Join Delphi Research today and immediately get access to our full Member Portal!

The Delphi Podcast Host and GP of Delphi Ventures Tom Shaughnessy sits down with Aftab Hossain, also known as DCInvestor, one of the most well-known names in NFT space.

Episode Highlights

The Delphi Podcast Host and GP of Delphi Ventures Tom Shaughnessy sits down with Aftab Hossain, also known as DCinvestor, one of the most well-known names in NFT space. The two discuss all things NFT culture, the process of NFT curation, social dynamics around NFTs, and much more.

We would like to thank our sponsors for making this podcast possible.

Kava: Kava connects the world’s largest cryptocurrencies on DeFi’s most trusted platform. Mint stablecoins, lend, borrow, earn and swap safely across the top crypto assets with a simple user experience and the confidence of institutional-grade security. To learn more visit kava.io

Celo: Celo is a mobile-first platform that makes financial dApps and crypto payments accessible to anyone with a mobile phone. Celo supports over 1000 projects who are everyday building applications and issuing digital currencies from 100+ countries around the world. Learn more at Celo.org. 

Every Delphi Podcast is dropped first as a video interview for Delphi Digital Subscribers. Our members also have access to full interview transcripts. Join today to get our interviews, first.

Show Notes:

(00:00:00) – Introduction.

(00:00:31) – DCinvestor’s background.

(00:01:12) – How DCinvestor got started in NFTs.

(00:04:48) – Advice to people entering the NFT space.

(00:10:03) – How DCinvestor curates his NFT collection.

(00:16:15) – NFTs versus the traditional collectibles market / art world.

(00:21:47) – The market for NFTs / inclusivity of NFTs.

(00:24:50) – NFTs on chains other than Ethereum.

(00:36:19) – NFT fractionalization.

(00:41:47) – Communities around NFTs.

(00:45:26) – DCinvestor’s thoughts on artists’ release cadence.

(00:47:43) – Social curation of NFTs.

(00:50:46) – The generative art market.

(01:02:04) – DCinvestor’s thoughts on the traditional art market getting involved in the NFT space.

(01:04:10) – The path to sustainably supporting long-tail creators.

(01:10:43) – DCinvestor’s thoughts on choosing between his NFT collection or $ETH.

Resources:


More


Disclosures: This podcast is strictly informational and educational and is not investment advice or a solicitation to buy or sell any tokens or securities or to make any financial decisions. Do not trade or invest in any project, tokens, or securities based upon this podcast episode. The host may personally own tokens that are mentioned on the podcast. Our current show features paid sponsorships which may be featured at the start, middle, and/or the end of the episode. These sponsorships are for informational purposes only and are not a solicitation to use any product, service or token. Delphi’s transparency page can be viewed
here

 Music Attribution:



Interview Transcript:

Tom (00:00:00):

Hey everyone, welcome back to the podcast. I’m your host, Tom Shaughnessy. I help run Delphi Ventures and one of the podcasts hosts. I’m thrilled to have on DCinvestor, real name Aftab. He’s such a well-known guy in the space. He’s been around the block. He’s got a lot of interesting takes on Ethereum and NFTs. He’s been around a while. His profile picture is punk. So you know he’s legit. Aftab, how’s the going?

Aftab (00:00:24):

Hey, it’s going really well, Tom. And thanks for having me on. I’m really excited to be on a longtime fan and big fan of Delphi Digital.

Tom (00:00:31):

Thanks, man. No, it’s a pleasure to have you. As normal customary first thing to do, tell us a little bit about yourself.

Aftab (00:00:39):

Yeah, so I’ve been in the Ethereum space and in the Bitcoin space prior to that for a while now. I recently left my job as a public sector management consultant, and I was doing that for about 15 years actually. So a pretty long time there. And now I’m pretty much focused full-time in the space as a project investor and advisor, and just trying to help advance the causes of decentralization and helping in this movement as I can. And so yeah, that’s just a quick summary.

Tom (00:01:12):

So the pod series is around NFT culture and community. I don’t have a great answer on what that even is yet, but how did you get so enthralled with NFTs? Like what was the starting point for you?

Aftab (00:01:23):

So to be honest, I’ve been really involved in the Ethereum space for a long time as I mentioned earlier. And that has focused a lot on spaces like DeFi primarily, although NFTs have always been a part of it in the background. And I actually bought my first NFTs way back in 2017. I got some CryptoKitties like a lot of people who might be listening to this, which are pretty, that’s an old NFT game if you haven’t heard of it. But at the time NFTE seemed more like a novelty and not something that would really mature into this asset class, which is what I think they’re really growing into.

Aftab (00:01:56):

And it was really when I left my job in around February that I just had more time and space to explore NFTs because to be honest, it’s hard to do all the Ethereum stuff that I was doing and DeFi stuff I was doing and do a full-time job and really going into NFTs. But as I really started to dive into the space, what I realized was, I had been approaching it mentally before as like, okay, these are assets for these online games. And that’s primarily how I thought about them. What I discovered as I dived into it was, wow, there’s a lot of like really talented artists engaging in the space also.

Aftab (00:02:32):

So we are going beyond just these game utility items into the space that was focused on art. And I’ve always been interested in art as an immature just admirer, but never really owned any high-end art like a lot of people. But I saw these NFTs and I was like, “Well, maybe I should just start buying some of these.” And I just started collecting them one by one. And before I knew it, I was buying a ton of them and just hoarding them. And the people that I was crazy I think at the time because they’re like, “What are you doing with all these NFTs?” I was like, “I don’t know. I just liked them.” And I feel like over time as I collected more and more, the potential value proposition of them started to become more clear to me. So that’s how I became an accidental NFT collector.

Tom (00:03:15):

It’s wild that you even said that for those who remember CryptoKitties. Like it’s wild to think that four years ago, the NFT drop is so different from what we have today. Is it weird to you that there was such a long break in between then and now?

Aftab (00:03:33):

It is weird, although it’s not surprising. And I actually surmised that. And you probably remember back then. CryptoKitties “broke Ethereum” or that’s what a lot of people said at that time because it spike the gas fee so much. And I think, by the way, we’ve learned a lot since then. So one of the things that CryptoKitties did was, it had all of these breeding mechanics on-chain, which we’ve since discovered is not like a good way to use the chain and to use chain-based data.

Aftab (00:04:01):

However, using the chain to record the fiduciary ownership data of who owns an asset, not necessarily doing these breeding games on-chain, actually turned out to be something that was really beneficial. So I think naturally as we went through the brutal bear market, I think we can say brutal bear market of the past like couple of years, there was just not a lot of interest in stuff like that. People were heads down. They were building a lot of stuff with ROSA merging on DeFi. And a lot of stuff was being built in the NFT space as well, but it just wasn’t getting the same kind of attention. But once you needed to be honest, once prices go up and once ETH prices go up and people start spending more money on these things, all of a sudden they become a lot more interesting. And I think that’s part of the dynamic at play.

Tom (00:04:48):

So I wanted to save this question for later in the podcast, but I’d be remiss not to hit this off given the long gap between CryptoKitties launch went through a bear market. Now NFTs are popular again. There’s a long time there. And I don’t know if people new to the space understand, people that are new to NFTs in the last couple of months, I don’t know if they understand bear markets, the waiting games, the real grit and work that goes into actually building these communities. What would you say to people entering the NFT space now potentially chasing that hype cycle? Like do you think that they get the longterm timeline here?

Aftab (00:05:28):

I think a lot of them will not. And it’s the reality. And I write quite a few posts on my Twitter account where I’m like urging people to show some restraint or to be very thoughtful in what they’re buying because people ask, are we in a bubble? And the answer is yes. We are in some kind of a bubble. Bubbles are not necessarily bad though. And they are what any investible asset goes through for a promising sector. And we’ve seen this in cryptocurrency multiple times. We’ve seen it in tech stocks prior to that. And I do believe we’re seeing it to some degree in NFTs now. The question is, how high does it go? And where does the crash back down to? I can’t answer a questions like that. But I do think that if you’re buying NFTs, you need to like buy them for the right reason.

