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If you’ve ever wanted a Masterclass in Web3, NFTs, Cryptocurrency, Decentralized Autonomous Organizations (DAO) and Decentralised Finance (DeFi) then this 45-minute podcast is for you!
I was fortunate to be able to convince Nick Abrahams, the Global Co-leader of Digital Transformation Practice at leading law firm Norton Rose Fulbright to come on the show and give us a very informative, no-nonsense look at some of the hottest topics in technology at the moment.
Nick is the founder of the successful online legal site, LawPath (90,000+ users) and he created the world’s first AI-enabled privacy chatbot, Parker. He also has a thriving career as a keynote speaker on future trends and innovation.. He is the author of the best selling Kindle books “Big Data, Big Responsibilities” and “Digital Disruption in Australia”.
He is on the boards of ASX-listed software company Integrated Research ($500M); the global genomics research leader, the Garvan Foundation; the Vodafone Foundation; and the Sydney Film Festival.
We had a whirlwind tour around Web3 and the many umbrella topics.
I started by asking him for some quick definitions of
We then delved into each in more detail including
- Why is Web3 so important?
- Establishing ownership with Web3
- A 3-dimensional experience of the web
- How big could the Metaverse become?
- What does the Metaverse mean for corporates
- Companies embracing the Metaverse
- Why is Facebook/Meta scared about the Metaverse?
- Are we being brainwashed by Facebook’s view of the Metaverse?
- Things for brands to consider before they jump into the Metaverse
- Tokens as a new asset class
- The concept of Tokenomics
- Legal implications for the Metaverse
- The “MetaBirkin” that upset Hermès
- How the legal industry is coming up to speed
- The different types of NFTs
- Flex Club NFTs
- Art NFTs
- Collectable NFTs
- Twinning NFTs
- Gaming NFTs
- Branded NFTs
- How can corporates best manage NFTs?
- Cybersecurity concerns around NFTs
- What is the future of blockchain, bitcoin and distributed ledger technologies?
- What’s the hottest thing in crypto at the moment?
- The future of DeFi – a parallel banking system
- Decentralised Autonomous Organizations (DAO)
- Staying up to date with all these concepts
1:18 High-level definitions
3:49 Why is Web3 so important?
4:11 Establishing ownership with Web3
4:50 A 3-dimensional experience of the web
5:53 Web3 is the umbrella term
6:05 How big could the Metaverse become?
6:33 Throwback to Second Life
8:50 What does the Metaverse mean for corporates?
9:24 Play-to-earn gaming
10:06 Gaming guilds concept
11:13 Companies embracing the Metaverse
13:10 Why is Facebook/Meta scared about the Metaverse?
14:20 Are we being brainwashed by Facebook’s view of the Metaverse?
14:55 You need a reason to draw you into the Metaverse
16:56 Things for brands to consider before the jump into the Metaverse
19:21 Tokens as a new asset class
19:42 The concept of Tokenomics
20:30 Legal implications for the Metaverse
20:36 The “MetaBirkin” that upset Hermès
21:45 How the legal industry is coming up to speed
23:58 Non Fungible Tokens
24:00 NFT “price is right” gameshow
24:35 Flex Club NFTs
26:15 Art NFTs
26:55 Collectable NFTs
27:45 Twinning NFTs
28:08 Gaming NFTs
28:15 Branded NFTs
28:49 The Bored Ape Restaurant
29:35 NFT for ticketing
31:18 The Twitter NFT fail
33:10 How can corporates best manage NFTs?
35:10 Cybersecurity concerns around NFTs
38:21 What is the future of blockchain, bitcoin and distributed ledger technologies?
39:07 Stable coins
41:36 What’s the hottest thing in crypto at the moment?
42:43 Employee token option plan vs options
43:17 The future of DeFi – a parallel banking system
43:37 Decentralised Autonomous Organizations (DAO)
44:42 Staying up to date with all these concepts
Welcome to The Actionable Futurist® Podcast, a show all about the near term future with practical and actionable advice from a range of global experts to help you stay ahead of the curve. Every episode answers the question what’s the future all with voices and opinions that need to be heard. Your host is international keynote speaker and The Actionable Futurist®, Andrew Grill.
Andrew Grill 0:30
Today’s guests is Nick Abrahams, who was a corporate technology lawyer based in Sydney for Norton rose Fulbright Nick as the global co chair of the firm’s digital transformation practice. Nick regularly advises on tech m&a IT procurement and data privacy and cybersecurity matters, and also assists in house counsel teams with innovation projects. He’s involved heavily in the technology sector as a lawyer, advisor, non exec, Director, entrepreneur and investor. Nick is coming to us today from my old hometown of Sydney, Australia. Welcome, Nick. Hi, Andrew. I’m gonna get you to be very concise on some of the things today we’re talking about some big topics, I want to kick off with things around web three, the metaverse NF T crypto, we follow each other on LinkedIn, even this morning, I wake up to even more news, let’s just break it down. We’re going to hit you with some terms. And I’m going to get Nick at the top of the show to give us a one or two sentence response to what these things are. Then we’re going to dive deeper. So let’s start with the big one. Web three, what is it in a sentence or two?
