The Darkside of NFTs

The Darkside of NFTs

In this episode of Startup Hustle, join Matt and Matt for Part 8 of our NFT series as they discuss what’s new in the metaverse and shed some light on the darkside of NFTs.

Covered In This Episode

A peek inside the NFT Economy

Nature, a leading science journal, published a recent study. This study discusses how the NFT market is almost entirely dominated by “whales.” These are deep-pocketed players in crypto. They said that 85% of all transactions are by the top 10% of traders alone. It means that the trading activity of the top 10% of “buyer-seller pairs” already equates to the combined dealings of the remaining traders.

Shady dealings in buying and selling NFTs

In the NFT world, people can have multiple wallets. Trading the NFT many times for the public will drive value and make it look financially robust. And since buyers and sellers remain anonymous, all the transactions are known to the public. All except for the person behind the wallet remains a secret.

Get Started with Full Scale

It so happened that in December 2021, a CryptoPunk NFT was sold for $532 million. What would have been a record sale in the art world turned problematic. In truth, the value of the NFT was pushed up by a single user who was both the buyer and seller.

Sale of unauthorized NFTs and the legal tussle

On January 22, 2020, a legal tussle ensued between French luxury group Hermès and American artist Mason Rothschild. The latter used the iconic Birkin bags as digital tokens and named it MetaBirkins.

NFT Scams

Due to its anonymity, a lot of scams popped out in NFT. One of them used the name of an acclaimed anonymous street artist, Banksy. In September 2021, a fake Banksy NFT called Great Redistribution of the Climate Change Disaster was sold for over $300,000.

Tax evasion

A lot of traders take advantage of the invisibility of NFT to avoid paying mandatory taxes. The logic behind this is that NFTs only exist in the crypto world. Technically, NFT is not a visible item by design.

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Highlights

  • Move to earn NFT (3:36)
  • Darkside of industries or businesses (6:30)
  • Over 10 % of traders are performing over 80 % of transactions in the NFT industry. (08:04)
  • Minting NFTs (11:00)
  • MetaBirkins (14:08)
  • Fake Banksy NFT (17:55)
  • Tax evasion (22:19)
  • Crypto (33:40)
  • Ape coin value (39:23)

Key Quotes

Especially in an industry where everyone is anonymous, and you can digitally transact money and sell goods anonymously with no track record. Yeah seems fraught with problems.

The NFTs can create an impression that it’s highly valued when it’s not.

When you’re at the top of that list, there are definitely people that are just buying your crap because you’re at the top of the list.

Be sure to listen to the entire NFT series on Startup Hustle.

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Rough Transcript

Following is an auto-generated text transcript of this episode.

00:00.00

Matt DeCoursey
And we’re back, back for another episode of Startup Hustle. Matt DeCoursey here with Matt Watson. Hi, Matt. Wait, the dark side.

00:06.32

Matt Watson
Um, what’s up from the dark side?

00:19.90

Matt DeCoursey
Like Darth Vader dark side or the dark side of NFTs.

00:21.39

Matt Watson
Absolutely you know what I need to get an NFT of Darth Vader; that’s what I need. Yes, yes.

00:27.41

Matt DeCoursey
You have a good point there. Do they have those yet? Oh, so much to talk about, so much to talk about. You know we’re gonna get into that, but before we do today’s episode, Startup Hustle is brought to you by Canva, where you go to collaborate and create amazing graphic design for free. Whether it’s a presentation to share an idea, a video to launch your business, or a social post to start a conversation with Canva, you can design anything, including NFTs of Darth Vader. I bet it might be copyrighted.

00:54.55

Matt Watson
I was getting ready to say that, like now I know what I’m doing tonight.

01:00.67

Matt DeCoursey
You can discover the magic of visual communication and how Canva helps you create a lasting impact today canva.com to learn more. There’s a link in the show notes. So Matt, here we are. It is the seventh or eighth, or I don’t know; we’re deep into this series about NFTs. And you know what’s crazy is the NFT industry has changed dramatically within the context of this series. It’s crashing, man.

01:27.89

Matt Watson
Um, it’s definitely been down a little bit, although Coinbase came out now, and it supports NFTs and the coinbase wallet. So now there’s like millions of new people who can buy NFTs, but it seems like it’s cooling off a little bit.

01:35.69

Matt DeCoursey
Yeah, yeah.

01:42.83

Matt DeCoursey
A lot of it’s crashing. I saw that the volume was way down, and you know, I don’t know whose numbers to believe, but they’re definitely down, I mean, a lot of it. I think we even predicted that a couple of weeks ago on some of this stuff, like how does this hold water now. You know that’s not exactly what we’re talking about today, but you know, so let’s do a little recap. So we started WFt as an NFT that was on April 1; we talked about NFT art on April 8. NFT is in the music industry. And then we had a special edition where I got to sit down with NFL Hall of Famer Eddie George because in the middle of all this. They reached out to us and wanted to use Startup Hustle as the platform to announce their NFT series, so that was fun. We talked about the earn NFT network and followed that up with the play to earn economy, which was interesting. I learned a lot about axes. Do people get their axes back? Is that what? That’s the dark side; it has gotten to you with that reaction, Matt.

02:39.70
Matt Watson
I think they lost their ass. Ah, maybe. Um, thinking.

02:52.38
Matt DeCoursey
You know, talk too little. I believe that you did an episode about tracking ownership of NFTs, or was that me.

02:57.92
Matt Watson
No, I did that with Mario; that was awesome. He was actually like a hedge fund basically that invested in NFT stuff. It was a cool conversation.

03:06.22
Matt DeCoursey
Yeah, and if you were listening last week, you know I get to sit down with Ben Topkins, and they are so Matt that was ah a team of triple-A game developers meaning like the best of the best like from ea sports and stuff like that, and they launched skatex.io which. I thought it was super cool. It’s like a skate video game, and your NFT is your skateboard. I thought that was kind of neat. But actually, we were talking about some of the industry and everything, and that’s like a tangible way to get in and play something. Um.

03:28.40
Matt Watson
Okay, okay.

03:36.49
Matt Watson
You know? So you know we might have to add a whole new episode. Something you talk about how this industry is changing so fast. Have you heard about the new like move to earn like where you like you buy NFTs of shoes, and then you go run in real life, and you make money by running or some stuff?

