Buying and selling works of art has always been seen as a hobby for the elite. And, while non-fungible tokens (NFTs) are certainly not making it cheaper, they are changing the game.
The most popular NFTs sell for millions of dollars and have some famous buyers, like Jay-Z and Logan Paul.
So, what is it about NFTs that makes digital art all the rage?
According to crypto analyst Marija Matic, “It’s like wearing a Rolex, but it’s even more prestigious and cool because not many people know about NFTs; it’s a signal for recognition.”
But the real appeal goes far beyond status. The possible applications for NFTs are almost limitless, so much so that Chris Coney claims “there aren’t enough people on the planet Earth to actually roll out all the possibilities.”
You can watch Marija and Chris’s interview here or read on for the full transcript …
Chris Coney:
Hi there, and welcome to this week's addition of the Weiss Crypto Sunday Special with me, your host, Chris Coney. With me today is the lovely Marija. Marija, welcome back to the Sunday Special.
Marija Matic:
Thanks for having me, Chris. Hi.
Chris:
Thank you for being here. So today we're going to discuss going a bit deeper into NFTs. But I've called this episode “From $100 Million Digital Art to Playable NFTs.” That's about as concise as I can put the thoughts that I was having when I came up with this idea. So, let's start general and then go more specific.
When I started thinking about this I thought okay, I'm always going down to the root causes of things, like simplifying what's at the base of it all. In investing, basically all we ever talk about is price. The next level up from that are the two forces acting on the price: upward and downward forces. If there's a stronger force pushing the price up than down, then it goes up. And if there's a stronger force pushing down the nook, it goes down. And that's what we're constantly trying to guess: Where is the balance right now, and where is it going to go?
And when we chart it, we chart it historically and then try and use that to project where it will go in the future. That would be technical analysis. We also do fundamental analysis, where we see — based on what's happening in the world and the direction we think it's going — where the price will go and what forces are going to act on the price.
Then I started thinking about these two forces, how they act on art. Physical artworks — a canvas painting, a classic like a Van Gogh — were the examples I gave last time we spoke. The thing about physical artworks is that they do decay. They can get damaged and so on. So the classics were painted in the 1500s; you would expect over the years the scarcity of those would increase. Because people know they're perishable, they're in museums and they are in air tight glass cases just to make sure that they are preserved.
That just makes me think about “The Da Vinci Code,” where they're trying to slow that process of decay by preserving the art. But accidents and thefts happen and make physical artworks scarcer over time.
But that isn't really something that can happen with digital artworks. That's where I started thinking about the distinction between the two. That force where is physical artwork becomes scarcer is something that would push the value up over time.
[The lack of this force] is something I think everyone is trying to get their head around about NFTs. And this may even be a problem with valuing art that has always been there: If that art does go in and out of fashion. IF so, there’s an inconsistent demand which firmly depends on why you are buying the artworks.
Let me ask you a question here. I suppose right now, one of the most desirable NFT collections are, in my opinion, The CryptoPunks. Will they ever fall out of favor, is what I am thinking. Do you think they'll ever fall out of favor?
Marija:
I think they will have swings in price, but I don't think they will ever fall out of favor because they represent an important snapshot in the history of crypto. They are one of the first NFTs. They have become some kind of digital flux. Especially if you buy them and use them as your avatar, your profile pic.
Chris:
Social, exactly.
Marija:
Exactly. It’s like wearing a Rolex, but it’s even more prestigious and cool because not many people know about NFTs; it’s a signal for recognition.
Chris:
You said there'll be swings in prices, but why?
Marija:
Because the NFT market, like any other market, has its bullish and bearish periods. Right now we are in a bullish period for NFTs.
Chris:
Okay. Bullish and bearish periods based on what though? Because that kind of carves back to what I was just saying about art going in and out of fashion. When I was talking about, say a specific collection or styles, like Jackson Pollock. Do you know who that is?
Marija:
Yeah.
Chris:
That is a very distinctive style. If you don't appreciate what it is he was doing, you just think its garbage. Art tends to be like that — if you don't get it, you just think “Oh, that's junk.”