Nick Abrahams 1:26
Web three, if we think about it, we’ve got you can read the internet, you can write to the internet, but also you can own things on the internet. So you can own digital things. And also our experience of the internet will be embodied. So we’ll move from two dimensions to three dimensions. metaverse. So the metaverse is really just social media sites. But in sort of three dimensions, it’ll be an embodied experience of social media. And f t non fungible tokens is a way of owning digital things. cryptocurrency is the tokenization of everything where both money but also assets can be reduced to tokens and transportable electronically via a distributed ledger. The blockchain is really just a series of databases that are all connected, and they prove transactions defy decentralised finance, it’s basically doing all the traditional things that a traditional bank would do lending and savings and so forth, but doing it with cryptocurrency, in a decentralised way. So there’s no middleman and a nice segue to the last one d a, oh, the decentralised autonomous organisation. A lot of people describe this as the company of the future. Conceptually, it’s more like a partnership with people who are members of it and who have voting rights in relation to what it’s going to do.
Andrew Grill 2:58
So that was a high level look. And I think it’s a challenge sometimes to condense down into a sentence or two these huge concepts. And just talking off air, your title is about digital transformation. And I’m sure your clients, my clients, many of them are still struggling with the transformation getting their things online getting the website to work properly. The challenge, I think is we’re asking people to delve into this Metaverse go into this new challenging world when they’re still fixing the problems that are still there. We’ll go into that. Let’s look at those terms. One by one. Let’s start with web three. Because I think a lot of people and I want to get your view on this. They group all of these new things into web three. You know, one of your top topics is web three the 3 trillion reasons to learn more about cryptocurrency Metaverse, you talked in your description about web one being read only web two being read and write. So web three, let’s go into more detail. What’s the difference? And why should people care about web three,
Nick Abrahams 3:48
the two key changes that web three bring about is the ability to own digital things. So if we think of web one and web two, it’s been fantastic, because a democratisation of content. So we can have you know, 1000, or a million PDFs of something, or JPEGs and something and they can be transported around at no additional cost. But we are unable to establish ownership of any of those digital files. Whereas what web three gives us through NFT technology is the ability to actually be able to say, you know, I own that particular digital file, and that’s recorded on the blockchain for all to see. So I think there’s that ownership, which is really, you know, if we want to see where the big opportunities are coming from, it’s out of gaming, we can talk about that a little bit more detail. It’s also our interactions with the internet are now going to be quite different as we move from what is a two dimensional experience of the Internet, whether you go shopping, etc, to a three dimensional experience where you will via a variety of technologies, whether it’s virtual reality, augmented reality or other types Have things and you will experience the internet in a three dimensional way. So shopping will no longer necessarily be, you know, clicking on on an image of something and it going into a virtual shopping cart. But the experience will be one of actually being engaged within the interface and grabbing things and putting them into what appears like an actual shopping cart.
Andrew Grill 5:25
And for some people listening today, there might be well, I don’t need a third dimension just yet. And so I think that’s why there was some friction and and understanding and conceptualising what this is. And for some people, let’s call them Gen Y, Gen Z, Gen alpha. This is completely normal. But for people who are our age, they’re like, We don’t need the third dimension. When we talk web three. Is it really an all encompassing? So could we put NF T crypto blockchain? Could we put them roll them up to web three? Is that a fair assumption was that being too general?
Nick Abrahams 5:52
Web three is the umbrella term for cryptocurrency decentralised finance, NF T’s and Metaverse sort of become a convenient shorthand for
Andrew Grill 6:04
some experts expect that by 2030, there may be as many as 5 billion users, the metaverse and this giant ecosystem will nurture an economy of its own. So where do you stand on that view?
Nick Abrahams 6:15
You know, you’re quite right. Most of us can’t really understand why people would spend time in in things like decentraland, and sandbox and those other standalone Metaverse, platforms, because it just doesn’t seem that attractive. And we’ve done it before. So we had Second Life was essentially the same sort of visual experience more than a decade ago, and that failed. Two things have changed now. And I think they’ve changed largely because you can now own things in these Metaverse land. So if we look at how this all started from gaming, traditionally, it was the guessing game, whether you’re playing fortnight or x infinity or Roblox it used to be the case that when you made you know, you would buy something. So if you wanted to level up as they call a buyer buy a new sword or buy a new suit of armour skin, as they call it, you paid the money to the operator of the game. And then, you know, whilst Have you played the game, fine, you had an asset that you could use in game, but the minute you left the game, that asset was worthless to you. Whereas now what we’ve got with the metaverse is there is this entire secondary economy. So that within these game is now and indeed within decentraland. And sandbox is people can set up businesses actually creating new skins for yourself. So they sell you those skins of an NFT or they send you that sword as an NFT. And then you can trade that sword. And then you can also earn cryptocurrency within the game. So so that’s where it all becomes really enticing. I mean, the the actual experience of Second Life was it really tapped out and going to a virtual disco and having your avatar sort of dance as awkwardly as I dance in real life. But in a virtual world and there wasn’t wasn’t that much driving. Whereas what we’ve got with the metaverse is the ability for people and organisations to create businesses on top of a platform and make money and create experiences for people.
