Ep. #864 - The Real Story on Non-Fungible Tokens
It’s the final episode of the NFT Series on Startup Hustle! Are you ready to hear what Matt DeCoursey and Matt Watson have to say? Listen to our hosts’ candid thoughts about the NFT industry. Discover the things they have learned through this 10-week series—perhaps it will steer you in the right NFT direction.
Covered In This Episode
Are you planning to invest in NFTs? Hold that thought! Matt and Matt have something to say before you buy a Bored Ape. Or any other non-fungible token out there.
The hosting duo has researched and talked about NFT for ten weeks. Startup Hustle’s NFT Series started back on April 1, 2022. And believe it or not, we didn’t intentionally kick this series off on April Fool’s Day!
Now that the end of the series has arrived, the Matts wrap things up by sharing their parting thoughts on the NFT industry as a whole. Here are the discussion points from this conversation:
- The NFT Market and Its Vulnerability to Manipulation
- NFT in Digital Art, Games, and Everything Else in the Metaverse
- Is There A Dark Side to NFT?
- The Hype Cycle of NFTs
- The Volatility of Cryptocurrency In Relation to NFTs
Want to follow Matt and Matt’s NFT series from the start? We got you covered. Here’s the series lineup:
- WFT Is An NFT?
- NFT Art
- NFTs in the Music Industry
- What Is The Earnft Network?
- NFT Games and the Play to Earn Economy
- Tracking Ownership of NFT Assets
- Inside the NFT Industry
- The Dark Side of NFTs
- NFTs, Legit or Bullsh*t?
- The Real Story on Non-fungible Tokens
- Backtrack the NFT series and everything that happened in between (02:37)
- NFT in games, buying land, and the metaverse (10:27)
- NFT, digital art, and their darker side (13:38)
- The story of Matt DeCoursey’s Bored Apes, gas fees, and other things NFT (16:32)
- Apecoin and the logjam in Ethereum (22:01)
- The problem with blockchain (23:54)
- The NFT market and its vulnerability to manipulation (28:55)
- Is NFT only a status symbol? (33:14)
- NFT and the hype cycle (40:11)
- Matt and Matt’s opinion on whether NFT is legit or not (01:43:25)
- Ethereum, Polygon, their architecture, and the possible effect on gas fees (01:47:44)
The whole thing with the digital art I don’t get is—okay, you claim that you own it. You claim you own the original, but so what? I can still put it on my computer. I can still print it out. I could still make a poster of it. Just because you claim that you own it, anybody can make copies of it.Matt Watson
Facebook, Instagram—all of it. All these things that display and show images are racing to figure out how they’re going to let people display their NFTs.Matt DeCoursey
With NFTs, I feel like it turned into a status symbol thing. People get a Bored Ape, and they put it on their Twitter. And you get people like Eminem and Madonna, and all these people that have bought Bored Ape. And they changed their avatars on social media. It was like a giant ego-stroking thing.Matt Watson
Don’t waste your money on the wrong investment. Gain more insights from Matt and Matt’s final episode of their NFT series now!
The final episode of Matt and Matt’s NFT series is brought to you by FullScale.io. We know how hard it is to look for software developers nowadays. But why waste your time and energy when Full Scale can help?
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Following is an auto-generated text transcript of this episode. Apologies for any errors!
Matt DeCoursey: And we’re back for another episode of Startup Hustle. Matt DeCoursey here, with Matt Watson. Hi, Matt.
Matt Watson: What’s up?
Matt DeCoursey: Well, I’m just here to tell the real story of NFTs with you. Do you think ten weeks of preparation, research, and conversations are enough?
Matt Watson: I am ready to talk about Fungigal Ape photos.
Matt DeCoursey: Fungi. That’s a type of a visit . . . is that the kind of visit you get in jail where they let someone else? Is that a fungigal visit? Was that conjugal?
Matt Watson: Non-fungible.
Matt Watson: I don’t know. Yeah, you’re right, conjugal. Yes, non-conjugal visit.
Matt DeCoursey: Asking for a friend here. Asking for a friend. Yeah, asking for that’s . . . what [are] non-conjugal tokens? Well, I don’t think that’s what we’re supposed to talk about today because my notes here say that we . . .
Matt Watson: That’s a lot of bullshit. That’s just as much bullshit as non-fungible tokens are.
Matt DeCoursey: Possibly, possibly. Well, we’ve had ten weeks of research to try to figure that out. If you haven’t caught this series from the beginning, it started on April 1, which was not an April Fools’ joke when we published an episode titled, WFT Is An NFT. One of my favorite titles of all time, but I think many people were asking that, man. WTF is an NFT? So we got into answering it. We followed up the following week by discussing NFT art.
Matt Watson: Yes.