Aftab (00:06:11):

And when I bought all of my NFTs, Tom, I wasn’t really viewing them as an investment. I was buying them because I was interested in collecting them and supporting the artists. And then over time I started to view them as this asymmetric bet where I’m like, “Okay, even if this goes to zero, I’ll still be okay financially.” But it seems like if these things succeed, that 1% asymmetric bet and that percentage has now gotten bigger, I would say probability wise if this succeeds, then this is a new asset class and this is something that’s going to continue to grow and appreciate over time. Not all NFTs are going to fall into that bucket to be perfectly honest.

Aftab (00:06:49):

During the bear market, a lot of these NFTs will effectively go to zero because they will not be able to find a buyer at any price. And I was saying that I have as you, NFT is only worth what someone else is willing to buy it for. So if no one else was willing to buy it, make sure you like it and make sure you are happy to spend that money. But that being said, I understand the realities of people viewing this as a speculation game. It just requires a lot of care and like any speculation game. And you also have to realize the NFTs are a lot less liquid than like fungible tokens as well. Even if you want to sell, if you had some ether or some other token that you wanted to sell on an exchange, you can find a buyer for that. If you have an NFT you decide you don’t want to own anymore, you might not be able to find a buyer.

Tom (00:07:36):

I’m really liking the caution that you’re giving people, especially on the liquidity because obviously works both ways. One question I want to dig into there is, you said that early on, you bought a lot of your NFTs because you liked the artists. You loved the movement, you want it to support those artists and building a gallery of things that you actually liked and appreciated. How do you mix that with people just aping into the newest art box drop? I guess my question is like, how do you get back to that authentic stage where people are actually collecting, but we were not in a dead bear market where we just lose all the hype and innovation because you need a lot of that hype to drive artists to be here to create all this stuff?

Aftab (00:08:20):

Right. And I think it’s going to be a constant push and pull between those dynamics to be perfectly honest, Tom. And I think we’re going to go through periods that are more frothy like right now where almost anything that drops has a buyer. That’s not something that is probably sustainable, nor should it be sustainable, especially at the prices that we’re seeing. So I think naturally over time as the industry develops, and I do think we’re seeing an industrial base for NFTs really start to develop. So it’s not just the one-off artists doing their own thing in a corner. Now there’s a huge audience.

Aftab (00:08:56):

Things have changed a lot. Quite frankly, things have changed a lot more quickly than I expected in the past six months. And I would say I’ve been collecting NFTs probably close to the beginning of this year. But things have changed tremendously in that time to the point where you’ve got major celebrities using CryptoPunks and other NFTs as their profile pictures. You’re seeing them take bigger ownership stakes in certain NFTs. So all of that was not happening prior to now. And it certainly wasn’t happening in 2017 when we went through the bear market of 2018 and 2019.

Aftab (00:09:33):

So I think that things have fundamentally changed it. And even if we go through a barest period, you’re not going to see like I think that I’m pretty confident that for some of the top pieces by the top artists and the top collections, you’re not going to see those valuations drop to zero. I know I’m providing a lot of caution across the board, which I think is warranted, but I don’t think that the entire asset class is going to go to zero. I think that what has been unlocked as something that is a lot more durable and is going to continue to be built out over time.

Tom (00:10:03):

No, I love that. And I’m jealous of your collection. For those who are listening or watching the video, it’s gallery.so/dcinvestor. You have Fidenzas, you have Ringers, it shows that you spent a lot of time to craft what you have here. It doesn’t feel to me you just ate into like… You could have bought tons of punks, but instead you have punks. You have a full collection. How do you size this? How do you decide not to just buy the floor of punks and to curious something you like because what I’m seeing here is what looks like a lot of time? Exactly. Does that makes sense?

Aftab (00:10:46):

Yeah, and I appreciate that, Tom. And yeah, to be honest, I’m extremely discriminating with practically every single NFT buy. First and foremost, for me as a collector, and I really view myself as a collector. I know there’s a lot of flippers in the space, which I really don’t encourage anyone listening to this to take up flipping because it’s extremely risky. And the people who are doing it are very sophisticated, very knowledgeable and know what they’re doing.

Aftab (00:11:11):

And yes, there is money to be made, but it’s higher risk. For me, I don’t really like to operate on this kinds of timeframes. I just tend to be more of a long-term thinker and investor. And so for me, the satisfaction of getting into something early that or relatively early that I think has potential for the future, it’s just something that’s more mentally stimulating for me. So that’s why I choose the path that I have.

Aftab (00:11:35):

So almost as interesting as what’s in my collection is probably all the things that aren’t in it, but could have been in it. And I don’t claim to catch every trend. I don’t even try. My philosophy is always, one, I have to really like the NFT and I have to like the artists that’s creating it. And if those two criteria are not met, I’m just not going to buy it 99% of the time because I don’t… So that’s number one.

Aftab (00:12:00):

But I think beyond that, I also look a lot at characteristics, especially for these generative art sets where there’s like multiple pieces. I really try to assess the sets as a whole. So I almost will never buy mints on the day that they’re minted just because I don’t like getting into these gas wars and stuff like that. And I also prefer to select the outputs that I want for my collection. And if you look at my collection, you’ll see that I’ve part of when I bought the pieces, I was thinking about how I would curate them physically in space. And eventually I want to do some kind of a 3D gallery where I can display these. So a lot of when I was buying these things, I had those things in mind.

Aftab (00:12:41):

And I think over time, that thought process has just revealed itself to be, I happened into collections that became more valuable perhaps because of those reasons. So I do think that there is some fundamental value drivers to the space. I can’t necessarily enumerate them for you. It’s like, if it looks right, then go for it. That’s how I feel about it. And if you don’t have that confidence, that’s okay too. I think for anyone who’s listening to this and just wants to get started out, go out and buy a cheap MFT and don’t view it as an investment. Just get into the space, go through the experience, create an online gallery for yourself, display it, share it with your friends. And then eventually you’ll start to develop that intuition. You don’t have to spend millions of dollars to have a collection that appeals to you personally in my opinion.

Tom (00:13:28):

I really like your answer. My other question, I know we’re going off the question path here, but it’s interesting. Let’s say somebody who’s maybe not in your position, somebody who spends a lot of time and they’ve put, let’s say a good portion of their resources into buying one NFT they really like. They’ve limited resources and they want to buy this NFT and they like the artwork and the artists and they get involved in the community, what have you. They front-load a lot of their social capital, a lot of their time, a lot of their network to build out a knowledge about this specific NFT and their connection to it, et cetera. Then down the line, they might want to sell it. Right?

Aftab (00:14:06):

Mm-hmm (affirmative).

Tom (00:14:07):

It seems very hard for NFT collectors to sell pieces because they have such a public attachment to them. How would you sell a Fidenza without people thinking up DC’s bearish, Fidenza market over? How do you go through that thought process if you were in the position where you had to sell something?

Aftab (00:14:24):

Sure. And I’m somewhat known in the space for the fact that I haven’t really sold many NFTs at all. And the only thing I sold is some land from Axie Infinity that I had put up like months ago and it happened to sell. And I was almost surprised when it sold because I had forgotten about it, but I have not sold any of the NFTs that I bought yet. Does that mean I’m going to hold all of them forever? No.

Aftab (00:14:46):

But I think your question is very interesting because do people form an attachment to their NFTs? And I think the answer is yes. And by the way, that’s also a huge bullish driver for the evaluations of some of these. Because if you’re using like a CryptoPunk as your profile picture, and then you sell it, people are going to be like, “Why’d you sell it? Do you like broke?”

Tom (00:15:05):

I don’t know.

Aftab (00:15:07):

You’re going to get a lot of flack for it, to be honest. I’m not discouraging anyone from selling if they need the money or if they get a life-changing amount with an NFT. Feel free to take profits. My approach has always been just to, I want to buy and hold the things that I want to collect.

Aftab (00:15:22):

And over time as I need liquidity, I’ll sell off individual pieces to support that versus like what I’ve seen a lot of people in this space do, Tom, is they’re just like, “Okay, I think we’re at a top. I’m going to sell everything.” And they flip out of everything. And then things that just… I’ll be honest, I think I’ve handled it outperformed a lot of those people with a lot less effort. And I think it just comes down to what is your motivation for being in the space? If it’s just about making money, which yeah, you can make money, then I think your mindset is going to be different from that of mine, which is really about long-term collecting.

