized to wbtc, but there's a long term goal. Um, and then you get to uh, that's kind of one category. So any assets you see that aren't native to Ethereum, um, can be, you know there's other Ren does other things and there's other solutions like uh, WBTC for other assets. Um, but then you get to the weirder ones which are like synthetic assets, uh, which are kind of I guess two certain ways to do it right now. Um, one is something like synthetics where you put assets in a vault and then mint uh, an asset that is pegged to the value of something else but it still has to have a reference point like an oracle. So uh, there's an SBTC that's a synthetic minted btc, which means that you are taking your SNX tokens as synthetics, putting them up as collateral and then taking out basically a debt position against that, um, denominated in Bitcoin. But then there has to be an oracle basically of record to monitor that position and then liquidate you if you get some other collateralization ratio. Uh, but once you do that, you can then sell it and use it across the ecosystem. So those are kind of the two flavors, um, fully synthetic and then like backed. Now that's a bit of a, bit of a rant. I don't even know if there's anything to pull from there.

Speaker A: Well, I think the broader thing to hit is this. Interesting how it's different I think from how you imagine currency in traditional systems. Uh, if you go from one country to another, you give them your dollars and they give you Euros. The idea once, once the money becomes code, it gets weird because you can do this thing where you're like, well exchange rates mess with me when I'm trying to buy. Uh, exchange rates become a thing you have to deal with if you're going from one country to another. Right. Like you suddenly have less money in some context because you went to another country, you exchanged the currency, et cetera. Right. Uh, and so like you don't and you, and you gave up control of the money that you exchanged. Right? And so there are situations where because you went to another country, you're taking a more valuable currency and you're in terms of, you know, sort of what it would be worth in six months when you would want to exchange it back, but you don't control that currency anymore. Right? So the best you can do is get your dollars back. Get dollars back with what's left after you leave and go back to the US and you want US Dollars. Right. Uh, with code, you can do weird things. Like say, well, what I'm actually going to do, I'm going to take this Bitcoin and I'm going to lock it up and put a wrapper around it, which is just some extra layers of code that refer to the code that is your Bitcoin. And that code is going to make it operable. On Ethereum, which is a completely different network, you can think of it like a different country. Uh, and now you can do these weird things with it over here, and then you can imagine that those layers can do all kinds of things, right? And so what you just described is a fairly simple one, right? The code is, uh, I've locked this Bitcoin here, and so as long as that's locked there, this other asset will have value. And we know that that value is that tied to that Bitcoin because that Bitcoin is locked up, et cetera. Uh, but immediately you can say, well, we can do more creative things than just lock up a Bitcoin. We can do other, like you said, synthetic stuff. Where. And I think the synthetic ones are the ones where, oh, it's this plus this, plus this, which is a creative way to handle the same problem of, ultimately, I have value in Bitcoin. It just sits on the Bitcoin network. And so if somebody doesn't accept Bitcoin like this, this bridging or wrapping situation has to happen to get it into the system where the other stuff is happening. And so I think that's the place we're thinking of it like different countries. Makes sense. And so instead of exchanging for a different currency, if I want to use it on Ethereum, um, I put it in a wrapper that Ethereum recognizes, which is just essentially an envelope of code to make it work with Ethereum. And then I can go do Ethereum things with it. Um, and you see that a lot if you're on Ethereum, there's other places where you need to wrap things to do stuff. Uh, I see it a lot in the dao space because, um, a lot of daos only accept certain types of tokens. And so if you want to put dai, for example, into a dao, you have to wrap it. So you'll see w dai instead of dai, but it's still die. It's just wrapped in a token wrapper to make it behave slightly differently inside the dao.

