Why we should be paying attention to NFT's

I was obsessed with Diablo 2 in high school. After doing my homework and studying for the SAT’s, I’d spent the rest of the day slaying demons online. There was one part of the game that I found addicting: treasure hunting. In Diablo 2, the best weapons were randomized. Every boss drops a random weapon, and the properties of the weapon were random too. You'd end up with one of a kind weapons. After a few months of killing the same bosses over and over, I was able to obtain one of the rarest and most powerful weapons in the game. my bow was similar to this I was ecstatic when I got this item! I posted my find on a Diablo 2 forum, and the reactions were insane. One person offered to send me $500 cash in the mail for it! I turned him down. Even though my bow wasn’t “real”, I had an emotional attachment to it. Looking back, I realize this was my first exposure to the concept of NFT’s. Earlier this year, an [NFT by Beeple sold for $69 million](~/AAAHUQA~/RgRjCmGYP0UgYWQ2OTI5ZDg1YTE5MTI5Y2Y3Nzk1MzcxNzUyYzBiMTBEX2h0dHBzOi8vd3d3LnRoZXZlcmdlLmNvbS8yMDIxLzMvMTEvMjIzMjUwNTQvYmVlcGxlLWNocmlzdGllcy1uZnQtc2FsZS1jb3N0LWV2ZXJ5ZGF5cy02OS1taWxsaW9uVwVzcGNldUIKYSeY3Cdhn67CHlIbdHJpc3RyYW1iYWxkd2luOTJAZ21haWwuY29tWAQAABbd). I rolled my eyes and immediately thought, “that’s an interesting way to do some money laundering.” But you know what? There have been so many things that I thought were stupid at first, that ended up becoming massive successes. I had no idea that a lip syncing, dancing app called Musically could turn into the next big social media sensation (TikTok)! You can't “skate to where the puck is going” if you're not open to researching new technologies and ideas. Trust me, never ignore what the nerds are excited about because they’re the ones building the future. In this email I want to: - Give a quick 80/20 on what NFT’s are - The psychology into why people are spending so much money on “JPEG’s” - Practical uses of NFT’s outside of digital art - And thoughts on investing in them Let’s dive in! What IS an NFT? It stands for Non Fungible Token (NFT). Let’s start with what fungible means. Fungible means it can be replaced by another, and it’s the same. Think about a dollar - there’s no difference between a dollar that you and I own. Non-fungible means that it’s unique. The Mona Lisa is non-fungible because there’s only 1 original in the world. The first Superman comic book is non-fungible too. There are around 100 copies in existence. Why would they be non-fungible if there are that many? Think about why a mint condition one sold for $3.25 million, and lower quality versions only fetch $100k. The quality differences make them all unique. Let’s transition into the online world. A decade ago, there was no difference between digital images. We could both have an image of this monkey on our hard drive and it’d be the same. The Ethereum blockchain meant we could now apply ownership status to digital items. A token could verify and prove who "owns" a digital item. While we could all have an image of this monkey on our hard drive, [only one person in the world is considered the owner of this](~/AAAHUQA~/RgRjCmGYP0UgNzYyNWU0OGE5ZTMwOTJmYzQxZjY3YTBhYWU1ODQ3OWNESWh0dHBzOi8vb3BlbnNlYS5pby9hc3NldHMvMHhiNDdlM2NkODM3ZGRmOGU0YzU3ZjA1ZDcwYWI4NjVkZTZlMTkzYmJiLzIxNDBXBXNwY2V1QgphJ5jcJ2GfrsIeUht0cmlzdHJhbWJhbGR3aW45MkBnbWFpbC5jb21YBAAAFt0~). According to Opensea, this image of a monkey is actually a Cryptopunk was sold for close to $5 million USD! So, what makes this piece so valuable? First worth is relative. It's worth whatever someone out there is willing to pay for. Some people are willing to pay $50,000 for a Nike “[Back to the Future](~/AAAHUQA~/RgRjCmGYP0UgOGRkOTYxNGE5OGRiNDEyZmE0OTQxOWFjMTgyOTUxOWREPGh0dHBzOi8vc3RvY2t4LmNvbS9uaWtlLWFpci1tYWctYmFjay10by10aGUtZnV0dXJlLWJ0dGYtMjAxNlcFc3BjZXVCCmEnmNwnYZ-uwh5SG3RyaXN0cmFtYmFsZHdpbjkyQGdtYWlsLmNvbVgEAAAW3Q~~)” shoe. You and I probably wouldn't, but that doesn't mean it's not worth $50k to someone else. One of the most powerful