Aftab (00:15:58):

So I don’t think it’s bad that anybody sell their NFTs if they need the money. I do want to underscore that. But if you’re just getting into this for the money and you’re just trying to get a 2X, then I would just say there’s easier ways to make that money probably in the crypto space than with NFTs.

Tom (00:16:15):

Now, I love that. And I hate to go way back to the beginning here, but I’m assuming there’ll be people who listen to this first episode in the series and say, “Hey, why are they so bullish NFTs?” And not to get back to basics here, but there’s a lot of Netflix documentaries that got me interested in NFTs. There’s Uncorked, the guy selling the fake wine. There’s the famous art curator who was selling the fake paintings. I forgot the name of it. Then there’s Skrewball where they were just overprinted the baseball cards. There’s a lot of interesting comparisons. What is the most important aspect of NFTs versus the traditional collectibles market art world that drives you to want to be a collector outside of the artwork, but the specific technicals of what Ethereum or other chains offer NFTs for you?

Aftab (00:17:05):

Yeah, I don’t know if can put it all just on one factor, Tom, but I think it’s the combination of some of these factors. And I think the first one, of course, has to boil down to the perfect provenance of these items. Like if you’re spending a lot of money on an item like an NFT, you want to be sure that you’re not getting a fake. And I think if you, anyone who’s collected anything outside of NFTs like physical collectibles knows that counterfeits can be a serious issue. Like if you’re collecting trading cards, magic the gathering cards, like whatever, like comic books, some of the higher value ones there is that risk of counterfeiting. So that’s gone with NFTs.

Aftab (00:17:44):

Number two is the supply that is outstanding is known. So if you’re buying like, if you bought like a baseball card in the 90s as I’m sure you probably did, I certainly did. I bought all these sports cards. What they never told you was how many were being printed. And at the time it’s like if you were early to that, some of those cards became worth a lot, but then later on, they just there’s overpaying the heck out of them. And that was true of comic books and a lot of other collectibles. And so I liked the fact that the supply is known.

Aftab (00:18:13):

Also for me as like a collector, it’s just a lot easier to maintain the inventory. I don’t have to take up a lot of space. I live in DC area. Don’t have a ton of space. I don’t want to clutter up my home with a bunch of collectibles necessarily, but I like the act of collecting and I always have. And so I think that’s compelling. But I think another… I think those are some of the more base human reasons why I might want to collect them. But if you look ahead, I think that there’s a lot of potential for NFTs to be integrated with decentralized finance and to become these really valuable, programmable reserve or collateral assets, which just become incredibly useful.

Aftab (00:18:56):

We’ve already seen some of that in the higher end physical art market, but there’s a lot of intermediaries in those processes. If you have like $100 million painting and you’re storing it at a Freeport in Switzerland or any other major city, it’s like sitting in a warehouse somewhere and then you have to sign notes with all these bankers to borrow against them. You may not be able to enjoy the artwork while you’re doing that. You might be able to. If you want to sell it, it’s a lot harder.

Aftab (00:19:21):

So I think NFTs solve a lot of those problems. And I know it’s like a mental leap for someone that might be coming from the physical art world to understand that value. But as someone who’s grown up in Bitcoin, Ethereum and DeFi, I can just see NFTs slotting right into this ecosystem.

Tom (00:19:38):

That’s a hell of an answer. Yeah, no, I totally I agree. It’s wild. It just feels like such a dichotomy. Like people in crypto just get it. Like you see all the problems with national art market, you’re like, “Man, I can’t believe they even deal with authenticity and provenance and wondering if something’s real,” but then you go talk to a lot of traditional art people and they look at crypto and they’re like, “Oh, absolute scam.” They don’t even believe even an inch of it. Why do you think there’s such a disconnect there?

Aftab (00:20:09):

So I think it blows down to, for guys like us who have been immersed in crypto for years, the value proposition of digital scarcity is just easier to understand. It’s like if you tell me like you send me one Bitcoin or one ether or even one NFT, one CryptoPunk, I don’t have to make a leap of faith to understand that. For someone that is looking in at the space from the outside, they have not necessarily made that leap yet. They are not ready to… They just see the JPEG that’s selling for a million dollars and they’re like, “How can a image that I can copy paste sell for a million dollars?” And a lot of us grew up during that 90s internet era where it was all copy pastable.

Aftab (00:20:52):

This idea of digital scarce images then you make sense. And even now anyone can view these images for free. Anyone can copy them, but only one person can own it. And I think that is like an ownership mindset that people don’t understand. I do think what’s really interesting about NFTs though is, well, Bitcoin… Well, we’ll start with Bitcoin. Bitcoin introduced digital scarcity to a lot of people. Prior to that, the concept was completely foreign and really did not exist. The idea that you can have the censorship resistant asset, which can not be just like copied or faked was revolutionary at the time.

Aftab (00:21:26):

A lot of people still, even in 2021, don’t understand that. But what they do understand, I think NFTs are actually easier for them to understand. So like if they say, “Oh, there’s a unique digital asset and only one person can claim ownership over it.” Okay. That makes more sense. I’m not saying it’ll make sense to everyone on first blush, but it’ll make sense to a lot more people.

Tom (00:21:47):

So that’s an interesting point. I feel like when things get too complex, people eventually leave. If there’s enough complexity and enough time, it’s not solved. And I’m going to paint some broad brush strokes here pun intended, but scaling on Bitcoin too hard, Ethereum. Scaling in Ethereum potentially too hard. Other layer ones like NFTs are just so easy compared to DeFi. Like people don’t have to worry about Oracle attacks and token economics and like reviewing the code. Differences or bugs in generative art could create really cool pieces of artwork. They’re like a feature, right?

Aftab (00:22:23):

Mm-hmm (affirmative).

Tom (00:22:24):

So I guess what’s your take here? It’s like the target market for NFTs is just so much larger than DeFi. I guess how do you think about like market sizing and inclusion and things like that?

Aftab (00:22:36):

So I think the use of like layer-1 ledgers like Ethereum for NFTs is actually a good use of the black space because they don’t, especially for higher value ones, we’ll start there because you’re not necessarily transacting them a ton. They’re very high value transactions or they can be. And so you’re willing to absorb the transaction fees. And once you get it, I haven’t had to move any of my NFTs. It’s super easy. I buy it and then it just sits there in my wallet. And I don’t have to do a lot of maintenance on it.

Aftab (00:23:07):

Compare and contrast that to the state of DeFi now. And it’s a lot more complex, especially the state of DeFi up to this point has focused a lot on these farming games and things like that, token farming games. And obviously that’s not the future of those technologies, but it has been what we’ve seen up to this point. So I view NFTs is actually a lot easier to deal with. And overall is a good use of this kind of technology. I think that it will only get easier to use from here though.

Aftab (00:23:37):

And I think that right now you still do need to have a fair amount of technical knowledge to be able to use these blockchains directly. And think part of that is just, quite frankly, that’s like the alpha. You what I mean? If you’re smart enough and if you want to take the time to actually learn how this stuff works, you’ve had access to these opportunities. You could have bought a CryptoPunk for a couple of ether earlier this year, and it would have been pretty easy. It’s just on an open marketplace.

Aftab (00:24:03):

So right now is the time where there still that kind of opportunity. Soon, I think one, you’re going to see more custodial wallets probably emerge where you’re going to see custodians like exchanges and similar entities, payment processors who are willing to provide you with a wallet and a more streamlined experience. We’re already seeing OpenSea in some of these other marketplaces committing to do this. Actually Nifty Gateway has been an early example of this. Their whole shtick was like making it super easy to use. You can deposit Fiat in through your bank account and you can buy an NFT on there. I think that kind of flow is only going to get easier and it’s going to encompass more and more NFT assets, not just stuff that’s created on Nifty Gateway.

Tom (00:24:50):

No, that’s a really solid answer. Perspect that take. And I guess my other question for you on that topic is like we’ve seen NFTs start to bubble up on other chains like Space Monkeys on Solana, Take Your Pick. And I saw a tweet the other day and that I initially agreed with. It was that Ethereum has so much creative juice. It’s hard to copy and I very much have that opinion. Like you have a lot of the creative builders here. And look how fast Loot Project has iterated, right?

Aftab (00:25:19):

Mm-hmm (affirmative).