Matt DeCoursey: One week later, NFT is in the music industry. And then, we had a special visit from NFL Hall of Famer Eddie George, who used NFTs to introduce a collection of content that had some . . . We like to tell the real story of entrepreneurship. He was telling the real story of what it’s like to be an NFL player. Looking forward to catching the rest of those. We talked about earning, you can earn, Matt, you can earn with NFTs. You can play to earn, you can move to earn. You can do a whole lot of stuff to earn. We talk about tracking NFT assets inside the NFT industry.
Matt Watson: Yes.
Matt DeCoursey: Dark side of NFTs, and then we just got to whether any of this is legitimate [or] bullshit. Now we’re going to wrap up that whole thing. What’s not bullshit is the fact that FullScale.io powers today’s episode of Startup Hustle.
Matt Watson: Bullshit.
Matt DeCoursey: Software developers are difficult [to find], and Full Scale can help you build a software team quickly and affordably. And has the platform to help you manage that team. Visit FullScale.io to learn more. Well, nine episodes later, we learned that non-fungible tokens, not non-conjugal, and it’s a mouthful, man. That’s a lot to say. If there’s a lot in a name, that’s not it. I would have to go back and say that maybe not well named.
Matt Watson: Non-fungi, fun, drinkable, fungible.
Matt Watson: There’s a reason they just call it an NFT. You know, my favorite, the other day, Elon Musk posted on Twitter like he always does. And it was a whole collage of Bored Ape.
Matt DeCoursey: Yeah, yeah.
Matt Watson: And NFTs, and he’s like, well, they seem pretty fungible to me.
Matt DeCoursey: Which made a point rise sharply, which, I think, is not a great sign for an asset. When one influencer can post a tweet and wildly change the value of something, the thing about that . . .
Matt Watson: Yeah.
Matt Watson: That is the world of crypto.
Matt DeCoursey: I know, that’s a weird thing, right? That’s kind of always gone on with crypto. Who was the one dude, the weird guy? McAfee, and he died. Yeah, yeah.
Matt Watson: Oh yeah, yeah. There’s been a bunch of people over time that have hyped this stuff up. And they had a way of moving the markets, right? They had to be doing a little manipulation and making some money from it. No doubt Elon Musk is like, “Okay, I’m going on. SNL tonight . . .”
Matt DeCoursey: Yeah.
Matt Watson: “I’m gonna buy some Dogecoin before I go on. I’m gonna pump this shit and I’m gonna have my people sell it for me now.”
Matt DeCoursey: That didn’t work out. Yeah, I was on the bad side of that one.
Matt Watson: I don’t feel bad.
Matt DeCoursey: Probably all things NFT, all things crypto. In fact, I’m thinking about starting a service where I’ll tweet out when I’m getting ready to buy something, so you can dump it.
Matt Watson: That’s pretty much been my whole experience with crypto. I’ve learned every way to lose money with crypto, pretty much.
Matt DeCoursey: Yeah, I have to think. Another thing is like maybe I’ll do my own NFT. And NFT holders will get that info, like a presale password code kind of thing. So, yeah, who knows.
Matt Watson: So, in general, I do believe the technology behind. NFTs have value and we will see value out of it in the future. But you know, I think, to date, it’s been used for games and buying land and the metaverse. We’ll talk more about that, I’m sure, during our episode today. It’s been used a lot in art but I don’t know if it’s found its true use case yet. Just like when smart contracts came out with Ethereum several years ago. [There] weren’t a lot of things in Ethereum that were really using smart contracts. And then NFTs came out, which is decentralized financing. So you could put your Bitcoin up and borrow dollars against your Bitcoin. And do all these different financial things, and he uses a lot of smart contracts. A lot like it’s this huge boom. So far with NFTs, we’ve mostly seen it as art, which has been kind of a gimmick, in my opinion. And not what we’ll see, maybe . . . in the future, more real-world use cases of the technology.
Matt DeCoursey: It was just a little over a year ago that the gold rush for NFTs really kind of began. And what we’ve always said about a gold rush is that the people that usually make money during the gold rush are the people that sell pickaxes and shovels. Then also, you’ve got some of the people that created the damn NFTs.
Matt Watson: Dude, the guys that created OpenSea are the ones that made all the money. That company supposedly is worth like one now.
Matt DeCoursey: It’s been pretty interesting because, as mentioned, we started this series on April 1. We started recording it a couple weeks before that, but we’ve kind of seen the thing take a sharp decline now. It’s kind of followed the market trend where crypto kind of did the same thing. But the gold rush for NFT really started in the spring of 2021 when people and artists sold every day. The first five thousand sold for $69,000,000. Not doll hairs, Matt, dollars. But if you had one doll hair, that would probably be worth a lot too, but not as much as $69,000,000. That started putting the spotlight on digital art now. With that you’ve seen, 50% of NFT sales are less than two hundred bucks. But $69,000,000 man for a JPEG.