Speaker B: Um, yeah, I mean, it comes down to, I guess, jurisdictions as networks and then what works in each jurisdiction. So you can go down to Belize or whatever and they take dollars and you're like, okay, great, here are my dollars. Um, but it's the same thing, I guess, where it's like, you got to understand, um, what things are backed by in a similar manner where if you're going to go to a country, the amount of assets you might convert into, I mean, right. You know, the financial network has become fairly global for most countries. You can still just like, you can just go with your credit card and like the network you're participating in is your credit card network. So like, it just uh, works. But like, if you're thinking going somewhere where that doesn't work or you roll it back, you know, 20, 30 years, if you're going to go somewhere for a while, you need to really take into account like, what's backing this asset that I'm kind of wrapping my dollars into and what are the risks involved. And I think when you're looking at, oh, I'm on Ethereum and I want to have some bitcoin exposure, what do I buy? And you see there's like eight different options. You need to understand what's backing each one, what the trust assumptions are, what the technical assumptions are, and which one you're most comfortable with, which one's been around the longest. So most people would say wbdc. It's just there's the most of them and it's been around. But also they can blacklist any address. So at any point, like some contract that you deposited in or your self, period, for whatever reason, they could say, okay, we don't think this person should have WBTC anymore. And they can say, okay, no, you can't move the WBTC that you have or you can't receive it, um, and basically just make it go away. Now will they do that? Is there a history of them doing that? No, like there's no history of that happening. But it's, it's a trust assumption that you're making where something like sbtc, you wonder like, okay, well, what's the point if we can use wbtc. What's the point of sbtc? Um, or even like dig, like what the synthetic rebasing BTC that Badger launched. Like, what's the point of having something that's. If we have WBTC and it seems to work fine, it's like, well, it works fine until it doesn't. Um, and the government comes after them hard and says, okay, you got to shut down X, Y and Z contracts, addresses, protocols from accessing it. So that's why I think there's, you know, there's a lot of different competition, uh, for being like the best synthetic btc, um, out there. And then you have, you know, other. You can take those and then you can take these different flavors of BTC and you put them in something like Curve, which is basically just a, It's a decentralized exchange where you pool in all these different assets that are supposed to kind of be worth the same amount. They're all kind of the same thing. And they have this with dollar pegged assets as well. And then you get to trade them directly with a smart contract. Uh, and it's similar to Uniswap, where there's basically like a curve that you're trading on, um, where the more you buy of one, like the more expensive it gets to all the others. But there's like an assumption in Curve that all the assets that pull together are supposed to be the same. So it's much more of like a flat change. Like you have a lot more flexibility than in Uniswap. Or it's like a very prices can very wildly. But then that itself spits out another token that's kind of like an interest earning Bitcoin variant because you can go back and redeem it for any of these flavors of Bitcoin, but it's also earning trading fees. But then someone might just take that, put a nice little token symbol on it and then you might think you're holding like interest earning Bitcoin. But now you actually have exposure to the risks of four different types of synthetic Bitcoin, uh, behind it, Synthetic or pegged Bitcoin behind it. So it's, uh, it's, you know, so

Speaker A: yeah, then to the, to the due diligence aspect of the question that was asked on Twitter. Uh, I don't know well enough to, you know, say anything really, except that it's, it's, it's like anything else in the space. You know, do the research to know what's happening back there and where the, you know, risk vectors are. Um, any situation where you're adding that extra layer is adding extra possible attack vectors versus just keeping it in bitcoin on the bitcoin network and let it appreciate at the rate of Bitcoin. That's an avenue to take where you only have the bitcoin attack vectors open. Right. Uh, but you add the new layers and you're creating new things. And it doesn't mean they're unsafe. It just means understand what you're getting into there. You know, it's, it's, it's similar. Like you said, uh, the great thing about the credit networks is I don't have to go, you know, like, if I'm traveling to Venezuela where there might be legitimate hyperinflation of the currency at any time, I don't have to worry about that when I travel. And that's the beauty of the credit network working that way. Right. But it used to be a problem and it's, it's still sort of what we're talking about here. Right. Like things could happen because the system to hyperinflate and then you just would lose your money. So be, uh, careful, do your research.

Speaker B: Right. The yield in defi doesn't come from nowhere.

Speaker A: Yeah.

Speaker B: If you see super high yield, there's probably, uh, some risk behind it. That is perfectly your own decision if you want to take it. And it's just, you should try to understand what it is not be like, oh, there's like 50% APY here on Bitcoin. Let me go get that.