Tom (00:25:19):

There’s so many attachments to that already. Kyle Samani responded there and respect for a suite. He’s like, “Look, it’s selection bias.” Like you can build other things in other channels, like Audience and Solana, Take Your Pick. What’s your thoughts though on like NFTs and other chains? Do you foresee yourself I guess ever holding NFTs on Solana or another chain in your own gallery?

Aftab (00:25:42):

It’s possible. Right now, my perspective up to this point has been like, well, which chain do I have confidence is going to exist in like 50 years? And for me that’s like I know Ethereum Bitcoin will survive on those timeframes for some of the other chains. I haven’t always had that confidence. Maybe I’m becoming a little bit more confident that they will. But for me, it boils down to the, one, the quality of the art, but also two, the utility of the assets.

Aftab (00:26:12):

And I’ll start with the quality of the art. And you touched on this. Ethereum is naturally attracting that mindset. Both on the technical creative level, but also on this art side. Ethereum embodies that decentralized grassroots movement of being this Web3. And I think other chains will try to compete for that vision or will try to compliment it. And I think actually that’s the way that I’m viewing it more and more is other chains are going to compliment what is created on Ethereum. And this idea that any chain is going to replace the Ethereum is not really realistic.

Aftab (00:26:48):

And it just comes down to I think the nature of the assets that are on Ethereum. And even if you look just at NFTs, there are now enough historic sufficiently important valuable NFTs on Ethereum that Ethereum is probably not going to go away because everyone who holds one of those assets is automatically a believer in Ethereum. And they don’t want to watch the CryptoPunks just evaporate. So you become the span of the network that you’re buying NFTEs from. And that will work to the advantage of some other chains as well.

Aftab (00:27:16):

But I do think one, Ethereum still has that core of artists who wanted to plant Ethereum. And the best artists, they don’t necessarily care about like the gas prices. They want to be on the chain where you can get the CryptoPunk, the X copies and the Dmitri Cherniak Ringers and other generative art sets. They don’t necessarily want to be on a chain where there’s mostly knock-offs of those. And so that is something that might be a temporary condition, but could shift over time.

Aftab (00:27:42):

But going back to my other point was the utility of these assets. And on Ethereum you do have this composable, highly liquid ecosystem. Right now today, you don’t necessarily have that on other chains. Could it emerge in the future? Yes. But right now you have people spending, in some cases, tens of millions of dollars on single NFTs on Ethereum. You haven’t seen anything close to that on other chains. So my perspective is to remain open-minded to see what emerges there, but I also want to see that value proposition proves itself. Because I do think for possibly for the foreseeable future for high value NFTs, there will be a bias towards NFTs that are created on Ethereum, but that’s just a hypothesis we’ll see.

Tom (00:28:28):

Yeah, no, that’s fair. It is interesting to think through that. And it’s interesting because it goes back to curation of it. For you, you’re buying stuff on Ethereum for the reasons you discussed and not so much x Solana and others. And that is, I guess, a form of curation, curating by a one. I’d love to get your take on just, I don’t know, it’s a longer question, but overall curation is tough. Like I look at your gallery, I love Fidenza because you own it. Like you’re helping to curate the space whether you know it or not, I guess.

Tom (00:28:59):

But then there’s stuff like SuperRare who wants their token holder security, and then there’s stuff like ArtBlocks where there’s a curation panel of a dozen or so people. And then there’s the factory where you’ve had a curated [inaudible 00:29:10] on the factory automatically and then there’s the playground. And then there’s just the market. People on Crypto Twitter Schilling stuff and that’s a form of fashion. How do you think this all shakes out because the social signaling from you whether you want the power or not is pretty big at this point? So yeah, I’m wondering your take there.

Aftab (00:29:30):

So it’s really interesting because I think and this is where I draw a lot of lessons from previous art movements in history. Like if you look at the Renaissance and how that evolved and other more modern art movements, and there are lessons from those times. However, we are in a fundamentally different period with the internet. And an artist could have created great work in the 1500s and they would die by the time it became known to the world or by the time it gained popularity.

Aftab (00:30:00):

Today in an internet-enabled world and artists can create something and it can go viral in a day and become the biggest thing on the internet for a period of time, maybe for a long period of time. And I think in that kind of environment, you have to look at value accrual dynamics differently. And there is these mimetic components cannot be ignored. And I can’t define what creates good memetic value. And I don’t mean just purely like internet memes, which are typically like jokes of stuff like… It’s not just like crass memes. I’m talking just what defines the popular taste and how quickly can it evolve?

Aftab (00:30:43):

And I think the answer is, it can evolve incredibly quickly. And yeah, maybe like collectors like myself have some part in that. My philosophy has always like, look, I’m like collecting for myself. I was probably one of the first bigger collectors who started displaying my stuff in a gallery. Just because for me it’s like art is like meant to be shared, I was creating an experience for myself, my vision was always to be able to share that with others and share like, “Hey, this is the stuff that I like, and this is a reflection of me and my taste.” And so I wanted to do that.

Aftab (00:31:16):

I do think that there are other people and this is where you got to be really cautious as a participant in the space, there are people who will just come online and drop some tweets. They basically pump and then they’re dumping a project. And I’m not a fan of that kind of stuff to be honest. And I think it’s long-term detrimental to the space. And I think ultimately it’s going to be on individual buyers and collectors to become more sophisticated and be more realistic about what actually is desirable, what white have long-term value, what is just a passing trend or fad for today?

Aftab (00:31:50):

I don’t claim to be like an arbiter of that by any means. But if people look at my collection and they’re inspired and I’ve had several people come up to me and say is like, “You inspired me to change my mindset about NFTs to go from just flipping it to actually buying stuff I want to collect.” I view that as like a huge positive because if we want to create this decentralized internet NFT-driven metaverse culture, we need people to hold onto it and not just like turn their head to every single new thing that pops up. And I think we’ve seen that. Interestingly, I think there’s a lot more appreciation for NFTs like short history in the past few months than there has been before.

Tom (00:32:29):

Now, that’s incredible. I love that. And it’s going to be cool to see people curate their own galleries for the longterm and stuff like that. I had one pointed question for you. Just compare it to the traditional world, do you think that we’ve already had the Picasso of NFTs create artwork? Do you think that that person already exists or do you think that’s to come?

Aftab (00:32:52):

So I think digital artwork as a medium is not new to NFTs. And there have been some artists who have been super talented and now NFTs are providing them with a way to earn money for art that they created basically for free, in some cases for years or decades. And so the talent, the latent talent has existed I think in a lot of ways. I don’t know if we’ve seen our Picasso of NFTs, but I’ll often say stuff like it’s like OpenSea… You go on to OpenSea. It’s like going onto a Walmart for the Picasso’s or Van Gogh’s because it’s like this big auction site. So we don’t have… I don’t think we’ve had enough experiences yet, which have made people appreciate NFTs as like fine art.

Aftab (00:33:34):

And I think that that is where… I think we’re eventually going to get more and more to that point where people start using NFTs more not just as these assets or as these digital pictures that they’re changing every week, but they’re going to be viewed more and more as fine art. And my hypothesis is that a lot of art, I wouldn’t say every grand master is just to practice nostalgia because a lot of like historic grandmasters, pioneered new techniques, but that said, we have seen a lot of new techniques pioneered in on-chain generative art. Some artists are combining audio and visual elements in really novel ways like DeafBeef.

Aftab (00:34:10):

And I think that we are going to look back on some of these creators and we’re going to say, “Wow, this guy or gal created this artwork that was truly impactful for NFTs as an art form.” And I think that we’re only going to be able to assess that in hindsight, but the way that I think of that, Tom, is I really think about these assets as how much is a piece today going to influence a creator tomorrow? And the pieces that influenced the most downstream creative energy are going to be remembered as grandmasters. It’s really hard to like look in the moment and say, “Well, this is someone that’s going to be truly remembered as a great artist.” But I think most people just don’t view the passage of time like that and don’t view themselves as being a part of history in the making.

Aftab (00:35:00):

But that’s been like my thesis since I’ve gotten involved in like the NFT space. I’m like, “This is going to be historic.” In 100 years, this is going to be something that was important. This whole idea of creators being able to earn money for their works that they weren’t able to before is going to inspire tremendous creative talent to flood into the space. And they’re building on the shoulders of the people who are creating today.