This is why the art market and pricing it is very difficult to put your finger on. Do you have any idea why you'd have what we'd call as a bull market or a bear market in CryptoPunks, for example?
Marija:
Well, it was given for free at the beginning, CryptoPunks. Then they gained notoriety— they were always a popular kind of cult project, even though they don’t look like much. You have these pixelized characters, they look easy to make, etc.
In recent months it became digital flux. You have all these high-profile people like Jay-Z and Paul Logan who got on the train and use them as their avatars. Right now, we’re having an avatar mania. This is what's driving the current bull market for NFTs. We have all these cute or cool projects that have issued usually a series of 10,000 different avatars.
They are similar enough, so you can be considered a tribe, or a follower of that project. They also all have their own rare traits, which gives them uniqueness. Some are rarer than the others, which give the difference in the price. And then we have the floor price, which is extremely important because when the floor price is rising ... the floor price means the cheapest NFTs from one project —
Chris:
In the entire collection, right?
Marija:
In the entire collection.
Chris:
So the floor price for a CryptoPunk would be the cheapest one you can get out of the 10,000.
Marija:
Right. The cheapest ones are $200,000. Then you have the most expensive ones, sold for over $20 million, $30 million, even though you get one image.
I totally understand there are people who really value their online persona. This is not just about getting yourself an avatar. It’s interesting that I haven't met a person on Crypto Twitter that uses someone else's NFT. They're using their own NFTs that they bought. Very rarely you will see, or I haven't met anyone —
Chris:
I agree.
Marija:
It’s very interesting how people really value to own what they display, right now in the Twitter crypto world. So it’s interesting you have all these avatar projects coming out. Of course not everything is successful. The problem also is that most of them are issued on Ethereum, and in order to mint them on Ethereum you have a very high transaction fee.
Chris:
Sure.
Marija:
So your floor price cannot really go ... No one wants to sell beneath what they minted it for.
Chris:
Sure, absolutely.
Marija:
So you won't find projects below $300, not because people think it's worth that much, but because their initial minting price fee was high.
Chris:
And I suppose that depends on when you mint it. So some NFTs that were minted when Ethereum transaction fees were $300, unfortunately it doesn't matter what demand there is, they've got to get that back somehow.
Marija:
Yeah, but you have many projects which were minted during a gas war during and people were fighting over those mints.
Chris:
Why didn't you mint it later?
Marija:
They paid $1,000 or $,2000 for gas, just in order to-
Chris:
Why does it have to be minted there and then, why not wait? Why the battle for time?
Marija:
Because it's cheaper usually. If you believe that the project is going to make it and you want to enter the mint phase, you don't actually know what you're going to get. It’s like a lottery-
Chris:
Oh sorry, you the collector or you the investor.
Marija:
You as the collector, investor, whatever.
Chris:
Oh, OK. Sorry, I thought you meant the projects were doing that. Okay got you. That makes more sense now.
Marija:
There is a drop now, a mint drop. And then, if you are informed early enough and you want to get involved with that drop, you have to fight with other people who also want to mint those. Because they are cheap during the drop, very cheap.
Chris:
That's exactly the same as the ICO mania, right?
Marija:
Not quite, but similar.
Chris:
It's the same in the sense that … When a lot of those ICOs, which were totally decentralized were smart contracts that had say a maximum cap of 1 million tokens, opened the ICO, you would send your Ethereum to the smart-contracts address, and it would then mint the tokens and send them back. And that's what happened, the same thing. When the ICO opened, everyone mashed it and tried to race their transactions through, and so the gas wars appeared. So it's the same in that regard.
Marija:
Yeah indeed this looks similar to the IDO, Initial Dex Offerings of some kind. They sell out very quickly, in like 15 minutes, half an hour. And then you have all these people fighting over to mint and see what they are going to get, because the picks are revealed right after. And usually if the project is successful, especially now during the bull market, you can earn a lot. Its additional incentive.
Chris:
That's a quirk. We should probably explain that quirk you were talking about just there.
I am a big Star Trek and Star Wars fan and, back in the day, there was this company called Decipher that got a license to make this collectible card game.