03:52.57
Matt DeCoursey
Man, I’d be broke.

03:56.68
Matt Watson
There’s some. There’s some weird stuff going on out there, man. But yeah, you can buy NFTs of shoes now, and like, I guess it syncs to your fitness tracker or something, I don’t know, just craziness.

03:58.13
Matt DeCoursey
Now.

04:04.66
Matt DeCoursey
I knew you could buy NFTs of shoes because I’ve seen them on OpenSea, just like some different, you know, versions being a sneakerhead that caught my eye, and I thought that was kind of cool. Now you know we’ve had okay so with the ads that we’ve had for this series and a lot of different stuff.

04:09.53
Matt Watson
Um, yeah.

04:24.63
Matt DeCoursey
You know I used one of my apes to make an ad and mention like for the ads to launch the series, and a lot of people in the comments on Facebook and Instagram were like it’s a scam. It’s this. It’s that it’s a way to launder money. There’s all this crazy stuff going on. And you know what I mean, there might be a little bit. I mean, I think any industry. Is there any industry for real that doesn’t have like a little bit of a dark side?

04:52.30
Matt Watson
Well, especially in an industry where everyone is anonymous, and you can digitally transact money and sell goods anonymously with no track record. Yeah seems fraught with problems.

04:55.53
Matt DeCoursey
Ah, yeah, right? Well right? Yeah, well, not everybody. Well, you know, last week I was talking to Ben Topkins about that and like one of the things with so they sold out their NFTs their skateboard and NFTs like almost instantly like within minutes. But one of the things was so we’ve talked about this way back at the beginning of the series talking about being doxed.

05:24.85
Matt Watson
Yes.

05:26.30
Matt DeCoursey
So they were like fully doxxed as founders like their whole founding team is very public like they’ve all worked for like Lucas films and like very well known and that brought a lot of creds, but we did talk a little bit about that. So anytime you get the anonymity, you never know, so you know we talk.

05:39.86
Matt Watson
I do not want to be doxxed, by the way. I want to be forever known as the other Matt, and nobody really knows who I am.

05:46.98
Matt DeCoursey
I refer to you as the other Matt, and almost daily, I will literally tell people. Let’s say you know, but you know my business partner and podcast co-founder. You know the other Matt.

05:51.51
Matt Watson
So don’t dox me. I don’t think anybody didn’t really know.

06:02.62
Matt Watson
Yeah.

06:04.27
Matt DeCoursey
And I said he probably calls me the other Matt, so that’s probably even more confusing than having two Matts, and by the way, neither one of us can be mad at fullscale.io or mad at startup https://startuphustle.xyz, so we’re even confused. Matt, let’s talk a little bit about this, so you know.

06:14.21
Matt Watson
Yeah, yeah.

06:21.64
Matt DeCoursey
The industry is okay, so some of this when we talk about the dark side, I mean when we think about the dark side of industry or business, and I wasn’t kidding, I think most industries have like sneaky little bull about them that so like, Okay, you worked in the car industry for a while is that one that is always, has high reputational value. No.

06:47.10
Matt Watson
Oh, come on. You don’t trust a used car dealer salesperson.

06:53.16
Matt DeCoursey
It’s literally the term for a shady salesperson like it’s the brand standard. So but you know, every industry, I think, has a little bit of a dark side. Now some of this stuff. You know when you look at.

06:57.18
Matt Watson
Yeah, yeah.

07:08.62
Matt DeCoursey
And I’ve teased, and you know, some of this other stuff with the industry like so we went, and the thing is we’re going and trying to do research for the show, and we’re trying to find stats. And some of this stuff is like, okay, so where do you get your statistics from because there aren’t a whole lot of people that are. Or tracking this. There’s actually a company here in our hometown at Kansas City called cryptos slam that keeps up with a lot of this, and they get referenced in a lot of articles. I see them all the time like I in me just out looking for stuff for this series. I saw a lot, so cryptos slam kind of like running; they’re like the feed.

07:29.18
Matt Watson
Um, ah, wow.

07:41.64
Matt DeCoursey
For a lot of this stuff and a lot of the transactional data, but some of the stuff we found is that so. And once again, it’s difficult for me to attest to these statistics as being accurate because there is no governing body or any kind of standard. I mean, some of this is just what other researchers found, but they’re finding that the top 10% of traders are performing over eighty percent of transactions in the NFT industry.

08:10.37
Matt Watson
Well, it’s almost a way of gaming the system, right? Because in any kind of marketplace, a lot of things are based on volume. It’s like, there are thousands of millions almost of NFT collections. But you want to know what’s hot, what’s selling, what are the new things, right? It’s like you take back those skateboards, for example. If I was a guy who released those, I would’ve bought 50 of them myself, and then I would have just kept buying them from myself every 5 minutes, over and over and over and over again. So it looks like there are a lot of volumes, right? Like you, you’re just scamming the volume out there so that you show up number one on the chart, and it’s no different than what people do to manipulate.

08:37.76
Matt DeCoursey
Right.

08:49.86
Matt Watson
You know app downloads chart charts on Android or Apple, right? Like, hey, tell everybody you know to go download the app and pump up the numbers. And it’s no different. As you said, the crap goes on and all over the place. But it’s really easy to go on go on in. Crypto and NFT where everything is automated, and if you’re a computer programmer, you can write code to do all this crud and automate buy. We could buy and sell the same NFT back and forth to each other every minute and make the price go up $1 every time and do it a million times a day.

09:17.40
Matt DeCoursey
Or make it or make it be trending on OpenSea, so like so when you go to OpenSea, which is kind of like the StubHub of NFTs now let me define that. So you know, if you go and buy a ticket for a concert or a sporting event, you might buy it at Ticketmaster.

