Young and Profiting with Hala Taha - YAPSnacks: Are NFTs a Fad or the Future of Art?

Episode Date: May 10, 2021

Are NFTs a Fad or the future of art?   Today on YAP Snacks, Hala takes you on a journey to learn about NFTs, the cryptoart that top entrepreneurs and investors are backing as the next big thing that shouldn’t be dismissed similar to the dot com boom in the late 90s.   NFTs are the latest cryptocurrency phenomenon to enter the mainstream – they turn digital works of art and other collectibles into one-of-a-kind, verifiable assets   While the concept of NFTs have been around since 2012, they’ve exploded over the past year. In 2020, the market grew by 229%, reaching $250 million in value. And, in February 2021, more NFTs were traded in 24 hours than in the entirety of 2020.   In the crypto space, hype is definitely par for the course. But this feels different mainly because the mainstream hasn’t just taken notice. They have skin in the game— from fashion brands like Nike and Louis Vitton to sports brands NBA/ NFL, to musicians like Kings of Leon and Grimes. They all are putting their hats in the NFT-ring, creating NFT-based consumer goods and services.   So are NFTs the future? Or is the NFT craze just a bubble stemming from increased online activity following the pandemic?   Well the good team at YAP have investigated the topic and we are here to give you the facts, so you can better understand what NFTs are, and decide if you want to get involved or just let it be another crypto trend you let pass by and fade away.   This episode is sponsored by Olay, and Betterhelp.   Social Media:   Follow YAP on IG: www.instagram.com/youngandprofiting Reach out to Hala directly at [e-mail] Follow Hala on Linkedin: www.linkedin.com/in/htaha/ Follow Hala on Instagram: www.instagram.com/yapwithhala Follow Hala on ClubHouse: @halataha Check out our website to meet the team, view show notes and transcripts: www.youngandprofiting.com Learn more about your ad choices. Visit megaphone.fm/adchoices

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You're listening to YAP Snacks, hosted by me, Halataha. Today on the show we are covering NFTs. Are they a FAD or are they the future of art? NFTs is the latest cryptocurrency phenomenon to enter the mainstream. They turn digital works of art and other collectibles into one of a kind verifiable assets. The concept of NFTs has been around since 2012, but it's exploded over the past year. In 2020, the market grew by 229 percent, reaching $250 million in value. In February 2021,

more NFTs were traded in 24 hours than in the entirety of the year 2020. NFTs have clearly captured our imaginations, and it's because the concept of NFTs fuses so many different social and financial trends. It has a cryptocurrency angle, a virtual reality angle, a meme angle, and it's no wonder that everyone can't stop talking about NFTs on social media. In the crypto space, hype is definitely par for the course. But for me, this feels different. And mainly because the mainstream hasn't just taken notice, they have a skin in the game. From fashion brands like Nike and Louis Vuitton

to sports brands, like the NBA, the NFL, the UFC, two musicians like Kings of Leon, Grimes, Deadmouse, they're all putting their hats on the NFT ring, creating NFT-based consumer goods and services. So the question is, are NFTs the future, or are NFTs just a craze? A bubble stemming from increased online activity following the pandemic? Well the answer is unclear, but me and the good team at YAP, we've investigated the topic and we are here to give you the facts, so you can better understand what NFTs are and then decide if you want to get

involved or just let it be another crypto trend you let pass by and fade away. Okay, so if you listen to Young & Profiting Podcasts or YAP Snacks episodes, you know that I like to start off complex conversations with context and definitions, just to make sure everybody can understand the conversation as we go on and everybody has a clear foundation and understanding of what we're about to talk about. So let's kick it off with some definitions. NFTs, what do they stand for?

They stand for non-fungible tokens. Non-fungible means unique and irreplaceable, just like real artwork is. On the contrary, Bitcoin, for example, is fungible. And that's because Bitcoin can be exchanged for one another. Two bitcoins carry the same value, just like US dollars do. And you can trade one US dollar for another. It's the same value. When you trade NFTs because they're non-fungible, if you trade one for another, you're gonna receive something entirely different

from what you originally had. So NFTs are non-fungible. Other cryptocurrencies like Bitcoin are fungible because you can exchange one for another. Hopefully that's clear. Now, NFTs also are different because they're a cryptocurrency that carry items instead of money. So NFTs represent an item and they also have three distinguishing characteristics. Number one, they're unique.

So every single NFT represents a specific asset and is tracked on the blockchain separately, even if that asset is one of a series or one of a limited edition series. Number two, they're hard to copy, but they're easy to verify. So, NFTs get recorded on the blockchain, and the NFT has to be validated by using mathematical proof. At the same time, the NFTs history is publicly available and anyone can see or confirm the NFTs authenticity. Number three, they are tradable, but not interchangeable. Like I mentioned earlier, NFTs are unique.