Tom (00:35:23):

Now, that’s pretty cool. I like that. The hindsight thing is pretty interesting because I’m trying to figure out how much time’s going to pass until it’s hindsight. NFTs and crypto moves so fast that it might not be a hundreds of years obviously. I feel like the time that’s going to be a lot shorter.

Aftab (00:35:39):

Yeah, we are going to look back and people are already doing this now. They’re looking back on artists like XCOPY who created an NFT art through the entire bear market. No one was paying attention, no one cared or very few people were. And now they’re looking back on MS. This was someone who was hugely influential to the genre and is a very important living artists. And the internet compresses all those timeframes from hundreds of years, in some cases to weeks. And will they have durable staying power? I think so as long as these digital assets are relevant. And I think stuff like as we start to think more about the metaverse, these digital assets are going to become even more important.

Tom (00:36:19):

Now, I’m with you. And I was having the conversation internally with my partner Medio and one of our guests analysts Coley B. I don’t think he wants me to share his real name. So we’ll use that for now. He’s a fantastic analyst within Delphi, a great partner of ours. And we were talking about one of one drops and we were talking about like supply NFTs and we’re talking about fractionalization.

Tom (00:36:41):

And one of the things that came up was, we’re trying to figure out in an era of fractionalization and full disclosure, we’re an investor in Fractional, just part of the example here. Why would people want to buy like a floor of punk or a floor of Fidenza. Well, I say floor of Fidenza they’re so expensive, but why would somebody want to buy a floor when they can buy part of a fractionalized Zombie prom or something very rare? What’s the impetus for somebody to want to buy one of like the whole thing when they can just buy part of the best version?

Aftab (00:37:12):

So I think it a highly individual specific question, and even the same individual might have different preferences or hold both preferences at the same time quite frankly, which I think we will see. But I think, one, it goes down to the motivation for why someone is collecting.

Aftab (00:37:29):

So for me, I do like to hold the whole piece. I like to be able to… And to be fair, I got into a lot of these when they were cheaper and it was more affordable to get whole piece. But I like having these pieces, I like having them in my gallery, I like having that curated experience. Like you’re not going to get that same experience anywhere else unless they’re copying my NFTs. That’s the only place where you’re going to see some of the NFTs that I have. I do own several NFTs that are one of twenties. So they’re almost like fractional in that respect. And that’s just because I like the artists and I liked the art and I liked having them displayed in my gallery.

Aftab (00:38:04):

I think the fractional piece is interesting because, one, it brings I think a big part of the use case is actually the financial exposure. So someone can now get financial exposure more easily to some of these high-end pieces that they could not afford like a whole one of. I think that’s usually valuable and raises the value of every other piece in the space that even the ones that aren’t fractionalized because it allows that much more liquidity into the system, and that’s not something that’s really done easily in traditional art.

Aftab (00:38:33):

It is done at the high, but it’s through all these intermediaries and we all know that all of those experiences suck and are not accessible to most people. But anyone can go on right now, Tom, and buy a fractional ownership in a zombie punk. And I think that’s pretty cool. And I do think we’re going to see people even showing those off and saying like, “Hey, look, I own like 1% of this punk.” And that’s going to be cool. And I think people… It just comes down to whatever people view that as valuable for collecting that it’s going to happen.

Aftab (00:39:03):

We haven’t really had this fungible tokens being these collectibles in a large way. Like most people have their ETH balances or BTC balances. They’re kept secret or you try to keep them secret. It’s not really public information that you want to share. And I think that maybe as we get into this, we are going to have people say, “Hey, I own 1% of this punk, 1% of that punk. And here they are in my gallery.” And I talked with Andy from Fractional about this a couple of times, but I do think… What I told him was, “Think about how you can make this a meaningful experience for collectors, not just speculators.” And I think the team is really trying to think through how to do that. Hey Tom, I think you’re on mute.

Tom (00:39:44):

Oops, sorry there. Yeah, I’m trying to think of it not in an us versus them kind of situation, but sometimes it’s hard to think through where the value flows. Do you think that we should think about it as two sides? Like for the community, it’s very cool to be able to own part of a punk, use this likeness, join the community around it, but the other side, for some collectors, they want like a one of one like they want their own squiggle, they want their own punk. But I guess from a financial perspective, I guess it’s hard to think of the floor is outperforming part of their rare piece that gets bid up, given an M Dynamics and only presented as a collectible supply in there. But it is interesting to think through the two sides there.

Aftab (00:40:24):

Yeah, and I don’t have an easy answer for that. My hypothesis is that floors are going to do just in general a lot better than people think they will because I think the instinct is to assume that only the highest end are going to appreciate, but I think the floors also have a liquidity to them that creates that value. And I actually wrote a tweet along these lines earlier today. If you own one CryptoPunk or one generative art piece, you’re part of a community just by buying that. And those things become… It is I think people actually feel more comfortable buying assets like that than buying a great one-on-one piece, even if it’s from a known artist.

Aftab (00:41:03):

And some of the factors I think are important are like, well, if you’re buying a CryptoPunk, you have a floor punk, let’s just say a floor punk, you have all of these comps. You probably have a sale that occurred in the past hour and you can say like, with some reliability, this is what it’s worth right now. How do you assess that for a one of one piece by an artist who’s maybe only created five pieces and four of them haven’t changed hands in a year or something like that? It’s a lot harder. And so if you’re a buyer, you become more comfortable deploying large amounts of capital into things that already have more of a price history basically and especially at a recent price history. And so that’s why I think people are always… The floor of some of these desirable sets is not a bad place to be at all in my opinion.

Tom (00:41:47):

Now, I’m with you. It’s an interesting conversation. I don’t have any killer thoughts there, but it’s just a question I’ve had. And I want to switch gears a bit to the community side of this because we just talked about buying part of a punk, joining the community, getting engaged. It’s hard on art. How do you think through judging a community’s fatality or does it not matter because it’s artwork versus other defined communities? Because obviously I’ll take squiggles for example, there’s a squiggle Dow. I’m sure punks they even have dows, if you have a cowboy hat. I think there’s a cowboy hat popped out or community. How do you judge community very early when you’re dealing with a soul artist? It’s hard to think through… It’s like you’re betting on the artist, but you also I guess want to community or does that not matter as much?

Aftab (00:42:36):

So for me and people have different investing styles and collecting styles. For me, I actually try not to get too wrapped up in community stuff. Because again, as I told you, everything I’m buying mentally, I’m buying for like five to 40 year hold or whatever until I’m dead. I’m playing to hold a lot of this stuff for the longterm and exiting along the way for liquidity when I need to.

Aftab (00:42:59):

So I view community dynamics as potentially a femoral and very difficult to assess like which ones are going to have, long-term staying power. I definitely missed out on some really valuable NFTs by having that mindset. But I just stick to the domains that I can understand and feel like I can have like an edge on long-term. And I feel like assessing community dynamics for these projects, even for like five years from now is extremely difficult for me to do.

Aftab (00:43:24):

There are some exceptions to that, by the way. And I think those revolve around like dows that are funded. I think this Nouns Dow Project is super interesting where they sell one noun and every day and they have accumulated a treasury where thousands of ether already. That stuff is like more… I get that more, these purely like avatar profile picture social token projects. I think they can create a lot of value. So first of all, I don’t want to discourage anyone from getting involved with them. I think that you got to consider how much capital are you willing to allocate to something like that. And how much of that is that part of your portfolio.

Aftab (00:44:01):

But as far as the social dynamics, let’s just use on the art side. Well, you can use Art Blocks as an example. And I think a lot of your listeners have probably heard of Art Blocks by now, but this is a platform for generative artists which was created. I think they launched either late last year or very early this year. I got into it in February. And the what attracted me to it was, there were all these different artists coming there, creating like really cool work. They were all interacting with each other, but I also saw this collector base being created and I was one of them. All love this stuff and I’m like, “Wow, this is so cool. I want to buy one of these. I want run from each set.” And I was like, “Okay, let’s take this and multiply it by like 100 or 1,000.” And then it could become something that’s really important.

Aftab (00:44:48):

I think the other thing that true artists do not just these profile pictures, but the artists is they have referential respect for the people that proceeded them. So it’s not just a project or one community. It is a culture that is created around them. And very much around on-chain generative art, I’m seeing a culture emerge around that. I’m seeing cultures emerge around other kinds of NFTs as well. So I think that whether you like it or not, when you buy an NFT, you do become a visible part of some community. I just think that the community is not always as at the forefront as it is in certain kinds of projects. Does that make sense?