09:22.32
Matt Watson
Yeah, exactly

09:35.96
Matt DeCoursey
Which is a primary ticketing source meaning that it’s a platform that teams, artists, and venues use to sell their tickets now after that ticket is sold if you choose to resell it. It has now entered the second dairy market when you buy a ticket from Stubhub, which is probably the most famous site for that. You’re buying a ticket that is not from its original source. So the price can fluctuate. It could be marked up. It could be marked down now we talk about the dirty side of different industries now. Matt and I both worked and entered around ticket brokerages way a long time ago, but this was a common thing. Tickets, they would basically have fake sellouts, so they want to drive the demand, and they want you to try a couple of times and not get a ticket, and then you try that second or third time, you’re like, oh wow, I finally got one in my basket. I better go ahead and buy this, so I don’t miss out. Now what Matt’s talking about is driving up the volume. A lot of these things. So if you go to opensea.io and you hit the button that says explore, it’ll show you what’s trending. That’s like the very first thing, so these things kind of move up and down the charts each day, and I don’t even know what drives them; it might be volume. It might be transactions. But I do know that when you’re at the top of that list. There are definitely people that are just buying your crap because you’re at the top of the list. Yeah.

10:53.79
Matt Watson
They’re speculating on it, right? And you’ve minted some NFTs, and there are some out on OpenSea if you go to OpenSea and search for Startup Hustle, I think you’ll find a few of them. But it’s just playing around for all this, but they’re not worth anything, right? I don’t think anybody’s bought any of them, so NFTs have what they call a floor price which is kind of the–

11:07.20
Matt DeCoursey
Nope.

11:11.56
Matt Watson
The lowest price that has somebody has bought one out across the whatever the collection is, so right now; those are all effectively zero. I could go on there right now, and I could buy one of those for $100000 and then buy another one for $100000 and another 1 for $100000 and all of a sudden. It’s like, wow. These things are super hot. They’re selling for a lot of money. Meanwhile, I sent you 300 grand, and you just gave it back to me. Yeah, hey Matt, here’s your 300 grand back. You could just send it right back, and I could go buy him again. Okay, now I’m gonna buy him for 105000, and then you just send me the money back.

11:33.13
Matt DeCoursey
Yep yep, and if those funds were acquired by us illegally, that would then be money laundering. Because I would say, oh wow, I created this art, and I sold it for $300000 now I’ll pay tax on it now the money’s clean. That’s how money laundering works, and that’s really all it is like if you watch Ozark on Netflix.

11:53.55
Matt Watson
Yeah.

12:00.59
Matt Watson
Yep.

12:06.14
Matt DeCoursey
That’s all that dude is doing for the Cartel all day is bringing in fake forms of revenue and then paying tax on the income, and now it’s “clean money.” So I mean.

12:10.16
Matt Watson
Yep.

12:15.49
Matt Watson
Yeah, and so so so.

12:19.70
Matt DeCoursey
That’s what comes up. That’s what people are talking about with some of this because there is some transactional history that has occurred there was, and we’ll get into that in a little bit. We have a couple ah couple of examples with that.

12:30.49
Matt Watson
Yeah, so I think money laundering is a big part of this, and honestly, that happens in the real world with real art, too, right? Like a lot of the things that go on with art with NFTs that are kind of shady happen in the real world with physical art. It’s not much different from physical art.

12:44.63
Matt DeCoursey
Yeah.

12:49.72
Matt Watson
Has long been the same sort of thing because it’s sort of untrackable, untraceable, and what is it worth? Who knows? It’s totally speculative. It’s the same sort of stuff.

12:57.84
Matt DeCoursey
When something’s worth millions upon millions of dollars for someone with the right kind of talent or skills to reproduce that, it’s worth a shot, and you know, I don’t have numbers on this, but I’m a documentary buff, and I’m also an art collector, and I’ve been fascinated like it’s believed that a huge number of the masterpieces that you think that you see in actual art museums and stuff weren’t actually painted by Picasso perhaps. And it’s because it’s once you know that people are so good at faking some of that stuff. And so, that’s essentially what NFTs are trying to solve. They’re trying to say, “Hey, look, we do have this digital thing” with it, all right? So there are a couple of examples here. So.

13:41.26
Matt Watson
Right.

13:49.67
Matt DeCoursey
This is the sale of unauthorized NFTs, and we talked about this in the beginning, too now this is the thing, too, kids like dude if I wanted to just take a picture of Watson and put it up on OpenSea and sell if I could do that, but I don’t have the rights. I don’t have your name, image, and likeness rights, right?

14:06.62
Matt Watson
Um, oh yeah.

14:08.99
Matt DeCoursey
So I could drop that in there. So on January 22, 2020, the Guardian reported that french luxury group Hermes, which makes purses and stuff like that, was initiating legal action against an American artist named Mason Rothschild over the use of the former iconic Birkin bags.

14:17.29
Matt Watson
Yes.

14:28.99
Matt DeCoursey
As digital tokens called MetaBikins, and I’m seeing a lot of this so similar. Nike sued StockX in February of 2022 for using the shoemaker’s brand and iconic logo to create market NFTs, and you know it’s just like this, so I see a lot of that. A lot of that on these and NFT things like there’s one you mentioned. The walk to earn or run to earn, I mean, there was an NFT launch that was just literally reproducing. It had these little glitch videos of just popular shoes. All different kinds. But dude certainly did not have a license from Nike, Adidas, Puma, New balance, all of them, but they put him out there anyway.

15:05.99
Matt Watson
No, no, well, the Birkin bag thing you mentioned here; I’ve read about that before, and that’s fascinating because you’ve got these metaverse projects like Sandbox and Decentraland and whatever. That you can potentially buy digital goods in so, you get these crazy-ass people that want to buy like a fancy purse in the meverse, which I don’t understand, but they do, and like you have people that spend, I think thousands of dollars, buying these digital Birkin bags that are just a rip you know like she’s not the company that makes the Birkin bags right.

15:36.71
Matt DeCoursey
Yeah.

15:43.37
Matt Watson
But she just made a picture of them. That’s it; it’s hilarious. Kudos to her, right? But yeah, now she’s getting to.

15:44.13
Matt DeCoursey
Yeah.

15:49.83
Matt DeCoursey
Now here’s the thing, though, if you’re functioning in a world of anonymity, you can hide behind a whole lot of layers of stuff. It makes it really hard to get, and then you know what, here’s the reality you might get a cease and desist letter, and then you just don’t do another round of them, and you’ll be all right.

15:56.20
Matt Watson
You could.

16:07.71
Matt Watson
You know, that’s a funny thing about crypto, right? They come to you and like, oh, you’ve made millions of dollars making these fake Birkin bags, or you’ve made millions, millions of dollars in profit off of bitcoin, and you know, what you can realistically say? He’s like, “oh, I lost my crypto wallet.”