Andrew Grill 8:24
You mentioned Second Life just before we started recording, I went to redownload Second Life, I wanted to see how the experience changed because I played with it back in 2003. When my computer was a lot slow and the graphics weren’t as cool. I walked down the large jetty, which is the first time you go in there, I’d set my avatar up and walked around. I was underwhelmed after about 35 seconds, so I’m probably the wrong generation. But I think the way to get into put our Metaverse clothes on metaphorically and understand what it means is you’re right around gaming and owning things. I suppose the leap for corporates listening to this podcast is, so I’m not a gamer. I’m someone that sells pharmaceuticals. So how am I going to exist in the metaverse and we’ll go on maybe a bit later on to the legal implications. How can corporates listen to this go from gaming to e commerce and selling things that they have physically in their stores?
Nick Abrahams 9:11
Well, let’s start with gaming. And then we’ll talk about sort of who have been the first movers in this space. So if we look at gaming, that’s where the more advanced Metaverse business models are coming from. And so there’s the concept of play to earn gaming and xe infinity is one of the great examples you can earn cryptocurrency So consequently, it’s called Play to earn and you can earn a significant amount such that in places like the Philippines, there are now people whose job it is to just they just play x infinity and earn cryptocurrency and these aren’t elite gamers these are sort of you know, your super ego gamers as they’re called. These are just normal people who’ve taken a shine to it and and play it and so they can earn cryptocurrency and they’re in many cases earning double the average wage. You’ve got your first Metaverse, worker there. And then we’ve got this concept now in gaming of what’s called guilt. And so what happens if you want to go into one of these games, and there’s more than x infinity, there’s a lot of Pedro games. If you want to go into one of these games, you need to acquire the necessary NF T’s in order to be able to be competitive in the game. So you need to acquire you know, the specific skin or the sword or whatever it is the you know, the potions, etc. So you have to acquire those, but that’s quite expensive. So to start off, being remotely competitive in xe infinity is about a 2000 US dollar proposition, which for folks in the Philippines, for example, now, they don’t have $2,000 to drop on starting in a game. And so what they do is they rent the NF T’s from the so called Game guilds. And so what you’ve then got is a very familiar business model organisations, these game guilds, that own assets that rent those assets out and receive payments, so so you can actually do a traditional sort of discounted cash flow against that too. That’s what’s growing up in gaming, and then that’s what we’ll see come over into the real world. If we look at who’s embraced the metaverse and I think probably the better way to think of this is to think of NF T’s first and who’s embraced NF T’s and then think about the metaverse. We’ll talk about the metaverse Nike. They’ve got a very big proposition in the metaverse and you know, you go in there, you can do a whole range of different games and so forth. And there’s also you know, you can buy a whole range of digital assets for your avatars and buy Nike shoes, etc, etc. And so we’ve seen that as as a big area so that the first off were the fashion labels. So the Dolce and Gabbana has products and so forth. So they’ve all got significant propositions, significant Metaverse propositions. So fashion has been very big how you dress your avatar, and then the fast followers have been sports and the sporting brands. And then now we’re starting to see beverage. So Miller Lite has a big land where you can go and sort of drink in a Metaverse bar. And there’s sort of things that that happen, opportunities that arise in real world as you do that, and then McDonald’s have just launched some patterns, which would allow you as you cruise through the metaverse to order your McDonald’s, and then that would actually be delivered to you in real life. I don’t think I’m 100% convinced you or anyone that this is a fantastic experience right at the moment if you’re not in the world already, or if you’re not under 26. But, you know, I think what we’re starting to see is that these worlds are starting to really collide. And you know, as particularly as that younger demographic gets older, they’re very used to a gaming type experience. And ultimately, the reason why Facebook is now called meta and they’re investing so much money is that our social media experience will be replaced by a Metaverse social media experience. And that’s gamers do a lot of social networking within a game. And so that’s why Facebook is so scared because they face a genuine existential crisis as a result of this move out of traditional social media.