Speaker A: Yeah. The greatest thing is just try, just understand why you're doing what you're doing. Not just because they're just aping into things. Because Reddit said so.

Speaker B: Yeah. And I think that's the framework data feed though. Yeah. Yeah. Just different ways to do it. Um, and then you figure one that you're comfortable with and for the applications that you're using it for, and eventually probably some winner will emerge. But it's still early, so that's not really the case yet. All right, uh, last one. I think I'll do a quick hit on NFTs. Uh, I think it's been pretty hot so recently. Do you follow the NFT art market?

Speaker A: I do. I've bought a few things here and there. Uh, but I'm also very aware and that's why, that's why I'm excited to talk about it and why I understand what's going on. But like, I also, I'm aware of the part of my brain that it triggers. That's like the old you Know, I used to collect baseball cards and I used to have, you know, those guides that have like the value of the baseball cards in there. And like, I did the same thing with comics for a while and I'm still very aware of that part of me that's like, just been there forever, that's like, oh, it's an issue number one, I gotta get it. And I have so many issue number ones for things that didn't turn out to be popular comics and they're worthless. But, but there's that thing where like, if they could add that extra layer of like this thing might appreciate in value, then people were more willing to jump it. So they were launching these issue zeros and issue ones like crazy throughout the 90s to target me. You know, the person who was like, I want to read the comics and maybe it'll be a cool story, but also it might be worth money later. Which has not really panned out. But, uh, yeah, I guess the place to start is just what is an nft? And maybe the place one step further back from that is when we talk about all the tokens and the wrappers and everything we were talking about in the previous thing. On Ethereum, um, on different chains, they have different types of tokens that have different properties based on what's in their code. And so the popular one on Ethereum that's sort of like your cryptocurrency coin Token is the ERC20, which is just the, it stands for, uh. What does ERC stand for? Ethereum. Request for comment is what it stands for, but it's number 20. And so that was, that was the proposal that was eventually decided to be implemented in the protocol to allow anyone to issue their tokens. And so ERC20 tokens are the coins that just, you know, get passed around, right? They're standard. Yeah, Standard. There you go. That's a better way to say it's a standard for the behavior of these coins. And so any wallet that can see ERC20 tokens can accept your coin, basically. Um, the first NFT contract I knew about was 7 was ERC721, which is a standard for a type of token where they're non fungible, which is where the NFT comes from, non fungible tokens. Um, by that they mean, like, you know, in the US system, a dollar is the same as a dollar and they're exchangeable for any dollar. And it doesn't matter which dollar you have, it's still worth a dollar versus baseball cards where you have the one, and that's that one. And if there's only 200 of those, then you know how limited the supply is of those baseball cards. And now you get the thing I was just talking about with like the books of value and whatever, right? Like Ken Girthy Jr. Rookie cards. There's only so many of them and they're worth, you know what they're worth. Um, so that's where the NFT market's coming from. The non fungible tokens are more like those art tokens. If I have one and you have one. Even if they're the same sort of run of tokens, they're, they're sort of unique to one another. And so I can't just, you know, it's not like having a, uh, dollars, I guess. Um, I don't know. How is that for, uh, the, the what is an NFT kind of rundown?

Speaker B: Yeah, it largely covers it. It's um, and there's, it's a little bit of overlap.

Speaker A: You can't just say, well, it's fungible. People don't know what fungible means.