motivations in the world is status signaling. According to Cashvertising, “To be superior, winning, keeping up with the Joneses” is biologically programmed in us. That driving force is why the CEO of LVMH is the wealthiest person in the world. This desire to status signal has only increased in the past decade. Social media has made us more insecure than ever. We can't help but compare ourselves to others because we're constantly bombarded by other people's highlight reels. So this leads to people wanting to status signaling more and more. We have to show off the latest place that we ate brunch at! There are several interesting trends when it comes to status signaling. First, we're spending more and more time online. The flexing is going from in person -> online. Before: Show off status in person to other people. Here is a LV bag, and a fancy car. Present: Show off status online using items from the physical world. Here is a photo of my fancy vacation and my fancy car. Future: Show off digital first items. Gen Z is doing it now with rare skins in Fortnite. Crypto people are showing off their NFT's. Imagine what happens once virtual reality starts becoming more popular. Second, people tend to exaggerate and fake their wealth online. The rapper Bow Wow was caught lying about flying in a private jet once. I once saw an influencer post that she was on the beaches of Bora Bora. Someone caught that she actually in Florida.... Don't get me started on what Facetune and photoshop has done to our trust issues. It's hard to trust what people say online, so “proof” will become more valuable. But how do you prove things in an online world? Let’s circle this back into Cryptopunks. Cryptopunks are expensive. The cheapest ones are ~$280,000 as of this writing. Many people in the Crypto world are anonymous for safety reasons. If that’s the case, how do you status signal to the world that you actually own a ton of Crypto? You buy a Cryptopunk (or another NFT) and display it as your profile pic. It’s signaling “I’m a big swinging dick in the space because I can afford a Cryptopunk.” You might be wondering what’s stopping you from uploading a .JPG of a Cryptopunk that you don’t own? You could. But it’s kinda like wearing fake Jordans to a sneaker convention. People will know, and you’ll be laughed at. Wealth can be faked online. Supercars can be rented. Everything can be photoshopped. NFT’s provide proof in an increasingly digital world. Some other motivations include identity and a sense of belonging. Humans are tribal by nature. It's why people are so hardcore about college football teams, or why they're so passionate about iPhone vs Android. APPLYING NFT’S OUTSIDE OF DIGITAL ART NFT’s are synonymous with digital art right now. I want you to think about how the technology are going to be applied to the rest of the world. Remember that NFT’s provide proof of ownership of a digital item. Gaming: Gaming is by far the biggest potential of NFT’s. You already have games like Axie Infinity and Gods Unchained. Items in the game are automatically NFT’s. Imagine playing a video game, and getting paid thousands of dollars for your rare items. This is already a reality. Axie Infinity started in 2018 and already has a market cap of $4.2 billion [Here are some of the top items being sold](~/AAAHUQA~/RgRjCmGYP0UgNzA4OWM5OWRlNTQ2OTk4ZTg5Zjc5NjQ3YjU5ODIwZWZEXWh0dHBzOi8vb3BlbnNlYS5pby9jb2xsZWN0aW9uL2F4aWU_c2VhcmNoW3NvcnRBc2NlbmRpbmddPWZhbHNlJnNlYXJjaFtzb3J0QnldPUxBU1RfU0FMRV9QUklDRVcFc3BjZXVCCmEnmNwnYZ-uwh5SG3RyaXN0cmFtYmFsZHdpbjkyQGdtYWlsLmNvbVgEAAAW3Q~~)Now imagine popular games such as World of Warcraft, Pokemon, and Magic the Gathering implementing NFT’s. Event Tickets: Scalping is a dirty part of the event tickets. Scalpers buy tickets and resell them at an inflated price. Scalpers end up profiting instead of the artist, and some fans get “priced out.” [One comedian in Holland completely sold