6 Questions for Wes Levitt of Theta Labs – Cointelegraph Magazine

Cointelegraph By Editorial Staff

We ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and we throw in a few random zingers to keep them on their toes!


 

This week, our 6 Questions go to Wes Levitt, head of strategy at Theta Labs.

At Theta Labs, Wes works on corporate strategy, marketing and press relations, and analytics. He has been a speaker on blockchain topics at conferences including the New York Media Festival, Blockchain Connect and NAB Streaming Summit, among others. Prior to joining Theta Labs, Wes spent eight years in investment roles at Mosser Capital, a real estate private equity firm; and Redwood Trust, a mortgage real estate investment trust focused on securitized debt. Wes is a CFA charterholder and holds a BS in economics from the University of Oregon and an MBA from the Haas School of Business at the University of California, Berkeley.

 


1 — If the world is getting a new currency, will it be led by central bank digital currencies, a permissionless blockchain like Bitcoin or a permissioned chain such as Diem?

If it’s only one, I would say CBDCs are more likely since governments are unlikely to give up the power of issuing their own currencies. But Bitcoin and other cryptocurrencies can exist alongside CBDCs and serve a different purpose. Even if Bitcoin never replaces the major fiat currencies (or their CBDC successors), it is hugely valuable by providing an alternative to them. The mere existence of Bitcoin, with its fixed supply and pseudonymous transactions, should force central banks to think twice about inflating their currency values away or forcing widespread surveillance on consumers.

It’s true that we aren’t seeing that yet with rampant money creation in the U.S. dollar, euro, Japanese yen, etc. in the past year — but that’s partly a function of Bitcoin and other crypto markets just being too small to be a workable alternative yet. But that’s changing quickly — you are seeing companies like MicroStrategy, Tesla and Meitu add Bitcoin to their corporate treasury, which becomes more and more feasible as Bitcoin’s market cap grows. Eventually, Bitcoin should grow large enough to be investable even at the scale of central banks, as an alternative or supplement to their gold holdings.
 

2 — Does it matter if we ever figure out who Satoshi really is, or was? Why, or why not?

I do think it matters, but that it’s best for Bitcoin if we never find out who Satoshi is/was. A real person will have a backstory, profession, country of origin, etc., which could only lead to division and bias in the crypto community. It’s better that Satoshi remain more of a legendary figure that people can interpret as they choose to. I think Satoshi himself realized this, and it’s why he chose to remain anonymous.

 

3 — What’s the silliest conspiracy theory out there… and which one makes you pause for a moment?

For silliest, I’ll go with a tie between QAnon and “Bill Gates putting tracking chips in the COVID vaccines.” Both are so stupid that they’ve become useful as a signaling device. If someone believes in one of those things, I can safely ignore anything else they say and save myself the time.

The one conspiracy theory I 100% believe is that David Stern regularly rigged the number-one pick in the NBA draft. Ewing to the Knicks in ’85, New Orleans getting Anthony Davis after Stern traded Chris Paul away, Lebron and Rose go to their hometown teams, the Cavs get three number-one picks in four years after Lebron leaves… way too many examples to have happened by accident!

 

4 — Other than the present day, in what time and in what country would you like to have lived?

I would have enjoyed mid-70s England, mostly for the music. You had the punk scene emerging with the Sex Pistols, The Clash, and The Damned, and many others. Iron Maiden and Motorhead are just getting started along with the whole NWOBHM [new wave of British heavy metal] scene. Plus, if you stick around until the late 70s/early 80s, you’ve got XTC and Depeche Mode and the Police just around the corner. One of the best five or so years in music you can find for a single country.

 

5 — Have you ever bought a nonfungible token? What was it? And if not, what do you think will be your first?

My first-ever NFT was purchased for just the price of some ETH for gas — I created it myself with Enjin back in 2018. This limited edition “Wes-branded” sword didn’t make it into any crypto games, sadly, but it was obviously a very cool concept, even if it was still a few years before the mainstream use of NFTs. The entertainment space is getting the most attention for NFTs right now, but the idea of taking legendary items with me between RPGs is still the use case that resonates with me the most. I’m not much of an art collector myself, but I could absolutely see myself ponying up for rare items that are interoperable between games — now, I can justify that this NFT purchase is an investment I could use across many different games in the future.

 

6 — What’s the unlikeliest-to-happen thing on your bucket list?

I’d like to live long enough to see humanity establish settlements on the Moon or Mars or other potentially habitable moons like Europa, and to travel there myself once that becomes feasible at a commercial level (i.e., without having to go through astronaut training just to go!) This still feels like too far away for my lifetime — we are 52 years post-Moon landing and barely any closer to permanent settlement. But the pace of technological discovery is always increasing, so I hold out hope that it will be in my plans for 2050 or so!

 

Stay positive, and keep building! Crypto goes through breakneck cycles of euphoria and despair — you have to take a step back and look at the big picture sometimes to keep your head on straight in this wild space.

 


 



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Overpriced crap or new art history? – Cointelegraph Magazine

Cointelegraph By Eric Shaw

It’s been a heady few weeks for commerce and art.

Surely a revolution is afoot and we’re too mired in the hot mess to see it right.

With that proviso, here are two notes from the front lines.

NFTs are cutting-edge, digital art ain’t

Some folks say the non-fungible token (NFT) that allows a digital artwork to be possessed exclusively by a purchaser is traceable to the creation of Colored Coins in 2012 — or to CryptoPunks in 2017 — even though the this market exploded just the other day.

 

A page from Jules Antoine Lissajous’s A Study of the Optical Representation of Sound Vibrations, 1957

 

But digital art (DA) itself has an older pedigree.

As early as 1857, the Frenchman, Jules Antoine Lissajous (1822–1880) published images of mathematically-designed “Lissajous Figures” by capturing lines created by sound harmonies with a camera. These figures had been identified 42 years earlier by the American, Nathaniel Bowditch (1773 -1838) — it’s just that Bowditch didn’t render them as pictures.