You cannot exchange one for another equally, like you would Bitcoin. That said, you can buy, sell, or resell NFTs. Most of the NFTs that exist reside on the Ethereum blockchain. If you guys need a foundation about cryptocurrency, like Bitcoin or Ethereum, head over to my episodes number two and three. A couple of years ago, when cryptocurrency first came out and I was first podcasting. I created two very deep complex episodes on Bitcoin, Ethereum, and the landscape of the cryptocurrency space and their phenomenal episodes. So again, that's episode number two and three if you guys want some foundational material

on cryptocurrency as a whole. NFTs are cryptocurrency assets that represent a wide range of unique items, both physical and virtual. NFTs can be anything digital, so it could be art, videos, music, gifts, games, text, memes, code. I think it's really helpful to think of NFTs as special one of a kind items, like a rare stamp. And anything can literally be converted into an NFT, even a screenshot of a tweet which we'll get into in a little bit. Okay, so let's make this real with some examples. So let's take this YAPSNACS episode. In theory, this could be an NFT that is existing on the Ethereum blockchain and it's housed securely in my digital wallet.

And anyone can verify that this YAPSNACS is authentic on websites like EtherScan, which basically pull in the transaction history of everything done on the Ethereum blockchain. So I can choose to put this one of one NFT of YAPSNACs up for sale and anyone can bid on it or buy it right away on its listed price. And you might be thinking, but wait, I can copy and paste and drag this file onto my own computer a million times over why would I want to buy YAPSNACs when I can just go on Apple Podcasts and listen to it whenever I want. Why would anybody want to own digital art if it can just be copied and consumed by everyone? Well, as the current owner of this YAPSNACS episode NFT, I would say go ahead, copy it, put it all over the internet, share it with your friends, turn it into a meme, I beg of you. And this is the big idea.

NFT's allow us to completely transcend that supposed conflict between scarcity and abundance. We can now truly have our cake and eat it too because content gets to be both scarce and abundant. By creating a rare one-of-one NFT that represents a potentially famous or very popular file, we're opening the doors to capture the value of viral content. Not by necessarily monetizing every time the Cappsnacks episode is consumed, but because the value of this original NFT will go up in value as the cultural significance of it goes up in value as well.

As people believe that it's art, as people share it around the internet, this original one of one NFT becomes more valuable. And so I'll give you guys another example. Let's take the very popular painting, the Mona Lisa. If you go to the Louvre and you take a photo of the Mona Lisa with your phone, you wouldn't then claim sole ownership over that Mona Lisa. And the more people that take pictures of the Mona Lisa and start sharing it everywhere,

the more that that painting's cultural relevance continues to grow, and the more value that that original Mona Lisa painting has. And then you can think of the blockchain as the Louvre, meaning the open and distributed nature of the blockchain allows us to verify and trust the history and ownership of digital content. The same way that we trust the Louvre holds that real monolisa painting. Okay, so let's talk about some of the reasons why people

think NFTs are here to stay for the long term. And I think the most important and most compelling argument is that NFTs are a major shift in a positive direction for creators when it comes to IP or intellectual property ownership. So NFTs are very trustworthy. They have trustworthy documentation of their history and origin, and they can have code attached to do almost anything a programmer can dream up. So one of the most popular things that people are coding into NFTs is the insuredee

that the original creator receives royalties from any secondary sales. So, for example, an author could release a book as an NFT, and they can continue to generate royalties when the original buyer decides to sell that book. So, the artist can sell their art to a global audience, and they not only get a greater cut of that profit, but they can also program any future royalties into that NFT as well. So this was never the case in the past.

So if you take like paintings or albums, when they're sold, they're sold for a specific price, and then if the owner then resells that asset, the artist never really gets anything from that sale. And so oftentimes, something sold for an original price and then gets sold for 10 times more and the artist never sees any of that profit on the backside. And so this is ground breaking because artists will continue to get royalties from the

resale of their digital works. And that's going to empower creators in a way that we've never seen before. Continuing on to talk about the proponents of NFTs, let's move on to some of the celebrities that are co-signing this NFT boom. One of my idols, an entrepreneur, Gary Vaynerchek, he was an early investor in Facebook, Uber Coinbase, and now he's jumping on the NFT ban wagon as well. So he recently was teasing drawings on Twitter, and he announced that he's releasing his first NFT collection called V friends. It's a series of 10,255 character tokens available for purchase

via the cryptocurrency Ethereum. Each token will include a smart contract that includes metadata that he can use to interact with buyers. And he's going to do this, for example, through an annual business event called Vcon, in which token holders will get exclusive access to this event for three years after purchase. So here's some quotes from Gary Vee.

