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December 3, 2021 43 mins

Episode 17. Do you think NFT´s are nonsense? You should listen to this.

We talk about NFT´s, what they are now, where they can go in the future, how to understand their value and the potential disruption  they could create in different industries.

We  discuss:
- What´s an NFT at its most basic
- Different chains and markets where they live (Ethereum, Tezos and Solana)
- Why again you need to ignore the noise to understand the signal
- Where can you find value?
- NFTs as proof of authenticity
- NTFs as a new model for all Artists and Intellectual Property creators
- How artists can generate royalties for a life-time.

We do not provide financial advise in any form.  All information is our opinion and for entertainment use.

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Transcript

Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Gabriel Riesco (00:01):
Welcome, everyone to a new episode of the
crypto noobs. Podcast. HelloAlex. How you doing? Good. Okay,
so we're gonna dive in rightaway. Today, we're gonna talk
about a very hot subject, whichis NF T's. It's creating a lot
of agita. Some people don'tunderstand it. Some people think

(00:23):
it's nonsense. Some people thinkit's a bubble. But the reality
not everyone knows what NF T is.
I'm not a huge expert, but myunderstanding and if to make it
simple, if you don't know whatan NF t is, you have to
understand right away, it's acollectible. If you understand,
if you understand collectibles,you're going to understand NF

(00:44):
T's. If you don't understandcollectibles, just don't play
the game, because then you'renot going to understand
collectibles. And then you'renot going to understand what NF
T's are, which is like a double,double draw for you. But
anyways, having said that, Alex,what is an NFT?

Alexandre Fuchs (01:04):
So, so I've gone down the rabbit hole on
this one again. NFT just standsfor non fungible token to make
it super simple, justdefinitionally what it means is
that what you're buying is notthe same as other individual
units. So for example, when yougo and buy Bitcoin or Aetherium,
or any of the usualcryptocurrency or crypto assets,

(01:26):
whether you own this particularBitcoin, or that particular
Bitcoin doesn't matter, everybitcoin is kind of the same the
same way that $1 is $1. So if Igive you $1, you give me $1.
Bill, we haven't really, youknow, nothing has changed since
you know, similarly in the realworld, if I have a trading card,
and I give you a trading card,you give me one back then the
specifics of that trading card,baseball card, whatever, or arts

(01:47):
or Picasso or whatever, isobviously what's important in
trying to figure out the valueof one NFT versus another NFT.
So the market as it exists rightnow or how it's been developed.
So at the very beginning, theway to think about it is it
again, it says back to theblockchain a decentralized
system, so that you can accountfor individual tokens, but this

(02:12):
time, not fungible tokens, theway that we all understand
Bitcoin Aetherium and the restof the blockchain is to work.
This is just passing aroundtransactions where you're
passing around the same token,the same fungible the same
elements back and forth betweenpeople who are buying and
selling Bitcoin buying andselling a theorem and so on, so
forth. In this particular case,you're tracking individual

(02:33):
tokens.

Gabriel Riesco (02:33):
Okay, so tokens, let me let me stop you there for
someone that doesn't understandwhat fungible is, what's the
difference between fungible andnon fungible?

Alexandre Fuchs (02:41):
Sure. So fungible just basically means
the same fungible means that ifyou were to put it together, it
would essentially and you wouldhave pulled one out, it would be
the same than the one that youput in. And so water is
fungible, right? If you addwater to water, whatever water
you take out of the tub, or youknow, receptacle is going to be
water, right? If you put 10Picasso's in with 10, Matisse

(03:03):
and 10. So then what you maytake out of that box may not be
10, Picasso's, it could be onebigger, so for Matisse and twos,
or whatever it is, it's notfungible because they're not the
same.

Gabriel Riesco (03:15):
Got it. Okay, so keep going.

Alexandre Fuchs (03:17):
So, so what's new about this is that so now
you have a technology thatallows a very public in a public
decentralized way, again, let'snot forget the pillars of what
blockchain technology is aboutdecentralization, that instead
of having to get somethingauthenticated by Christie's or

(03:38):
by, you know, the manufacturer,or the initial artist or
anything like that, what happensat the genesis of the of the
individual token, the creator ofthe token, ascribes, you know,
this finds creates the token,whichever way they want, but
it's not recording a way thatnobody can challenge whether it
is authentic to the person whocreated it, or it is authentic

(04:01):
to the specifics that were givento it to start with.