And this is where all this NFT stuff is coming from.
I would go down to Hewing's Hobbies in town and pay 1.99£. They’d give me a little playing card-sized foil pack. I would crack it open and there would be nine cards in it. One rare, three uncommon ones and six common cards. Oh, that adds up to the wrong number, but you get the idea. Then you would fumble straight through to the rare one to see what it was, because they were the most powerful in the game and you checked them off your list, which I always wanted to collect the sets and so on.
So, what you're talking about is the digital version of that.
Marija:
Yes.
Chris:
So, let’s use CryptoPunks as an example. I'm not sure if that worked like this but, say on day one you know there are 10,000 variations of CryptoPunks, but you don't get to choose which one you get in the minting phase right? You just pay your fee and when they've all sold out, the block chain reveals all the cryptographic secrets and you see which one you got. And it’s kind of like simulating that opening of the pack, like I did back in the day.
So it’s got that same uncertainty to it, right?
Marija:
Exactly. And that's the most exciting part, actually.
Chris:
Oh absolutely. I'm totally with that.
Marija:
And it’s usually limited, you can mint two or up to 20. So it's a very interesting process.
But the point is, not many people know when the projects are going to be minted. They're not informed. They maybe find out later about NFTs or hear about them only when they become more successful, and so they want to own them. So, you get other buyers; we call them secondhand buyers.
These are limited edition things. There are people who want to own them, even if there are 10,000 NFTs in a series. And you have 3,000 people who are minting them, and the limit is 20 per one person. People are going to fight because there are not going to be enough for all those people who want more.
Chris:
You have to get in on the mint phase.
Marija:
Yeah, it’s something like that.
Regarding the value of the project, it's usually determined by the volume of trading. If there is interest in the project, you would see it usually by the increase in volume traded. So if people are continuously trading —
Chris:
On the secondary market, yeah sure.
Marija:
On OpenSea for example, because OpenSea is the biggest and most popular marketplace for NFTs. It’s so big that it is eating the most gas on Ethereum.
Chris:
I noticed that. I noticed that more than Uniswap (UNI) now. I couldn't believe it. I actually saw it by accident: I was just on Etherscan and I saw the gas guzzlers list and I couldn't believe it.
Marija:
That's what I don't like about NFT crazes, that the gas fee has gone up so much. Yesterday, you would have paid $100 for one swap per coin on Uniswap because of the NFT craze on the other side.
Chris:
Yeah, because it's a public network and everyone is sharing that capacity. So, it is what it is.
I'm sure you're happy that the NFTs thing is succeeding, but you don't like the fact that —
Marija:
No. Actually, it’s really very addictive.
Chris:
I know.
Marija:
Essentially, you have these amazing, crazy communities which are connected to PFP, to avatar kind of projects. Then you have communities that are connecting through the art projects. Art launches or gaming, NFT games, etc.
Chris:
We'll get onto that in a minute because that is another rabbit hole. I just wanted to make a point here. You said some people miss the minting phase because they don't hear about the minting event before it happens and they end up on the secondary market, right? I wrote down there, that's actually an impossible problem, because you can't wait to launch until everyone heard about it. You can't guarantee everyone's going to hear about it. You do your best to advertise and get the word of mouth, but still not everyone who is interested is going to hear about it in time.
So, that is an impossible problem for every project, I imagine. That's not something we can solve very easily, because you can only read so many emails and text messages and so on and so forth.
Marija:
You have websites where you can look for upcoming mints, but you didn't know which ones are going to be successful. You can guess or you can get into a couple mints. But also you really need to be involved with the community in Discord or other groups, chat groups.
Chris:
Why?
Marija:
Well you would notice, for example, influential people. And if they are—
Chris:
You're doing that to try and work out if it's going to be successful?
Marija:
Large collectors, influential people, etc. ... they're all in these Discord groups where you can chat with them, get to know them. If you're involved in the community, you will hear, “oh these people are going to get walled,” and other things that are not really advertised.
Chris:
Whale collectors.
