Have you heard Money Is Just a meme, In the new frontier of cryptocurrency markets, it’s not uncommon to get lost in a theoretical debate about the value of money. But is money just a meme in itself? That’s what Brian Mosoff, chief executive officer of crypto-investment firm Ether Capital Corp., had to say on this week’s latest episode of the “What Goes Up” podcast in a wide-ranging interview.
There’s nothing like an explosion of blockchain news to leave you thinking, “Um… what’s going on here?” That’s the feeling I’ve experienced while reading about Grimes getting millions of dollars for NFTs or about Nyan Cat being sold as one.
And by the time we all thought we sort of knew what the deal was, the founder of Twitter put an autographed tweet up for sale as an NFT. Now, months after we first published this explainer, we’re still seeing headlines about people paying house-money for clip art of rocks — and my mom still doesn’t really understand what an NFT is.
Money Is Just a Meme
Non-fungible tokens, or NFTs, went from non-existent to taking over the world in record fashion. But what is their utility besides being collectibles? Brian Mosoff, chief executive officer at Ether Capital, joins the “What Goes Up” podcast to talk about how something can “meme” its way into becoming valuable and why NFTs are gaining traction in an environment where everyone’s searching for scarcity.
Plus, he shares his views on how cryptocurrencies can play a part in a portfolio and how the space could be regulated.
In economics, a fungible asset is something with units that can be readily interchanged – like money.
With money, you can swap a £10 note for two £5 notes and it will have the same value.
However, if something is non-fungible, this is impossible – it means it has unique properties so it can’t be interchanged with something else.
It could be a house, or a painting such as the Mona Lisa, which is one of a kind. You can take a photo of the painting or buy a print but there will only ever be one original painting.
NFTs are “one-of-a-kind” assets in the digital world that can be bought and sold like any other piece of property, but which have no tangible form of their own.
The digital tokens can be thought of as certificates of ownership for virtual or physical assets.
How do NFTs work?
Traditional works of art such as paintings are valuable precisely because they are one of a kind.
But digital files can be easily and endlessly duplicated.
With NFTs, artwork can be “tokenised” to create a digital certificate of ownership that can be bought and sold.
As with crypto-currency, a record of who owns what is stored on a shared ledger known as the blockchain.
The records cannot be forged because the ledger is maintained by thousands of computers around the world.
NFTs can also contain smart contracts that may give the artist, for example, a cut of any future sale of the token.
Is this a bubble?
A day before his record-breaking auction, Beeple – whose real name is Mike Winkelmann – told the BBC: “I actually do think there will be a bubble, to be quite honest.
“And I think we could be in that bubble right now.”
Many are even more sceptical.
David Gerard, author of Attack of the 50-foot Blockchain, said he saw NFTs as buying “official collectables”, similar to trading cards.
“There are some artists absolutely making bank on this stuff… it’s just that you probably won’t,” he warned.
The people actually selling the NFTs are “crypto-grifters”, he said.
“The same guys who’ve always been at it, trying to come up with a new form of worthless magic bean that they can sell for money.”
Former Christie’s auctioneer Charles Allsopp said the concept of buying NFTs made “no sense”.
“The idea of buying something which isn’t there is just strange,” he told the BBC.
“I think people who invest in it are slight mugs, but I hope they don’t lose their money.”
The Bottom Line
Nothing. Millions of people have seen Beeple’s art that sold for $69m and the image has been copied and shared countless times.
In many cases, the artist even retains the copyright ownership of their work, so they can continue to produce and sell copies.
But the buyer of the NFT owns a “token” that proves they own the “original” work.
Some people compare it to buying an autographed print.