Gabriel Riesco (04:03):
So in other words, it's a guaranteeing the
authenticity, the originality of

Alexandre Fuchs (04:09):
the yes, on top of a couple of different things.
So basically, if you want to puta poem and you want to write a
poem, and you say, Okay, I havea poem, I'm the first one who
wrote this poem, nobody elsedid. Or script or anything, any
intellectual property, right. Sofor example, in Europe, what you
do if you write a script is thatyou take the script and you

(04:30):
register it to some nationalagency that says, I wrote this
first right. In the UnitedStates, for example, just kind
of funny what you do is that youput the script in an envelope
and you mail it to yourself andyou never open it to make sure
that you have something that hason the outside date stamp that
says that inside of this is thiswork product that you did that
you can always prove to anyoneand anybody in court that you

(04:52):
were the one who wrote it.

Gabriel Riesco (04:53):
Yeah fellow that you're better off doing the
trademark and whatever

Alexandre Fuchs (04:57):
you agree that's your property, but of
course, by But in thisparticular Yeah, but again,
going through the trademarkprocess or registering process
or anything like that isexpensive, timely, and so on so
forth, right? In this particularcase, what you have is something
really cheap, very simple.
Basically, that cannot becorrupted, if you believe,
obviously, in the underpinningof the technology, where you can

(05:18):
say, I have written this poem,I'm now creating it as a token,
it will timestamp, it will say,This is mine. And I can go out
and put it out there as beingmine. Right. Now, for artists,
you can ascribe anything to it,anything to the properties of
that token. So what's happenedis the first market it's

(05:40):
developed is this kind ofDigital Arts where, you know,
people just don't want to buy atoken for the purpose of a
token, they want to buy a tokenbecause it has something right.
So the first market wasdeveloped, which has developed
is the idea of attaching a JPGfile an image or GIF, and
animations, something ofgraphical nature. And the way to
think about it is that theGenesis if you want to think

(06:04):
about who would get thebeginning of this market, or of
this technology would be peoplewould have two skills, creative
skills and technology skills.
Creating an NF T is actuallysomething you know, let's say
complicated, but not supersimplistic. It's technical, you
have to have a lot you have themeans you have to do certain

Gabriel Riesco (06:23):
SWAT there, say you have, like a piece of art or
a real piece of art. And you'rethe artist and you you painted
that. What's the differencebetween that real piece of art
and an NFT, you keep talkingabout tokens, I don't want
people to confuse

Alexandre Fuchs (06:37):
Well, that's important that they shouldn't
confuse it. Because what youhave is a token, not something
physical, it is only a token, a

Gabriel Riesco (06:44):
token is the NFT.

Alexandre Fuchs (06:45):
The token is the NFT NFT non fungible token
is the token, now you add to thetoken, or you put in a token,
certain properties, something.
So this is what I'm trying tosay at the very beginning, first
markets is putting to the NFT. Aimage and then you promises the
artists that you're not going tocreate another NFT with the

(07:06):
exact same image, right, inorder to be able to create a
market because if you kept oncreating and kept on selling,
then it doesn't have so then youhave the whole concept of
scarcity. This is very similarto limited edition and
photographic prints are thephotography is or other pieces
of the on markets where somebodycreates something, and now they
make it available for sale. Inthis particular case, again, all

(07:27):
you're buying is a token, you'renot even buying the JPEG, the
JPEG is just an attribute, it'sit's like a piece of data which
is attached to the token, right.
But if the artists the Creatorhas structured or, you know,
behaves in a certain particularway, which means that they're
not just going to resell threetimes 20 times 500 times the

(07:48):
same thing. And which is thebasic understanding that already
exists in real art, which isthat, you know, a painter
doesn't usually repaint theexact same painting 14 times in
order to sell it, thosemechanics are more or less the
same, right. But again, what'simportant is you're not buying
the JPEG, you're not buying theimage, you're buying a token.
And for the moment, again, we'revery much at the beginning of

(08:11):
all this at the very beginningof all this, the tokens tend to
have a JPEG attached to it orGIF, or something, which is the
art creation.

Gabriel Riesco (08:20):
Yeah, and some people get confused with, I just
want to add this here, becauseyou can't you can copy a PDF
and, you know, spread it allover the internet. And so I've
heard before saying, well,what's the value of having
something that can be copied?
Well, when you, that's when youneed to understand collectibles,

(08:40):
right? If you have like the MonaLisa, right? It's not the same
having the Mona Lisa, theoriginal painting, one of these
are certified. And that is theoriginal, of course you can do,
you can print and you can doposters, you can do all kinds of
stuff from the Mona Lisa, butthey're not going to be as
valuable as the original MonaLisa. So an NFT gives you to my

(09:02):
understanding, gives you thatability to say okay, this is the
original, and I can prove it.
And that's kind of the one ofthe one of the values of the
NFT, that once you have that,that is original, of course, if
you have the choice of buyingthe original, or the copies,