Marija:
Not just that, but also different research. All the people from the community are researching this or that incoming mint. Looking at the team, or the artist behind the project, or their previous projects, [investors] may find some value in some of those. It’s quite complicated to be honest.
Chris:
Yeah absolutely it is.
Marija:
No one can guarantee that one project will succeed on the level of CryptoPunks, or Bored Apes or other projects, like penguins. Penguins were a total surprise.
Chris:
Is that a successful one? Because I did see that. Is that a good one?
Marija:
Yeah its crazy successful.
Chris:
Penguins, who would have thought.
Marija:
Yeah. All these projects somehow gain —
Chris:
I think it’s just enhanced though, isn't it? That's how, in general, how art works. It’s very difficult. To quote Steve Jobs, it’s very much the "people don't know what they want until you show them" thing.
You can’t do a market research survey and ask people what kind of art would they like to see, because people don't know, right? Art is an original creative work, and because its original, no one can ask for something they've never seen. So if you or I come up with an original piece of art, until we've created it, no one can demand it. It’s kind of back to front in that way.
Marija:
Well, here in the NFT space, you already have collectors who are collecting certain artists. For example, if it's a Misang or some other famous NFT artist, [the collectors] will follow what they are doing. Like if they’re getting involved in some multi-artist project, [then the collector will say] “I'm getting involved as a collector, because I want to own, I want to invest in that project.”
There are already serious collectors that follow either artists or the teams that are issuing the project. There are some serious music and other NFT projects, photo projects, that have gained. They are so expensive, you can't even imagine.
Chris:
Photo projects?
Marija:
Yeah photo projects. It’s crazy.
Chris:
Interesting, that's very interesting. That means that those investors are more interested in the artist, then, because there is something that gets them interested in the artist. But once their interested in the artist, they say, “Well, I like their style; I think they're going to be successful. I want to know whatever they create; I want to see what it is.”
So how am I going to liken that to the real world? For me that would be Lincoln Park. After their first two albums, I'm like, "These guys, this is it. I'm sold." I just watched them like a hawk for every album they released. They had my attention from then on and that was it, I'm a lifelong fan of theirs. I've loved everything they've come out with.
Marija:
Yeah, especially the validation is very important. You have now these photographs that are from Justin Aversano, the Twin Flame collection, which is now going to be auctioned off by Christie's. You have all these levels of validation of the project — from Jay-Z using as it as his profile photo to Christie's auctioning off the NFT project, or Beeple reaching $69 million or whatever the price was, things like that. And then you're looking at it like, these are how the high profile and high-priced projects reach mainstream.
Chris:
Oh really? I just wrote down there, the art gains value by social consensus and influence. That's what I wrote down there in response to what you just said. That's basically what you just said, right?
Marija:
Yes.
Chris:
The Christie's brand, or what's that Winklevoss platform called? Nifty Gateway? So immediately, that brand inherits their brand affinity from the Winklevoss twins, who are hardcore crypto people. And if you get featured on Nifty Gateway, you've got this double brand inheritance. Even an artist who you've never heard of could gain traction by inheriting the approval of those bigger brands. And then Christie's-
Marija:
Yes.
Chris:
Go on. You go ahead and speak.
Marija:
Yes that's very interesting what you said. For example, there is a project now — I was learning a lot about it — that had 55 artists. Some of them are very well known and some of them are less known, but are also very, very good, just not as famous. Even these artists can raise their reputation by being involved in the same project with these high level and well-known artists. It’s good for ... Artists can be more successful. If some artist sold his works for 36 ETH on SuperRare, if they get involved in a project which has 100 of the same images in the same project.
Chris:
Prints, whatever mints, whatever we call them. Copies.
Marija:
Yeah. Then maybe some people will say, “Okay the fair price for this — where you get 100 pieces in a series, but they’re the same — is going to of course be cheaper.” They're not going to be 36 ETH because this isn’t unique.
Chris:
The one of a kind yeah.
Marija:
One of a kind, but if its 100, then you kind of take that into consideration.
Chris:
Yeah dilute it, totally.