16:08.49
Matt DeCoursey
You never know, you never know.

16:24.84
Matt DeCoursey
I sent it to the–

16:26.95
Matt Watson
It’s all gone. Sorry, I don’t know what happened; I forgot my 12-word phrase. I got somebody sent me a link; I clicked on it. I was so stupid, I put my 12 words in, and the money’s all gone.

16:38.94
Matt DeCoursey
Should I not use the word password 12 times in a row for mine?

16:43.91
Matt Watson
But really, you could still have your wallet and know, but who the hell knows? Nobody knows, but you could be like, oh no, I lost the money. It’s gone.

16:47.26
Matt DeCoursey
Yeah, so you know it’s a funny thing about wallets and NFT transfers. I thought was kind of funny so Elon Musk this week changed his Twitter profile to be a bored ape, and everyone now that now the Ape. No one knows if he actually owns the ape that was actually used in his Twitter profile but tent but hit the wallet that did get bombarded with everything from dick pics to like promo ideas to like all of it, which is kind of funny.

17:12.42
Matt Watson
Oh geez.

17:18.60
Matt Watson
You know what? I never thought of that, but this is like the next generation of Dick Pics because you could go mint a picture in an NFT, and that’s the thing about this with NFTs is I could send you an NFT to your wallet like if I know your wallet address, I can send it to you, and there ain’t crap you can do about it.

17:24.94
Matt DeCoursey
Yeah, yeah, yeah, um, yes.

17:37.94
Matt Watson
So that’s what I’m going to do. I’m just gonna min dick pics all day and send you. Yeah.

17:38.20
Matt DeCoursey
Yep to me? Well, don’t do it during a board ape NFT metaverse sale because of the gas prices. If that’s what you want to spend gas on, Matt, you can. Ao, all right?

17:48.45
Matt Watson
Ah, yes.

17:55.87
Matt DeCoursey
So here’s another one so in September 2021, a fake Banksy NFT titled the Great Risk Redistribution of the Climate Change Disaster sold for over 300 grand, and interestingly, the fake work was advertised in an auction on Banksy’s website so

18:11.26
Matt Watson
Wow.

18:13.48
Matt DeCoursey
Yeah, Banksy has an agency called Pest Control, and the acclaimed street artists confirmed that neither was the art by him nor was any NFT been sold on his site, so you know another thing, so phishing scams and so. Suspicious popups so meta masks which is a very popular wallet. It’s actually for NFTs is probably the most popular wallet. The users were recently targeted in a phishing scam involving phony advertisements that ask for users’ private wallet keys or 12 words security seed phrases which is a big red flag. Don’t ever give anyone those 12 words.

18:32.93
Matt Watson
Yes.

18:47.99
Matt Watson
Nope.

18:48.40
Matt DeCoursey
Um, there are also fake malicious popups that are operating via discord telegram and other public forums that link they look like normal login pages look. It’s the same kind of stuff that when I get them every day in my email about different stuff, like you know, your server company is not emailing you from a Gmail. So.

19:05.92
Matt Watson
Get ah, get a hardware wallet, people.

19:07.51
Matt DeCoursey
Yeah, but anyway, there are a lot of scams out there. So I have some more examples, but Matt, you know I wanted to first remind you that today’s episode, Startup Hustle, is brought to you by Canva. With Canva, you can design your ideas with ease and get inspired with over half a million free templates and a rich content library that helps you and your team achieve your goals. You can sign up and start designing for free at http://canva.com Matt, you know a little fact here, I made the proposal for Canva to be a sponsor of this series and some other episodes of Startup Hustle, and I made the proposal for Canva using Canva.

19:42.86
Matt Watson
It’s funny, as you know, I enjoy hosting an episode of Startup Hustle every week now, and Canva’s been the sponsor for a lot of them, and it’s funny because most of the hosts are the guests that are on the show I asked them if they’ve used Canva before and every one of them like has like glowing reviews about how much they love Canva.

19:47.67
Matt DeCoursey
Yeah.

19:54.74
Matt DeCoursey
Yeah, I know I’ve been asking the same thing. Yeah, yeah, at one point, I was the best graphic designer at our office, just using Canva. I’m not sure if that’s a compliment to our organization or not. It might be.

19:59.35
Matt Watson
So.

20:04.33
Matt Watson
You still might be. So you bring up a really good point earlier about the Banksy thing, and here’s the reality, right? I could go and download every bored ape NFT there is. I could use Canva, and I could flip the image, so instead of the Ape looking left, he looks right.

20:23.37
Matt DeCoursey
Yep.

20:28.64
Matt Watson
Or whatever, and then I could re-upload all those and sell them as NFTs. I could remint them and how would you know, not and not even change them, right? Just flip the image from one way to another, whatever, and just and just upload them, and now they’re basically fakes or whatever, right?

20:33.22
Matt DeCoursey
Could just change the background. Yeah, yeah.

20:47.94
Matt Watson
And that’s the problem, I don’t remember this statistic, but it’s like 80 or 90% of all NFTs that are uploaded to OpenSea are crap like that; they’re fakes. They’re scams. They’re stolen their whatever, and in the original days of this, I guarantee you if you go search Google you’ll find people who did these people like. Got stumped by that. Like somebody downloaded a crypto punk or bored ape or one of them and changed like one pixel of it or flipped the image or and I didn’t even change it. They just re-uploaded it and minted it, and somebody was dumb enough to buy it, and it wasn’t the original.

21:08.49
Matt DeCoursey
Yeah.

21:20.70
Matt DeCoursey
Well, let’s talk about that for a second because we’ve been referring to my apes. I didn’t buy board apes; I bought Grandpa apes which, by the way, look exactly the same for like like ah like a point zero one percent of the price. They look the same, and they’re still NFTs, and honestly, they look better than the bored apes, and I’ve used them as my profile. I use them in my– dude, people keep asking me. They’re like how much did you pay for the Ape, and I’m like one hundred bucks, and they’re like what.

21:42.16
Matt Watson
Um, if you didn’t know any better. You would think they were, yeah.

21:54.40
Matt DeCoursey
How’d you get, you got a bored ape for a hundred bucks? I’m like, no, dude, it’s fake. It’s kind of like a metaBirkin bag. You know it wasn’t the real thing, and you know that’s the thing like, I mean, I have a few. Honestly, they look cool. They’re fun.

