To begin understanding the value and also risks related to NFT’s, let’s consider a few things I loosely call “rules.”
First rule is to the same as physicians: “Do No Harm.” Learn from mistakes like the ICO craze. We don’t want to harm investors or the brand of NFT’s, buyers, or artists. This requires self-policing, or mitigating human nature, as I explain in my books.
Second rule is to define its purpose. There are two purposes: to reward artists for digital art, and to track use of it for royalties. These are great improvements, and Smart Contracts help auto execute the royalty payment process, like it does for music, only better. The purpose is not to make rich people richer. NFT’s are a path and also an end product, whether they remain in the art arena depends on mistakes made now, more than innovations made later. Let’s avoid mistakes so we see clear and beneficial purpose from NFT’s.
Third rule is to determine which has value. And since art is subjective in appeal, instead look for pre-existing examples of what has proven valuable over time. Comic books, baseball cards, stamps, are collectibles that took a long time to be appreciated. So let’s look at Hello Kitty. Hello Kitty made billions and original pieces are collectable because the logo gave meaning to females from 5 to 25 all over the world. I was in Japan when it rose fastest, and most people don’t know that Hello Kitty made a deal with the Otaku, who are the children of the digital underground of Tokyo. I went down into the underground to see it. Rumor has it that Kitty paid $200 million to Otaku over the years for pointers on emerging trends. The Otaku gave cred to innovations and product design in Hello Kitty. So how do we capture this spirit in youths and adults so NFT’s last? You can’t really measure an NFT, the best you can do is perform ratios, which is how we measure valuable complexity in Physics, according to the famous Julian Barbour. So how do we get an Otaku type of group involved with determining the value of NFT’s? You need to explore the evolution of Gamers, what they value most, and their potential to both lead and disrupt finance and culture arenas to master that move. Once any investment groups convinces Gamers it can solve some of their key goals or issues, you have a global market of almost a billion people verifying the demand and value for NFT’s.
CryptoKitties was the first … it had a resting period … then proved to be a durable investment over time. Now it truly is collectable. Just like comic books. And baseball cards – they helped in self-identification and the identification of idols. NFT’s need to follow this proven system.
Fourth rule is legit sellers. This means Exchanges that do not allow manipulation by a few big investors. Over 80% of high value NFT’s were executed by only 2 buyers, which means this market is easy to manipulate. Just like SoHo needed more small art stores to determine value for Pop Art in the 70’s, we need more galleries that know how to recognize collectible art and set standards for it. The most promising exchange is from Denmark, named Hoard Exchange. It can trade, rent, and get loans for and off of NFT’s, like royalties. I’m looking into what agency has oversight on Hoard’s services: Denmark is very high on ethics, so I expect no market manipulation. But all DeFi type of exchanges are still vulnerable to hacks. The next thing Hoard needs to do is standardize various types of ownership. For example, owning an NFT could be for a limited time. This is a good thing, because it would allow art collectors to have a way to price appreciation of not just one NFT but to a class of them, so that they are given a name, like Post Modern Realism or Abstract Art. Then, contracts also need to have names so that the buyer knows the limits of the rights to use the image. Some NFT’s cannot be used for logos or book covers for example – that right remains with the original artist. By creating categories for contracts, the buyer knows what he can do with the art and for how long. NFT’s that are moments in history can be shared in a virtual way with the world, and so can the process of art itself. And here is where a new era of NFT’s begins. Now that the marketplace has been established, an Artist can videotape the process of making the art, explain the inner Angst felt in trying to perfect it – especially in choreography, gymnastics, and SpaceX, which show humanity mastering the physical limits of our universe. If we could make an NFT of Elon Musk’s mental designs, then we present what I term, “Farming Imagination” which is written about extensively in my book ONE FISH SAYS TO ANOTHER FISH. I’m the only one that understands how this concept links with NFT’s. I often say life’s mysteries can all be seen in movies, and in this case it is the Pre-cogs in the Tom Cruise movie Minority Report. What they are really trying to capture is the human mind’s ability to transcend time to mitigate human nature. Farming Imagination will capture this and present it in NFT’s. I’ll be excited to work with the investors that usher in this amazing interface with technology, to explore our individual greatness of imagination and prove it in an NFT.