(09:24):
you're going to want to have theoriginal because that's where
the value is. But to myunderstanding, you can do other
stuff with the NF TS with likesmart contracts. It gives you
much more a play of a game, notjust for the artists for but for
the whole. It's a way to

Alexandre Fuchs (09:43):
Yeah, I want to get away from the word game
because I think obviouslythere's always game theory and
kind of actors behaving indifferent ways in this new
marketplace. But what it does isthat it records this token
Remember again, this the tokenthat's unique on onto a
blockchain and then that makesthat token tradable, which means
that you can sell it as anartist. And as a collector, you

(10:05):
can collect it as a collector,you can sell it to another
collector, as a broker, you caninvest in it, you can create a
portfolio, you can do all thesekinds of things. And it mimics
if you want so very much many ofthe attributes of the existing
art markets, which is that,sure, you know, an artist, a
dealer could try to create anumber of different versions of
something. But if you are abeliever in this particular

(10:28):
artist, and that artist is theoriginal mentor, the original
person created the the tokenright, then you have a direct
link between you in the originalartist and control vertical.

Gabriel Riesco (10:39):
Let me stop you there. You said a word minute,
can you explain to someone thatdoesn't know what the main thing
is?

Alexandre Fuchs (10:45):
Sure, the easiest thing is right, it means
writing to the blockchain orbasically creating so you know,
you have you are creating atoken, minting the token is
creating the token onto theblockchain of which are many
blockchains that is, and youhave now created, it's now once
it's created, you have aninventory as the artist, and you
can put that inventory on themarketplace for people to see

(11:07):
and buy just the same way.
That's the equivalent, it'salways very helpful in this to
try to make the parallel in thereal world, the same thing that
you're in, in the studio, you'rein front of the canvas, you're
making a painting, you're takinga picture, you're doing
something, it's something thatwhen you create something,
that's the main thing, and youhave an inventory as the

Gabriel Riesco (11:24):
artist, have you meant it to anything?

Alexandre Fuchs (11:27):
I have, yes.
Okay.

Gabriel Riesco (11:29):
Can you describe the process? How do you do that?
So

Alexandre Fuchs (11:33):
the process without going into the details
of which chain is relatively?
Okay,

Gabriel Riesco (11:38):
so what did you meet? Is the start there? No. So

Alexandre Fuchs (11:43):
I, I entered an image, right, like I admitted
the images or other things, butbasically, what you need is

Gabriel Riesco (11:49):
like a photo.
Yeah, let's just say, okay. It'sjust an example. It doesn't have
to be personal. So it's, it's anexample of mine one. All right.

Alexandre Fuchs (11:59):
Well, that gets into trouble. Let's say that I
doodle something and I decidedto then have to make a picture
and make a circle, I dosomething I put fill it with
color. I'm in Crayola mode. Thenext step, next up is let's say
I take a picture because it hasto be digital. So I can
transform, I can scan it, I cantake a picture, I can do
something, but I will. Let me.
Let me try.

Gabriel Riesco (12:18):
Let me just remind you an NFT is a digital
asset, because that's it. That'san important thing to
understand. Because that's whyI'm going through the process of
what you did. So people canunderstand. Yes,

Alexandre Fuchs (12:28):
but it's but it's not, it isn't. It's not
that we're going to confusepeople. If we go down that road,
I need to keep it simple, right?
The NFT is only the token,you're attaching a JPEG, you're
attaching something to thetoken. So it's very important
not to think that the JPEGitself with the image itself, or
the art itself, is the token itis not a token is just an entry
in a database. On theblockchain. If we go down that

(12:49):
road, we're going to confusesome people. So we're trying to
make a little bit of clarifyingassumptions. But basically, if
you if you are trying to,because remember that you could
create an NFT for anything, youcould create an NFT for a piece
of intellectual property, youcan create it for poem, you can
create an NF t for the for acar, you can create an NF T for

(13:10):
Absolutely. For music for it forsomething music or anything,
right. So right now, we're onlytalking about a very small
subset, which is where themarket is right now. Which is
where graphic artists who havetechnology skills have put in
their art as an attachment to atoken and then sold that token
with which the art follows.