21:56.12
Matt Watson
Um, the grandpa. Yeah.

22:08.23
Matt Watson
They do.

22:10.81
Matt DeCoursey
I just, I mean, I wouldn’t have bought it if it wasn’t. I bought them just out for the experience of this series, you know, and I wanted to use them in my Twitter profile. Now here’s the thing, since I owned them and I own those images, technically, I did. I used them, and I used can. To turn them into advertisements for this series and I promoted them on Facebook and Startup Hustle, and I got a really good reaction from them. So thank you. Thank you. Grandpa Apes.

22:33.30
Matt Watson
And to and what I was mentioning, right? is people take bored apes, and they look exactly like a bored Ape, and they’re like reselling them. But you’re not buying the original, right? Where what you’re talking about is these are just pictures of apes; they’re not.

22:43.88
Matt DeCoursey
Yeah, yeah, yeah.

22:51.70
Matt DeCoursey
Yes, yeah.

22:51.72
Matt Watson
Truly unique art, but it’s easy for people to just get confused and potentially buy this stuff. That’s not actually a bored ape, just like you mentioned earlier. Like, how do you know if Picasso made this or not, you didn’t really buy it Picasso, but it looks like Picasso.

23:02.54
Matt DeCoursey
I was searching for bored apes. So when I was doing my research, and I came across these, I was like, what I know there’s other stuff so I just went to open, see I just put in Ape and I went down and I mean they oh my god dude.

23:14.68
Matt Watson
Yeah.

23:18.69
Matt DeCoursey
Like it’s like, one, it feels like 20% of NFTs are ape related, which you know, I mean I’m okay with that. I mean, I don’t know. I’ve also— I’ve got– What else did I get? I have some ducks.

23:21.74
Matt Watson
Yes.

23:35.67
Matt DeCoursey
The best, the most valuable thing about the duck is I’ve been able to send people duck pics. Yeah right? And if you go to OpenSea and you search Startup Hustle, because I also had our designers make a couple–

23:36.26
Matt Watson
Um, wait, hold on, I was going to say I took that back earlier. I’m just going to send you duck pics for now.

23:54.50
Matt DeCoursey
Make a couple and NFTs of us just because I wanted to see what it took. There was like, dude, putting something, creating an NFT for sale on OpenSea is as easy as uploading a .jpeg, right.

24:06.46
Matt Watson
Yeah, yeah, yeah.

24:09.49
Matt DeCoursey
And then you can put it for sale now; minting them and using the layer generator is a much different thing. We’ll talk about that at a different time. But yeah, so our designers made a whole bunch of samples, and the funny part was I told Andrew of our weekly host for e-commerce. I actually made an Andrew NFT and named it Andrew number one, and then I transferred it to my wallet, and I told Andrew that I would never ever ever, ever sell Andrew number one. What does that mean? All right? So let’s talk about some more shady stuff here because this is the one I was holding out for, so in December of 2021, a Cryptpunk NFT sold for $532000000, and in a way, it would have been a yeah, would have well the hang on it would have been a record sale in the art world but it wasn’t because reports reveal that a major.

24:52.61
Matt Watson
What.

25:01.32
Matt DeCoursey
Ah, a major issue in the transaction. The value of the NFT was actually pushed up by a single user who is both the buyer and the seller.

25:08.26
Matt Watson
I mean, first of all, kudos to that guy if he’s got five hundred and thirty-two million dollars in Ether or USDC or whatever to even pull this off. Like damn, he was probably okay with the gas fee.

25:12.55
Matt DeCoursey
Right? Right? Well, what about the exchange fee on that? I mean, do you pay? Do you pay five million bucks to OpenSea just to do that?

25:28.48
Matt Watson
Oh yeah, they charge. They charge a small fee. Damn.

25:32.31
Matt DeCoursey
Yeah, it’s… I mean, it’s a fee just like any of these things. So that sort of trading has been kind of widespread in the NFT world because buyers and sellers can remain anonymous on the blockchain. The only. The thing that’s public is the record which is still verifiable now. The wallets involved in the transactions are known, but the person or the user behind the wallet remains hidden so since people can have multiple wallets. It’s super easy trading. The NFTs can create an impression that it’s highly valued when it’s not. Yeah, this room. Ah, you know so much about NFTTs, honestly reminds me of a lot of the crap that ticket brokers would pull when I was in that industry, so you know you’d end up like, I mean, you’d have. Every person you knew under the sun with a Ticketmaster account and a credit card so you could ship tickets to their house, and the ticket limit of 8 was really more like 88 because you had 11 mailboxes to do it and then you know, and that’s the thing is it just wasn’t difficult to do that kind of stuff, and you know honestly–

26:17.56
Matt Watson
Um, yeah.

26:32.26
Matt DeCoursey
Ah, the funniest trick of getting around a ticket limit was just putting. Ah, so if you live at 1, 2, 3 main street just unit 1 unit 2 unit 3 unit 4 unit 5 to infinity because a lot of people live in apartments and they can’t like if you are in a huge skyscraper of a building. They can’t.

26:48.18
Matt Watson
Yeah.

26:50.46
Matt DeCoursey
The whole building of 10000 people to just one order. So I mean, a lot of this stuff was really gameable and really easy to pull off, you know, and it’s like it’s the same thing with, you know, in the ticket world if you had a venue like an artist that was way too big to play in a thousand-seat venue. They just decided that they were going to do a little show. It’s like the supply and the demand economic of it just really blew stuff up. So okay, how about tax evasion. So.

27:10.40
Matt Watson
Yeah.

27:17.77
Matt Watson
Um, dude, I mean that’s.

27:20.68
Matt DeCoursey
That this has been a big thing with crypto and NFTs in general because, like you were mentioning, oops, lost it is that a write-off.

27:26.57
Matt Watson
I don’t think you can lose. I don’t think you can write off if you lose money, right? Just like you’re like, oh, I had $10000 in cash, and somebody stole my purse. Can you write that off, but not if you lose it.

27:33.55
Matt DeCoursey
Sure, you can if it’s an investment.

27:43.11
Matt Watson
Not if you like it, just lost it. That’s different. I didn’t sell it for 0; I lost it. I don’t think you’re gonna write off a loss. I’m gonna start losing a lot of minds.