Andrew Grill 13:20
Nice segue because I’m going to talk about Facebook, they actually changed their name to meta platforms, they paid a bank, I think $40 million for the brand. So who should we believe when we hear about the metaverse if you believe the Mark Zuckerberg, Facebook, Metta World will all be wandering around with headsets, I encourage my clients to become digitally curious. So what you’re talking about I absolutely agree with, but I’ve never been a real gamer. However, if you look back to sort of 1994 1995 when universities had the internet, and I was playing around with it in xiety, 9819 99, you could dial up to the internet, back then probably thought we weren’t really need to be doing much with this. I actually have a video of me on George Street in Sydney in 2000 on a web phone, scrolling through CNN news, thinking this is the future. But I think you and I we are pioneers in this space. Because while we may not be living and breathing it I mean, I don’t see you with a gaming headset on and a gaming chair because you’re a lawyer. Maybe you’re doing your part time. I think we need to be curious. Back to my Facebook question. Who should we believe? Are we being brainwashed by Facebook’s view of the metaverse? This is the way it’s going to be. We’re going to meet Zuckerberg as an avatar. Who should we believe other than you when we’re hearing about metaverse? I think the
Nick Abrahams 14:30
metaverse is it’s a slow burn. I mean, I don’t think we’re flipping over into you know, in the sandbox tomorrow. If you’re a gamer, fine. You’re already in that world that’s going to grow and as the gaming community grows older and so forth. I think there’s a natural growth out of that in terms of what happens with those that aren’t in the gaming community. There needs to be a reason to draw you into the metaverse. So snow Dog has a land in Sandbox. So I don’t want to live next to Snoop Dogg in real life and all live next to snoop bugs in Sandbox, but someone paid a million dollars to get the house next to Snoop Dogg in Sandbox. So there are some people who do it and I think for the crypto natives, they get it because this NF T proposition really becomes quite compelling and, and NF T’s have have developed as a digital asset class. And so in order to show those off, you need, you know, you want people to experience that inside and Metaverse type experience, I think that will help to drive it. But I think for people who aren’t crypto natives, or gamers, I think it’s going to be quite slow. And I don’t think anyone’s saying that, you know, this is going to flip overnight. I think that Mark Zuckerberg would love for Facebook to stay exactly the way that it is. I think that would be that’d be fantastic. But what he has recognised is that they’ve got declining user numbers, and you know, a whole bunch of discord and a whole range of other social media platforms that are chipping away. And he’s losing that that younger generation, it’s critical to any major brand to ensure that they can attract and retain sort of younger generations because they obviously become older and then
Andrew Grill 16:19
I have seen so some corporates trying to jump onto the metaverse NFT crypto bandwagon you’ll remember not long ago, Kodak tried to rebrand themselves around Bitcoin. You’ve had whole companies based on Bitcoin and, and they want to get the bragging rights. You published a LinkedIn post today that Deloitte had just announced the opening of their smart factory in decentraland. Price Waterhouse Coopers bought some land there in January and KPMG has bought crypto to hold on to its balance sheet as part of a treasury diversification strategy, and also bought a high profile NFT. So I can understand these thought leaders being the first to try these platforms being digitally curious, but I’m sure as I said in the intro, many of our clients are trying to work out how to just to transform digitally. What thing should they be thinking about before jumping into the metaverse in terms of IP regulation, branding, customer service, as a lawyer, and as a very savvy tech lawyer? What are you advising them in terms of the legal minefields with web three Metaverse and NF T’s? I think it’s fantastic
Nick Abrahams 17:10
that folks like Deloitte and KPMG, and PwC, are having a go because I think that they do need to be involved in the ecosystem can’t advise on something unless you’re part of it. And you understand the ecosystem. I don’t think any of those folks saying, you know, we’re gonna make a fortune out of this. And you know, the Deloitte one was, you know, it was interesting, because it’s a smart factory. So the idea is that clients can go in there and experience what VR can do for manufacturing and VR, virtual reality is, you know, can do great things for manufacturing and remedial maintenance, and so forth. So there’s great, great opportunities. So I think no one’s panting, the balance sheet, funding the whole company that this is going to be the way out, but I think there’s absolutely enough interest there from there’s two big client bases that I see that that we represent. And I’m sure it’s the same for KPMG and PwC, and so forth. So you’ve got your fast growth. Early Stage, crypto, or Metaverse are NFT companies. And those businesses are really important because they are growing at an extraordinary clip. I’ve, I’ve had two meetings with two separate founders over the last month or so, where they both talked about expectations of 1,000x return. So 1000 times your money, and are you and I come from a time during.com Where if you could get 10x, you thought that was a great outcome? Well, now they’re talking about 1,000x. And there are businesses around that have had 1,000x outcome in the crypto space, and they’re legit businesses. So I can’t say that’s not a potential reality, it is possible, not likely for many organisations, but what that means is that there’s a significant group of companies that are growing and the need to be serviced. So we see there’s a lot of opportunity in that with we’re getting very significant companies growing, and I just spent the last couple of days looking at the token omics of a token issuance. And so what happens now, if you’re a crypto style company, or token based companies or an NFT related company, then you have three asset classes of equity, you’ve got cash that you may have, you’ve got your shares, and now you’ve got the tokens that you can produce. And those tokens are sort of quasi equity in some way. They’re like shares and so you then need a whole shedule of what we call token omics, which says you know, what can the company do with those with with tokens when they’re minting new tokens with the other reasons why folks like you know, our our shop and PwC KPMG need to be across this stuff is the vehicle over negotiations are all trying to figure out how they should be in web three. So you look at, you know, Tesla