Matt Watson: Yeah, it is crazy. The whole thing with the digital art I don’t get is—okay, you claim that you own it. You claim you own the original, but so what? I can still put it on my computer. I can still print it out. I could still make a poster of it. Just because you claim that you own it, anybody can make copies of it.
Matt DeCoursey: One of the things too. We kind of talked about this in the prior episode. There’s a lot of imposter stuff, and I bought some Grandpa Apes, which look a lot like a Bored Ape. In fact, I did not buy Bored Apes. I didn’t know they looked like them. But that’s not what they are. Here’s the thing, man, that people are asking me. They’re like, “Dude, how much should you pay for that Ape?” I’m like thirty bucks.
Matt Watson: Yep.
Matt Watson: And $75 in gas fees. Thank you, Ethereum.
Matt DeCoursey: And then $75 in gas fees to get it? Yeah, but I was shocked the other day because I was kind of rounding this out. I immersed myself in this whole NFT thing, so I’ve gone through a bit of a liquidation. Even at the end of this, because I had Ducks, Angry Pitbulls, Apes—it was a bloodbath, man. I can’t keep it.
Matt Watson: But did you have any Squiggly Lines? Those are my favorite.
Matt DeCoursey: No I didn’t. All that shit didn’t appreciate fast enough for me to leverage it into a doodle. I mean, what the fuck is that? I mean literally like a curved line, a curved red line, and they’re like, okay.
Matt Watson: I don’t know, man.
Matt Watson: A rainbow-covered colored line or whatever.
Matt DeCoursey: Okay, that’s going to be $8,000, please. Like for what? So, yes. Well, you talk about gas fees. In last week’s episode, that was the thing we said. We’re not legit but . . .
Matt Watson: I’m just gonna have my kids draw stuff from now on and sell it as NFTs.
Matt DeCoursey: I had a very small amount left in my digital wallet at OpenSea. And I was like, “You know what? I’m gonna buy one more Grandpa Ape.” I was so thrilled that the gas fee was only $9. I was like, whoa.
Matt Watson: The fees have come down.
Matt DeCoursey: I didn’t even think I had enough money for it because I was expecting the gas fees to blow up the whole transaction. So let’s talk about that. The thing that’s crazy for me is, I mean, people complain about buying. They’re like, “I bought a $30 ticket on Ticketmaster and there’s $27 worth of fees.” Hold my beer, man, said the NFT community. Because it’s crazy why exactly does it cost so much and this has come up too. This has been a big thing. So [Yuga Labs], which owns the Bored Ape brand, also acquired all of CryptoPunks along the way.
Matt Watson: Ah, yeah.
Matt DeCoursey: They launched Apecoin and they sold $500,000,000 worth of land in the metaverse. They created a huge logjam in the Ethereum network along the way. That caused them to give back thousands of dollars in refunds, but people were paying.
Matt Watson: Yes, yes.
Matt DeCoursey: Thousands of dollars in gas fees. So the question I have—does that mean that there’s someone, like some Ethereum miner somewhere, that had an amazing day because of that?
Matt Watson: Yeah, so if you’re mining Ethereum right now. Yeah, those gas fees go to the miners. And you know Ethereum is going to change to proof of work instead of proof of stake. So it is gonna change a little bit in the future. But, yeah, I think there was like a hundred million dollars in gas fees or some crazy shit. The day that they sold that metaverse land, it was just absurd, just the transaction fees were crazy.
Matt DeCoursey: So that was the day Ethereum miners were like, “I’ve been waiting for today.” Can you? What.
Matt Watson: This highlights the problem with blockchain stuff to begin with. Right now, [it] is not very scalable and does not . . . Think about how many transactions, like Visa and Mastercard, do in a minute? Like blockchain does. It’s got to be like one of those.
Matt DeCoursey: Yeah.
Matt Watson: It’s nowhere even remotely close. Because any kind of new game that comes out or any of this stuff, it always crashes whatever blockchain it comes out on. Like every time. This is not scale.
Matt DeCoursey: I think that’s the biggest limiting factor. [In] my experience, that’s the biggest deterrent of.
Matt Watson: Yeah, now it is.
Matt DeCoursey: You look at that. You’re trying to buy an overpriced JPEG for forty bucks and then it’s $97. Think about that.
Matt Watson: Yeah, now.
Matt DeCoursey: Let’s look at the logic of that statement. Let me explain this, Matt. Just tell me if this sounds legit or not. Matt, I was trying to buy a $47 JPEG earlier, and I’m so pissed because after all the fees and everything, it came out to be [nothing].
Matt Watson: Well, you know.
Matt DeCoursey: What’s the difference between that and going to Adobe Stock and buying the image for ¢99?
Matt Watson: It’s crazy. The good news is there are other blockchains that have much lower transaction fees. The NFT markets were starting to expand to those. Like on Salana, Polygon, Phantom, and all these other blockchains that have much lower fees. The fees are less than a dollar.