Gabriel Riesco (13:30):
Okay, so it's so let's go back to the process of
how you were meeting that so wecan understand exactly okay, I
don't

Alexandre Fuchs (13:37):
want to spend too much time on it because it's
not an easy process and we'regonna lose people. So it's just
you basically go somewhere, youneed to set up a wallet, which
means that you need to have anidentity on the blockchain. As
an identity a blockchain you canwrite the blockchain as an ID.
When you write to theblockchain, you incur fees which
are paid in the token of theblockchain. So in this

(13:59):
particular case, if you are in atheorem blockchain and you
decide to do in the theorem andft, you then use a service that
will mint it, you will pay themfor minting it, you will pay
some fees. And now you will begiven an address or details for
that NFT on the Ethereumblockchain, once it's on the
blockchain, I really can see it.
It can be traded, you can doanything with it, and is the
most important thing that I wantto make sure we get to quickly

(14:20):
is that you can set royaltyrates for that individual piece.
And that's the most importantthing that artists content
creators and people don't getunderstand where 95% of the
market is not there yet. We'reonly people who happen to have
technical skills, advancedtechnical skills and creative
skills. Understand this now, butthis is where this is going. You
can as opposed to where theworld is now where you can sell

(14:46):
a piece of art and then throughThe Gallerist at a very large
commission, if anybody knowswhat the galleries takes of the
selling price 50% Usually younever participate in the
appreciation of your work everafter you're done, right. So you
can only create new series newworks and so on so forth to
create new revenues in thisparticular case, and NFT has the

(15:07):
magical ability to set a royaltyrate since everything has to go
through the blockchain. If yousell a piece of art to someone,
and they go on to sell it tosomebody else, you will
participate at a rate that youdecide at the very beginning
when you meant

Gabriel Riesco (15:25):
when you say you, you are

Alexandre Fuchs (15:27):
your artist. So if I'm an artist, I go in Mint I
set up, I don't set a price,there's no pricing involved in
the minting, you're justcreating something on a
blockchain and as a result of ablockchain, you then go out and
you then go out and make itavailable for sale. If you want
to, you can get it for yourself,you can just mint it and have an
NFT if you want to. But let'ssay that you go out and put in

(15:49):
market buys, you sell it tosomeone you start to Gallery,
sell it to a collector, whateverit is, any transactions after
that with the gallery, resell itto somebody else, whether the
collector sells it to somebodyelse, you have set the royalty
which is set in stone for thelife of the NFT. We're
automatically your wallets,because again, remember, you
started out having an identityon the blockchain, you will earn
royalties.

Gabriel Riesco (16:08):
So every time that NFT is sold, the artist,
every time that that happens isgoing to collect a royalty from
that transaction, correct? Yes.
And that's where it becomessuper powerful. And this is
where one of the, say qualitiesof the NF T's is these potential
and royalties, which can changea lot of different industries,

(16:33):
their music industry comes to mymind, because I'm a musician,
but also the art and many otherindustries. There is a lot of
nonsense to on the NF T's andsome people confuse the nonsense
with the marketplace and thereal face. Can you talk about
that?

Alexandre Fuchs (16:54):
Yeah. So now stepping away from the objective
and kind of fact Base to, youknow, Alex's idiotic opinions.
To me, this is a very immaturemarket, right, it's a very early
market. So few things. Themarket for NFT started with
Aetherium chain, the theoremchain is a proof of state is a

(17:14):
proof of work chain nowtransitioning to proof of stake
chain and has been beleagueredfor a long time by very, very
high fees, right, which meansthat it is very expensive to
mint, anything on the chain.
Right. And to super simplify.
Again, many people willdisagree, but the way I think

(17:35):
about it, there are basicallytwo types of artists in the
theorem chain, there are peoplebuying, why should say artists
and collectors buying. Again,this, many people will not like
this status symbol tokens, whichis that you see a lot of
collections, which are very,where again, they have been

(17:59):
constructed a series of one, soevery individual token is
unique. But it's part of acollection that looks very, very
similar, which are derivation ona theme, board, ape, Scripto,
punk, so on so forth, wherebasically, you can create 1000s
of unique pieces, which eitherthrough generative arts or
through actual work are verysimilar. And then people can go

(18:22):
out and buy those at extremelyhigh prices in some cases, and
very often use them as avatar ontheir social networks. profiles,
and then use them essentially asa belonging, group membership
token, right. So

Gabriel Riesco (18:38):
in that case, it's kind of like having jewelry
in the internet, right? It'slike, okay, I, this is my
avatar, this is my image, I'musing this. And if you know
about this, you know that Ispent a million dollars on exact
avatar. So he says,

Alexandre Fuchs (18:51):
exactly, and by definition, like anything, like
people will buy the lottery orwhatever it is, are different
levels. And now some that gotsome millions, sometimes
100,000, some good cause 20,500,and whatever, you know, wherever
you are, you are where you are,and they're all the pressures to
try to be in the highest groupthat you possibly can for all
kinds of bragging purposes.
Again, I'm I'm not decrying it,I'm just trying to describe it
because I understand why itexists. It's a social formation

(19:12):
makes a lot of sense. Perfect.
The second type of artist thatis on there is an audience that
already has a following in thereal world where some brokers
and themselves have decidedpeople David Hockney, many
others go to the NFT markets asanother product to sell to their
collectors so Christie'sSotheby's will organize and

(19:34):
manage the transition for verywell established artists. So if
you want to think of the artistspool as being very big, medium
and small art astride the verybig artists can go to a market
like the NFT and go out and puttheir work on it and find new if
that's new collectors, possibly,but certainly new products to
sell maybe to existing color.