and blah, they’ve you know, they’re all they’ve been acquiring crypto to hold on the balance sheet. As a, you know, it’s corporate treasury diversification. You’ve got, you know, Starbucks and Microsoft accepting crypto payments. You’ve got to understand how that stuff works got Samsung and HSBC, opening in the metaverse, so we have to be part of it. And so that’s that’s sort of why it’s important. And in terms of the legal there’s a few wacky cases. One of my favourite one right at the moment, there’s a case of an artist created the metal book and it’s a very digital representation of the Birkin handbag. And as you can imagine, Amir’s who make the Birkin handbag, we’re not super excited that, you know, the normal look and sell for 10,000 us and the metal book and sells for 42,000. Us. So they weren’t happy. So they brought an action. And interestingly, the artist is claiming his freedom of artistic expression, and drawing parallels with Andy Warhol suit can the legal issues I’ve talked about tokenized, we’ve never had to look at that before. Now we have to become experts in how that all works. And then, you know, things around around the IP, lots of quite novel legal concepts being tested,
Andrew Grill 21:18
brings me to regulation. So I’m wondering the judge or the legal entities that are arbitrating that dispute with the meta book, and other than listening to this podcast and reading all the things you’re doing, how do they come up to speed to understand I mean, you’re doing the right thing as a tech savvy lawyer, as new things come up, you immerse yourself in it, but for your colleagues, for those listening that are in the legal fraternity, how can they possibly come up to speed to arbitrate something that is a very, very esoteric concept, everyone
Nick Abrahams 21:45
Nick Abrahamshas to change. And so we’ve changed as well. So we’re a law firm, or global law firm also got a significant consulting business. So a lot of what I’m doing these days, you know, there’s legal and then there’s the consulting aspect of it. So it’s sort of consulting with organisations going into web three and sort of a bit of morphs out of legal into do a consulting, the judges are just extraordinary. We’ve had this question forever, which is, oh, how does a judge who is of a certain age understand the Internet, and that was always thrown about that they’d never understand it. Judges are incredibly intelligent people, they do a lot of study of things. They have, I think, very curious minds, and so are fascinated by things. And they get up to speed. And you know, judges, at the end of the day, are really being educated as well by the lawyers who appear before them who explained the issues and because it’s an adversarial environment, will get the issues brought to razor sharp focus. So I’ve never, I’ve never been one to have a problem with judges not being up to the task. Technically, this is harder than than the internet wants to understand, certainly the issues associated with how crypto works. And then the speed of development of crypto and the different things that are happening, particularly in decentralised finance, that becomes very complicated very quickly for people who want to participate in that world. But I think with judges, they get a reasonable amount of time to get up to speed on things. And I think they’re good. The bigger problem is how do you regulate things like NF T’s and NF T’s are not protected. They’re not an asset class in the same way that shares are and so forth. So there’s no proper regulation around how they are made available, or distributed to the public. And so what we see is quite a lot of fraud associated with that.
Andrew Grill 23:39
Back to the regulators, I had the fortune of speaking to all of the governors of the European Central Bank’s late last year was on a closed session, and they are grappling with the issue of digital currency and NF T’s and they want to be playing in that space. And they were really looking to people like me and my esteemed panel of what do we do? Where do we go for information, so it’s good to see they’re up there a lot to get through. I want to move on to NF T’s now. And I really enjoyed watching your COVID isolation project your NFT prices, right game show, I’ll drop a link in the show notes. It was a bit of fun, but it really sharpened the focus on what these are. You gave some great examples of the different types of NF T’s and maybe you can run through them now for our audience.
Nick Abrahams 24:15
Most people can’t fathom why our NF T’s worth so much because all we see is the headline number, you know, this particular NFT sold for $10 million. And at the end of the day, it’s a digital file. Often it’s a JPEG and the idea that a JPEG alone is worth $10 million. seems impossible. What I’ve done is to split it into six categories. So the first category, which is the hardest one to understand is what I call flex club and fts. They’re things like board aches or crypto punks. And people are paying millions of dollars for these and there’s something very specific about the so think about why do NF T’s exist? So I’ve got a theory that they’ve actually been created by the cryptocurrency community. Many or a number of people have made a lot of money Out of cryptocurrency, like a lot of money, and then it’s all sitting in crypto. But that’s a non performing asset. So they’ve needed to effect create an asset class. And that’s what NF T’s are. So the digital assets that people can invest in, so So I feel like it’s an outpouring of the fact there’s just so much money that people don’t want to convert into us or Aussie dollars, because you know, they may not want to pay tax on it, etc. So you’ve got these concepts of NF T’s. First one flex club, NF T’s, there’s a limited number of them usually 10,000. So they’ve got this concept of provable scarcity, they have additional benefits to them. So you might get, you know, free NFT drops in the future. So think of that, like a dividend stream from a share. They offer access to VIP event where you can hang out with like minded crypto folks that are a little bit like sort of fancy crypto Country Club, you know, let’s not forget the basic humanity of it all, which is, these are people who’ve made a lot of money out of crypto, and so they would like to show off how much money they’ve had. So you know, in the real world, it might be a green Lamborghini. But in the digital world, if you own a board eight, or a crypto poem, that’s a sign that you’ve really made it and that’s, that’s what’s called Digital flexing. So we’ve got flex club, NF Ts, then we’ve got our NF T’s there was a an artist called people who previous to NF T’s had only sold a print for $200. And then last year sold a piece of digital art as an NF T for $69 million. All I can say about these art is art. And people pay a lot of money for contemporary art. But you know, others might think