27:47.90
Matt DeCoursey
I Bet there’s a way I bet you can. I bet if you did, you could sell that doc to someone for a dollar and figure it out. You know, but.

28:00.51
Matt Watson
Well.

28:02.72
Matt DeCoursey
So many, many, many crypto holders over the years, and this has been a big thing. This is why the government, and you know this has been highly unregulated, so many crypto holders have taken advantage of the invisibility of NFTs to avoid paying taxes, and this is kind of a tricky thing. So this has become. And NFTTs exist only in the crypto world, and they’re not visible items by design. So in the real world, so it has a bit of a sidestep around some of the IRS stuff, so in the US, cryptocurrencies are taxed by the Irs as a capital asset but not currencies. So. Ah, such crypto owners are required to pay capital gains taxes if they sell their crypto for a profit or use it for purchase; those who are discovered to have attempted to hide their crypto earnings could potentially be in trouble with the Irs. So I mean, is that like you buy my NFTT as an investment. And you’re like, I don’t know like ah I mean how does that work in regards to like hiding it.

28:57.97
Matt Watson
So I think there are a few things there. So, for example, I want to create NFTs, and I create a collection of a thousand of them or whatever, and I want to sell them on OpenSea. Well, first thing I can do is create a brand new wallet. That’s never been used before. And I would probably need to send a little bit of money to it that would be for gas fees, but you could use something like tornado cash, and I could send money from one of my other wallets to that one, and tornado cash makes it, so it’s untraceable. So now I’ve got, you know, $500 in Ethereum or whatever I need for the gas fees then. I go list all the NFTs for sale on OpenSea, and then let’s say I, you know, make a hundred thousand dollars whatever selling my NFTs; there is nothing that tracks that wallet back to any other thing that is me the other mat so as long as I don’t use that wallet in some way and connect it to you know, biance or. Coinbase or something that has a KYC like knows your customer thing. I’ve got a hundred thousand dollars with money that I’ve made that cannot be tracked back to me that is tax-free, I guess until I try and spend it, or I’ve got to figure out how to launder it right.

30:04.66
Matt DeCoursey
Yeah, but if you’re transferring crypt, if you transfer crypto to crypto in the way that you just described and there’s not the know your customer angle of things, then it’s yeah, so you.

30:10.64
Matt Watson
And then there’s.

30:15.27
Matt Watson
Right now, another good example of this, historically, would have been mining crypto. So like, I have a friend that has tens of millions of dollars. Maybe more of bitcoin, and he got it all for mining. Well, if he mined it all, it just goes right to his wallet because he mined it over the last. Ten years but he’s never sold any of it, never transferred it to Coinbase, never transferred it to any exchange. I mean, he technically hasn’t made any money and the same thing. It’s all on an anonymous wallet like nobody knows who the hell knows what he has; nobody knows.

30:37.70
Matt DeCoursey
So you haven’t technically made any money. Yeah, you haven’t made any money.

30:47.23
Matt DeCoursey
Yeah, yeah, so until you how until that transaction occurs later now technically the moment according to what I just read that if he spends it or sells it that that marks a transaction. So like 1 of the things like.

30:52.58
Matt Watson
Right? And.

31:05.34
Matt DeCoursey
You know you hear people talk about their stock portfolio, and you know the stock market just took a huge shit yesterday. Um, and people are like, I lost to a million dollars out of my $10000000 net worth not unless you sold something at the bottom of it because you haven’t, you don’t make any; you don’t win or lose until you sell. So.

31:19.35
Matt Watson
Yeah, yeah.

31:23.69
Matt DeCoursey
You can buy something for a hundred bucks, and it can have a value of 50. You haven’t lost any money until you sold it. You just have a lower asset value or maybe net worth or something like that. That’s why I’m holding onto these ducks.

31:33.56
Matt Watson
Yep.

31:37.80
Matt Watson
Ah, yeah, see all of my wallets.

31:37.90
Matt DeCoursey
I owned a couple of these. I own like I own a couple of these ducks. I don’t understand how they’re ever going to be worth anything.

31:44.33
Matt Watson
See, all of my crypto wallets would be tied to the exchanges. So if I ever tried to do some kind of crap like that and claimed that I didn’t have the money or whatever because I’ve transferred money from my wallet to Coinbase and things like that, they could go back and see, okay.

31:58.87
Matt DeCoursey
Now you’re trackable. Yeah.

32:02.23
Matt Watson
You did this with Coinbase. We have your KYC. We know you did this transaction from here to that wallet address. Therefore we know that wallet address must be yours. Even though you claim it’s not, we know it has to be yours. So.

32:14.80
Matt DeCoursey
I have a hard time believing that the really smart people at the NSA haven’t figured all that out. Yeah, yeah, yeah, trust me, there’s Ai somewhere that if it hasn’t figured it out now, it will.

32:20.28
Matt Watson
There is software actually to help do all of this, and absolutely yes.

32:33.56
Matt DeCoursey
And so some of that now. Okay, so let’s talk about Oo dude you ready done dun du ah the dark web, the tor project, all right? So you know, always hear about the dark web. The dark web is a real thing. It’s not the standard normal internet people use.

32:33.80
Matt Watson
Yep.

32:44.28
Matt Watson
It’s a thing. Yeah.

32:52.76
Matt DeCoursey
Tor project or the onion router basically pings your IP location into so many locations that they can’t find the original source. That’s how they hide from this stuff, but the tor project is not, which by the way, was originally created by our government and military. Um, it’s a nonprofit organization that creates and deploys free and open source anonymity and privacy technologies for users who wish to keep their internet activities private from websites and advertisers. They sold an NFTT artwork for $2000000, so the artwork was created by Itzel yard. And it’s a piece of generative art of a private cryptographic key used to create the first tor onion service. So the artwork shows the code like there’s a lot of stuff in there. But you know, like I mean people are so one of the first things with crypto is like you remember the silk road.

33:42.46
Matt Watson
Um, yeah, oh yeah.

33:44.75
Matt DeCoursey
I mean, like a very robust online drug marketplace that and but and by the way, so they put that dude in Jail for life like he’s in like not only in Jail for life. He’s in like Solitary Jail for life.

33:49.87
Matt Watson
Yep.