Gabriel Riesco (19:55):
Yeah, and if you're an artist, I don't think
this is a substitution of yourreal life. It could be perfectly
well in addition, think of it,if you have like a real painting
that just painted and you wantto sell it for sale, or you sell
it for $5,000, once you soldthat painting, that's it for you
that painting is gone, you gotyour $5,000, there's nothing

(20:16):
else you can do. Obviously, theykeep selling for more money,
your reputation is going to goup. So your value as an RD is
going to go up. But with NF T'sis a little different, right?
Can you explain why, if you doan NFT of that same painting,
and you meant it in a way thatthat NF T's original, it's,

(20:37):
there's only one and you canmean that. But also you can
meant on the NFT itself on thetoken that the you're gonna get,
say 5% of the royalty and thepercentage you can choose as an
artist, you can do 5% or 2%, orwhatever percentage you want.
But you can make it like you canyou can get 5% of the royalties

(21:00):
every time that that NF T cellsand changes from hand to hand.
And that's the difference,right? That you can still sell
your painting. So

Alexandre Fuchs (21:12):
every time I want to get there, I don't want
to get there yet, because forthe moment we've just described
selling the token itself. Nowthere's a whole market to build,
where you sell a token which isattached to a pice piece of
physical art or physical,intellectual property, right? I

(21:35):
don't want to go there yet,because it complicates things a
little bit a little bit. But thepoint being that, yes, you're
right, in the future, not yet,because you don't see it yet
enough. But in the future, it isvery logical for an artist to
sell an NF T along with a pieceof real physical arts, in order
to be able to prove itsauthenticity, and also be able
to collect royalties. Andthere's a bunch of game theory

(21:57):
incentives, it's kind ofcomplicated, but as to why it
should kind of generally be thecase that the NFT will follow
the physical piece of art,because you could also imagine
that people would sell the NFTseparate from the piece of art.
But again, NFT is the proof ofauthenticity, or the piece of
art itself, don't want to godown that rabbit hole, because
that gets very, verycomplicated. But that will be
built. And we'll talk later,perhaps, you know, the idea of a

(22:21):
service that actually helpsartists go out and put their art
onto the blockchain. And then inthat particular case, they can
try to sell special series,which is digital art only, or
they can try to attach physicalart to it. Let's try to continue
them down this. So eath is veryexpensive, and is very active,

(22:44):
it can represent close to 10% ofthe eath gas fees, maybe more,
meaning that the activity on theblockchain can you know, the NFT
represent a very substantialportion of the activity there,
right and the demand for, youknow, for for for activity on
the Ethereum blockchain. So ofcourse, the problem we have that
structurally, is that medium andsmall artists just can't

(23:07):
participate in something whichis that expensive, it cost you
if it costs you three to $500,to listen individual piece of
arts, then you're then going togo and sell for 50 bucks, that
doesn't make any sense, again,to understand gas fees is
important, which means thatevery time that you buy
something on a chain, you needto record the ownership onto the
blockchain, there are feesassociated, which are called gas
fees, right? So

Gabriel Riesco (23:27):
so people can understand these save you, if
you if you buy right, somethingfor 50 bucks. Let's say for
example, that what will be thefees for that, and you can make
the number up

Alexandre Fuchs (23:43):
not to say that whether you sell a box or for
$500,000 are still going to be500 bucks.

Gabriel Riesco (23:51):
Exactly. So it makes sense to buy something for
500,000 Pay 500 bucks, but itdoesn't make any sense to buy
something for 50 bucks and thenpay fees for 500 bucks, you
agree with the money?

Alexandre Fuchs (24:03):
Agreed? So because of that? Sure enough,
there are other call them sidechains called them other block
chains that exist that havedeveloped independently other
art markets, right? And the twothat come to mind are the salon
on one side and tezos on theother side, right? And there is

(24:23):
a cottage industry, there's amaterially number of artists who
are trying to use both becauseagain, they're the gas fees are
negligible, negligible. Sothey're pennies in order to mint
pennies in order to sell right?
The value is different. We candiscuss where the value is, but
you know, there again, formedium and small artists, that's
where you go, you go to this.