 

 

The first art piece fully recognized as computer-made, and hence, “digital,” was Oscillon 1 made in 1950 by the American computer scientist Ben Laposky (1914–2000). He called these pieces “Oscillons” or “Electrical Compositions.” They were Lissajous Figures of a complex type. A 1953 show of his work in Cherokee, Iowa designated them “electronic abstractions.”

 

Ben Laposky, Oscillon 45, 1952

 

Laposky inspired other digital artists, producing the medium’s first major show in 1965, in Stuttgart, headlined by Frieder Nake (b. 1938) and the first museum show, “Cybernetic Serendipity,” at London’s Institute of Contemporary Arts three years later.

DA’s emphasis on geometric abstraction piggy-backed on the world’s excitement for Pollock and the swarm of Abstract Expressionists roiling the cultural waters of that day. The optical gamesmanship and clean rendering of DA designs also lent momentum to early 1960s Op Art.

 

Op Art: Frank-Stella, Untitled, 1966

 

DA’s entrancement with crisp linearity, geometry, and images categorized by number persists to this day.

Major digital art collections exist at the Whitney, MOMA, the Walker Art Center, and other juggernauts of the art world; and over a dozen museums dedicated to digital art now exist — from Zurich’s MuDa, to Tokyo’s Mori Museum of Digital Art, to the Center for Digital Art in LA.

NFT Pics: Easy on the Eyes, But not Museum-Ready

Beeple (Mike Winkelmann at beeple-crap.com — the man who created the $69 million Everydays) said we’re witnessing “The next chapter of art history.”

I differ.

New chapters of art history are written by artists making new art.

But this is a chapter being written by artists (and their advocates) making novel financial moves.

This is a new chapter in financial history.

 

Piero Manzoni, Artist’s Shit, 1961

 

It’s true, Damien Hirst and others have performed financial acts as aesthetic ones. Artists have sold air, shit, and invisibility as conceptual advancements, but that’s not what’s happening this month.

When this art is attached to an NFT and sold for piles of crypto, it’s not showcased it as an artistic performance.

Heaps of new market fluidity are is being leveraged, but no fresh aesthetic concepts is are shaping the action.

As of this writing, the overwhelming majority of images moving into NFT collections for slag-heaps of Ethereum are more akin to 1950s paperback covers than the digital art productions that have migrated to museums and marquee galleries for years.

 

Beeple, Infinity and Beyond, 2015

 

Though it’s main inspiration is anime, computer games, and comic books, this NFT-drop will surely persist in the field of cultural reference for decades, and, I will confess, there IS an art-historical development here, but I don’t think it’s the one Beeple is thinking of.

This moment is an A-bomb explosion in the larger fragmentation and recombination of kitsch and high art that’s been going on for one long, bloody D-Day since Andy Warhol’s first art show in 1962.

We can point to Toulouse Lautrec (1864 -1901), Stuart Davis (1892 -1964), and handy Andy (1928 -1987) as the dudes who threw the first blow, but the master bomb-maker in today’s fractured landscape is certainly Brian Donnelly (b. 1974), better known as the comic-figure maker, KAWS (. . . with apologies to Takashi Murakami).

 

KAWS, Small Lies, 2020

 

It’s true, this could be a new eruption of low-brow taste (as folks have said of the emergence of KAWs and Warhol), but I don’t think that’s the case.

There’s just a whole tuna school of new-money millionaires splashing around the planet who are used to Neuromancerstyle imagery — and they’re buying whatever they like.

It’s no art revolution.

It’s no change in taste.

It’s just the emergence of some delightfully new destinations for loads of disposable income.

That said, I’m confident that a cultural counterweight of historical artists will be joining marquee first-adopters like Kenny Scharf in the NFT market any minute now.

At the rate things are evolving, I’ll bet my bottom Bitcoin that as these wild, explosive, and strangely historical weeks round out the month, blockchain money will begin to chase higher-grade art commodities, just as it now chases CryptoKitties, video snippets, and original tweets.





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Making DeFi idiot-proof with Kava’s gamer CEO, Brian Kerr – Cointelegraph Magazine

Cointelegraph By Andrew Fenton

According to Kava Labs CEO Brian Kerr, the major reason that decentralized finance, or DeFi, has not yet hit the mainstream is that “93% of holders are never gonna touch their own keys.”

Kava is a non-Ethereum-based DeFi platform that enables users to earn interest on the cryptocurrencies they hold. The investors Kerr hopes to reach are those who used an on-ramp like Coinbase or Binance to buy cryptocurrencies that are now sitting on the exchange. They are “worried about ‘fat-fingering’ and losing their funds in a transfer, or something like that,” he says. Being used to keeping their money in a bank account, these investors prefer to keep their cryptocurrencies on a crypto platform rather than in a hardware wallet.

Kava’s platform connects lenders with borrowers directly, but the real challenge is “not just creating the protocol on the platform but making integrations on it directly accessible in the venues where people currently live,” he says, referring to exchanges and payment processors.

In the future, he envisions that major players like PayPal and Fidelity, which are both rolling out cryptocurrency solutions, may want to integrate with the Kava API in order to “extend interest-earning products” directly to their users.

“A core belief that we have is that you have to meet users in the venues that they’re at. I think of them like distribution hubs, but really they are retail-focusing apps that have relationships with their customers.”

Kava has already integrated with a number of platforms — including Binance, Huobi and Bitmex — “Not for listing our tokens but actually the savings products, and the lending products of Kava are directly available on those platforms.” Kerr envisions many more will plug Kava services into their platforms. “Basically, any app where crypto is held, we can expand the custody of Bitcoin or XRP or Ethereum or whatever it might be with financial services to put that capital to work.”

The vision is to allow a user holding a currency like Bitcoin to simply click on the interest-earning product they want and use a slider to adjust the amount of BTC they wish to earn interest on. The user experience is simple, Kerr says, as they won’t even see the Kava user interface or website. “It’s all handled on the back end.”

“I think that’s really the direction that things are going, is that people don’t need to know that DeFi is there.”