Matt DeCoursey: Yeah, yeah.
Matt Watson: For whatever reason, all the big money was still on Ethereum. I think that’s still pretty much the case today. If you want to launch an NFT series, and you want to make a lot of money selling it, that’s where all the Whales and the big money are. On Ethereum.
Matt DeCoursey: Let’s talk about Whales because that’s another thing that kind of tilted this market in an interesting direction. Something like 85% or you get back to this . . .
Matt Watson: Yeah.
Matt DeCoursey: This one kind of thing where 80% of the transactions are occurring from a very small number of buyers. Does that mean that, when doodles come out, they’re just people? The same people? Or do they just own a hundred of them?
Matt Watson: It’s pretty easy to control the market, right? The thing with NFT is . . . say there’s a collection of 10,000 of them. You might only have one owner altogether because people own multiple of them. Like you said, you own 11 Grandpa Apes or something and so . . .
Matt DeCoursey: Maybe 7
Matt Watson: In a market, it all comes down to how many buyers and sellers. If you’ve got several people that own a bunch of them [and] they have no interest in selling them. So there may not be much to sell anyways. Maybe there are 50 Bored Apes available that you could buy at any given time or whatever. If you just went and bought all of them up now, you control the market. You can relist them and double the price. I think there’s definitely some market-making going on in some of these lesser known NFT series. People are kind of controlling the price and inflating the price when they’re really not worth that. But because everything is anonymous and nobody knows who bought them, any of those people can kind of manipulate the pricing around.
Matt DeCoursey: Well, that’s not always the case though. Sometimes these purchases get tracked back to people, like in December of 2021, a CryptoPunk NFT sold for $532,000,000. It was a record sale in the art world. But then, it actually wasn’t. The reports later revealed a big issue with the transaction and the value of the NFT was actually pushed up by a single user who was the buyer and the seller . . .
Matt Watson: I wonder if . . .
Matt DeCoursey: I don’t understand the play there though. If you look at that, like okay, that’s going to have some massive transaction fees. None of you have to buy it from yourself, which also means you were [not] paying a fee.
Matt Watson: Yeah, yeah, which is crazy.
Matt Watson: Ouch.
Matt DeCoursey: So now, you just pay $12,000,000 to buy your own NFT. That smells stinky, man. Is that money laundering? Please explain the play to me there.
Matt Watson: Rich people problems, I don’t understand.
Matt DeCoursey: There’s something weird there, right?
Matt Watson: With NFTs, I feel like it turned into a status symbol thing. People get a Bored Ape and they put it on their Twitter. And you get people like Eminem and Madonna, and all these people that have bought Bored Ape. And they changed their avatars on social media. It was like a giant ego-stroking thing. Like a status symbol thing.
Matt DeCoursey: So I’m on my Twitter page, @decourseymatt, and I’ve got an Ape in there. What is it when it has six sides? Is that a hex? Which indicates on Twitter that you’ve used NFT. In that case, I do have to have the . . .
Matt Watson: Hexagon. Yeah, hex. Yeah.
Matt Watson: A legit non-fungible.
Matt DeCoursey: What do we call it? The non-fungible. You got to have . . . here, I’ll change it. But maybe I can change it in a moment and it’ll actually look at my wallet.
Matt Watson: Only the super cool people have hexagons.
Matt DeCoursey: Well, you don’t have to be that cool. Because you have to be a member of Twitter Blue, which is $2 a month now. That might not sound like a lot, but when there’s zero people on it, that’s a lot of dough for Twitter.
Matt Watson: Yeah.
Matt DeCoursey: Facebook, Instagram—all of it. All these things that display and show images are racing to figure out how they’re going to let people display their NFTs. In the meantime, people are just taking screenshots and posting them.
Matt Watson: Yeah, well, that’s the thing. If you could mint fake ones on OpenSea. Then create your own collection, and then just link that to your Twitter. I believe so.
Matt DeCoursey: Same result. As you mentioned, I clicked on OpenSea and I hit the explore button. One of the collections that is trending today . . .
Matt Watson: Oh, boy.
Matt DeCoursey: The Lost Apes. Everything is Apes. Apes are having a banner year. I feel like apes and monkeys went from being known from flinging poop at the zoo . . .
Matt Watson: Well, and.
Matt DeCoursey: To be what everyone wanted to be. Man, like they have their own coin. They’re getting their own metaverse. They can even be bored and people are down with it. So good for you, apes.
Matt Watson: We talked about this, one day. About why they were apes. Why apes? Why Bored Ape? You remember that? Most people who invest in something, especially if they kind of blindly invest in something, it’s kind of a slang term for saying “you ape into it.”
Matt DeCoursey: Yeah, yeah.