Tom (00:45:26):

No. No, it totally makes sense. I guess picking on an artist, I guess does it matter to you if they’re like mass releasing new releases or there’s a give and take here? If Tyler Hobbs never makes another project, Fidenza is probably worth more, but then, again, if he makes new projects, it makes him a more prolific artist or we’ll known. What’s your take on artists release cadence and experimentation and things like that?

Aftab (00:45:52):

So it’s a super fine balance. I don’t have a hard and fast rule, but in general I will shy away from artists who are extremely prolific just diluting their work basically. But also you do need to have enough where you can create this collector base around you. So I think the artists who are going to be most successful in this medium, Tom, are the ones who understand how to manage their social identities also. And there’s no cookie-cutter approach. I’m not saying you have to be like a same Tom online or you have to behave a certain way, but you have to be willing to create that community or there have to be people who collect your work that are willing to create that community for you. Because at the end of the day, that’s where you get the people who are really going to want to collect your work and not sell it. And that’s how valuations get driven up. It’s not the people who are selling. It’s the people who are not selling that drive valuations.

Aftab (00:46:41):

And so that’s pretty much how I think about it. So when I look at an artist, I don’t want to see them releasing a new set every week. That’s not interesting because it does devalue their work, or if the set is too big and it’s not interest… I was chatting with a generative artist earlier today and the discussion was along the lines of, if your set is too big in some cases, it’s not going to be visually interesting. It’s not going to be diverse. It just becomes like too big.

Aftab (00:47:10):

So part of the artistic process is selecting the right set size for a generative art set, which I don’t think… I think artists are becoming more savvy on that, but that’s been something that I’ve been acutely aware of as a collector. I want to own something that feels unique, but is also part of the set. And I think if an artist is just cranking out work, that is diluted to that. And so I think that most of the best artists understand this really well. And most of the best artists really carefully control their supply. They’ll act like they don’t, but trust me, they’re thinking about it.

Tom (00:47:44):

It’s a good point. And again, flows back to curation and I don’t have a good answer here, but I probably didn’t have a great question, but like the traditional art market is and curated by what I would assume to be very wealthy connected people in a private manner. And that’s just the total guess, but it will say. NFT art is so different because my next door neighbor has an opinion on whether he likes Fidenza versus squiggle, and that’s duration and it’s in the masses. I don’t know the effects of like global easy curation for art NFTs, but obviously there’s more involvement, but what do you think? Just doesn’t make just a massive market or their ripple effects? It’s just a better curation mechanic versus the traditional world? How do you think through that side of things?

Aftab (00:48:29):

Well, I think that in some respects we’ll probably repeat some of the mistakes from the traditional art world just because there’s so much content and it’s very difficult to filter it for most people. And so the way that most people make a buying decision is, they are looking for social cues from someone to say like, “Hey, this is a good set.” Tom, I get hundreds of messages a day. It feels like asking me, “Hey, is this a good NFT set? Would you buy it?” And it’s just I don’t reply to those because it’s like, look, I would rather just speak with my holdings and if you people want to look at them and say like, “Oh, well he invested in this. So he must have some faith in or you must like it.” Then that’s the degree of curation I really want to do.

Aftab (00:49:08):

I’ll have opinions on other stuff sometimes that I’ll express because I can’t afford to buy pieces from every set that I think is cool. But yeah, people are looking for that kind of guidance sometimes. And if I’m not providing that, which I typically don’t, then someone is. And so as they’re taking those cues from somewhere. I do think though the opportunity that we have with NFTs is, it can be a lot more organic because you can hear a lot of different voices, all agreeing that something is interesting. Fidenza and Ringers are two sets from Art Blocks, which I feel like had those moments where it wasn’t just me saying like, “Hey, I love Ringers. And it’s my favorite generative art set.” It was a lot of people saying that.

Aftab (00:49:47):

And same thing happened with Fidenza. Same thing has happened with CryptoPunks. And so those collection of voices create more comfort almost than just one art expert saying, “Well, this was good.” But I don’t think we’re typically… We’re never going to go away completely from models like that because we’re social creatures and this is a social… It’s actually an even more transparent market than the art market. So you can see moves live on-chain. You can see who’s buying what.

Aftab (00:50:16):

I’ve had this happen a few times where I made some bids on stuff and people came in and bought them in front of me. So I don’t really make bids on stuff anymore. I just buy it because if people see that I’m bidding on it and they’re like, “Oh, if he likes it, then it must be good. I’m just going to buy it.”

Tom (00:50:29):

Yeah, I never thought about that.

Aftab (00:50:30):

[crosstalk 00:50:30] all the time.

Tom (00:50:31):

It’s pretty crazy. Yeah, I was going to ask if people just send you random pieces of artwork to your DNS address just so they can say you own it. But-

Aftab (00:50:40):

Sometimes they do it. Yeah, I had to caution people on that. I was like, “Well, just go sit in my collection. Don’t assume that I bought it. You got all [inaudible 00:50:46].

Tom (00:50:46):

Yeah, no, that’s a rough road to go down. One of my other line of questions for you is on generative art. I am just completely blown away by like the ability for code to create artwork at mint and all the iterations you can have. And it’s crazy because artists are now coders. Codings enters all is art. I don’t know if anybody really thought about that in the traditional world. I’m sure it exists. But what’s your take on degenerative art market? There’s so many, I don’t know, have we seen the perfect code or perfect formula? What’s the iteration process like? What’s your take? There’s a lot of questions there, but I’ll leave open-ended for you.

Aftab (00:51:28):

Sure. Yeah, and I’m a huge fan of generative art, which if you look at my collection, you can see that. And I was probably one of the earliest most vocal proponents of on-chain generative art because when I got it, it just like clicked for me. I will start off by saying the generative art as a medium has existed for decades. Really since computers became more easy to use and popularized, people have been creating generative art. It just hasn’t really been a medium that’s gotten a lot of attention because as we’ve talked about like digital artists just hard to monetize in general, so it hasn’t gotten the same kind of respect. And I think the on-chain part fixes that. But people are even doing generative art by hand on paper, following algorithmic rules before computers were really available. So it’s not a new medium [crosstalk 00:52:14]. Think of that.

Tom (00:52:14):

It’s crazy world.

Aftab (00:52:15):

Yeah, people were doing that. Yeah, just like following algorithmic rules and drawing out and see what comes out. So that’s the nature of human creativity is we create machines and we figure it out what we can get them to do for us. And I think that generative artists have a unique kind of creativity because on the one hand you’ve got to have this logical ability to code it up, but you also have to have this creativity where you create something that is aesthetically beautiful and somewhat unique coming out of that.

Aftab (00:52:44):

And so for me, when I really understood the medium through NFTs and I was like, “This is really cool.” But I think what’s unique about the NFT on-chain aspect of it, Tom, is that it’s not just creating like that artwork using the algorithm because artists have been doing that for a while. And certainly in the past couple of decades with personal computers, artists have been cranking stuff out. And typically the generative art process was, well, I’m going to create 10,000 iterations of this algorithm. I’m going to pick the best three. I’m going to post them on Instagram or whatever. I’m going to try to get it into a gallery.

Aftab (00:53:18):

And that’s still cool. You know what I mean? I think that’s interesting, but the on-chain dynamic of like minting makes this 100 times more interesting for me because when you combine it with on-chain minting, basically the algorithm is stored on-chain. And when you go in and mint a piece or someone else does. Let’s say it’s a collection like Ringers, which has kept 1,000 pieces. And ringers, by the way, it’s like my favorite generative art set. So I encourage everyone to check that out Ringers by Dmitri Cherniak really talented artists. But like that algorithm only outputted 1,000 pieces. And each one was minted based on the transaction hash of the user that submitted it.

Aftab (00:53:57):

And so it is one of a kind, basically based on a random number that went in there. What is interesting to me is the artist had to give up his curation process to the algorithm. So the artists could not look at it and say, “Well, these are the 10 that I think are the best.” It’s like, look, these are the 1,000 that are coming out of this and there’s no controlling what comes out. If a total dud comes out, so what? You’re stuck with it. And I think that requires a nother level of talent and creativity to really design quality artwork with those kinds of restrictions, but also creating sets that are diverse, but still coherent and have a consistent quality to them.

