Both the cryptocurrency and NFT speculation market has been touted as the truth and the way for Artists and the Public at large to be in control of their financial destiny.
But on the death day of Bernie Maddoff, is all of this just the new digital Ponzi scheme?
On Monday, April 12, New York Stock Exchange announced that it would launch “First Trade” NFTs, to memorialize the true first trade of Spotify, Snowflake, Unity, DoorDash, Roblox, and Coupang.
NFTs, or non-fungible tokens, are a type of digital asset created to track ownership of a virtual item using blockchain technology. Such as Twitter CEO Jack Dorsey sold his first-ever tweet for over $2.9 million.
But did Jack Dorsey actually sell his Tweet or did he sell a URL that points to where the .JPG, .PNG file lives that is a screengrab of his first tweet? Or does it really matter? Maybe all they purchased was the metadata or Ethereum smart contract that shows that the image has been deemed by Jack Dorsey as the original and one and only with a URL that points to a JPG.
With NFTs, you don’t actually own the “thing”; you are simply linked on the blockchain to the “thing” as the actual owner. You are buying your place on the ledger. That means there might be hundreds of copies of a piece of digital art, animated gif, or an MP3 file, but its about who owns the associated NFT to prove you are the rightful owner. That smart contract is first signed by the creator and then secondly signed by you, the buyer.
But what if you are not the original creator but instead the corporate owner of the content such as NBC selling the SNL video clip about NFTs starring Pete Davidson and Chris Redd. Does the artist really get their fair share of the proceeds?
The SNL skit sold at auction for $365,000 USD and the proceeds were given by NBC to the charity Stop AAPI Hate. 2.5% of this sale will first go to the NFT marketplace OpenSea because it provided the platform. And you and I, the utility payers of the electricity grid pay the cost of the energy-intensive proof-of-work consensus mechanism. The artists, Pete and Chris, simply get a salary for their work on Saturday Night Live.
A piece of art in any of its forms is one-of-a-kind unless it’s copied over and over and over — then its value diminishes. However, the goal of NFTs when used by artists is an artist can subdivide the full artwork into components and sell its parts. But again, you are simply paying for your place in the smart contract — that cannot be deleted, removed — unless an asteroid hits the Earth and creates an EMP event.
With the NYSE selling the first trade NFTs of public offerings they are attempting to share “for others to share in their success,” exchange president Stacey Cunningham stated.
But again, is the Public really sharing in the success? Or is it the techno rich and few?
This brings us to Coinbase’s direct listing today. Coinbase shares opened at $381 today and were valued at $99.6 billion.
A $100 billion dollar company that sells cryptocurrency — but lacks any customer service or helpdesk if one of its customers has a problem. Coinbase simply gives you a link to submit a complaint.
Because of this absence of Coinbase’s customer support, fraudsters have created scam customer support phone lines and email contacts to get full access to your computer, online financial accounts, and digital life. If for no reason but to protect its consumers, there should be at a minimum one email contact connected to a real human for the amount of money that is flowing into Coinbase.
Coinbase also goes further to use Anti-Money Laundering laws to prevent its customers to exchange cryptocurrency for cash and withdrawal — even if a customer follows the five-day wait period to deduct available funds. Proceeds or revenues generated from cryptocurrencies can be bought and sold but your initial base amount of money you add to your portfolio cannot be extracted.
Is this to prevent a run for cash if a cryptocurrency starts falling? Or prevent the startup from becoming insolvent?
Having the public pour money into digital currencies via a downloadable app without regulation is a risky business but Coinbase seems to be the poster child of success.
Coinbase wasn’t the first to succeed. It’s predecessor was Bitmex and it’s CEO Arthur Hayes who now is the US Commodity Futures Trading Commission’s Public Enemy Number one for being too successful and not trying to prevent money laundering. Arthur surrendered on April 6 in Hawaii.
But based on the hype and publicity that Coinbase is getting on its IPO and the massive amounts of money being spent on URL links that point more to 404s than JPEGs — the investing Public seems to be the foil for these digital hopes — not it’s fire.
The problem with all this is there is nothing real. No real legal contract. You either download an app and give details to your bank account; buy a pointer to a file, not even the real file. Just a pointer. You are not even allowed usage rights to the NFTs you purchase.
For NFTs to become more than a Ponzi, they have to be bound to legal contracts. Become real. But instead -
“All one great big lie.”
— Bernard Madoff
Your results may vary.