(24:49):
And again, it's going away fromthe factual to, you know, to
more opinion, there seems to bea very active Create a community
around the tasers chain. It'smessy. But just to make a
statement backed with, you know,not enough research, the average

(25:14):
quality of the work on thetasers chain seems to be
significantly more artisticallydriven. Then on Solano on eath
meaning that on Solon and eath,you see way more of these
trading card ish type ofprojects, collections, things
that are kind of the same. Andmaybe you want to call them
social collections, butsomething which is, again,

(25:36):
collections of in have uniqueitems, but which are very
similar in large numbers, whichis which are much more where the
market is now, if you want tothink of when the market is not
for NF T's and for digital NFT's. But if you want to think of
where the art marketshistorically has been, always
has been, it's a verydecentralized market with every

(25:58):
artists having their own voiceexpressions on so forth. And
that's what you find on tasers alittle bit more. So if you go
to, there's a place called hereand now in Latin called HC in
its Nunc, or objects, forexample, which are two curated
marketplaces, you if you gothrough that your average
experience, let's say as atraditional art collector is a

(26:19):
little bit more consistent withwhat you've lived in the past.
What's interesting there isthat, you know, you can you can,
you can find a lot of art there,there's a lot, there's a lot to

Gabriel Riesco (26:31):
do. Okay, for someone that doesn't understand
this fully. Correct me if I'mwrong, but the difference when
you say you meant or you'rebuying an NFT, so on on
Aetherium, or Tasos, or Solana,the difference is like you're
paying in different tokens whenyou're doing theory on your

(26:51):
being with eath. When you'redoing your data you're paying
with cash, right? You're dealingwith a Solana, you're paying it
with with songs. So that's justto clarify, because this can get
pretty messy, if you don't knowwhat we're talking about.

Alexandre Fuchs (27:06):
No, and that's the point and again, the the
price of tasers, the price ofSoldotna. And the price of eath
moves around all the time sothat the price of the art itself
is influenced by the currency.
There's a lot of it's a verymessy overall, it's very
interesting. These are notorganized markets. So this is
early and as it is early, thereare many things to learn and to
understand and and you know,hurdles to get over to

(27:29):
summarize, right, buying an FTSselling and FTS minting and FTS
is technically complicated forthe average person. It is not
something that most artists aregoing to do by themselves. For a
little while. Now, you couldhave said the same thing about
using a cell phone or whateverit is, at whatever point and so

(27:51):
on so forth. But right now,that's more or less where we
are, right. So if you want tothink about there's a couple of
things to talk about, right. Soultimately, artists and
collectors should probably notcare which blockchain This is on
as long as the blockchainsurvives. So the fact that you

(28:12):
have small artists and kind of afervent creative community on
the tasers, Blockchain, and youhave these kind of more
established communities on theeast blockchain, this, my sense
is going to be some kind ofrealization that's going to
happen at some particular point.
And there's true probable eventson the horizon, which may make

(28:40):
this happen, which is atCoinbase, not having been
allowed to commercialize theirland product, which was their,
you know, their next bigproduct, which was where they
would basically allow you toearn money on your crypto,
funnily enough, which was, whichESEC stop them from from doing

(29:00):
the lending part. Yes, the LENDprogram, which funnily enough
for Gemini, and other peoplealready have one that's gonna
get into that. They haveannounced that their next big
thing is going to be in fts.
Right. And what that means isthat they're most likely going
to build some tools forcollectors, perhaps artists and
some software to go out and dothat. And it's very possible
that they will build a new kindof social mechanism that that I

(29:21):
think is needed. We'll talkabout that maybe later. But coin
base is very likely and theyhave already Yes, and now today,
they're going to be somewhatblockchain chain agnostic. So
they will have a theorem I wouldassume, but they also will open
it to design to Solana whichbasically means if to a coin
base customer buying arts. Whatdo they care if it's on
Aetherium or Tehsil. So So now,in that respect, until coin base

(29:45):
with its brand and its marketingmuscle can make that point quite
heftily and the same thing willopen sea open sea is the largest
marketplace on the Ethereumblockchain, and they have
announced that they will addother blockchains To the
recollection

Gabriel Riesco (30:01):
of the open seas marketplace for what, for eath

Alexandre Fuchs (30:04):
for three or in part in the largest one. So one
basically where we're most ofthe volume on the CRM happens.
So, the point is that you canimagine fairly quickly. So
again, step back NFT is, is avery, very large in the
applicability of NF T tobusiness models, creative models

(30:26):
are distinct models, is at itsinfancy, it is mostly focused
now on digital art. In thatdigital art, there is an
inconsistency between themarketplaces and then
consistency between the gas feesand consistency between the
values, which provides in mymind a little bit of an
arbitrage and, you know, kind ofhappy hunting in certain chains