A refuge in gaming

Kerr, now 32, describes a rough childhood of being raised by his grandmother in an ethnically diverse and working-class neighborhood where “all the neighbors were doing various forms of drugs, more the hard stuff like meth and heroin. It was very different from your middle-income white suburbia of America that most people think of,” he recalls, adding that for as long as he can recall, he felt out of place as one of the only white people in his school.

It was also a scary environment. “Every day at noon there would be huge fights and police would come in with riot shields,” he reminisces of his underfunded high school that resembled a prison — full of gangs and often unable to provide teaching. With that in the background, he gravitated toward a group of students “who liked playing video games.” That’s how he got into gaming, which would go on to define much of his career.

The competitive environment of university, where he first started in software engineering, was an unexpected challenge because in high school, “I was able to coast through that without any real guidance or good habits.” He dropped out.

He soon started taking classes again and eventually was accepted to San Francisco State University in 2007, where he settled on business because he saw it as a generalist degree for an uncertain future. “I ended up switching my major about eight times through that process,” he recalls.

Upon graduating in 2011, he was hired by Sierra Circuits, a circuit board manufacturer, where he was “a sales engineer working with tech guys at Boeing and Raytheon on their prototypes for things that would go up into space.” Though he gained confidence in working with technology, he soon dreamed of leaving the family-run company for entrepreneurship where he could be his own boss.

“All the executives and anyone that got promoted was like within the family, and everyone else was treated almost like a second-class citizen. That was my first education on how companies should not be run. I also realized that I need to do my own thing.”

Leaving the company, Kerr arrived at a fork in the road. On one side was a well-paying job with chip manufacturer Nvidia. “It was sort of a fast track to a CMO [chief marketing officer], definitely a great opportunity for where I was in my life and experience level,” he says, adding that the work would have focused on the company’s important gaming product lines.

The other option was to move to London where he would work for Fnatic, a three-person esports-gear startup, “to entertain my entrepreneurial desires, taking this enthusiast esports team and turning it into something real.” The idea was to “build a Beats by Dre, but for gaming gear,” with celebrity gamers and influencers helping design things like keyboards, headsets and mice.

“I had these two opportunities. One was a very reliable corporate job that was gonna teach me a lot about how a big company works — that was going to be really good for my career. Whereas on the other side, it was a pretty questionable opportunity.”

He asked various friends working senior-level jobs at different businesses what they would do, and they all considered Nvidia to be the obvious choice. “Zero people said to take the role at Fnatic trying to build hardware. ‘That’s preposterous,’ they said.” He decided not to take the advice and moved to London. The work also took him to Gothenburg in Sweden before bringing him back to the San Francisco Bay Area in 2015.

At Fnatic, Kerr helped build the team up from three to over 100 people and learned to run an international business with manufacturing in Asia and partnerships with gamers around the world. Business was booming due to esports entering the mainstream through things like Twitch, a streaming platform marketed toward gamers. Early on, having an esports team was just a hobby between friends and family who might collect the occasional sponsorship — and then, “All of a sudden, these teams are worth hundreds of millions of dollars and the lines of business are huge and there’s media rights involved and everything else.”

Blockchain calls

It was in San Fransisco that Kerr met Alexander Kokhanovskyy, a Russian esports founder who was launching DMarket, a decentralized market for in-game items. The ownership of digital assets like character skins or gold for multiplayer games such as World of Warcraft seemed natural and intuitive to Kerr, so he joined the project as an adviser.

“It blew my mind that these guys were able to raise $20 million in about three weeks on effectively a PowerPoint because it was really hard to do that for a legitimate business like mine, with millions of dollars of real revenue.”

Witnessing DMarket’s success in gathering investment capital served as Kerr’s wake-up call to blockchain, causing him to look more deeply into the growing industry.

“I was fortunate enough to be able to ping my network and get in front of people like Joseph Lubin and executives at Ripple and others, all within the span of four weeks after deciding to jump into crypto as my next thing, and that’s been the story ever since,” he recounts.

“I just knew I was going to dedicate at least the next five to 10 years of my life into this industry because there was so much disruptive technology that was going to be in play. It was just gonna be the best opportunity, for me and then also to give impact to the world.”

Non-Ethereum DeFi

Kerr says that his Kava co-founders came from the poker world and gained respect for the idea of censorship-resistant money because online poker sites would often get shut down by regulators due to gambling laws. When this happened, all the money held by the companies would be seized, meaning that “my co-founders’ money was just locked up for years, and they had no access to it. They weren’t able to earn interest on it. It was just stuck in limbo.” As a result, much of the online gambling industry switched to cryptocurrency.

Kerr expresses wonder at the various ways that cryptocurrency has drawn people in. Whether through poker, gaming, or by encountering it via work or study, there are many paths to blockchain. “I just happened to lean really heavily on the gaming side.”

Kava Labs actually began with a very different mission, he explains. “We founded Kava Labs actually thinking that cross-border payments using digital currencies was actually going to be the biggest game-changing thing. The volumes of trade in foreign exchange are some of the largest in the world, so the TAM [total addressable market] seemed to be so large that you could make an impact there.”

 

 

The firm’s original goal led the team to work with Ripple to speed up transactions. Some of the solutions it worked on included implementing “noncustodial wallets into Lightning Network with Ethereum payment channels, and Dai payment channels using Dai stablecoins,” he says.

Between 2017 and 2019, the crypto-payments industry “was not going into the billions — it was still in the $100 millions,” Kerr said, explaining that the business was not scalable at that volume. With the team being $500,000 in the red with its own money by June 2019, a change of course was needed.

“We did an audit of all of our skills at that time, and we had built up this big wealth of knowledge of all the different blockchains — how they work, what would be the requirements to make them interact with each other.”

They decided to build Kava as a platform for accessing DeFi services without needing to rely on Ethereum. The first step was to write a blog post, after which the project attracted a “total of $8 million over the course of a few weeks.”

In October 2019, Binance Launchpad hosted a KAVA token sale and airdrop, a lucky strike that Kerr says resulted in a wide distribution of tokens, which is generally seen as evidence of investor confidence. “It’s been kind of going to gangbusters ever since we launched the Kava blockchain,” which happened the following month.