Speaker B: Yeah, yeah, it just means like, you know, one's transferable for the other. So like the ERC20 token standard, it's just, yeah, like I said, it's a set of rules so that all these different applications, we can have all this composability because they can all make the assumption that the tokens do X, Y and Z. Because everyone's saying, okay, well if we're going to launch a token, we're going to use the standard. We can do some other little things in there. But more or less the most important components, it does the same way. And usually how it's launched is you can have a cap on it and say, okay, there's going to be 100 million of these tokens and that's it. But you can still have rights to increase the token supply or not. And sometimes you can get rid of those rights so it's fixed forever. Um, but one of those tokens is no different than another one of those tokens. Um, an nft. Functionally it's just a token that can reference, uh, some metadata. Um, the metadata can be different. It can be like when we're talking about NFTs, a lot of people think of like art. So the Art NFTs, it's just basically like a JPEG or a GIF or PNG or some image file that's stored somewhere and then referenced in this token. Uh, so that when you have it, you can then you know, a wallet can render that image or gif or video or whatever and you can even do like audio. There's stuff you can, limitless amount of stuff you can connect to an nft, um, it's similar in that you can choose the amount of total supply it can have. So you can have new, you know, multiples of uh, the same, you know, token, uh, referencing the same metadata. So you can have you know, 100 of the same image. But it's uh, yeah, it just behaves a bit differently. Like there is some overlap because like yeah, it's kind of fungible in that. Okay. If I have, we have two that are the same image, like they're going to be kind of transferable but that's not usually how these are used because they're a lot more expensive to move around. There's more data involved in them usually. It's, there's, you know, for the art ones there's one of one, one of ten. You know, if you're gonna do like one of a hundred, that's that, that's fine. But you know it's, it's, there's certain parts of it that uh, you know, make it lean more towards being limited in how it's used. So uh, that was probably, it's low supply ERC 20s and high supply NFTs kind of overlap a little bit.

Speaker A: Once you have blockchain, uh, technology you can introduce digital scarcity. And so when you look at a fungible token like DRC 20s they are scarce but not necessarily unique. Um, one to the next. Right. So you can say the supply is 10 million or Bitcoin as an example. You know the, the total supply that there will ever be is 21 million. So you've you know, created scarcity of that resource. But one bitcoin is no different from the Next. Bitcoin uh, NFTs add another layer where you can have uniqueness from token to token or uniqueness within, you know, these limited runs. And that gets you uh, a uh, completely different dynamic because there's no reason to collect bitcoins like in the way that you collect art. Once you introduce that scarce plus unique thing then you, then you have what you have when, when you, when you're dealing with art collectors or baseball card collectors, uh, except in the digital space which we've never had before is the thing. Right. Like there was never, you know. Yeah, somebody could say we're only going to issue 200 of these, you know, counter strike skins or whatever. But like it's kind of Fake scarcity because it doesn't have a blockchain piece in the middle as a verifiable sort of resource. Right? And so it was always just like, yeah, well, but you're going to issue more of them later, or whatever. The NFT piece puts the same scarcity and verifiable uniqueness and scarcity in the middle with the blockchain. And so you're. So the reason you're seeing this explosion now is because artists are going, oh, this actually potentially fixes. Like, if you can digitize the provenance of a piece of art, like, you can imagine attaching an NFT to a real painting, and then when that painting gets resold at auction, you can actually have a royalty cascade down to the artist. So that. Because, you know, this is a thing that I'm. I'm obsessed with on, um, sort of the legal side is like, artists are consistently screwed by royalty structures. Especially if you're like a painter, you know, if you sell a painting for $20,000 at your, you know, your, your gallery opening, and then it resells five years later for 2 million because you got super famous, you don't get a taste of that 2 million. Like, that seems pretty unfair because they're still kind of piggybacking the fact of the work that you've done. But that's just. It doesn't work. And because we don't have things like easy digital tracking. So you can imagine where stuff gets cool with NFTs because of that. But not to say that that's happening, that is a thing that's built in. But, like, what's happening now is artists are starting to emerge that are putting out these digital, you know, sort of artworks that have this NFT backbone. And I think the interesting argument you see, uh, especially from the shitheads on Twitter who are trying to be trolls that are just like, I just screenshotted your nft, now I own your artwork. And it's like, well, first off, you've done nothing but reveal how ignorant you are and how much I shouldn't take your VC money anyway, because you don't understand what's happening here. Uh, but also the point that they do have is interesting, which is that JPEG is still fungible. I could still replicate that jpeg, but if it's not attached to the nft. So anyway, so they're end up being viewing platforms like OpenSea. There's a couple other places where you can go and verify your NFTs. And so it's that weird. It's that funny thing, because we're putting this digital backbone on top of a thing we, we already know about art, right? But we're having this weird thing of like, people want to say, well, that JPEG is the art. It's like, well, no, the art is a combination of the image, but also knowing that I have the one that was created by the artist. And so it's digitizing an aspect of art that's always been ethereal and intangible, uh, in a, in, in a really cool way. Um, but ultimately that's why you're seeing stuff going for a bunch of money.