Tom (00:54:37):

Now, that’s an awesome answer. And I watched the Bob Ross documentary last night. Interesting how much he went through. And I won’t share too much for those who don’t want to see it, but for those who watched it, they’ll get my comparison here. On Ethereum, we saw a lot of copycats. TRON’s a good example copy paste code kind of idea. And that won’t go down that rabbit hole right now. But it seems like in the generative art market, since the formula’s on-chain, anybody can really copy it and just make a bunch of money. But on the flip side, those who dig in can easily say, “Here’s a compare and contrast. It’s pretty similar. You’ve got to rip up. It’s not really worth it.” What’s your take on where do you draw the line between copying the code that creates the good stuff versus creating something brand new? I don’t really have a lot of insight into the code itself that creates the stuff.

Aftab (00:55:29):

Yeah, and I think in frothy market conditions like we are global have today, almost anything will sell. So it’s like, yeah, you can create… But I do think that social cues are pretty important here. If something is a blatant rip off of work that an artist has done, and we have seen that in some cases where people have just tried to use that artists direct algorithm and either do it again on an Ethereum or on some other chain, those things are not received well. And yet the person who puts out that scam might make a little bit of money, but they have almost no value on secondary or if they do, it’s not really something that’s cool to have honest in some cases.

Aftab (00:56:11):

There’s been knockoff punks on a lot of chains. And I’m not a fan of that when you’re just copying someone else’s creation. That’s not cool. I think if you’re iterating on it and doing something interesting, then hey, that’s part of what art is. Art is all about taking techniques that other people have done, iterating on them, adding your own flair to them. And I think the market will become fairly sophisticated and we’ll just value that stuff appropriately. And a lot of it’s going to be worth zero. And that’s fine. You can still collect it if you want. I have a fast food punk that somebody sent me. And I think they’re actually worth some money, but it’s my punk wearing like a McDonald’s hat and just think it’s like funny. And I’m like, “Okay. Cool. It’s that someone that’s more skeptical might be like, “Well, it’s just a rip off. It’s a cashing up.” It’s like, yeah, but it’s just for fun.

Aftab (00:56:58):

So I encourage creators not to take those kinds of things too seriously. But I totally stand by the creators who are like, “Hey, you just copied my work one for one and deployed it on another chain or another Ethereum.” That’s not cool. And I think those will be judged pretty harshly over time.

Tom (00:57:13):

Yeah, no, the transparency helps to allow people to judge it. I totally agree. And one of the questions I glossed over I should have asked earlier, do you expect to like earn a yield on your art NFTs. NFT’s rare axes. You could gain with them, you can earn a yield. Do you expect to earn a yield per se on your collection? Or is it for you just free to look at it for everyone?

Aftab (00:57:37):

For me, it’s free to look at it for everyone. And I may eventually do some kind of gallery at some point, but I my goal would not really be to charge or if I do charge, it’ll be donations that are going to charity or something like that. My goal is not to earn income from the pieces I have.

Tom (00:57:52):

It’s hard considering it’s all public.

Aftab (00:57:54):

It’s all.

Tom (00:57:54):

Yeah, it is.

Aftab (00:57:57):

Yeah, I don’t know who’s going to pay for it or what they’re going to pay for. But yeah, I actually think people might be willing to donate to charity in exchange for visiting a virtual gallery or something. I think that there’s models like that that could become compelling. But for me, I really view these as collectible pieces of history and I just want to have them, but also my motives also go beyond that because as I mentioned earlier, I think a lot of these assets are going to be usable in DeFi stacks in terms of DeFi apps and stuff like that.

Aftab (00:58:26):

I don’t know exactly what that will look like, but it is possible that I might be able to deposit works into some of these protocols in the future and either borrow against them or put them up as some form of other collateral or earn some kind of yield that I haven’t anticipated. And I think people are thinking about how to design mechanisms like that.

Aftab (00:58:45):

So I’m open to stuff like that. I’m definitely open to that. I think there’s a world in which I don’t have to sell that many of my NFTs at all because I’m able to just borrow against them. And if they keep going up in value, then I can keep borrowing more. Of course, if it goes down, then I lose the NFT. But am I willing to take that risk with one of my NFTs? Maybe. I’m looking forward to experimentation like that as this becomes a true asset class because these are the things that make NFTs unique and give them this unique value proposition versus physical art.

Tom (00:59:20):

Now, I’m with you there. And the verse physical art ideas is pretty interesting. Damien Hirst is a well-known artist. He created a work called The Currency. It’s like 10,000 paintings of dots and a fault. And I think the way it works is, at the end of the year, people can choose whether they want the physical version or the NFT version. Is that accurate? I was wondering your take there. Do you think that… It’s sample bias because I guess they’re buying it crypto, but I think, but what’s your take, do you think most people are going to choose the NFT version?

Aftab (00:59:49):

So I’m not 100% sure, but I think when you did the claim, you had to choose on the spot.

Tom (00:59:54):

Oh, got you. Okay.

Aftab (00:59:55):

I think I actually own one, but I seem to remember selecting the NFT. But I think that it’s going to be really interesting to see it. I haven’t seen how the numbers have been shaking out, but I think the NFTs are actually like way more interesting to me. When I bought it, I was like, “There’s no way I’m going to keep the paper copy of just for me.” And I actually think we’re in this like halfway point, Tom, in this industry where people are still trying to grasp their mind on buying something that’s 100% digital. It reminds me a lot of when I was like, when I bought my first Bitcoin, I’m like, I guess it was around 2013 or something like that. And at the time I wanted to buy one of those Cassius coins or I don’t know-

Tom (01:00:35):

Oh yeah.

Aftab (01:00:35):

You remember what I’m talking about?

Tom (01:00:36):

Yeah.

Aftab (01:00:37):

Where you buy like this brass coin or whatever, and it’s got a private key inside of it. It has one big coin depository.

Tom (01:00:45):

It’s crazy thing about it in hindsight.

Aftab (01:00:48):

I know it is. But at the time I was like I want one of these because it melds this physical and digital thing. I wasn’t like ready to go digital. Mentally I wasn’t there. And I think with NFTs, we’re seeing some of that. Even some of like Beeple’s earlier releases. And Beeple has done some really interesting and innovative, unique stuff with his physicals where it’s like, you buy it and make your sentence you like little like frame. I actually bought one of his pieces. I have an open date yet because again, I’m not that keen on the physical piece, but it’s a little monitor that displays the work. And I think stuff like that is interesting.

Aftab (01:01:23):

But now all of a sudden, if you want to resell that NFT, you’ve got to deal with this physical inventory. And I don’t think that’s what Web3 is like about this decentralized ownership. So I’m in camp like give me everything decentralized as NFT and it’s the artist wants to sell me a physical print of it because I own that NFT, that’s cool. I’m going to buy some of those. I’m going to hang them up on my walls. But for the most part, I’m much more interested in digital inventory.

Tom (01:01:53):

Yeah, I’m with you. I guess the only way it’ll be really interesting is if 999 people chose the NFT version and one guy gets the print, but granted, we already probably know this to your point, people have already decided.

Aftab (01:02:04):

Yeah.

Tom (01:02:04):

And just to close out, I have two last questions for you. When I left Wall Street, I was so bullish on institutions coming into crypto and all the capital they can bring. Now I couldn’t care less because I think DeFi cryptos is going to level them and rebuild them from the ground up. But what’s your take on the traditional… We’re seeing punks and stuff being sold at Christie’s. Do you care if the traditional art market gets involved and say is a buyer for your assets? Or do you not care as much?

Aftab (01:02:36):

I care in so far as it’s a validation of the culture that’s establishing itself in the crypto sphere. I really view NFT as this, digital, but let’s just say it’s a physical manifestation of what crypto is all about. It’s all about this decentralized ownership. A lot of the art that’s happening on crypto is not stuff that could be funded easily outside of crypto. And it’s frankly a lot of artists and work that have been marginalized by the traditional art community for a long time.