Matt Watson: I didn’t do a lot of research or whatever. But I’m stupid and I just “aped into it,” right. Until a lot of crypto people . . . that’s how they invest they just blindly invest in all sorts of dumb, shitty projects, and they ape into them, right? And so, I think, that was the play on the plan words; the joke of this [is that] they really were bored apes. As an investor, I’m an ape and I’m bored. I’m looking for the next thing to invest in. I think that was where all came from.
Matt DeCoursey: Well, I was gonna ape into giving you an ape. But then, I blew all my money on gas fees. So I have no way to get it over to you. Ah no.
Matt Watson: NFT in the art side has definitely gotten all the press and all the highlights. We’ve been talking about that, and I think over the last like twelve months or so, it was definitely a huge hype cycle. I would say it all came crashing down. Right around at the end of the Super Bowl, around March 1st, when Snoop Dogg released his thing and we can talk more about the music stuff. But, I think, that’s about that time that the whole thing came crashing down. Which, like you said, was about when we started recording these things.
Matt DeCoursey: Snoop got forty four million bucks after the Super Bowl, man. And that wasn’t difficult; much like it is not difficult to find expert software help when you go to FullScale.io. Where you can build a software team quickly and affordably. Use the Full Scale platform to define your technical needs and see what available developers, testers, and leaders are ready to join your team. Visit FullScale.io to learn more. You do not need an NFT to enter. No, no.
Matt Watson: Oh, this isn’t like a Gary Vee show.
Matt DeCoursey: Do you need NFTs to listen to his show? Yeah, VCon.
Matt Watson: To go to his in-person events. Yeah, you have to have an NFT to go to his event. It’s like an excuse to use NFTs. Like you don’t need NFTs for that, right? You could use Eventbrite or Ticketmaster or something, but no.
Matt DeCoursey: Yeah, I’m gonna go to a concert soon in the Full Scale suite. And I’m just gonna have the shit on my phone. Yeah, that’s what I should do.
Matt Watson: Can show him your Grandpa Ape.
Matt DeCoursey: I used to be a ticket broker . . . For years, I carried a Justin Bieber fan club card. I gotta tell you what, man, I used that shit. I’ve cut lines in it. I’ve gotten discounts with it. I mean, you walk up, there’s a line like . . .
Matt Watson: Yeah.
Matt DeCoursey: Wherever you’re at, and you walk right up, and you just flash the Bieber Fever card. Usually, the doorman laughs so hard that a 45-year old suburban dude came up with the Bieber Fever card. They let you in, and that would be fungible. Is it fungible if I can hold it? Yeah, didn’t I go to a Justin Bieber concert with you recently? Are you reading that on air? The wives wanted to see that one. I thought that shit was terrible.
Matt Watson: I think it means that you can like . . . it’s unique and you can’t duplicate it. Yeah, we did. Yes, I still have Bieber Fever.
Matt DeCoursey: People kept asking me now. I go to a lot of events. We’ve got a suite at the T-Mobile Center, and I gotta tell you what, man. I was not on . . . it’s not on my list.
Matt Watson: So.
Matt DeCoursey: What is on my list is one of the things that I thought was pretty cool. I like to play to earn things. I think that’s pretty neat, and I got a chance to sit down with Ben Tompkins who is one of the founders at Skatex.io.
Matt Watson: Yeah, yeah.
Matt DeCoursey: I liked what they did. They have a game that was a whole team of what they call Triple A. I guess Triple A game designers. So if you’ve worked for . . . see, when I hear Triple A, I think one notch below the big leagues.
Matt Watson: Yeah, yeah.
Matt DeCoursey: But yeah, that’s like Alea and sports. But I guess, if you’re a Triple A game designer, that’s a big deal. And they have a whole team. And they’ve made a Skateboard game. So their NFT is you buy your own unique skate deck and, I’m assuming, stuff that goes with it. And you can get in there and play. I thought that was pretty cool but I did ask him . . . what’s the real difference? I could have a Playstation 5. I can go down and play Tony Hawk right now. I don’t need an NFT for that. I guess, some of it is back to that unique thing. Matt, you and I could have the same skateboard and that could be upsetting for some people.
Matt Watson: That’s what’s crazy about some of those games—the entry cost to play. The game is super high. Like you spend hundreds of dollars to buy an Axie Infinity, ax, or a skateboard. Or you can buy shoes or whatever and then . . .
Matt DeCoursey: We kind of do that with a playstation too, though. Man, I think, I paid like sixty-seventy bucks for that game. Yeah, more.
Matt Watson: True. And $300 for the console on top of it, right? That makes sense but it’s just crazy to me that you spend hundreds of dollars to basically play the game now. It’s interesting [that] as you play the game, potentially, you create new characters. And you can sell that to somebody else, or you get kind of digital. You know, gold, gems, or whatever the kind of currency is within the game. And then, you potentially sell those to other people that need that thing to do whatever you do in the game. So there’s people that make money doing it. We talked about this because there’s seemingly millions of dollars. And people, like in the Philippines, that play Axie Infinity because they can make a few dollars a day. Which is a lot to them in these countries, and there’s people that make a lot of money doing it.