Despite the hype, the initial minimum viable product took until June 2020. That product was a platform offering collateralized loans first for Binance’s native Binance Coin before expanding to Bitcoin, XRP and others.

Kava has grown substantially since launch, with Kerr explaining that the platform now boasts about $300 million in deposits and $80 million in outstanding loans between an approximate quarter-million accounts.

“I expected it to grow more, but it is the largest in-production non-Ethereum DeFi platform and application that exists today. I’m very proud of that fact, and I think it’s only sort of up from here as we add more assets and add more financial services on top of it.”

Despite his apparent success, it hasn’t been an easy road. “I’ve always had a little bit of imposter syndrome,” he says, referring to the feeling that one’s achievements or position have not been earned. The fact that the industry is rife with scams and hacks no doubt adds to the pressure, and many Bitcoin-maximalist and no-coiner types are known to deride the DeFi industry as little more than a Ponzi scheme. The high rates of return can also paradoxically turn away users who view DeFi’s opportunities as too good to be true.

Kerr has high hopes for Kava’s newest feature, a “hard-protocol money market” which was initially set to be released on March 31 to allow users to earn interest on Bitcoin. “It will be very high early on is all I can really say, but it’s going to be likely in the 20%-plus APY range to start,” he says with confidence. However, he does not expect such high returns to last, due to increasing competition between DeFi platforms as borrowers seek the lowest interest rates.

“I think all the DeFi services are going to be commoditized over time. Everything can be squeezed in terms of prices as people chase yield.”

 



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This is how to make — and lose — a fortune with NFTs – Cointelegraph Magazine

Cointelegraph By Andrew Fenton

The rise of nonfungible tokens, or NFTs, has been nothing short of astounding this year. Google searches for “NFT” are up over 600% since mid-February, hitting initial coin offering mania levels, and the top NFT platforms are turning over millions of dollars each day.

In a single 24-hour period earlier in March, sport collectibles platform NBA Top Shot saw sales of more than $7.89 million, art house OpenSea took in $4.88 million, and “digital antique” NFT project CryptoPunks netted $3.28 million.

The mainstream media is showing more interest in NFTs than it has in crypto for years, with publications from the BBC to The New York Times running explainers and the odd hit piece. Prices certainly look frothy, with Beeple’s “Everydays” selling at Christie’s for almost $70 million, Jack Dorsey auctioning the first-ever tweet for $2.9 million, and an Alien Crypto Punk changing hands for $7.57 million. Established artists including Banksy and Damien Hirst have jumped onto the trend, along with musical acts Kings of Leon, 3Lau and Aphex Twin.



(Alien Crypto Punk, Larva Labs)


At various points, the crypto community thought that either fast, cheap payments; decentralized finance, or DeFi; or the attraction of “hard money” might bring in the masses — it turns out the great unwashed are more interested in owning a JPG.

Colin Goltra, who co-founded the NFT-based Narra Art Gallery in Decentraland, says this is a very good thing, as NFTs are bringing new demographics into crypto, outside of the usual finance and tech types.

“Suddenly we’ve got this fresh blood of people exploring the space with new eyes,” says Goltra, who also heads up Binance Philippines, adding: “It’s refreshing to interact with new community members — you’re really inspired by the art, you have a lot of fun, and it’s kind of like a game to collect.”

“Make sure you’re getting some combination of that stuff out of it too because if you’re just treating this as financial speculation, honestly, there’s probably other games in town for that.”

So, how do you get involved? Magazine spoke to some of the leading experts in the field to find out.

 

 

How do you spot value in an NFT?

Unlike DeFi protocols, where you can value a project by comparing its revenue and growth potential to the price of its token and its total value locked, the value of most NFTs is highly subjective, and sentiment can turn in an instant. Earlier this month, CryptoKitties were changing hands for an average price of $1,263. By later in March, that had fallen to $115.

It’s also important to understand what you’re actually paying for. With digital art, for example, an NFT gives you ownership of a unique token linked to the art, similar to a certificate of authenticity. But you don’t own the copyright of the art, nor do you get a physical copy of it, and it doesn’t stop anyone else from copying or viewing it.

Australian dance music producer Flume sold a music and animation NFT, “Saccade,” for $66,000, despite retaining the copyright to the music and leaving it freely available for anyone to watch on YouTube. Castle Island Ventures founder Nic Carter likens buying an NFT to getting an autographed print:

“What I’m buying is effectively a digitized version of a signed setlist after a gig, or a signed, limited edition album cover. As I jokingly put it, the NFT should be understood as the autograph, not the art.”

The blockchain on which the NFT is minted also affects the price, with users paying a premium for Ethereum-based NFTs, given that the network is secure, decentralized and expected to be around for a while. But the choice of blockchain is less of an issue with in-game assets (which may need a faster blockchain) or with something like NBA Top Shot (which uses Flow), as it’s the only place you can buy licensed NBA memorabilia.

Value drivers

Different categories of NFTs — including art, music, in-game items, virtual land and collectibles — have different value drivers, explains Andrew Steinwold, managing partner of NFT investment fund Sfermion.

He says that in-game assets derive value from their utility — a sword with 10 times the power of the average sword should fetch a higher price, for example — while virtual land is priced according to “location content and parameters.” Crypto art’s value is based mainly on an artist’s reputation, while collectibles “derive their value from the narrative that surrounds the asset.”

Across all categories, scarcity and uniqueness help drive value — provided there is demand, of course. “Collectibles often come in various editions which vary by size and have rarity tiers. First editions in a project’s series typically command a premium,” explains Delphi Digital research analyst Alex Gedevani. “Even better if there’s historical significance and/or strong narrative behind it like CryptoPunks, the first NFTs.”

Alien and Ape Punks are the most prized CryptoPunks. For the blockchain-based game Axie Infinity, where users raise and battle fantasy creatures called Axies, “The scarcest, most valuable Axies are Mystic Axies,” says Jiho Zirlin, co-founder of Axie creator Sky Mavis. “They have rare limited skins and these skins will have a deeper evolutionary tract than other Axie body parts.”