Aftab (01:03:04):

That said, I don’t believe in being exclusionary. I love supporting, if it’s the counter-culture, great. If it appeals to me, I’ll support it, but I’m not about excluding anyone from participating. So if institutions want to come in and want to help expose this art form to more people, I’m in favor of that. Do I view them as buyers of my NFTs? I don’t know. And I think that for me, my goal is not to sell my NFTs like a bunch of institutions.

Aftab (01:03:33):

I do think it’s important that we get them into the hands of some museums so that people can understand them. It’s immense their cultural relevance in a way that perhaps goes beyond what we’ve already achieved so far. But I think fundamentally it’s about just expanding people who are exposed to the art. And if we expand the collector base through that, I’m somewhat agnostic to who’s buying it. But if all of the great art just gets bought by these traditional art funds or hedge funds, I don’t think that’s like a great outcome because I don’t think that’s within the spirit of what we’re trying to achieve.

Tom (01:04:10):

Yeah, no, I totally agree. I don’t want them to just buy it and be an exit liquidity. I want them to validate it and help curate and get the masses involved. I totally agree. My other closing question, I have two more, sorry, but I think it was Kyle Samani on Twitter and I’m going to botch this because I’m doing it from memory, but I liked his tweet. It was how do you actually support millions of creators? It’s just hard. Not everyone has 0.5 [inaudible 01:04:35] to every art play. You mentioned earlier, it’s impossible for you to do every play, even in where you’re at.

Tom (01:04:41):

How do you think we’re going to… I guess we’re going to need new business models around this beyond just primary market sales. And that can happen. Look at YouTube. You know what I mean? It’s traditional world. What do you think is the path to sustainably supporting the long-tail creators if it’s even possible?

Aftab (01:05:01):

I don’t know that everyone that wants to be a creator will be able to earn money being a creator. And in that sense, it’s not going to be that different from how art exists today. But I do think the people… Is more likely that talent is likely to be surfaced through this process and through these mechanisms of being on-chain so that really great talent won’t stay buried in the basement. They’re going to be able to earn essentially a lot of money by creating work for others that add to the culture.

Aftab (01:05:30):

So I don’t know that we can support every single creator that wants to earn a living from NFTs. And frankly, I don’t know if that’s the right answer that people want to hear. I don’t think this should be our goal. I think our goal should be to get more really great creators, the recognition that they deserve and allow them to earn a living through doing this work. And I talk to a lot of artists and NFTs have changed their lives because they were working in some cases like one or two jobs doing something else. They’re just doing this as a hobby. Even though they’re tremendously talented, they could not focus on it because there was no business model for them to do that.

Aftab (01:06:09):

Now they’re able to sell this work. And on top of that, these royalty mechanisms that are built into these NFTs are hugely impactful. And the idea that you can create a work of art and earn like a few percentage points every time that’s sold and that allows you to continue to create more work, I think that is a really virtuous and exciting mechanics. So I’m more excited about that than getting everybody paid for every single JPEG they ever create because I don’t ever see us being in a world where that is possible probably

Tom (01:06:42):

No, you’re right. And the ongoing royalty to the creator baked in, I guess like the NFT smart contract at that level, that’s really interesting because it drives them to create quality. Like don’t drop 1,000, drop your best piece because you’re going to make money on it forever. That’s really powerful. Obviously that doesn’t exist in the traditional world. Does it anywhere? Or traditional art work?

Aftab (01:07:08):

Not as a matter of course, no. I won’t say that it might be a mechanic that exists somewhere as something esoteric, but yeah, in our ways to get around that for NFT is by the way because I can just send you an NFT and you can pay me OTC. But it goes against the spirit of what we’re doing here. And I wouldn’t participate in a deal like that myself because part of what I’m doing is when I buy it, I want to support the creator. Even if I’m not the first buyer, I’m supporting that creator. And if I sell that work for a lot of money, then that creator has contributed to that upside. And I want them to have a piece of that.

Aftab (01:07:44):

In traditional art it hasn’t been like that. The especially for new artists, they’re selling their work at a really low price. And then it sells for millions of dollars and they never see another penny from it. And they can create new work to tap into that. So that also, this goes back to our talking about earlier, this gives them another avenue through which they can control their supply because they don’t have to create like a ton of new work if they get residuals or royalties off of the existing work. And I don’t want to stop creators from creating. Everyone should have their own creative process. I’m more just thinking about it from the mindset of a collector and where I want to put large chunks of money. And yeah, some of these things do matter to me.

Tom (01:08:22):

No, it’s a really good question, sorry, it’s a really good answer. And I really liked that. You have such incredible takes on the space outside. I want to keep going for a little bit. Again, I’m going to paraphrase another tweet, but I don’t have it pulled up, but I remember Suzu tweeted. It may have been recently a couple of weeks ago like people want to buy the most culturally significant things in the world and I might be botching it a little bit, but it’s a really powerful point because it’s just so true. Owning ETH is one thing, but owning the most culturally significant pieces of art, that’s a flex. What’s your take on his idea there? Do you agree? Disagree?

Aftab (01:09:02):

I think what he was alluding to there, it’s just inherent to human nature and people… And there is like a status symbol effect NFTs. Now, I’m just going to say, when I bought a lot of my NFTs, they were not status symbols and they were not particularly valuable.

Tom (01:09:16):

You were negatively. People got out of you’re wasting your ETH.

Aftab (01:09:19):

I can’t tell you how many people along the way have just told me, why haven’t you sold these? What are you doing? How much money are you putting into this? All of my good friends were really, really skeptical and I’m like, look guys for me, I wanted to own these pieces of history and these pieces of the culture that we are creating in the space. Because I think the culture that we’re creating here is, I think it’s going to become the predominant culture.

Aftab (01:09:41):

Crypto culture is just going to be cultured in 10 years. Okay? Because what we’re creating here is so important and so impactful. And so defining to the course of history that crypto culture is just going to be culture in 10 years. It won’t be the only culture, but it will be a predominant culture. If not, one of the most predominant cultures. We’re already seeing this by celebrities and influencers from outside the space coming into it. They’re validating what is being created here.

Aftab (01:10:11):

So for me, it was just a no-brainer to collect some of these pieces that I felt like I enjoy a lot. They reflect my taste and they support the creators that I want to support so they can keep creating. So I was like, “I want to do this. I want to have these pieces.” And yeah, it is a flex, but for me, I just like having the satisfaction of knowing I’ve got them. I like looking at my gallery. I like arranging the pieces in there. I like having discussions with the artists that I’ve collected from. And I engage with a lot of them frequently. And it is fun.

Tom (01:10:43):

I really liked your answer. And just to close out, not like an investment question or advice here, and I don’t mean to distill our whole conversation to like one like binary answer here, but let’s say your gun to your head or you’re getting divorced or something and somebody says, “Hey, you can keep your whole NFT collection or you can keep your ETH.” And let’s say they’re dead-even. What do you think you’d pick?

Aftab (01:11:07):

I think if it was gun to my head, so for me, I would probably keep my NFTs because I’m attached to them. I wouldn’t want to keep them. And I know that if I had to sell some of them for ether, I could do that. If I chose the ether, I’ll probably never be able to buy some of these NFT again.

Tom (01:11:26):

Great answer.

Aftab (01:11:28):

And that’s just how I view now should most be… Now, if you are making that binary, Tom, I would just caution people that doesn’t mean put 100% into NFTs. That’s a very figure I gave you a very personal answer. I think most people are actually going to be much better off financially sticking to ether, especially if they don’t know what they’re doing rather than trying to speculate on random NFTs. But like I said, if you like it, collect it and that’s got to be the number one rule that guides you.

Tom (01:11:55):

Yeah, no, the curation and getting into the place with the ease is the barrier, knowing what to buy. Aftab, this has been incredible, man. You’re extremely charismatic. You have a ton of knowledge on the space. You’ve been around for a long time. I really am straight up jealous of your collection. I love it. And the other thing is, I cannot believe that you were working a job outside crypto while doing all of this.

Aftab (01:12:21):

It is crazy. I really appreciate that, Tom. And yeah, really excited that we got a chance to connect and chat today.

Tom (01:12:28):

Yeah, thanks so much for coming on, man. I can’t wait to share those.

Aftab (01:12:31):

Okay.

Sep 9, 2021 | | Chain Reaction

Reach Out

* fields are required
By submitting this form you accept our terms and conditions