Matt DeCoursey: Including the people that steal Axie Infinity because that happened along the way, too. Someone jacked all the Axes, man. Did anything ever come of that?
Matt Watson: Well, you talk about the hack for $600,000,000. I haven’t heard much about it. I think that was from their exchange. They use it for people that like to have money and digital stuff in the game that want to transfer it outside of the game. So it goes through a crypto exchange and they . . .
Matt DeCoursey: I know, I read an article that said they got a little bit of funding to help restore that. They basically raised a huge round to just restore people’s cash. That’s one of the things that . . .
Matt Watson: It’s crazy.
Matt DeCoursey: You need to look out for that 10 episodes later. I can’t say, “Hey, dude, you should really buy NFTs.” I can’t say that. I’m sorry, I can’t. Not with a clear conscience, man. I just can’t. I really can’t.
Matt Watson: On the game side, I can see [that] you play the game and get a special sword or whatever. You consult somebody else and as somebody who has played games like that before, I have bought those swords from other people. Now, I did it without the blockchain. The blockchain may make it easier. These games become marketplaces that make it easier for those transactions to happen and incentivize people to play, to make or find the swords, and sell them. That’s how they make money doing it. I get [that] it creates this marketplace, which is cool. But then, they’re all sort of Ponzi schemes because there’s got to be somebody else coming in [and] buying the sword that you just earned, right? You got all these people that play the game every day because we’re trying to make these swords. But somebody else has got to come buy that sword. Whatever the thing is, it’s a little bit of a Ponzi scheme. Eventually, you’re gonna have . . .
Matt DeCoursey: Yeah.
Matt Watson: All these people that paid $600 for their skateboards you’re talking about. And then nobody wants to buy them anymore, and they’ll just be left holding.
Matt DeCoursey: Yeah, I think that’s the main thing. So much of this stuff is popular until it’s not. That’s the main issue I’ve got here.
Matt Watson: Yeah.
Matt DeCoursey: Questionable sustainability. For example, look at a Bored Ape. That’s a trend. That’s a thing, right? So do you remember Von Dutch, the fashion brand? Paris Hilton had all this stuff. I just watched a huge . . .
Matt Watson: No.
Matt DeCoursey: A three-part documentary about that. [It] was a very interesting story, but you know it was a huge fashion brand. All the stuff was really high priced and then, one day, it wasn’t. That’s the way that you use the term “hype cycles.”
Matt Watson: Yeah.
Matt DeCoursey: That’s exactly what you find in fashion. Your kids will probably be able to do a better job of explaining that to you on some days than other people. Like one thing is cool and then it’s not. And when it’s not, some of this stuff . . . I guarantee you, there’s a lot of NFTs out there. A lot of NFT holders are like, “Wow this is really illiquid all of a sudden.”
Matt Watson: You [would] think that the value of things will perpetually just go up, right? But a lot of all this NFT stuff, no, it’s just gonna go down. I believe you got on the hype side and then, eventually, nobody will want to buy this stuff anymore. It’ll be like our old baseball cards when we’re a kid and nobody wants to buy those anymore.
Matt DeCoursey: So let me see how much the cheapest Bored Ape right now is. But let’s talk about that for a second because another thing that controls that value is you could say . . . So that’s 89 Ethereum now; 89 Ethereum is worth half as much as it was six months ago. That is a whole other thing. We learned that, years ago, first, trading a little crypto here and there. And Bitcoin was kind of the “gold standard.”
Matt Watson: Yep, yep.
Matt DeCoursey: So you could have . . . If Bitcoin went down twenty, it just drags everything else with it. Because that was the central token that people were often traded in and out. You saw other things come out like these so-called Stable Coins. How is that going for Terra right now?
Matt Watson: Whoa, yeah, Luna, Terra. Yeah, that’s a whole other [thing]. That’s like billions of dollars. Yep, I got hit with that one.
Matt DeCoursey: That wiped away literally billions of dollars in assets in days and days. So the thing that’s challenging with that is could you really trust again.
Matt Watson: Nope, I’m out on any kind of algorithmic . . . That’s another word. It’s hard to say stable coins and stuff in crypto. No way.
Matt DeCoursey: One of the things we probably learned is that there are a lot of unpronounceable things here. I asked Eddie George to say “non-fungible tokens” five times in a row really fast, and he did it. He did it.
Matt Watson: Non-fungible tokens. Non-fungible tokens. Non-fungible tokens.
Matt DeCoursey: So that was 3 but he did 5. He nailed it. Did you know that he’s also been a Broadway performer? Yeah, how many people have scored [nine] touchdowns or more in the NFL? Or in the NFL Hall of Fame and also start on Broadway?
Matt Watson: What? No.