33:58.40
Matt Watson
Who.

34:00.21
Matt DeCoursey
As like you know now, here’s the thing is, that dude’s locked up forever. But ah 10000000 of these other places are out there, and they use crypto and NFTs, all this kind of stuff to create untrackable transactions. So you know, like I mean there’s.

34:14.35
Matt Watson
Well, and speaking of that, so we talk about the traceability of the blockchain and crypto and all that, there are other blockchains that are untraceable like Monero and Zcash and some other ones that it’s untrackable, like if I sent you money. There being no way to know that that happened and track it and a lot of the silk road and stuff like that, I think they probably did take bitcoin and stuff, but they also took other crypto like Monero and all these that are privacy.

34:41.67
Matt DeCoursey
That totally took bitcoin now back then; that was still pretty early in the history of bitcoin. I mean, back when bitcoin was like a hundred bucks kind of early, and you know the thing was like a real mystery to people then, and now you said like a lot of this stuff’s advanced in the tracking.

34:51.82
Matt Watson
Um, yep.

35:00.78
Matt DeCoursey
Things ago now look This wasn’t on the list, but I want to talk so we talk about the dark side of– I Just want to talk about the general cash grab. Okay, so like I mean to me, this is part of the dark side. Well yeah, so now look, hey if you can get it, get it, buddy, you know, but at the same time like.

35:07.46
Matt Watson
Oh yeah, Snoop dog.

35:20.53
Matt DeCoursey
I don’t know, I think there were some people that were very well positioned and ahead of the game here, and you know. Okay, so if you’re launching your NFT art project today. That’s going to be a lot like the market’s gotten a lot more finicky. There’s, you know, it’s flooded. It’s fucking flooded, dude. Everyone has an NFTT; we almost launched an NFT. We’re going to actually like make an NFT. We talked about it. We even designed it, and I was like, you know what, this is just going to become a distraction because I didn’t want to put anything out there unless it had tangible something tangible that came with it. But there is a ton of stuff out there. It’s like, dude, I saw everybody launched an NFT. It would be easier to probably list the people than entities and organizations and things and brands that didn’t launch an NFT than it would be to mention the ones that did.

36:08.53
Matt Watson
There are so many brands out there that are trying to do this, by the way. So I just looked on OpenSea about snoopogs. We talked about that in previous episodes because he made like crazy millions of dollars; the average price of those on OpenSea looks like it’s down like 80% or 90%.

36:15.84
Matt DeCoursey
Me.

36:25.90
Matt DeCoursey
Yeah, yep, oh yeah, and dude, honestly, so did all the NFTs that I bought just messing around with the series, and I stopped that weeks ago.

36:26.98
Matt Watson
From where it was right around the super bowl, It would be crazy around the super bowl and that shit tanked hard.

36:41.69
Matt Watson
Thank you for taking one for the team.

36:43.60
Matt DeCoursey
Was like, I wanted to see what it was about, and I mean, I’m just fascinated with this kind of stuff in commerce and business in general I mean, it’s not like big, but I was curious. I mean, if I wanted to understand how it worked and you go do it. You know, so I meant it a couple. You know, I bought and sold a couple. We created a couple just to see what it was like, and you know, I mean, we really did learn a whole lot. I mean, I had a little bit if I– It would have been a lot more fun if I bought the bored ape before it like went up 8000%, so you know, so some of it. So I think what? What we’re seeing. So. I mean, once again, there’s no real governing body on this. There are some definite influencers like you even have, like Gary V, who’s been a very, very progressive and big player with NFTTs. Like I was watching a video of him. He’s like yeah, 95% of NFTTs are going to end up being worthless.

37:28.76
Matt Watson
Yes.

37:38.42
Matt Watson
Absolutely.

37:41.63
Matt DeCoursey
So I mean– The thing is, so if you are, so is it a dark side of something if you’re launching. Okay, so you’re launching something. Do you think Snoop Dogg cares that the value of those are down 80%

37:55.87
Matt Watson
Hell no, he doesn’t care, and I think that I mean, that’s what you were you mentioned a second ago, right is like there’s a giant cash grab for some of this, and snoop dog may honestly go down as like one of the biggest and best examples of that when it happened right? Like.

37:56.84
Matt DeCoursey
$44000000 would make me maybe not care.

38:05.38
Matt DeCoursey
Yeah, yeah.

38:13.48
Matt Watson
Massive Cash grab just writing the coattails. No, no, yes.

38:13.60
Matt DeCoursey
He didn’t make those people buy those, though. That’s my point like we operate in a free market economy, like you know you know we want to we often celebrate the winners or sometimes Chastise the winners now look here’s the thing is if you want to spec if you want to buy speculative stuff. Like then, I mean, if you’re going to walk into the gambling Parlor. You can’t be pissed if you lose and only be like, only be cool with it if you win. I mean, that’s the way the shit goes. It’s the same way. It’s like. Dude, when you went and bought baseball cards as a kid, you wanted that elusive rookie card, and when you got it, You’re like yeah, that’s the coolest shit I’ve ever had. Yeah, but most of the other cards in that were loser players that didn’t. That weren’t worse shit. So What are you going to do? Sometimes you get the rookie, the expensive rookie card, and sometimes you–

38:59.31
Matt Watson
Yep.

39:06.59
Matt DeCoursey
You’re happy with the piece of gum.

39:06.62
Matt Watson
I’ll tell you what I’m going to do every time Elon Musk tweets about Doche coin. I’m going to go buy more dogecoin.

39:13.63
Matt DeCoursey
Did what you need to you, and you’re gonna need to really follow him because I’ll give you an example when he did the bored ape post that shot the ape coin up by like 50%. Yeah, you know I was just.

39:29.20
Matt Watson
And yeah, it’s crazy.

39:32.70
Matt DeCoursey
This is going go back for those of you listening; go back and check out the episode last week with Ben Topkins, which was just a general which was a look inside the NFT industry, and you know the thing I’m interested about, so we talked a little bit, so you know board ape just did this other world. They sold the real estate.

39:49.28
Matt Watson
Yes, wait, wait. This is what I love about the metaverse is you have like Decentraland and Sandbox and all these and that like land in the metaverse is is so valuable.

39:52.39
Matt DeCoursey
And dude, they got five hundred million bucks out of that when it came to primary and secondary.