Marija:
Dilute it. It’s complicated. I think it works, in a way there are some similarities in the regular art world or any other industry of that kind. But this is also more specific, and some things are easier to quantify. That's why it makes it exciting and why there are also so many analytics platforms popping up.
Not enough, unfortunately at the moment, but we are getting there. Measuring the floor prices, the increase in volume of projects, the increase in the number of the holders, things like that.
Chris:
Okay. Analysis is one thing, but it’s still not ... I suppose this is universal to investing as a whole, but it’s still not a guarantee, though.
I know why you do analysis on the art market — it's because if you're an investor that wants to make money, even though with art, you could say isn't really about money, it's about the creative process. That doesn't stop the money makers of the world wanting to reverse engineer it.
But I don't think it can entirely be reversed engineered. There is no formula for working out what's going to be a successful art project and what isn't. You'll never lock that down with 100% certainty I don't think.
Marija:
Well, if you're in the NFT space long enough, you will notice certain marketing tricks, certain things that ... It's not really, “God knows how this project became successful.” It's not like that.
Chris:
It's the totally random part of the —
Marija:
It's not really random. There are formal formulas for that. And if you are an investor for a long time in NFTs you would know what the project needs. In terms of marketing, business development, community management, how it needs to be done in order to become successful. So, there is a process which can be applied.
Chris:
Like a basic checklist of things. Sure, and of course you would say that because you're a Weiss Analyst. That is how I imagine you select recommendations for the Crypto Assets. They might meet all the criteria and that becomes an official Weiss recommendation, which gives it a high chance of success, but it's still not a guarantee, because you can't guarantee what the rest of the market is going to do.
Are you —
Marija:
There's never a perfect project.
Chris:
Absolutely, no.
Marija:
It doesn't exist. If it ticks majority of the boxes, you always have to make a trade off. And say, “Okay, maybe the economics of this project are not perfect. Or maybe unlocking isn’t perfect or whatever. But on the other side, I think that’s going to be offset by whatever increase the blocking of coins because of this demand or that demand.”
So, it’s never perfect, but you need to work with high chances.
Chris:
Yes. So you're balancing those two forces. It might be like, "Well the team has taken more of percentage than what I like, but it's okay because on the other side this is a big benefit, and it's going to have high demand" or whatever.
So that's why you've got to have ... I mean I was talking to Martin Weiss about this: You can't just do it all algorithmically. You can have the algorithm crunch most of the data, but then you need the human beings to take the bat on and do that bit, which is the intangible kind of balancing act. I don't know what we’re doing in our minds to do that, but that's what humans do.
Marija:
Weiss Ratings are another thing, it's completely done... they’re not done by people, they’re done by the algorithm.
Chris:
No, I meant like the recommendations from the newsletters.
Marija:
Ah. Yeah, the recommendations are done by people, but the Weiss Ratings are done completely by the algorithm. It’s not done by people.
But let’s go back to NFTs. The biggest issue with NFTs is liquidity.
Chris:
Yes.
Marija:
And how to make them more liquid. Especially now, when so much money is trapped in those NFTs, so much to eat. Which could be used now during the bull market. Its locked inside different NFT projects, its huge—
Chris:
What do you mean locked inside? What do you mean by locked?
Marija:
Not locked, but they're trapped inside. You bought an NFT for $3 million, so it means you cannot use your $3 million to buy Bitcoin (BTC, Tech/Adoption Grade “A-”).
Chris:
I see what you mean. Okay I see what you mean. So you're trading the—
Marija:
I call it “trapped.” So, you have an NFT you bought for $3 million, and you cannot sell it immediately on the market, like you can Bitcoin.
Chris:
Unless there's a buyer.
Marija:
You have to wait for the buyer. It’s not liquid like Bitcoin. So it's a huge decision to bet on. Especially those high value ones. I mean, for the floor prices, its easy because now you have protocols that accept floor priced NFTs of certain projects. They say, “Okay, if you have a Penguin, or playing cards or something, you can go to this protocol and if you don't want to wait on OpenSea, you can simply sell it or unlock it on that platform and get money in return.”