Matt DeCoursey: And can say non-fungible tokens five times in a row really fast. That might be one of his greatest accomplishments. I want you guys listening at home to try it. It’s not as easy as it sounds, all right? So as we move forward in the series, we kind of get into . . . there’s there’s the earn. Stuff that was interesting, and then we kind of got into the shady side. I think that the whole collectibles industry has always been a little shady. So is art. I mean, art houses, it can and has been . . . You know, there are well-known painters that use ghost painters. There’s fake [and], at one point, back in the early 90s, when Mark Maguire and Sammy Sosa were going for their home runs. Their records later came out, and said the mob and New York City had rooms of forgery experts just sitting there signing baseballs all day.
Matt Watson: I believe it. Yep.
Matt DeCoursey: Now, part of what an NFT does is an attempt to kind of authenticate stuff. Because you could buy that baseball, or you are like, “Hey, I’m gonna buy for my kid [a] Mark Mcguire. It’s awesome. It’s $100 and here’s your certificate of authenticity.”
Matt Watson: Yes, yep.
Matt DeCoursey: Which I could have also just printed out on my computer. Now that an NFT is intended to do that but still that didn’t stop it . . .I mean, a fake Banksy NFT titled, The Great Redistribution of the Climate Change Disaster.
Matt Watson: Yes, absolutely.
Matt DeCoursey: And sold for 300 grand.
Matt Watson: I think we talked about this. It was like 80% or more of all NFTs on sites like OpenSea were either scams, copies, [or] duplicates. People take Bored Apes and they just reupload them, and claim they are theirs. And they are trying to sell like fake NFTs, right?
Matt DeCoursey: Are bullshit.
Matt Watson: That’s like a huge percentage of it.
Matt DeCoursey: I was gonna buy this Bored Ape number one. But I spent all my money on gas fees, so I don’t have the one I need.
Matt Watson: Is that because of the price of actual gasoline right now? Because it’s also really high.
Matt DeCoursey: Are the gas fees though . . . I’m curious what the gas fees are. Are they the same on the 54000? I clicked on this.
Matt Watson: It would be the same. It doesn’t matter what the NFT is.
Matt DeCoursey: OpenSea literally says you need 89 more Ethereum plus gas fees to buy this. So I can’t . . . they are not even going to tell me what the gas fees are. But are those scalable with the size of the purchase?
Matt Watson: So the gas fees are based on the code that needs to run. We talked earlier about smart contracts and Ethereum. Those are more an estimate; more like how many lines of code have to run, and how long it takes to run those lines of code. It’s not really like a percentage of the transaction price kind of thing. It’s more about the processing power it takes to execute the code.
Matt DeCoursey: So Ethereum’s monolithic and Polygon is a microservice?
Matt Watson: I don’t know if that’s the right analogy, but it is just cheaper. It’s cheaper. Yeah, it’s just cheaper.
Matt DeCoursey: It feels close. We’re talking about that. But you talk about monolithic architecture, which is just massive blocks of code that don’t really run efficiently. They’re not repaired efficiently, and microservices are broken up into little tiny things. Why is something like Polygon so much cheaper? Because you’re getting ripped off with Ethereum. I got to be honest, like you just do.
Matt Watson: Ethereum is the oldest and has been around . . . it’s considered the safest and most secure because it’s very decentralized. It would be very hard for somebody to overtake the network and do things to it. That’s why people use it so much.
Matt DeCoursey: That’s essentially what happened with Terra though. Someone decided to take out a massive amount of money and it fucked the algorithm. The algorithm went haywire and then they had a weird cap.
Matt Watson: They shorted it.
Matt DeCoursey: On it. So like if Terra coin went below a dollar, it immediately started generating Luna coins, which were attempting to balance it out. But they had a hard cap on it, so it couldn’t even keep up with it. The next thing you know, once that thing got wildly out of place, it didn’t print.
Matt Watson: Yep.
Matt DeCoursey: Then they removed that cap and it was made one of Luna coins.
Matt Watson: Oh yeah, it got to the point where it’s like one of them. One, or an hour, or whatever. Yeah, and it went crazy. Now, there’s a trolly and there’s a lot. It’s worth like .000000 cent or something.
Matt DeCoursey: I don’t know how you trust it. I think it came up to a nickel, which I was saying to you, why that was occurring. Once that dropped and sat at ¢90 on the dollar even just for an afternoon, you lose your faith in it. So that’s the same thing, I think; it’s going to happen with a lot of this stuff. Once the hype cycle ends, or once something weird or goofy happens, then a lot of these people are going to try to go back to the well. Again and again and again and again. So I don’t know how reliable that is. One thing I do know [about being] reliable is if you need to hire software engineers, testers, and leaders, Full Scale can help. We have the people, the platform . . .
Matt Watson: There is going to be a Luna version 2. They have already agreed and announced it.