On NBA Top Shot, sport “Moments” with low serial numbers fetch higher prices, as do those where the serial number matches the player’s jersey number. A collector recently turned down a $1 million offer for a moment with a #1 serial number, which matched player Zion Williamson’s jersey number, #1.

 

 

The NFT art scene is perhaps the easiest for newcomers to understand. Just as in the real world, well-known artists with bigger social followings command higher prices than newcomers. Make sure to look at an artist’s overall volume of work: Someone pumping out 10 NFTs per day may soon saturate the market. Counterintuitively, however, big-name artists can actually launch a lot more work than others.

NFTs can be released in editions of 10, 50 or even hundreds of copies — similar to a real-world artist running off 500 prints and hand-signing them — or they can be released as unique, standalone one-of-one editions.

As you might expect, the one-of-one editions are the most highly prized, and that’s why Goltra focuses almost exclusively on them. “I do like the idea that I can be the unique owner of beautiful imagery, or a beautiful piece of art,” he says.

What should investors avoid?

A big red flag comes up for projects that are only in it for the money, and Gedevani cautions against “carbon copy clones of successful projects like CryptoPunks and Hashmarks” along with “celebrity NFTs that appear to be quick money grabs off their audiences.” He doesn’t mention Lindsay Lohan or Paris Hilton by name, but he probably doesn’t have to.

Another trap is buying stolen art. Russian artist WeirdUndead was outraged to find her stolen work up for sale on OpenSea after someone automatically tokenized it using Tokenized Tweets. She tweeted:


It’s an ongoing problem, given how simple it is to mint NFTs now. Visual artist Rosa Menkman likewise discovered that four of her artworks had been tokenized using another website called MarbleCards and auctioned on OpenSea. Apart from the ethical issues, it’s hard to see stolen NFT art maintaining value if its creator disavows it.

Even when the art is authentic, Steinwold says it’s important to assess the background and motivation of the person issuing an NFT:

“Are they some famous athlete that learned about NFTs last month? Or are they someone that has been in the NFT ecosystem for years and has thoughtfully crafted assets with a compelling narrative?”

Steinwold may be thinking of NFL star Rob Gronkowski, who sold $1.8 million worth of NFT memorabilia on OpenSea.

In the blockchain gaming world, Zirlin recommends steering clear of hyped-up but substance-free new projects, or as he puts it: “Chasing the new hot thing, trying to be early to a bad project rather than joining a more established project with potential.”

In the art scene, Goltra avoids NFT platforms that aren’t highly selective about the art they carry, such as OpenSea and Rarible. While he says large open platforms such as these are great for new artists and investors, they present logistical problems.

 


“There’s just so much work that you have to sift through to find anything of quality,” he says. He prefers platforms with “filters,” including SuperRare — which only offers one-of-one single editions — Nifty Gateway and Foundation.

Miko Matsumura, general partner at Gumi Cryptos Capital, recommends avoiding pretty much everything. “Almost everything in NFT will be worthless in the future,” he says, with limited exceptions for those that can be authenticated as having historical significance, such as CryptoKittes or NBA Top Shot collectibles. “Don’t buy stuff that has no historical value from sources that have no authority,” he warns.

Is a potential financial return the best way to approach NFTs?

In a word, no. Those with whom Magazine spoke agreed that collectors with a genuine interest in a category are the most likely to turn out to be successful in this nascent industry. “If someone is heading into a collectibles market with the intention of flipping for profit but doesn’t understand the nuances of the project, chances are it may not end well,” says Gedevani, adding:

“We are still largely in the experimental phase with collectibles across many categories like sports, avatars, game items and more. It’s better to focus on niches that genuinely interest you and where you can find an edge.”

Gabby Dizon, co-founder of Yield Guild Games and Narra Gallery, says we’re still so early in the NFT game that it’s very difficult to gauge potential financial returns. A better strategy is “to first buy something you would not mind owning for the next five years,” with one eye on factors that might see the value increase, like “scarcity, desirability, aesthetics and utility.”

That way, even if the market tanks, you still own an NFT you like. For Goltra, “The financial stuff is secondary,” adding: “There are pieces I could purchase as speculative plays but I don’t because it’s not the purpose for me. I just try to buy art that I like or that speaks to me in some way.”

 

 

Are some NFTs undervalued/overvalued right now?

Mike Winkelmann, the artist known as Beeple, certainly thinks prices are too high at present, telling Fox News: “I absolutely think it’s a bubble, to be quite honest. I go back to the analogy of the beginning of the internet. There was a bubble. And the bubble burst.”

Matsumura believes that “All types of NFTs are overvalued right now” and likens the space to a lottery, where the winners win really big and get all the publicity while “the vast, vast majority of people will be losers,” economically speaking. 

Goltra is also keenly aware the NFT mania could fizzle out, taking those high price tags with it. “I know we’re not immune to market cycles, the way that the rest of the crypto space is,” he says. “And so, I know that there’s a version of this where any media that we’re doing right now, you know, whenever this next cycle is over, we all look stupid.”

 

 

But Yat Siu, CEO of Animoca Brands, believes at least one NFT sector is currently not getting enough love, and that’s gaming. “Our opinion is that game assets are undervalued because NFTs derive value not just from provenance, scarcity, and general demand, but also from their utility,” he says.

“If you do wish to acquire NFTs primarily as an investment, then aim for assets that have underlying utility in a scarcity-based game or platform that is likely to grow significantly in terms of users — your NFTs will have a better chance to increase in value simply due to demand and supply patterns.”

As an example of a wise investment, he notes that crates of NFTs for the Formula One-licenced game F1 Delta Time were released for $500 in 2019, some of which contained sought-after Ferraris that have increased in value to as much as $60,000.

How important is it to understand the secondary sales market?

Steinwold calls secondary sales “perhaps the most important indicator of an NFT’s longevity,” and Dizon cites them as the true test of whether an NFT was worth the initial purchase price.