They have these second layers of tokens that represent floor prices of certain projects. The floor prices of projects are more liquid. But the expensive NFTs from the same project are not liquid. And now, you get this whole industry thinking about how to make the whole NFT industry more liquid with a second layers to some protocols and how to shorten the market.
So, many new products are going to come up. Products where you can shorten the NFT market. Indexes where you can say, okay this index with a basket of CyrptoPunks, Penguins, Bored Monkeys, something like that. The most famous projects, then you can say, okay I'm going to shorten this index because I think their average price, depending on what the index is about — the floor price, the average price, or the carbon price and if it’s going to be shortened or lengthened or whatever.
There's going to be a huge economy built around the NFT market, especially around how to create and enhance the liquidity aspect.
Chris:
Right. Yeah, absolutely.
You said Bitcoin and NFTs are on opposite ends of the spectrum. The reason why Bitcoin is liquid is when you want to buy or sell some.
Say you want to buy some Bitcoin, you don't care which BTC you get. That's the nature of fungibility — you don't care which Satoshis you get, as long as you get 10,000 of them, right?
But because some NFTs are one of a kind, that's it. Someone needs that one to be able to offer this thing ... and they need to value it, ideally, more than the last price you paid for it. Otherwise, it sat there illiquid in the way you describe it.
That is a big question. Say someone pays $3 million, or $3 million worth in Ethereum, for an NFT, though it depends why they bought it. We’re assuming it was an investment, because if it was, that investor is assuming that the $3 million value — that was in Ethereum and now in the NFT — is going to appreciate faster as an NFT than it would if you just held Ethereum.
Tough call, that one, if you ask me.
Marija:
Yeah, but all these people who are buying NFTs right now ... it looks like a huge market, but these are basically still crypto people. And many of them are whales, many of them are rich, many of them bought it when it was $100.
Chris:
We're just recycling that value inside of crypto right now.
Marija:
Or they mined it when it was $50. So they don't have this level of ... Some of them do not care. If they like the project, they're just going to buy it and, if they’re lucky, they’ll earn from it.
These really are the early days of the NFT revolution, and I think this NFT market is going to evolve. We're going to see more investors, maybe more careful investors, so not so many people will be aping in everything. But still, it has been very good for many people, but God knows how many of them are going to end up with bags of some useless NFTs with prices that could drop maybe 80%. We don't know. Right now, these are the very early days.
Chris:
When you call it a mania, that does sound speculative. Well, then again, this is probably a speculative comment: The mania we see now in NFTs and the rapidly appreciative prices, based on what you just said, sounds like it's a symptom of the amount of wealth early crypto investors have built. So to them, 100 ETH here or 100 ETH there would have been like one weeks’ worth of mining a few years ago.
Marija:
Back in the day, yeah.
Chris:
So to them, it's not really $3 million worth of Ether, it's a weeks’ worth of mining I did five years ago.
Marija:
Yeah, but it’s not just them. You can't believe we have so many crypto people who have put all their worth, which is maybe not much, maybe tens of thousands of dollars. They put everything in NFTs.
Chris:
To bid on NFTs? Wow, that is bold.
Marija:
People are putting everything. 100% people are going crazy. So it’s not just about the price people really—
Chris:
Oh, that's greed, that's what that is.
Marija:
Greed, no. People really like some projects. Which is crazy. You have these—
Chris:
Oh, they like them that much?
Marija:
Yeah, I know what you mean. But some of them have amazing gamified aspects.
Chris:
Okay, let’s talk about that. Go on.
Marija:
And they're very attractive. Or they can be very unique in what they offer and that’s why they’re interesting. Hashmasks were very interesting because they offered you the ability to change the name of the art. So you were involved; you were part of that art and could influence how that one particular piece will be successful or not.
Chris:
It's a type of governance in that way, isn't it?
Marija:
Something like that yeah.
Chris:
It gives you sort of like—
Marija:
Art works that are not finished. They will be finished after 10 years, because after 10 years you won't be able to influence the name of the Hashmasks.
Chris:
That's Hashmasks, right?
Marija:
Yeah, Hashmasks.
Chris:
So it's evolving art for 10 years at least.