it’s not very hard to create or not worth that much. But people will pay, you know, 10s of millions of dollars. So I think art, it’s one of a kind, we just put that to one side and say that is art and if the beauty is in the eye of the beholder, and if that Beholder just happens to have enormous amounts of crypto, that’s a great time for the artists then got the most exciting era. I think it’s collectible and fts. This becomes understandable, particularly with sports memorabilia, so we’ve always had sports trading cards. And now what we’ve got is those trading cards have been digitised. And so the US National Basketball Association has been the standout winner with an NFT drop called Top shots. And so more than 700 million US dollars worth of top shots, which are literally just little couple of second video clips on basketball. The Basketball Moves have sold in the last year. And then the great part about that is every time one of those top Shots gets on sold, the NBA gets 5% and literally every sporting code in the world is in the NFT game, that collectible game and then getting through them twinning NFT so this is where you get a digital twin of your real world purchase very popular in the luxury goods market. So Dolce and Gabbana just sold nine suits for 6 million US dollars and the hook was that you received an NF T twin of that suits over your avatar could wear the same suit online and Alfa Romeo just released the first ever car with an NFT logbook, we then got gaming NFT so talked about the idea of buying the skins or the sword that’s very popular. And then finally, where we’ve seen, you know, literally there’s over 100 of the world’s biggest brands have minted their own NF T’s in the last six months. And so that’s where you can actually do a significant amount of community building with your brand by minting NF T’s and think of that as an extension of the loyalty programme. So you give a particular NFT of you know, whether it’s a Nike NFT or a Samsung NFT and you make that available to community and then I get benefits as a result of that
Andrew Grill 28:45
really interesting different NFT asset classes. And you mentioned the board apes I read a story in the weekend about a pop up restaurant called the board eight restaurants, it’s a pop up and if you have a certain type of board ate you actually get some free meals but the kicker was they don’t take cash obviously they only take ape coin but when you pay for the eight coin between ordering it and then getting the burger the value of the coin has changed. And also you have to pay gas fee to actually complete transaction it actually cost the person more in normal money than it would normally to buy a hammer but apparently they’re actually very good hamburgers. So that’s a great thing.
Nick Abrahams 29:18
There’s been a surprising number of those that have hospitality flex club that that sense of, you know, a VIP access that you get something special the idea of paying gas fees, which can be incredibly expensive. This doesn’t appeal to me necessarily but you know, there’s a there’s clearly a market.
Andrew Grill 29:34
So one good use case I saw is ticketing. So I’ve been to a few concerts here in London I’ve dealt with the authorised ticket outlet but there are a number of secondary ticket selling services that have fallen foul of all the regulators because they charge very large prices. There’s one I saw was actually on a London Underground billboard. So this is me going mainstream called seat lab NFT and I went to their website and they’re talking about how they’re going to issue tickets in NF T’s. Now I can see about it being collectible, but it couldn’t be unique and Obviously, if it’s stored on a blockchain, it’s irrefutable. So those sort of use cases where we might break out of the gaming into the real world and actually solving real world problems like ticket touting.
Nick Abrahams 30:10
That’s a great use case. So if you look at Coachella Music Festival this year, they did their ticketing. By NFT. The Super Bowl was all ticketed by NF T tickets. And in fact, the US football folks, so they sold 250,000 tickets as NF T’s last year and intend to grow that this year. So ticketing is a great use case for NF T’s. And it solves two problems. You know, one is, of course, proving that you’ve got the correct ticket. And then the other one is, you know, people love to collect tickets to significant events. So yeah, I think tickets are going to be important, there’s going to be some utility to it. Like, I don’t think it works necessarily just for, say, a museum to do NFT tickets, there has to be more utility to the ticket these days. So one off big events. Yeah, okay, that’s a that’s a good one. Or if you if you love your particular team, that’s a reason to collect the tickets. But I don’t think just because you ticket people necessarily means you need to be in the NFT gap.
Andrew Grill 31:17
So you talked about the big numbers. And there’s one example I want to pull up crypto entrepreneurs Sina iSavi, bought Twitter founder Jack Dorsey’s first ever tweet as an NFT, for $2.9 million. Last year, it ended up with a top bid of just $280. He then listed the NFT, for sale again at 48 million. What went wrong here? And why are these prices so ridiculous? That’s widely regarded
Nick Abrahams 31:37
as being you know, maybe that’s the sort of harbinger of the NFT bubble bursting. I’m not sure that’s the case, because we’ve had, you know, a number of NF significant NFT drops, since then that have, you know, raised more than a couple 100 million dollars. So I don’t think it necessarily means that, you know, the whole NFT thing has been proven to be, you know, just a complete sham. And above all, it does show that you’ve got to be careful what it is that you’re buying, and what is the value to it. So if it’s art, then it’s art. And I think any art collector will tell you irrelevant what you pay for the art, you must buy the art because you love the art. If you’re buying it as an investor, then that’s a dangerous proposition. The fact that no one was prepared to bid, you know, more than a couple of $100 seems unusual. And you know, one thing we need to be careful about with the NFT world too, is there’s a lot of what’s called washe trading, where people are selling NF T’s to themselves driving up the price, it’s not necessarily a fair or level playing field out there with with NF T’s. I don’t think that that means that the NF T world is going to collapse. But it does mean that people should absolutely be on notice that, you know, be very careful what you buy.
Andrew Grill 32:58
You mentioned the sporting a uses and Becca in your part of the world. The Australian Football League or the AFL had a recent balls up pun intended with something they were doing, they left a Discord server open. So what should corporates and companies be doing to get into the NFT world securely and safely?