Fifth rule is timing. NFT’s appeared as a new asset class for a form of digital or crypto currency, at the same time it appeared as a way for artists and collectors to connect. The big money paid for Beeple and LeBron were possible they stood out and the marketplace wasn’t crowded. They also rose in value because they were first, they were artistically and physically impressive, and had a fan base. But now we need to pause, as the market becomes more crowded, and begin to set standards. I expect that there will be new SPAC’s created just for NFT collections. This makes sense, because it allows collections to be a numbers game: if you buy 1,000 NFT’s, many will be worth nothing in 5 years, but it only takes 20% to create 80% of the value in the 80/20 rule, the Pareto Principle of investment. Then the SPAC generates the demand for the 20%. They would need access to a company able to create the originals to maximize profits and give proof of how it will increase in value better than competitors or existing models, which is exactly what Creativity First Films offers SPAC’s. Special Purpose Acquisition Company are a perfect match for the film slates (assets) that deliver products and royalties, that include NFT’s among other ROI and long-term value like royalties. Proof of long -erm value can be seen in Amazon’s $8.4 billion purchase of MGM just for its treasure chest of films that receive royalties for eternity. If you know this value will appear quickly, the SPAC invests in the original then waits until distribution to cash out at a super profit. Amazon offered 300-500% of production cost for about a dozen films on the first day they were offered. So imagine a SPAC investing $250 million in 4 films offering NFT’s and Games, and getting over $1 billion within a year when they flip it. If they go public, they make about $5 billion over three years off it. Then sell it all off anyway. Either way, SPAC’s are a perfect fit with the future of sources of collections of NFT’s. High risk? Absolutely. High return under the right oversight? Yes, provided macro moves by agencies doesn’t screw this up. For now, innovators are racing to stay ahead of regulators, which is not a good thing, as proven by the ICO craze. It is time for a few wise thought leaders to replace hype with guidelines and superior systems for valuation.
The music industry created categories like Hip Hop, Country, R+B, Techno, House, etc. so fans could zero in on what they wanted, and artists could stand out and specialize. The NFT arena will have to go through the same process. This allows the standards to be refined.
Any real value of an NFT won’t be its original price, it will be the price after the first sale. For this reason, I think that a Blockchain tracking of owners will make NFT’s rise in value. The higher the social status is in the chain, the higher the NFT re-sale. It’s like owning Steve McQueen’s Porsche or Steve Jobs’ first logo design or Michael Jackson’s shoes – just as much as it is owning the first big sale by Beeple.
Another factor people underestimate is it makes sports and music idol memorabilia and images verified, so there can’t be fake jerseys or video of Ariana Grande finishing her latest hit song. So this bring a way to legitimize who made the original version.
As with many “Blockchain” spinoffs, people claim many things about NFT’s and the Smart Contracts underlying them that are not true. While at first the NFT is not an asset class it is being turned into one through Markets, as new Derivatives appear. While yes it is true that NFT’s can also be applied to tokenized purchasing of property like art and real estate, this is a Pandora’s box we don’t need. It is a problem in search of a problem.
However, through Edge Technology, seats at a major game, especially in the new technology experience known as X.R, Extreme Reality can be delivered as an NFT. You’ll have to be involved with CIT to get to understand that fully, which is why I’m a top global consultant for Blockchain, Crypto, and NFT understanding. I’ve got companies from Silicon Valley to Switzerland to Singapore to Hollywood recognizing my lead in this industry and monetizing it in a safe way. I expect my first clients to be from Switzerland and Hollywood, because the medium for popularity is through the films, which will deliver a dozen high value NFT’s per production when it is built into the shooting schedule and games and apps from the movie.
Soon, NFT’s will completely change, and the value of them will be reversed. The next value of NFT’s will revolve around self-portraits for the digital world. Within the NFT will be the metadata on the person that he or she wants the world to see. This is not just for popularity, this can be monetized. So for example, you have a digital NFT artist create your 3-D image. It appears 2-D on paper, but inside it is your consumer trait-so you can then license out your buying habits to Mercedes or Sephora. You own your own royalty on consumerism. There is only one company and person that knows how to do this, and it’s me, and Crypto Integrity Tao. There are dozens of technological moving parts. If the technology and source for the NFT are in the same business model (vertical business model) then this avoids a majority of problems the future of NFT’s and even cryptocurrencies will face.
Ultimately, we need to shift our understanding of NFT’s. They have the ability to manifest the inner sources of both joy and challenges for both the artist and buyer. They can represent the constant need for humans to create something out of nothing but their imaginations, will power, and emotional drivers. Do that right – capture it right – and it is priceless. For a comical example, we all know Van Gogh’s self-portrait of him with his bandaged ear. what if an NFT could capture what was going through his mind when he cut it off for the woman he loved? We he feeling ultimate love, or was he thinking they’d get along better if he didn’t have to listen to everything she said?