(30:50):
for interesting artists orcertainly art that you'd be
interested in. There is also asyou described, a future my mind
because it's not really thereyet massive applicability to
physical art, which is to attacha token to physical arts. And
then one thing that we haven'ttalked about is entirely other

(31:13):
models, we can talk about acouple of examples but where an
NF T can provide the same futureroyalty revenue and
authenticity, stamping forentirely for completely
different industries. So as youknow, I'm into collectible cars
and old cars and Indian marketsand even to some extent in the

(31:37):
new markets what happens is thatvery often you have companies
that will modify your car ormodify new car modify an old car
restore restore a car and add toit a lot of their intellectual
property DNA artisan Marines andso forth and and resell that car
or give you back the car for avery large fee. So let's take an
example of singer, which is acompany that takes a Porsche

(32:01):
nine elevens, and then willtransform a, you know, what used
to be a 50 to $150,000 car and,you know, put a lot of effort
into it and make it a milliondollar car. But the way it gets
to a million dollars is veryoften they'll do the work for X
amount. And then somebody whowants to jump the queue or
somebody who doesn't want towait or somebody who wants your

(32:21):
car will pay the person who usesinger to refurbish their car,
you know, two, three times whatthey paid. Again, in the last
couple of years, I've been quitehot. And this is true. All
around to in real estate. It'strue in many different places
where somebody who hasintellectual property knows how
to do certain things, transformsan existing item, or creates an

(32:45):
existing item, but only getspaid for the first transaction.
So Sr, for example, will takeyour car, charge you $500,000
give you back the car, and thatand that $500,000 is the revenue
that they're going to earn,they'll get some benefit out of
you driving it around and seeingit and so on, so forth. But
that's basically what theirbusinesses are like, it makes
much more sense from a revenuepoint of view. For them, perhaps

(33:09):
to sell the car a little lessexpensive, but to have a royalty
stream attached every time thatcar sells because with cars,
what you've seen Univeruniversally and with real estate
and other assets, you've seenflippers, you've seen people who
have done government work done.
And then after that somebody whodoesn't want to wait or has more
money than patience, or taste,or any of these things, go out
and beat up the price. And theoriginal value creator, if you

(33:31):
want in this case, does notparticipate in the revenue. So
if you think the value creatorhere is singer, knots the
flipper, then this is a modelthat you can imagine a lot of
these companies adopting rightwhere the car would go with the
NFT, the NFT would prove theauthenticity of the car, it will
be attached to the car and youknow, then generate royalties
for the original creator.

Gabriel Riesco (33:58):
Yeah, and the point behind here is that this
is a huge benefit for thecreators. For artists, creators
in general.

Alexandre Fuchs (34:06):
Yeah, I mean, just again, to wrap it up for
because we get into all thedetails, they want to think
about it as an artisthistorically, very, very often,
in many industries, not all notin music, not in film, not in
other things usually doesn't getto touch royalties in any major
way. And even in film and evenin music. Those royalties very
often are calculated in verynonsensical ways. Certainly very

(34:29):
opaque ways, right. So anybodywho has ever dealt with film
rights, music rights, and tryingto do any of the accounting
behind what your royalty streamis, will know that the studios,
the record company, and so on,so forth, do very creative
accounting in terms of how theyapportion costs and so on so

(34:50):
forth, in order to minimize whatyour royalties or rights were
and they are usually improvedroyalties, not revenue
royalties, except in certaincases. And therefore a model
like this one could be a veryinteresting one for many artists
to have, if you want controlover the relationship, right?

Gabriel Riesco (35:07):
Yeah. And that, to that matter also, especially,
specifically music, because I'ma musician. So I know you need
third parties like ASCAP or Skyein Spain that need to collect
the royalties and actually sendthem to you later. So that
intermediary is kind of gonewith the NF T's when you when

(35:29):
you're new when you meet it,right?

Alexandre Fuchs (35:31):
Possibly, I mean, there's a lot to, you
know, artists have to becomfortable. Buyers have to be
comfortable, there's a lot of,but a lot of things are going to
happen before have to happenbefore this ever becomes a
thing. But you can see why themarket forces from the outside
would make it a thing.

Gabriel Riesco (35:49):
And how the potential to be very disruptive
in that sense in a lot ofindustries.