Nick Abrahams 33:17
Very few organisations and I’d say probably none have the capacity to execute on a significant NFT drop internally. So there’s the technology layer, which in many respects is actually relatively simple. There’s a whole range of already existing smart contracts out there and platforms that you can use. So technically, you can, you know, you can possibly do it yourself. What’s critical is NF T’s don’t just sell because they grant you know, the board he didn’t sell, because they’re great pieces of art. I mean, there’s there’s nothing to the artwork, they sold because there was a community developed around them. And so, so with organisations that are looking to get into the NFT world, you need good advisors around how to build a community that’s going to support that NFT and that’s where discord becomes very important. So the discord which most people will not know what Discord is, if you’re a gamer or a crypto native, you’ll understand discord. It’s a very popular social media platform for those folks and then crypto Twitter is the other area and that’s that’s normal Twitter, but it’s just folks who concentrate on crypto related postings. And so that’s how you build your community. It’s a pretty fickle community in a sense that if you don’t know what you’re doing, or you get something wrong, which is what happened with the poor old landfill, then the community is pretty quick to react and yeah, the AFL unfortunately didn’t manage the cold channel correctly. And so they got bad reactions from that. But that’s why if your organisation is getting into this, it’s generally coming from the marketing team, the marketing team saying you know, we need to be In the NFT world, so it’s generated by marketing, but you need good advisors on how to build a community good technical advice, you know, good legal and consulting advice.
Andrew Grill 35:09
It’d be remiss of us not to talk about security, and specifically cybersecurity around here, because you’ve got all this money, this value, and every day I hear about wallets being hacked and exchanges being hacked. And I read yesterday about an Instagram account that was hacked, and then something was put up and people were then forced to buy things and they lost lots of lots of money. My 101 Public Service Announcement around cybersecurity is use a password manager turn on two factor authentication, check your credentials, and have I been poned? Their basic hygiene things, what do you need to do above and beyond that, if you’re playing in the crypto NFT, web three world,
Nick Abrahams 35:41
those basic hygiene factors are fantastic, you should apply those across everything that we do in the NFT world, there’s a lot of what’s called Ron Paul’s that have happened, which is basically people promote these NFT projects, and then people put their money in. And then, you know, the NFT project never happened, the lunar promoter was people are prepared to accept an eyewatering amount of risk in the NFT. World, I think, because the returns are so extraordinary. Now, as I said, if you have a potential 1,000x return, you can accept a pretty high level of risk. And that’s what people are doing. And so my advice would be a don’t get into the NFT world, unless you know an awful lot about it, I mean, you would have to spend 40, or 50 hours studying the NFT world to understand even the very beginnings as to why an NFT would be valuable, it’s a harder asset class to pick than crypto. Crypto is hard enough, but at least with crypto, you know, you’re investing in a fungible currency. So always be worth some value. Whereas with an NFT, you know, it could be worth nothing, you’ve got to study it very, very deeply. A lot of people will invest in NFT projects, where the promoters are anonymous, that’s not something I would ever think of doing. I mean, we wouldn’t do that in real life, we wouldn’t sort of, you know, put money into something where we didn’t know who was responsible for it, because the success of most of the NFT projects is largely derived out of a, who is the artist who’s involved and have they got a following, then, you know, if they’ve got a good following that the chances are they have it’ll be a good drop. And then who are the other promoters? Do they have a good reputation as well, I don’t recommend just punting blindly. I think, you know, the team is critically important and looking at what they’ve done previously in reading the white papers, etc. I feel
Andrew Grill 37:37
like we’re unpacking the Russian dolls, because we’ve talked a lot about crypto or cryptocurrency. And if I just rewind back to a sort of 2017, when I started getting really interested in this, I tell the story that I sat next to someone at a Christmas party in London, I said, What do you do? And he said, I’m a Bitcoin expert. I said, Well, this is your lucky evening, I’m gonna pump you for questions. A couple of things that I learned back then that really shocked me. First of all, Bitcoin was never designed as a currency, it’s got a global transaction speed of seven per second, if you compare that to visa does about 65,000. And more recently, I learned a fact that for every one Bitcoin transaction, it uses the same amount of energy that you could do 1.2 million visa transactions with, that’s alarming when people don’t know that. And to your point, you talked about a number of hours of educating yourself just about NF T’s you can probably do that and more in Kryptos what is the future of blockchain Bitcoin and distributed ledger technologies,
Nick Abrahams 38:25