To better understand secondary markets, Gedevani recommends making use of third-party or community-created analytic tools such as MomentRanks, Intangible.market and Evaluate.market, which help investors gauge the value of NBA Top Shot collections.

“Overlooking secondary sales is an easy way to make a mistake of buying an overvalued asset that has already run up substantially in a short time period,” he says.

How can you maximize the chances of winning an auction?

While you could “learn how to code and use bots,” as Steinwold suggests — or take a short course in auction game theory — the best way to win is to not play the game, says Goltra.

“Sometimes you can preempt the auction altogether,” he says, suggesting you slide into an artist’s DMs on Twitter or Instagram and negotiate directly.

“I think artists want to know that the collector of the art is appreciating it, and they like knowing who their collector is. To be able to actually strike up a conversation and kind of make friends with the artist is actually a best practice in terms of wanting to win something super rare.”

What sort of budget do you need?

A couple hundred dollars is a reasonable budget to begin with in most categories, though given the interest in NFT art at present, a couple thousand might be required to snare a one-of-one edition from anyone with a reputation.

To snag an art bargain on a low budget, you might have to work a little harder. “I specialize in buying NFTs of up-and-coming artists who are yet ‘undiscovered’ and whose NFT artworks are selling for much lower prices than more established artists,” explains Dizon. Such gems are more likely to be found on open platforms like OpenSea and Rarible — though you’ll need to spend a bit of time combing through the haystack.

 

 

OpenSea co-founder Alex Atallah says you can turn up hidden gems by looking for artists with few buyers to date but who have strong, unique social media accounts. “These are often the ones that will get ‘discovered’ soon by the NFT community,” he says.

Goltra adds that keeping an eye on the upcoming artists with whom better-known artists interact on social media is also instructive. “You can kind of tell when there’s a new artist that’s very prominent, because all the other artists get excited,” he says.

Games and collectibles platforms often have very affordable entry points: NBA’s Top Shot platform sells “common” packs for as low as $9, and collector Pranksy claims to have turned $600 into nearly $7 million worth of memorabilia in a few months on the platform.

Siu explains that newer projects sometimes reward early adopters in the community with airdrops and gifts: “Getting deeply involved in an NFT project early on is usually a sound strategy because there will often be early adopter drops or gifts for engaged community members,” he says, adding: “We have given out such rewards in games like F1 Delta Time encouraging players to play more frequently, and some of those rewards ended up becoming quite valuable.”

And for those who have no budget at all, you can actually play to earn by raising Axies — a pastime that helped numerous Filipino players make it through the pandemic, with some even becoming relatively wealthy in local terms.

“There are people making a living playing Axie,” says Zirlin. “From collectors to play-to-earn grinders in the developing world.”

 

 

How do I research the market?

Some of the better-known NFT news sources include Steinwold’s Zima Red podcast and newsletter, Delphi Digital’s Delphi Daily, Bankless and The Defiant. Art platforms such as SuperRare also feature interviews with artists and other content.

In addition, you can follow as many NFT accounts on Twitter as possible — including WhaleShark, DCL Blogger, Loopify, Linda Xie and more — and get involved with NFT communities on Discord, such as those of OpenSea and Token Smart. Zirlin says the Axie Infinity community on Discord is the best way to learn how to raise Axies. “I suggest becoming a community member by joining the Discord and meeting the other Axie trainers. Talk to other players that have had successful journeys and try to emulate their paths,” he says.

Gedevani says your time is well spent browsing social media, listening to podcasts and experimenting with projects. “That’s the fastest way to learn,” he explains. “Follow the builders/investors in the NFT community who have been through all the ups and downs and are best positioned to navigate this market.”

Final words of advice

We are still in the early days for NFTs, and no one really knows how the market will develop, so there’s an abundance of caution all around. Matsumura notes that in the current bull market, everyone can appear to be winning and making large paper gains, but sentiment can suddenly flip. “Some of those things will go to zero and stay at zero forever,” he says. 

Dizon encourages buyers to do as much research as possible: “Do your homework, make sure you love what you are buying and can afford it, then you can pull the trigger. The best time to sell an NFT is when everyone else is FOMOing in. The worst time to sell an NFT is when you need the money.”

Steinwold says a long-term mindset is likely the key to success. “We are in a frenzied period right now so be thoughtful in what you purchase. Ask yourself: will this NFT be around in two to three years?” He concludes:

“The NFT zeitgeist only caught on to a wider audience the past few months and this revolution will take many years so always play long-term games with long-term people.”





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Cointelegraph By Darren Kleine

Cointelegraph Magazine is a new publication that goes beyond the daily news and delves much more deeply into the stories, trends, and personalities that inspire cryptocurrency and blockchain conversations around the world.

We are people-centric, delving into *why* the true believers of blockchain feel they can change the world (and why they think it needs to be changed).

Through long-form features, thoughtful analysis, and a little humor and satire, we illustrate how the implementation of this technology is affecting the lives of countless people — today, right now, not at some distant point in the future.

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Cointelegraph By Jon Rice

Cointelegraph Magazine is a new publication that goes beyond the daily news and delves much more deeply into the stories, trends, and personalities that inspire cryptocurrency and blockchain conversations around the world.

We are people-centric, delving into *why* the true believers of blockchain feel they can change the world (and why they think it needs to be changed).

Through long-form features, thoughtful analysis, and a little humor and satire, we illustrate how the implementation of this technology is affecting the lives of countless people — today, right now, not at some distant point in the future.

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Cointelegraph By Jon Rice

Cointelegraph Magazine is a new publication that goes beyond the daily news and delves much more deeply into the stories, trends, and personalities that inspire cryptocurrency and blockchain conversations around the world.

We are people-centric, delving into *why* the true believers of blockchain feel they can change the world (and why they think it needs to be changed).

Through long-form features, thoughtful analysis, and a little humor and satire, we illustrate how the implementation of this technology is affecting the lives of countless people — today, right now, not at some distant point in the future.