He said, when I saw this macrohuman trend, the only way for me to help others understand it was to be a part of it. I know that NFTs will be here for the rest of my life, and I will be actively consulting, investing, and advising in this space. Gary believes that small businesses should look at NFTs as a massive opportunity. He thinks that everybody in small business is going to learn that NFTs are a way to do memberships, clubs, and discounts. Just like a lot of small businesses went out and built apps on phones a decade ago, Gary believes that NFTs will be part of the strategy for small businesses going forward.

He also says that 99% of NFTs won't be good investments and there's going to be some massive crashes in the next 12 to 24 months. Many will get confused and think that NFTs were a fad. That's when it gets really good. This will get interesting in a decade. And oh, by the way, that 1% of NFTs that will be good investments will be all time returns. So Gary Vee, who has been spot on the money on a lot of different innovative topics, is behind NFTs as well. This episode of YAP is sponsored by Ole Body.

Guys, I know most of you are still working from home right now, and I want to stress that you cannot skip your morning shower. Even though sometimes it's tempting to wait until later in the day, morning showers are super important. If I don't take a shower in the morning, I feel sluggish and unmotivated all day. Showering is much more than just getting clean from me. It means taking care of my body while also promoting self love. It gives me confidence and the energy I need to seize the day.

And now my showers are even better since Alay just launched a new collection of skincare-inspired body washes that include premium skincare ingredients. I personally love Alay's soothing body wash with Vitamin B3 Complex and Oat Acstract, which is perfect for ex-ema-prone skin. It transforms skin from dry, cracked, and rough to visibly healthy, strong, and plump. Fun fact, I only use fragrance-free products. I personally get really bad headaches from fragrance, and I find that using fragrance-free products keeps my skin super young and tight. I've been using Olaib products since high school, and I love their fragrance-free been using Olaib products since high school and I love their

fragrance free products. Olaib soothing body wash with vitamin B3 complex and oat extract is completely 100% fragrance free which is very hard to find and now I'm hooked. And while it's super moisturizing it doesn't leave a filming residue like other soaps and it lathers up super nice. You need to give these O these ole body washes a try. They completely changed how I thought about my body care routine and my shower. You can find ole body care products in the store or online. Ole body, fearless in my skin. This episode of YAP is sponsored by BetterHelp.

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and profiting podcasts, you'll get 10% off your first month by visiting our sponsor at betterhelp.com slash app. Join over 1 million people who have taken charge of their mental health. Again, that's betterhelp.htlp.com slash app. The other point I want to make when it comes to NFTs being here for the long term is that there's some precedent in terms of NFTs being a viable asset. The same reason why people buy NFTs is the same reason why people wear designer logos, drive luxury cars, or hang pictures up on their wall with important people. It's the same reason why people care about blue checks

on Instagram. It's saying that you own something original and saying that you own something unique. And I imagine that years down the line will all be checking out each other's digital wallets and bonding over our mutual interests over NFT purchases. And I think that everybody will have some sort of NFT project in the same way

that everybody today owns their own social media account. The other thing is that anything can be an NFT. There's so much room for innovation here. And let's just give a couple unique examples of people turning in things that aren't really typically considered art into an NFT. So NBA Top Shot. So NBA Top Shot is like a phenomenon and essentially NBA created a platform where users can buy sell and trade video clips of specific NBA highlights. And for example LeBron James had a clip that sold for over $200,000. Now there's not just one clip and one to one owner. There's usually a limited series where there's like 50 limited clips of one video

and you can own any one of those 50 clips just like an artist can issue a series of prints and you can own one of those prints that $200,000 LeBron James clip was number one in that limited edition series. So that's an example of an NFT that has a limited edition series of these videos, and it grows in value as the cultural phenomenon

around that video grows online. Another example is Twitter CEO Jack Dorsey sold the first ever tweet. He took a screenshot of the first tweet to ever exist and he sold that for over $2.9 million. And the reason why it's valuable is because Jack Dorsey is the one who put it on an NFT who created an NFT around this tweet. And because Jack Dorsey is an authentic person, it went for so much money because it's associated with him as well as being minted on the blockchain. So those are two examples of unique assets that have become NFTs just to give you guys some idea

in terms of the potential feature and the type of assets that can become NFTs. Okay, so we have to be fair and also discuss the naysayers in this space and the cons that are related to this space. A lot of the naysayers say that the vast majority of current or up-and-coming NFT projects are not gonna be successful investments down the line. Why?

Because people right now are very motivated to get rich quickly. There's a lot of short-term thinking. People are going to rush in, buy projects, just because somebody told them that something will be worth lots of money later on. When it comes to the art market, the two main cornerstones of it is provenance or history of ownership and originality.