out](~/AAAHUQA~/RgRjCmGYP0UgOTlhZDQzYWRjOGY2NWI0NDBkNzAzZDQyMTlkMTlmMjJEaGh0dHBzOi8vZGVjcnlwdC5jby80OTI4L2hvdy1jb21lZHktYXJ0aXN0LWpvY2hlbS1teWplci1iZWF0cy10aWNrZXQtdG91dHMtd2l0aC1ndXRzLXRpY2tldGluZy1ibG9ja2NoYWluVwVzcGNldUIKYSeY3Cdhn67CHlIbdHJpc3RyYW1iYWxkd2luOTJAZ21haWwuY29tWAQAABbd) his concert using NFT’s. All 50,000 tickets went into the hands of his fans at retail price. Stocks: Do you remember the whole Gamestop fiasco? A big part of it was due to naked short selling. Big banks were lending shares of securities that don’t actually exist. While it’s technically illegal, big banks are able to take advantage of different loopholes. Now imagine if the stock market was actually transparent, and you had to prove ownership first. Music. Real estate. The Creator economy. The applications of NFT is infinite. How to Invest in NFT’s: Don’t think for a second that I’m encouraging you to invest in NFT art. They’re highly speculative, and 99% of them will be worthless within a few years. Who knows what CryptoPunks, Bored Ape Yacht Club, Pudgy Penguins, and NBA Top Shots will be worth in the future. Instead, the best way to invest into NFT’s is to invest in Ethereum itself. Why? Because most NFT's are being minted and sold on Ethereum (Although it is starting to expand to other Blockchains such as Solana). To invest in Ethereum is kinda like investing in an Index Fund. You're not betting on any individual component, but that the entire market will go up. (Transparency: I own some Ethereum) If you want to go down the NFT rabbit-hole, here are some links: - [OpenSea](~/AAAHUQA~/RgRjCmGYP0UgNWEzNGZhNTMzMGNmYmQ0OWU2ODlhNWMzMTFiNDkyNWNEE2h0dHBzOi8vb3BlbnNlYS5pby9XBXNwY2V1QgphJ5jcJ2GfrsIeUht0cmlzdHJhbWJhbGR3aW45MkBnbWFpbC5jb21YBAAAFt0~): The biggest NFT market place in the world ~/AAAHUQA~/RgRjCmGYP0UgMGM1MTQwMjZmODE1MWVkNmIzOWYwYjkzNTE4MzdkNzBEF2h0dHBzOi8vbmJhdG9wc2hvdC5jb20vVwVzcGNldUIKYSeY3Cdhn67CHlIbdHJpc3RyYW1iYWxkd2luOTJAZ21haWwuY29tWAQAABbd - [NBA Top Shot:](~/AAAHUQA~/RgRjCmGYP0UgMGM1MTQwMjZmODE1MWVkNmIzOWYwYjkzNTE4MzdkNzBEF2h0dHBzOi8vbmJhdG9wc2hvdC5jb20vVwVzcGNldUIKYSeY3Cdhn67CHlIbdHJpc3RyYW1iYWxkd2luOTJAZ21haWwuY29tWAQAABbd) NFT’s applied to the NBA Cards ~/AAAHUQA~/RgRjCmGYP0UgNmVkNTJlZDQzZDU3MDc5MjdkYTg4MTA4NDIxY2FhMjREGWh0dHBzOi8vYXhpZWluZmluaXR5LmNvbS9XBXNwY2V1QgphJ5jcJ2GfrsIeUht0cmlzdHJhbWJhbGR3aW45MkBnbWFpbC5jb21YBAAAFt0~ - [Axie infinity:](~/AAAHUQA~/RgRjCmGYP0UgNmVkNTJlZDQzZDU3MDc5MjdkYTg4MTA4NDIxY2FhMjREGWh0dHBzOi8vYXhpZWluZmluaXR5LmNvbS9XBXNwY2V1QgphJ5jcJ2GfrsIeUht0cmlzdHJhbWJhbGR3aW45MkBnbWFpbC5jb21YBAAAFt0~) The biggest NFT game ~/AAAHUQA~/RgRjCmGYP0UgNzY2YzAxM2VmNTg5NWI2MWUwMzEyY2RlMjUyZDk3ODlEkmh0dHBzOi8vb3BlbnNlYS5pby9hc3NldHMvMHg0OTVmOTQ3Mjc2NzQ5Y2U2NDZmNjhhYzhjMjQ4NDIwMDQ1Y2I3YjVlLzYzMzk2NTU5MzgyMTA4MzY2ODkxNTUyMjI5MTA1MTM5MDQ1MTIyNjY2MjMyOTEwMjY5MjU2NjU0NjU3MzU5MzYyNjY0MTA2NTU3NDQxVwVzcGNldUIKYSeY3Cdhn67CHlIbdHJpc3RyYW1iYWxkd2luOTJAZ21haWwuY29tWAQAABbd - [The Gronk Career Highlight](~/AAAHUQA~/RgRjCmGYP0UgNzY2YzAxM2VmNTg5NWI2MWUwMzEyY2RlMjUyZDk3ODlEkmh0dHBzOi8vb3BlbnNlYS5pby9hc3NldHMvMHg0OTVmOTQ3Mjc2NzQ5Y2U2NDZmNjhhYzhjMjQ4NDIwMDQ1Y2I3YjVlLzYzMzk2NTU5MzgyMTA4MzY2ODkxNTUyMjI5MTA1MTM5MDQ1MTIyNjY2MjMyOTEwMjY5MjU2NjU0NjU3MzU5MzYyNjY0MTA2NTU3NDQxVwVzcGNldUIKYSeY3Cdhn67CHlIbdHJpc3RyYW1iYWxkd2luOTJAZ21haWwuY29tWAQAABbd): Rob Gronkowski is a famous Football player. He created his own NFT card commemorating his career. He also throws in the opportunity to meet him, and attend one of his football games. There's so much more I can talk about NFT's but this email is getting long. Something special is happening right now as we move into Web 3.0. More decentralization. More money is going towards the creators and the people, rather than entities. Keep your ear to the ground! Talk soon, Charles P.s. Make sure you watch [Ready Player One](~/AAAHUQA~/RgRjCmGYP0UgNGMzM2FhNWNhZGI2NWE3ZWJhNTQ3NzliYjY5NDU1MTREK2h0dHBzOi8vd3d3LnlvdXR1YmUuY29tL3dhdGNoP3Y9Y1NwMWRNMlZqNDhXBXNwY2V1QgphJ5jcJ2GfrsIeUht0cmlzdHJhbWJhbGR3aW45MkBnbWFpbC5jb21YBAAAFt0~). The world is heading in that direction faster than anyone realizes. You received this email because you subscribed to our list. 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