40:06.82
Matt Watson
Ah, no, there’s unlimited land in the metaverse. We have more land in Ape World now; like, is it stupid.

40:08.30
Matt DeCoursey
Yeah, yeah, well, that’s what I was talking to ask Ben about because we’re just talking about the inside of the industry, and I was like, what are all these metaverses going to do, and the interesting things going to be is his opinion was the and.

40:23.99
Matt Watson
Right.

40:24.20
Matt DeCoursey
Interoperability is like being able to go from Canada, the US, or going from other world to Sandbox or wherever now. It’s so funny because this is now the third time in my life that so when I was before the internet, it was like buying real estate. They’re not making any more of it, then they made the internet, and then there was just like all of it. And then people like, oh well, this is ah this is it now the metaverse is the next thing, and you know I don’t know all I know is that I’m going to have a fake ape carrying a fake meta Birkin bag with my unauthorized glitch Nike shoes. And I’m going to be rolling in the metaverse, and none of yall is going to know.

41:03.15
Matt Watson
To some degree think about I think about it, I guess like social networks, right? So you have Facebook and Twitter and Tiktok and Instagram and all that, right? And if you’ve got just the right Twitter handle or Instagram Handle, it’d be worth more money because it’s like it’s short. It’s cool. It’s, you know, whatever. And there are other social networks that exist, and New Social Networks get made all the time, and you can go buy that cool handle on those, but nobody cares. But if you’re on Twitter, if you’re at Elon Musk, that’s worth something, right? and to some degree, I think it’s sort of the same thing. It’s there. Eventually, we’ll come down to be like 3 or 4 of these metaverses that are the most popular, and all the rest of them are completely irrelevant. And yeah, if you have land or you have the right handle. You know that is cool. It makes sense. But.

41:45.25
Matt DeCoursey
Well, I’ve got a couple of comments about that, too. Now, before I do that. Before we wrap up this inquisitive and interesting, and informative episode on the dark side of NFTs, I want to give a big thank you to http://canva.com. You can work together from wherever, whenever. However, you can get on the same page as your team with seamless real-time collaboration. So what are you going to design today? Go ahead and send that over to us and share it with us to make a cool design. We’re still looking for fan art of Matt Watson. I still need someone to send that in, and by the way, if you’re the one that sends in the fan art of Matt Watson, you’re gonna have legendary status here on Startup Hustle. You know a couple of things, Matt, it’s kind of fun. So i.

42:18.23
Matt Watson
Yes.

42:31.54
Matt DeCoursey
Believe this episode will be outright around the time of our three Millionth download 3000000, man, and you know what’s crazy is it took four and a half years to get there, and now and thank you so much to those of you listening because now we’re on the pace to have a million every six months, so it’s pretty exciting.

42:34.70
Matt Watson
Holy Moly, that’s crazy.

42:48.20
Matt Watson
Thank you! I wish I could. I wish I could give all of them an NFT for listening.

42:50.36
Matt DeCoursey
Yeah, no doubt. Seriously, thank you. I’m going to airdrop all of our listeners a duck; pick what it’s a fucking duck, dude. So now, yeah.

43:01.19
Matt Watson
Oh good, I Yeah yeah, I know.

43:06.60
Matt DeCoursey
I had a couple of comments. You mentioned the metaverses stuff, and you know like people going in and getting some of that, so when the internet first came out, and you know there were people that were registering domains like I mean like tens of thousands of them, and I’m sure they did okay on a lot of them. You know if you look at some of.

43:15.37
Matt Watson
M.

43:23.41
Matt DeCoursey
The value of what those costs, you know like ah like a two-letter domain is ah that’s a hundred thousand dollars purchase at a minimum and some way, way, way, way, way more.

43:26.84
Matt Watson
And it was speculation. Um, yep.

43:37.94
Matt DeCoursey
You know, didn’t http://porn.com or something sell for like $10000000 a few years ago? I mean that that that costs someone $10 to register at some point so you know like there’s some people that are going to be big winners and then some of these metaverses you know, keep in mind these are things this is software and these are things that have to be.

43:41.74
Matt Watson
Um, yeah, no yeah, for sure I’m yep.

43:57.22
Matt DeCoursey
Built maintained. They have to run. They have to be an economy, and if they run out of cash. They are not going to exist. So I think that’s going to be the interesting thing. Yeah.

44:03.94
Matt Watson
Yeah, you will have invested money. Yeah, you will have invested money in Land fake land in a fake digital world that is no longer in existence.

44:12.90
Matt DeCoursey
You will have purchased a bridge to some beachfront property somewhere in Montana, right? Isn’t that how that goes on that beach beachfront property in Utah? Well, Matt, you know this, I bet you? Well.

44:22.43
Matt Watson
Yep, Pretty much who I’ll sell you some really cheap.

44:31.96
Matt DeCoursey
So I haven’t fully delved into the setlist of our next in the series, which just says legit or bullshit. So that sounds right up my alley. We’re almost to the end now. Um, I think we decided not to make an NFT, though.

44:47.31
Matt Watson
I think I’m just going to call bullshit.

44:51.83
Matt DeCoursey
You know what, we should. How dude, I just finally figured it out. We need to have a paper scissors Rock NFT, and that’s the thing, and it’ll pay you well, let startup, and for those of you listening.

44:59.20
Matt Watson
Ah, yes, there we go.

45:06.31
Matt DeCoursey
That hasn’t been around for a long time. I once beat Matt like 20 straight episodes at rock paper scissors like the mathematical the math on that was like something that could never be reproduced. Didn’t you send me a picture of a die the other day that like had scissors on it, and you’re like, this is how I’m going to play going forward some?

45:17.80
Matt Watson
Oh my goodness, I did; yeah, it was like a six-sided die.

45:26.29
Matt DeCoursey
Picturing I’m picturing myself throwing down rock and then you’re like hang on, and you like to roll this little dice, and then you’re like oh shit scissors and then do I smash the die. Okay, I’m into that. So.

45:36.93
Matt Watson
Um, yes, that’s how it works.

45:42.25
Matt DeCoursey
All right, I’m gonna get to work on figuring it out. What’s legit or bullshit? I’ll see you next week, Matt.

45:45.60
Matt Watson
All right, see you.

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