Alexandre Fuchs (35:54):
Yes. So going back to art, specifically what
we know the thing. Again, thisis a very messy place. It's not
mean structured yet. But what'sinteresting is that the
blockchain makes it possible foryou to know a lot of things that
you don't really know in thereal world of art, meaning, as a

(36:16):
artist, you get to know exactlywho your collectors are, you get
to know exactly what else theyown. You get to know what
pricing happens after you'vedone your initial sale, you get
to understand what otherartists, your collectors are
collecting your relative pricingcompared to other artists. There

(36:38):
is an enormous amount ofinformation and theory and
transparency that is notavailable in the normal art
market. And which by the way,has made the existing art
markets very, you know, veryopaque and perhaps manipulated.
Perhaps, you know, I don't wantto get into polemic about this.
But basically, the way to thinkabout it is that it is a tool

(36:59):
for decentralization forrecreating relationships between
collectors, curators,intermediaries, and artists. I
think I'm presentingunprecedented, right? And the
more artists go on to thatmethod. Yeah, you got to get
past certain things. Yeah, yougot to start understanding what

(37:19):
a token is versus what the artis. Yeah, there's a number of
probably legal and regulatedlike regulatory things that need
to be clarified. But ultimately,the Promised Land is very
attractive. And I think thepeople who have value, right, so
in my mind, collectors addvalue, artists add value.
intermediary can add value. Andthe fun in that respect. What I

(37:43):
find interesting is that that'strue opportunities out there
that are that are kind of notnot formed yet. Right? And
that's not really not reallythere.

Gabriel Riesco (37:53):
We're flirting with those ideas. Yeah, exactly.
Okay. Yeah. Let's finish withthat. Let's talk about this
idea. Because it might not justbe an idea. Yeah. Yeah, it's a,
it's, it's a service that, well,there's two very valuable for
artists for creators, but goahead and go Well, there's

Alexandre Fuchs (38:11):
two things that need to be built. Right, but the
first one that needs to be builtfor sure. And again, you know,
we'll talk about what we what weend up doing. But the first one
is artists 95% of the artistscommunity will not go through
the mental heartburn, of tryingto mint NF T's manager, that
empty collection, figure out howto sell it, figure out who buys

(38:34):
it, do any of that stuff, right?
And therefore, and I thinkCoinbase may do some of that,
perhaps, but independentcompanies that on behalf of
artists manage the royalty, theminting, the management, the
marketing, the royaltyaccounting, all of which is
relatively simple to do. To earnthe trust of the artist and

(39:00):
manage that relationship wellallowing them to very simply put
some of their work initiallyperhaps does digital but digital
plus physical and eventuallyanything onto the blockchain and
management managing that.
service on behalf of the artistfor the artist is necessary in

(39:27):
order to grow the market youmost of the artists we all know
would never spend any time doingthis.

Gabriel Riesco (39:31):
So this will be for say an artist that has some
paintings but is not savvyenough or doesn't want to put
any time into maintaining anunderstanding of this. This is
kind of an agency that will dothe minting for them and will
take care of all the the processof like royalties and marketing

(39:52):
and putting on our marketplaceand maybe what we can buy it or
sell it is that basically thethe area

Alexandre Fuchs (40:00):
Not nothing getting further but the end of
the second one which is related.
The first one is that you cansee what other collectors are
collecting. You can see whatother artists who is who owns
the same artists or, or piecesthat you own or any other that's
on the blockchain. It'savailable but the tools are are
painful. It is the experience oftrying to create for you a

(40:25):
network. In order to be able toact upon this information,
discover new artists, discovernew collectors, and look inside
people's collections, promotingyour own collection. The

(40:48):
Marketplace stuff is built, moreor less. It's all hinky. But it
is kind of built so that if youhave something for sale, you can
put it for sale. But theaggregation, the social tools,
the commenting the sharing, thetagging, content tagging, the
organization of all of thatdata, which exists on blockchain

(41:09):
is messy is is is thereavailable for programmers is not
there for the general public. Sothe ability to go out and put
together a coherent, simplesocial experience that allows
you to discover new artists tobe able to tag them comment on
art, share its post it lookinside collections, do maybe

(41:31):
some simple analytics, tracksome of the analytics, save
somebody's information for youto use is coming as well, the
same way that any other asset isbuilt, things have been built.

Gabriel Riesco (41:46):
So that will be like a platform that is well
organized and user friendly. Soyeah, more access of this.
collectors. Okay. Well, I thinkthat was a very interesting one.
Hopefully, this will open alittle bit of your curiosity
about NF Ts and hopefully youunderstand a little better on

(42:09):
why they're so hard now and why.
It's everyone's talking aboutit, but not everyone understands
what they are. And not everyoneought to understand who can
differentiate what's nonsense,or what real value or potential
value, Tim, anything you want toadd Alex?

Alexandre Fuchs (42:31):
No, I think this is an interesting topic.

Gabriel Riesco (42:33):
All right. Well, thank you so much. Have a great
weekend.

Alexandre Fuchs (42:37):
Thanks very much.

Gabriel Riesco (42:37):
We'll see you in the next episode.
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