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Cointelegraph By Jon Rice

Cointelegraph Magazine is a new publication that goes beyond the daily news and delves much more deeply into the stories, trends, and personalities that inspire cryptocurrency and blockchain conversations around the world.

We are people-centric, delving into *why* the true believers of blockchain feel they can change the world (and why they think it needs to be changed).

Through long-form features, thoughtful analysis, and a little humor and satire, we illustrate how the implementation of this technology is affecting the lives of countless people — today, right now, not at some distant point in the future.

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Kristin Boggiano – Cointelegraph Magazine

Cointelegraph By Elias Ahonen

Kristin Boggiano, a lawyer and co-founder of the CrossTower digital asset exchange, developed her ethos on protecting the vulnerable while working and living in the Amazon during the 1990s, helping fight for the rights of the Cofán people against the Big Oil companies.

She later worked creating mortgage-based derivatives on Wall Street right before exotic derivatives shouldered part of the blame for causing the global financial crisis, or GFC. In the aftermath, she put her inside knowledge to good use as a regulatory lawyer helping shape market reforms.

It was partly due to the GFC that institutions were slow to adopt Bitcoin in the early 2010s, she says.

“I came upon [Bitcoin] from the perspective of a lawyer, because my clients wanted to buy and trade it. I had to figure out what it was and how to trade it,” she recalls, looking back on the early days of crypto markets between 2011 and 2013.

Back then, her clients were not ideological types — they were institutions that saw opportunities in arbitrage. “Hedge funds didn’t have any philosophical desire to change the world with Bitcoin. They just saw it as an asset class, even as early as 2011 and 2012.”

But Bitcoin soon faced a reckoning with the collapse of its primary exchange, Mt. Gox, and the much-publicized arrest of Ross Ulbricht, who was operating the Silk Road darknet market.

“As soon as Silk Road happened, and Mt. Gox, I think institutional participation became questionable from a fiduciary perspective. You don’t want to participate in illicit activities.”

Seven or eight years later, the institutions are returning in full force. Boggiano considers proper regulation in the name of safety and legality to be critical to integrating the crypto industry with the powers that be. Just as the Cofán people of the Amazon needed environmental regulations to keep their land free of oil waste, she believes retail traders similarly need strong regulations to protect them from financial harm.

 

 

Apart from being the president of the institutionally focused platform CrossTower, Boggiano is also the founder and co-chair of Digital Asset Regulatory & Legal Alliance, whose “approximately 90 members are executives, senior legal and compliance officers of financial institutions and blockchain technology companies.”

She previously worked as both chief strategy adviser and senior regulatory counsel for Guggenheim Partners, an investment firm with $270 billion dollars under management. The firm has gotten recent press due to its chief investment officer, Scott Minerd, predicting Bitcoin will reach $600,000.

Sounds a little derivative

With her father serving as a doctor in the Air Force, Boggiano grew up on the move. “I lived in Texas, California, Taiwan, New Mexico, New Jersey, Colorado and back to New Jersey,” she says. When her parents divorced, she then split time living with each of them, until she left to study developing economics at Sarah Lawrence College, graduating in 1992.

After writing a thesis about Texaco’s work in Ecuador and the adverse human rights and environmental consequences of U.S. foreign policy on developing countries, she received a grant to travel to Ecuador where she worked for a law firm advocating for the rights of Indigenous peoples.

“I wound up finding the Cofán people in the upper-Amazon basin, and then wound up living with them on and off for a while, helping them think through how to acquire the title to their land.” The difficulty was that the Ecuadorian government owned rights to the oil underneath, which it wanted to extract — with U.S. oil companies often assisting in the drilling.

After two years of fighting for Indigenous rights, Boggiano was inspired to apply to law school. She graduated from Northeastern University School of Law in Massachusetts in 1997, also completing an MBA at the same institution in 1996.

“In the process of studying, I became fascinated with the derivatives markets.”

While still studying, she worked in the enforcement divisions of both the Commodity Futures Trading Commission and the Securities and Exchange Commission in New York, both tasked with regulating the U.S. financial system.

She soon got a job “trading or structuring equity and credit derivatives” for hedge funds and high-net-worth individuals on behalf of Merrill Lynch in the late ’90s.

“I was working 18 hours a day, sometimes seven days a week — it was just a really crazy market. [Chair of the U.S. Federal Reserve Alan] Greenspan was keeping interest rates really low, and people were really looking for yield at that time. So they were coming up with creative methods of creating products.”

“I think ‘81 was the first swap,” Boggiano tells Magazine as she explains the early history of derivatives before she entered the game. She’s referring to financial swaps, which are derivatives contracts that allow parties to trade the cash flow of one asset for another. These exploded in popularity because investors were looking for yield after the reduction of bank interest rates.

“Foreign exchange derivatives were the early ‘90s,” she calculates, adding that equity derivatives started to be used around ‘96, “But they were just starting and they republished the definitions in 2002.” Working on the trading floor, this put the young Boggiano in the middle of a financial revolution of the time.

That all sounds familiar

In many ways, Boggiano’s description of the ’90s and early 2000’s Wall Street world invites comparisons to the more recent decentralized finance, or DeFi, boom of the cryptocurrency world. Cryptocurrencies like Bitcoin did not initially offer any opportunities for cash flow beyond appreciation, but that is changing with things like Ethereum 2.0 offering staking rewards of several percent per year.

Today, many lenders such as BlockFi and Celsius, as well as various exchanges including Boggiano’s CrossTower, offer opportunities to earn interest yield on cryptocurrency holdings. Furthermore, DeFi platforms like Ethereum’s SushiSwap and Binance Smart Chain’s PancakeSwap allow users to exchange cryptocurrencies through the use of liquidity pools. These liquidity pools act as decentralized cash reserves to which anyone can contribute, with those contributors then earning yield in the form of trading fees.

The concept of DeFi has been called “financial Lego,” and goes much deeper. The tokens representing stakes in these liquidity pools can themselves be staked on other platforms (or vehicles, as they might have been called in Boggiano’s early days) to allow for yield farming, often generating tokens in new projects that may vest immediately or over several years.