Marija:
It's evolving. Very interestingly, you have the group of people who own the Clown — Hashmasks with clowns — and they displayed them in Times Square in New York and changed their names on the blockchain to represent the banks. They gave them the names of the banks and only people who are in the know, they would go to see the clowns. The whole square was full of the images of clowns, and you could go and see what it means. It was kind of a puzzle mystery — why are these clowns on the square?
These marketing tricks which can be done individually or in groups of people who hold similar collections or whatever. These are all kind of raising value for those pieces. Which are in the same collection of others, but they become more recognizable.
Chris:
Yes, absolutely. That is something that has always been universal to art, which is often there is a meaning to it, the intention of the artist. And often, the intention of the artist was to communicate some kind of message, but its cryptic. When you see what looks like the defacing of a building, it might be like the Banksy one with the balloon the little girls let go. You know that one?
Marija:
Yes.
Chris:
You might be like, “Well, someone's defaced that building,” and walk on. Or, if you know what that means, or any art, if you know what it's communicating then you go, "Ah, I know what that means."
Marija:
Yeah. But it especially becomes interesting to investors, to collectors, when you can get yourself into the art as well. When you can use that art to say something else or push it in your—
Chris:
Change the message?
Marija:
Change the message, exactly. So you are part of the art. That art ... it’s just like you have the Mona Lisa and it’s on the wall. Its interactive. It has this gaming kind of component.
Chris:
You can make it relevant to the times. Like you just said, if you put it in Times Square and everyone at that point in history is hating the banks, you can mold the Hashmasks to make fun of the banks by changing the names. And then maybe later on, they're all in love with the banks and they change—
Marija:
And you're not doing that. You're not mocking them publicly or breaking any law but you're still on the blockchain. Its mysterious message that says banks are clowns, rathers specific banks are clowns. This is very interesting.
This kind of digital art, it carries something which physical art couldn't carry. Digital art can go into physical.
Chris:
Yes you can print it out.
Marija:
It can become physical, you can print it out, you can display it here and there. Now you have these motion frames for the wall where you can display animations or whatever. It just gives new usages to the art. It gives more visibility to music artist. Audio artists, not just DJs. Or it gives value to strip ... how do you say the strip, the people who are making cartoons?
Chris:
Comic strip artists.
Marija:
Comic strip artist, or 3D animation artists. They are all more valued because this is the environment that likes them. The younger people, the millennials or the younger than millennials, that’s their real audience. And now, they are concentrated and are getting into this space.
And you have these companies who are organizing, who are looking for the best artist, like cartoon artists or 3D animation artists. They are curating them, giving them a platform to show what they’ve made and [in return, the artists] get a royalty from each purchase.
Chris:
Of their works, like their artworks.
Marija:
Their works, sorry, yes. On each purchase, or when the volume increases for some project, it means that the company which organized the project and the artist gets royalties. So if me and you, if you sell me some image or whatever, the artist are going to get their cut. And it's going to be visible to the artist immediately when it’s done. And it's going to get immediately sent out to the artist’s wallet, so it’s very nice.
Chris:
Absolutely.
Marija:
Its transparency to the artist, to the company and to the community, and we all know that its fair.
Chris:
And [the artists] get a share in the value they created.
So, the example I gave in our last conversation about NFTs was, if I paint the Marija portrait and then sell it to you for $100, that's it. That's me as the artist, I'm done.
If that work goes on to sell for $10 million in a few years, in the NFT world, I might get 5% royalty on that. Whereas in the physical art world, you better make sure you sell it for $10 million the first time you sell it, but not many people are going to pay $10 million for a self-portrait, so that's that.
Marija:
That's an amazing comment. Yeah, that's amazing Chris, exactly that. Because usually artist get recognized later on in life, or after their lives, unfortunately. So, this is an amazing thing.
Chris:
So, imagine that the children of the artists — maybe if someone's not famous in their own time — they pass those, what am I going to call, their digital rights onto their children. They then pass the key onto them, the key that owns that NFT and the royalties, and then it explodes. Elton John’s kids or Michael Jackson kids then are the ones who will receive the royalties. The key to that art can get passed on to as many generations as necessary.