we need to recognise that Bitcoin was never intended to be, you know, a transactional currency and it’s best analogy is digital gold in that, you know, it’s really a buy to hold proposition they’ll only ever be 21 million of them, there’s currently my mind about 19 million, so we’re getting closer to, to the 21 million. It’s not a transactional currency, but there’s loads of other crypto currencies that are intended to be transactional currencies. And so they’re the ones that we would look to in terms of being a cash type replacement Aetherium or others. So you’ve got that and then you’ve got the stable coins, which coins which are linked to particularly the US dollar, so they’re fascinating and they’re a really important part of decentralised finance. The idea is that you take all the volatility out of the cryptocurrency because it’s just a currency that is pegged to a to the US dollar, so you could transfer it across the blockchain. And it would be the equivalent of transferring US dollars across the blockchain, but you don’t have all of the transfer fees in the intermediary. Lots of good and interesting technology happening there. The energy usage is a massive issue with Bitcoin is not great for sure and use a lot of energy as does Aetherium and a few of the other what’s called Proof of Work cryptocurrency. So what is happening is that there are solutions being devised which will move them away. from being this proof of work concept, which sucked a lot of compute power to doing other things. So I’m a believer that, you know, we will solve this, you know, in the next couple of years, the community has recognised that it’s an it’s a massive issue. And it’s a massive to hold back on the ability of these currencies, to have broad based adoption. I believe in five years time, we’re gonna look at this and say, Do you believe that crypto currencies and digital assets will be a part of the ecosystem. And if you say you don’t believe in, you know, just on the sidelines, I it’s not going to happen. You look at the numbers, cryptocurrency is now between two and $3 trillion worth of value and growing incredibly fast. And that’s only happened in the last, you know, 10 or so years. You’ve got NF T’s which went from in 2020 $13 million of value to 41 billion last year. And then you’ve got defy, which went from pretty much nothing to $200 billion last year. So to say that this is not going to be part of the landscape in five years, I think it’s pretty aggressive. And so my belief is that the digital assets and crypto will be part of the landscape in five years, but it’s not going to be linear, there’s going to be fraud, there’s going to be losses is going to be technology issues. Ultimately, we’ve got a new asset class for all of us, we need to be curious about it and try to understand how it works and how we can use it to benefit our businesses. And indeed, our customers
Andrew Grill 41:26
think the one thing we haven’t factored in, we don’t have an insight because we’re not there as what will central banks do. So that will be another thing that we need to factor in? What’s the hottest thing in crypto that you’re seeing at the moment,
Nick Abrahams 41:35
stable coins are absolutely the hottest thing in crypto. So this idea that you can link a coin to the US dollar. So you know, it was in effect the same as a US dollar. And that was US dollars, actually, verifiably held in a financial organisation or bank, that was where they started. And now you’ve got sort of crypto stable coin. So what they do is they over collateralize, the coin, so that one, let’s call it lunar, which is one of them, that one learner has three learners deposited as collateral against them. So you can be comfortable that there’s real value to it. It’s trying to take out the volatility. And then you’ve got now what’s called algorithmic stable coins, which just the maths on that blows my mind. So this has all happened in the last six months. So that’s why I say this stuff is moving incredibly fast. What’s exciting is I think, stable coins. And then I think token omics, we will talk more about token omics, you’ll hear loads more about economics in the next year or so. I mean, I did my very first and I think one of the first in this country, at least an employee token option plan, where the employees of this particular company, rather than be given equity, or shares were given tokens, and that we’re super excited about that, because tokens as soon as they vest can then be sold on a decentralised exchange. Whereas if you’re just getting equity, unlisted company, it’s an illiquid asset. So yeah, token omics, I think is, is the next big thing.
Andrew Grill 43:05
I agree. We’re almost out of time, we could have a whole session on that. So maybe we’ll come back and do that at some other stage. But before we run out of time, defy and Dao, you alluded to that there, where will we see that play in the next few years
Nick Abrahams 43:17
decentralised finance, I think it’s going to be very significant. It’s effectively a parallel parallel banking system. There’s a lot of smart money in it, I think they’re getting quite sophisticated with the way that they are dealing with both transactions and also trying to take the risk out of that. So I think defies interesting. Dows decentralised, autonomous organisations. So people believe that this is an alternative to companies, you know, there are the sort of techno utopian idealists who believe that these are all organisations that exist and you and everyone votes on everything. And I just don’t think that that happens, and they vote because it’s all done by technology. So you know, if you’ve got a certain number of governance tokens, you can get a certain number of votes and every decision has to be voted on. So anyone who’s ever been involved in a partnership will know that everyone voting on everything is a very poor way of organising any complex business. I don’t think that’s Sexually going to work at least as as pure as that. But this concept of Dows is very strong in the crypto community and it will continue to grow. But I suspect it will start to morph into something that looks a lot more like a traditional corporate structure where you’ll have power to make key decisions centralised in a few people very similar to what we have with traditional organisations, but certainly something to keep an eye out for.
Andrew Grill 44:42
how can listeners stay up to date with these fascinating topics? And how do you stay up to date?
Nick Abrahams 44:46
You should definitely read a lot and podcast coin telegraph would be a great place for everyone to start. It’s got a good pasta board understanding of things to look up crypto or Metaverse in podcast or you could you know listen to my podcast on LinkedIn, there’s some good folks, obviously, you know, Andrew, yours, my things, everyone’s posting some good things. And it’s about engaging with the content and engaging with community asking you questions, and you’ll find that people are very excited to explain what’s going on.
Andrew Grill 45:13
Nick, thank you so much for your time today a fascinating discussion. I’m sure we’ll talk more in the future.
Nick Abrahams 45:17
Thanks very much, Andrew. Appreciate it. And thanks, everyone, for listening.
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Transcribed by https://otter.ai