Matt DeCoursey: And the process to help you build and manage a team of experts. When you visit FullScale.io, you just have to answer a few questions. Then let our platform match you up with a fully batted, highly experienced team of software engineers, testers, and leaders in Full Scale. We specialize in building long-term teams that work only for you. [Visit] FullScale.io to learn more. I talk to Startup Hustle listeners a lot through Full Scale. They could come over to Full Scale. I’ve talked to people from all over the world doing all different kinds of things. So, at a minimum, we try to give you some good advice.
Matt Watson: I love talking to startups and entrepreneurs about what they’re doing. So always feel free to reach out.
Matt DeCoursey: I’m always excited if I can give someone advice, especially if it’s the kind of advice that prevents them from falling down the money pit. Yeah.
Matt Watson: I had that conversation with Sam the other day. It’s like, “I’ve been listening to your podcast forever. And you guys told me this was a bad idea and not . . . you finally figured it out. It did it anyway.”
Matt DeCoursey: And they did it anyway. Sometimes you have to touch the fire to learn that it hurts. I think that’s what a lot, and on that note, of people learned with NFTs. Some of these have worked out. The thing that I realized is that the people that are actually making money on this stuff are the people that are chasing down. They are joining all the Discords. They are getting the white listed fermenting things. And they are basically flipping them when they come out.
Matt Watson: Yes.
Matt DeCoursey: That seems to me like the only spot that . . . One of the things with event tickets is you know ticket brokers want you to go to your computer at 10 a.m. [on] the day that tickets go on sale. They want you to find a sold out house and they want you to panic. And rush to go buy something because you’re worried that it’s going to be gone. I will tell you right now; you can always find a ticket. You can always find a ticket. You can always find a ticket, and that’s the same thing I found with NFTs. It really felt the same because you know ticket brokers, I mean, why did I have Justin Bieber fan club cards?
Matt Watson: That’s very similar.
Matt DeCoursey: Because I joined the Justin Bieber fan club, like frickin 75 times to get codes. I got in early and then I sold it. I sold those tickets for a very large premium to people that hadn’t.
Matt Watson: You wanted to get in early.
Matt DeCoursey: Weren’t paying attention. Basically, people would sometimes call [and] they are like, “Why am I paying $300 for this ticket? [It] says $99 and ¢50.” I said, “You paid me to wake up and buy that for you three months ago.” Honestly, most people, you would say that to him, and they would be like, “Oh, okay.”
Matt Watson: I’ve been there.
Matt Watson: My wife did that one.
Matt DeCoursey: It makes sense.
Matt Watson: Yep, my wife did that one. She couldn’t get tickets, so she went on Stubhub or something, and spent like $2,000 for these front-road tickets. I’m like, “You did what?” Yeah.
Matt DeCoursey: Yeah, did you go to the show? Did you even get to go? It was for Tim McGraw. You’re the only person in the history of Tim McGraw that paid $2,000 to see Tim McGraw
Matt Watson: Yep, it was to Tim McGraw girl.
Matt Watson: You do what your wife wants to do. That was my ex-wife.
Matt DeCoursey: And women kind of like him. Maybe he’s popular. I’m more into Tim McGraw’s wife than I am [with] Tim McGraw. He’s married to Faith Hill, right? I might pay 2 grand to see her.
Matt Watson: Ah, yeah. What do you think about the metaverse side of this?
Matt DeCoursey: Oh, dude, I don’t get it. It feels to me like the same thing that I see with my kids playing Roblox. Like why? I don’t need an NFT. I don’t need to buy land there. I get some of it, but I just think a lot of it’s bound to just.
Matt DeCoursey: Dog shit. Can there really be one? Are there really going to be 500 highly sophisticated, highly trafficked Metaverses?
Matt Watson: There’s never going to be more land. Land is a valuable asset, not in the metaverse.
Matt DeCoursey: Dude, they said that twenty-five years ago, it was well-known, like buying land. They are not making any more of it. Then they built the internet, and then there was every dot-com and everything else. That was the next land rush. Now, this is when that saying is applied to something, and there will be a fourth. I don’t know what.
Matt Watson: If you’ve ever played Minecraft, there’s an unlimited amount of land.
Matt DeCoursey: Well, right? That’s the thing, though. It’s like we’re not working with finite substance here.
Matt Watson: No, there is Ape world land now. Did you get some Ape world land there? There’s an unlimited amount of metaverses, people. It’s a stupid investment.
Matt DeCoursey: No, man. I’m just trying to exist on the very small, posted stamp of earth that my house exists on. And it’s not in the metaverse.
Matt Watson: And not in the metaverse. No.
Matt DeCoursey: And well, that’s it. We’re done with an NFT series. I hope you enjoyed it. And like I said, if you want to go back to the very one episode, April 1, we covered a lot of stuff. Be careful, people. There’s a lot of weird shit going on out there. See you down the road, Matt.
Matt Watson: See you. Thanks.