Imagine that. Imagine whoever, the descendants of [Da Vinci], who painted the Mona Lisa — because that would be going on every time the Mona Lisa changes hands, if it was digital mind you.
Marija:
It's also good for the teams behind the projects. If they continue to receive these royalties, there will be incentive to continue to promote it. Or maybe give back to the community in terms of, maybe they are going to create a side project and give out free NFTs or maybe curate a gallery... how do you say in English, when you make in a gallery?
Chris:
Oh, in a gallery they call it an exhibit.
Marija:
Exhibit, yes. They can create an exhibit — either physical or virtual exhibits. There are many virtual exhibits. There are people who are exhibiting their NFTs which they own in virtual world. Virtual worlds are not a huge thing. Many people spend a lot of time in a virtual world where you have galleries. You have people who actually go inside the galleries to view things. There are so many things going on in virtual world. And these digital assets are needed.
Chris:
Let’s just spend a few minutes on the virtual reality (VR) piece before we finish up today, because we're coming up to the hour. You've already touched on this: VR is going to play a big role. You see now a lot of these NFTs that are spinning 3D images, but they ‘re still 2D on the screen. It's a weird two-dimensional depiction of a three-dimensional object.
Whereas when you take it into VR, you can control the motion around the object. You can have a proper 3D object that you own in VR, and then other people will have to come into VR to view it.
But beyond that, you could make the entire VR experience into NFT. So if someone wanted to experience that experience, they'd have to come to your house in VR to do it. Have you thought about this much?
Marija:
No.
Chris:
I've thought about it because I am always like, "Where is this going?" So that's where my mind went, imagine that. Imagine if the NFT was an experience.
Marija:
Well, as you say, you can display it in your home, you have now... There are these special motion frames being built, and I was a little surprised to see them. I didn't know that they already are starting to get sold. Where instead of like this, you will have a frame, like a TV but much nicer. Where you can display your animations, your collectables, whatever you have.
Chris:
Your own little exhibit.
Marija:
Yes. They're very ... You can display them in galleries in virtual worlds, you can print them.
Chris:
Absolutely, that'd be cool.
My idea about the VR experiences though, that would ... Because we've got all this fancy cryptography stuff, that's how we can protect these artworks. The reason I'm pretty bullish about an NFT virtual reality experience is that you could then make access permissioned. The platform that hosts this would have to support this feature.
Now, I don't know what a VR experience NFT would look like, but someone's going to have to come up with that. You could walk up to my front door, to my gallery in the VR, then the system would know that I owned that piece of virtual real estate, that space in the VR, and it would know because of my Ethereum address and my key. It owns that VR experience and is inside that space. But to access it ... If you just walk up to it in VR it wouldn't open.
Marija:
Yeah so you pay the ticket.
Chris:
And then you'd go to the ticket booth, you'd pay it in crypto. I would receive that money, and it would unlock for you, you’d be the owner of your own private key to the door. And then in you would come, and you'd have the VR experience, once, no recordings. And then you would walk out again, and it would lock again.
I mean it's totally mind blowing. Totally, totally, totally mind blowing, but that's where VR NFT experience would go.
Marija:
There's so many possibilities. And becoming creative in those possibilities, there are many creative people thinking about them, like you. You gave an interesting idea. Whatever you come up with now, someone is probably going to make it tomorrow, if not you.
Chris:
I just can't get the time. That's the trouble in this space. This is what blows my mind are the possibilities, because I don't think there are really enough people on the planet Earth to actually roll out all the possibilities. And new possibilities are coming quicker than we can possibly roll them out. That's a little frustrating for someone like me, because I can see it quicker than I can do it.
Marija:
Yes. I know. It’s very difficult.
Chris:
Cool. This is probably not going to be our last conversation about this, so for now Marija thanks very much for being on the Sunday Special.
Marija:
Thank you Chris, it was very interesting.
Chris:
That's going to do it for this week's edition of the Weiss Crypto Sunday Special. Thanks again Marija for being on the show. Until the next one, it’s me, Chris Coney, saying bye for now.