 

 

Just like the 18-hour days Boggiano recounts, there is no shortage of “DeFi degens” skipping sleep to manage their yield farms across a multitude of newly emerging platforms. FTX’s Sam Bankman-Fried famously spends almost every waking moment at his Hong Kong desk and sleeps on an office beanbag.

In 2000, Boggiano left the floor to work at a law firm and help build new products for the new financial ecosystem. “It was a wild market. I was doing credit-default swaps on residential mortgage-backed securities, and then putting those into other vehicles,” she explains.

In 2007 and 2008, the global financial crisis decimated the market.

“Once the market crashed, I became a regulatory lawyer and helped shape regulation from pre-Dodd-Frank [Wall Street Reform and Consumer Protection Act], all the way through rule-making 200-plus rules,” Boggiano recounts, recalling the tumultuous era when she worked to create stability by way of regulation and oversight.

It may not be fair to assign all the blame for greed upon the innovators of Wall Street; it was the investors, after all, who demanded returns on their capital despite a difficult economic environment where previously high interest rates had fallen. No longer could you put your money in a bank account and watch it grow as consistently. With the idea that money should earn favorable interest firmly entrenched over generations, the creation of exotic new methods to achieve it seems inevitable.

Bitcoin from the ashes

It was in the fallout of this crisis that many began to question the stability and even legitimacy of the financial system centered largely on Wall Street.

What made this early derivatives market more serious than an anonymous online DeFi casino was that the money flowing through it was not the gambling budget of self-styled “degens” who “aped in” to new yield strategies without critical analysis. Instead, the money often represented the life savings and mortgages of average people.

Who better to step into a role as a regulator than someone who understood this crucial area intimately? That person was Boggiano, who retreated from the chaos of the trading floor to a law office where she would work to help rebuild the system in hopes of allowing it to earn back people’s trust.

It was in this position as a lawyer that Boggiano came across Bitcoin in 2011. Major financial institutions she was working with were interested in it, but they were skittish.

The level of scrutiny at the time was very high, not least because the Bernie Madoff Ponzi scheme had recently come to light and the industry was in regulatory flux, Boggiano explains.

Today, things are different.

“We’re unquestionably seeing the participation and acceptance of Bitcoin from the institutional perspective,” Boggiano asserts, listing the likes of Elon Musk, MicroStrategy, Visa and Mastercard, as well as the endowment funds of major institutions like Harvard, Stanford and Yale as recently converted supporters. There is even interest on various national levels, such as China and the United States working on a digital yuan and dollar, respectively.

“I think that there’s a natural, healthy competition that Bitcoin has with respect to monetary policy in the United States and elsewhere. That competition is a good thing because it’s forcing countries to think about their economic systems.”

“We’re gonna see significant adoption and change over the next three to five years — it’s going to be a different economy,” she says with total confidence.

One question that comes to mind is whether some institutions feel as if they missed the crypto boom, seeing as they were often prevented from making moves in the early years due to the associated uncertainty. Boggiano does not frame this as a missed opportunity but as an appropriate exercise in caution. “I think that they’re doing the prudent analysis that they need to do in order to protect their investors. I think you’ve seen more activity from prop desks, who don’t have to report to investors,” she says.

“I think that the narrative to institutions is that when there’s sufficient adoption, [when] the number of Bitcoin wallets that are being utilized is considerable, it becomes a lot less likely that it’s just going to plummet to zero.”

Boggiano says it’s important to protect retail investors who are playing alongside the institutions. “We have a very antiquated financial system and regulatory process — I think that there’s a natural struggle that’s happening between innovation, and trying to protect the retail.”

Any investment offered to retail, she explains, is more highly scrutinized than those in which only sophisticated investors, like institutions and high net worth individuals, can participate in, as it is assumed that the latter entities are better equipped to understand the investments and manage losses. “Those protections are there so there isn’t fraud, there isn’t manipulation.”

Still, Boggiano acknowledges, “It’s primarily been a retail-driven asset class which is very unusual — mostly, asset classes are run by institutions.”

More regulation, less privacy?

“With respect to Bitcoin, I feel there is a moral obligation to develop a means to encourage privacy, but ensure safety,” says Boggiano. While she values privacy, she thinks protecting retail investors and the wider population is a higher priority.

An example of this being beneficial came during the Capitol insurrection, where investigators tracked down Nick Fuentes, who’d received 13.5 Bitcoin from an overseas donor. According to Boggiano, that was a great demonstration of deanonymizing Bitcoin transactions by way of following “digital breadcrumbs” in the name of public safety.

Coinbase is one company that is said to help authorities follow these digital breadcrumbs by providing crypto surveillance services to U.S. government agencies like the Drug Enforcement Administration and the Internal Revenue Service.

“We really need to develop an alternative means of protecting people’s privacy, but also to be able to track down transactions related to human trafficking and drug cartels, because those are not acceptable industries.”

Boggiano is, in some ways, the mirror opposite of Erik Voorhees, a previous Journeys interviewee and fellow Bitcoin entrepreneur also running an exchange platform, who said that “Institutions and government exist purely to curtail people’s power over money.”

Whereas Voorhees’ viewpoint reflects an individualist ethos of unbridled liberty where collectivist institutions limit the powerful and ambitious, Boggiano instead describes governments and regulations as necessary to protect the vulnerable, like the Cofán people of the Amazon who needed environmental regulations to keep their land free of oil waste.

“Left to people’s own devices, you get these imbalances of power and that can be very destructive to people who are in vulnerable positions,” she states.





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Page not found – Cointelegraph Magazine

Cointelegraph By Jon Rice

Cointelegraph Magazine is a new publication that goes beyond the daily news and delves much more deeply into the stories, trends, and personalities that inspire cryptocurrency and blockchain conversations around the world.

We are people-centric, delving into *why* the true believers of blockchain feel they can change the world (and why they think it needs to be changed).

Through long-form features, thoughtful analysis, and a little humor and satire, we illustrate how the implementation of this technology is affecting the lives of countless people — today, right now, not at some distant point in the future.

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