Speaker B: You know, I think the game example you use is like a good, good framework in that, you know, they could create some skin or weapon or whatever in some game. Like the game producers, like right now can, can do that. But like, if you do it with like an NFT and you can say, okay, there's a hundred, there's only going to be 100 of these. Um, and it's just, you know, some code that says this is some sword or whatever that's supposed to be cool. All the players in that game and all the creators of that game are operating on like shared assumptions and framework. And then that's released and says, this is, there are going to be 100 of these swords, and this is a sword, and the sword is like referenced by this, you know, um, contract address that can't be replicated and is stored on some open public blockchain. Someone else could have the same code for that sword, uh, and upload it in the game or what have you. But then people know that one's not the real one because there's a thousand, and this one's already been there and this is the one that everyone agrees is the real deal. And you can kind of extend that then to the art where it's. Yeah, the artist and the art buyers and art appreciators are all saying, hey, we all agree that when this is launched and they say this is the real one, and we're all going to start operating on that shared belief, then, okay, now you have it and someone screenshots it and uploads another version of it, it's like, well, okay, great, that's. You have fun with that. But I think the best arguments I've ever seen for why digital art can be worthwhile is like, well, because someone will pay money for the real ones, they won't pay money for the, the fake ones. So it's like, right? I mean, you know, really what it

Speaker A: boils down to the part of it that's just also kind of ignorant about that argument is it's not like we don't have real world versions of the same stuff. You know, if you ever go to a comic book show and go through the section of the people selling high priced comics, like they don't just have X Men number one, they also have a certificate of authenticity and an appraisal certificate and a rating. And you know, there's already a subsystem of verifying that this is the real thing. Like it's not a new, this is not a new phenomenon. Uh, I, I don't want just any X Men number one. I want the verified one that I know I can for one resell because it has all that information. But you know, so, so acting like, like that, like, like that mentality doesn't already exist for the collectors and so copy. I screenshotted your what? Like just being a troll. But, but yeah, I think the better, the better explanation when you're talking about the game piece is, you know, you can also. It doesn't even have to be. It's, it's just about a shared reality. And that, uh, that reality could even be overseen by the game. So the game could be the one checking the chain. And if you know that the game is verifying that only 100 of this, you know, sword could ever exist, then it doesn't even have to be like me to you checking the chain to verify that that sword exists. Like I might want to do that before I buy it. But if you're talking about gameplay and you're supposed to have this badass sword, the game can just check that it's the real one. Right? Even if you bought a fake skin of that sword, like it wouldn't work. And that already kind of works if you think about how skins work in those games. Because the games have already decided what the real version of that skin is. And if it's limited, they're already doing that. But once you leave the world of Counter Strike, that doesn't work anymore because you don't have the shared reference. Uh, blockchains give us that shared reference, which means we can introduce that uniqueness and scarcity to anything we want to layer that on top of. And so, you know, you can imagine that with podcasts, you know, MP3s, uh, deeds to houses, um, I think, you know, the implications for NFT stuff is really big. Uh, but like most things, art, art is going to be the reason that it, you know, people get to know about it to Start with, um, yeah.

Speaker B: And right now it's kind of like expensive to deal with them. So it makes sense that more higher end art and allowing artists to kind of go directly to uh, the people that want to buy the stuff is kind of taking off and people are experimenting with things which is, you know, a lot of cool stuff out there. And one thing I do to circle back to because it's. I don't know if there are any people deeper in crypto bitcoin listening. So, uh, bitcoins are actually kind of NFTs because it's like a specific UTXO, like the transaction output. They're all actually specifically unique on what the path is through since it was mined to getting to your wallet. Um, and there's actually a premium on clean UTXOs. So if it's something that was like freshly mined or ideally even something that like the US government has held and then released, sometimes getting those specific bitcoin can uh, fetch a higher price. Um, which is always interesting because you're always at the mercy of.