NFTs definitely deliver both. Everything is original and everything can be tracked in terms of its ownership. That is 100% for sure. However, anything that's original and unique doesn't inherently make it valuable. So for example, if you have kids, your kids are creating hundreds of unique pieces of artwork,

but nobody wants to buy them. And this could be the same for a lot of NFTs. They may be digitally verified, and they may be a one-off and very unique, but that doesn't stop an artist or thousands of artists from flooding the market with more and more NFTs, whether that's video clips or tweets. And then maybe those NFTs will lose their allure and just become a commodity. So long story short, there may end up being a major supply and demand issue when it comes to NFTs. I think that the most important issue when it comes to NFTs and the reason why people might not get behind it is because it's so horrible for the environment.

It is terrible for the environment. And I think this is the number one downfall of NFTs. And if you know anything about Bitcoin, you probably know that Bitcoin mining already generates 38 million tons of CO2 per year. That's more carbon footprint than countries like Slovakia. And it's crazy to think that blockchain and Bitcoin can be causing more pollution than entire countries. And the younger generation may be tech savvy and really into this stuff, but we also really worry about the environment. And so I think as people become more aware of the huge energy demands, when it comes to blockchain,

they could be weary of supporting it and buying and selling assets on the blockchain. So I think the number one threat to NFTs is the fact that it's terrible for the environment and I think if they want any sort of adoption from the younger generation, they're going to have to figure that out because I don't think a lot of people realize how terrible cryptocurrency is for the environment and I think once people realize that, they're going to care a lot more and not want to use it. And then lastly, security. Everybody says the blockchain is secure, but there has actually been a lot of crypto hacks.

And I think that if these crypto hacks become mainstream, it could be harder for NFTs to see long-term success. So with all this said, do I think that NFTs are a fad or are they the future? I personally believe that they are the future. I think that NFTs represent a cultural change. And in the past, if you look at history, every major change comes with skepticism and confusion. And I think we're in that transition period. If you take Uber and Lyft, when they first came out, so many people thought it was crazy to get into a stranger's car.

And now it's totally the norm. I think NFTs will be the same. I think they're going to be viewed as a fad until those people make that mindset shift and kind of embrace where the world is headed. So I think it hasn't really hit mainstream. And the mainstream coverage is just focused on all these silly crazes, and that's because that's what attracts all the clicks, clickbait, but I think beyond the memes and the tweets,

NFTs have a lot of practical use cases that I think are here to stay. I think the core concept behind NFTs is really powerful. Essentially all in NFT is taking some data and coding it on the blockchain so that you can financialize it and trade it. The other reason why I think it's here to stay is that there's $78 trillion worth of unbankable assets globally. So what that means is that there's a lot of assets that people cannot leverage and they're not counted as assets by the banks because they have no way

of like validating that asset or verifying that asset. So let's take like rare wine or a rare book or an art piece like a very old authentic art piece van Gogh. That's really hard to count as an asset right now. It's called an unbankable asset. NFTs could be this amazing revolution that can help replace many laws with simpler, more transparent ways of unlocking

and interacting with those unbankable assets. So I think that's another use case for NFTs that I think are, it's here to stay. And I think we may be witnessing a bubble, an NFT bubble that may end up crashing, but that doesn't necessarily mean that NFTs are a fat. Even if there's a bubble in the NFT arts scene, and there's lots of celebrities like Gary Vee and Elon Musk inflating it, that's not really a bad thing. Bubbles are completely normal.

That always happens in technological developments. The market eventually corrects. And the hype and the money generated by the bubble is essential for funding this beginning phase, where the technology is improved, refined, it's matured. And this bubble also leads to a lot more talk about the topic, which leads to greater education and knowledge on the subject for the public. So I personally think that with greater understanding of NFTs, with people understanding the possibilities that they can create, as people get more familiar with a concept, that the opportunity for NFTs is only going to stay and become more long term.

So I think that NFTs will gain even more popularity as an asset class, as people and the mainstream begin to understand them better. And there you have it, your introduction to NFTs. I hope that you learned a whole ton in this episode and that you walked away making some of your own judgments and decisions. This is definitely the start of something historical.

You shouldn't take NFTs lightly, but you should remember to do your own homework before you even think about investing. There's lots of scams out there, so please do your due diligence and most importantly, be patient before you take the step into the world of cryptos. It's a massive opportunity. There's definitely upside, but don't forget this is a long-term hustle and 99% of NFTs will not last. No one representing Young and Profiting podcast is an investment advisor, and this series

is solely for educational purposes. It is not intended to provide investment advice whatsoever. I can't stress this enough. Please seek personalized advice from qualified professionals regarding any of your investment requirements or decisions. How did you guys feel about this episode? Tell me your main takeaway by leaving a review on Apple, Castbox, Podbean, or your favorite podcast platform.

This is Hala, signing off until next time. Are you looking for ways to be happier, healthier, more productive, and more creative? I'm Gretchen Ruben, 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. 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?

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