Speaker A: That's funny.

Speaker B: Oh, did this.

Speaker A: I didn't know that.

Speaker B: Yeah.

Speaker A: Do I have a purchase one of the Silk Road? Yeah.

Speaker B: So you want the Silk Road and

Speaker A: the FBI and then to you.

Speaker B: Yeah. So it's like it basically gets cleaned by the FBI. But if you're like, oh, like some, someone in like Iran had this. You know, I have some of my bitcoins from a UTXO. Like one of my UTXOs like came, you know, down its path three hops, uh, came through a blacklisted address in Iran. It's like, no, now I try to send that somewhere else, like to Coinbase or whatever and they're like, nope. Or you just get flagged. Um, so that does actually matter a bit. Um, but it's not a huge, huge issue. But uh, I always thought having clean bitcoin utxos as NFTs would be interesting as well. Uh, then you can just basically have them clean on bitcoin and then the NFTs can be routed around. But yeah, I mean there's the stuff that you can do. It's cool to see the experimentation and just like all the um, effort going into it. Now you can use it for logins, you can use it for art, you can use it for games, you can use it for, um, it's just another bit. There's also another standard ERC 1155. I think that you can actually tokenize your NFTs with an ERC 20. So you can actually have partial ownership of NFTs, because that's one big thing. I didn't mention partial ownership. Yeah, because there's no decimals on a ERC721. Uh, not like there is for ERC20 and there wouldn't for an 1155 either. But you can get to that point where you could have like, oh, I own half of this piece of art. Um, and you're already seeing it now kind of in a different order. Some new projects popping up where they just buy up digital art like NFTs, like these, like crypto punks and um, axes and all this. The hash masks was a big thing like these like, um, programmatically generated pieces of art and they're holding them as an index fund. And then you can buy a token that represents like a ownership in that index fund. Um, I guess has some claim on those assets. So it's interesting to see these things kind of get unbundled, rebundled into different things and then I guess we'll see what sticks for how people want to get exposure to it.

Speaker A: Definitely cool tech though. So among, um, NFTs.

Speaker B: Yeah, NFTs are cool. Go get some digital art.

Speaker A: I don't know exactly how to invest to.

Speaker B: Yeah, I've not gotten it because again,

Speaker A: it's back to that same thing of like, I don't feel like, you know, like with baseball cards it made sense because you could be like, Ken Griffey was a good player and so that's going to be an in demand card. Um, comics were weirder because it had to ultimately end up being a popular comic down the road. And so there's part of that where you're just sort of guessing on, you know, the art thing is, is it's just weird. I've never understood the art world in that aspect of what becomes popular and what's not.

Speaker B: It's.

Speaker A: It's sort of a circle jerk, to be honest. But yeah, it's interesting. I think the funds I see coming together are more like, let's buy up everything that, you know, anything that has a little buzz around it. And if a certain number out of any, you know, like, if one out of 30 hits, then we're doing fine or whatever. Right. Like, which is an interesting strategy to even be able to take because in the traditional fine art world, like, I'm not invited to any of the auctions where I could buy a Banksy because I don't have enough money for it, so.

Speaker B: Absolutely not. Um, so, yeah, I mean, it's a little tricky on Ethereum. Now because it's all pretty pricey anyway. But if you know what you're doing and you can find up and coming artists and their platforms like Meme and stuff, which provide some better access to things like that, um, new artists coming on, it'll be interesting to see some of these platforms start to get a good inflow of people that can debut and then get a. Get a following and give you, you know, some, you know, ways to kind of build your portfolio and then maybe one of them hits, you know, there'll be some digitally, I think, you know, few ocious, and some other ones are like basically digital artists first where they like, are now command tens or hundreds of thousands of dollars for pieces, which is just like, wild. But it's also a bull market, so that might change as well.

Speaker A: Yeah, who knows, right?

Speaker B: Yep. All right, we'll keep an eye out, everybody. Uh, we'll be hitting the Twitter for weeks coming up. Shoot us, Shoot us your questions or topics and I guess we'll see what pops up next week.

Speaker A: Talk to you then links in the description. As always, Sam,