Are NFTs the next big thing or simply a gimmick? In this episode, Roy aka @Zeneca_33 explains how they work.
Philipp: Welcome to another episode of In Your Best Interest, Your Personal Finance podcast. I'm your host, Philipp Muedder, and today we will be chatting with Roy. He also goes by his twitter handle, @Zeneca_33. Roy was a professional poker player for 15 years 9 (02:00) before becoming an NFT expert. He currently runs his own NFT newsletter, podcast, Discord server, and an NFT consulting business with more than 80,000 followers. Hello, Roy. Welcome to the show.
Roy: Hi, welcome. Thank you for having me. Hey, I'm used to doing my own podcast.
Philipp: I know, I know. So I'm excited to chat. I think you're the first person that has their own podcast, that's on our podcast. And obviously the topic of NFTs has come up, you know, among not only Stashaway clients, but obviously podcast listeners. We talked a year and a half ago with the CEO of Crypto.com. We talked about crypto in general from an investment standpoint. So obviously NFTs had a rapid rise, probably since, you know, late 2020 again until now and still going. But before we do that and go deeper into the NFT space, we always have a few questions for our guests so that our listeners can actually get to know our guests a little bit better. You've been a professional poker player for 15 years and then you got into the NFT space. how did you make that a full-time job and how did that all come about?
Roy: Yeah. So I'm born and raised in Australia due to my schooling there and all of that and sort of similar to what you were just saying. I was in high school and hanging out with friends, and we saw, I think it was like the early 2000s, 2004, 2005. Poker was sort of booming. It was on TV everywhere and everyone was talking about it. Texas Hold'em was all the rage. So we were out playing video games one day and then in a break we said, Oh, turn the TV on, and there was this poker game on.
And most of us had no idea of the rules of poker, but there was one of our friends there and he was telling us how to play it. And we're like, Oh, that sounds fun and exciting. Let's play, play, play.
And so, yeah, it just started out with me playing with some friends as I think most professionals start that way. And I guess more than anyone else, I was really fascinated by the game, the strategy, the tactics, the math, all of it, really the excitement, the psychology.
So I was just in my last year of high school, I think I was 17. I was just reading everything I could online. I ordered books off the internet and read all the poker books I could. And I mean, I was still underage. I was 17. I couldn't play for real money online, but I could play free rolls.
Roy: So where you sign an account for free, you don't have to pay to enter, but they let you play. So I was playing those and grinding and waited until I was 18.
And yeah, I graduated high school. I went to university. I was studying commerce law, but I was already pretty decently into poker at that point and like it was taking over my life, so was not at all caring about my classes or anything.
When I went there, I would have my laptop and play online poker instead of listening to the lectures and things. And it just got like back then. It was quite easy to, I guess, relatively easy to make money at poker. And I saw this opportunity to pursue that sort of, it wasn't necessarily a career at that point.
It was just like, let me take some time away from university and focus on poker. See where it goes. I had the opportunity to travel (04:00)because of it, because I could just play online with my laptop, and it just sort of evolved from there.
Like 15 years later, I was still playing poker. I had to obviously evolve and change my game and keep up with things. But yeah, that's how I got into poker. And I mean, we could go into actual poker history. There's a lot there, but we don't need to get into the weeds of that.
Philipp:So when you start playing poker, you start making money, you become a trained professional. How did that change? You know, like obviously you went to university, you know? You get a job, maybe your parents teach you about money, hey, you need to save a little bit. Maybe you need to start investing.
I think we talked about you're from Australia originally, so maybe you put money to superannuation, right? The usual kind of thing to set you up for your personal finances.
So how did that change then for you when you know, becoming a professional poker player and having these obviously not, you know, monthly every time the same income, right? And then having maybe also large chunks of income at a very young age. So how did you think about investing at that point?
Roy: Yeah, it was very non-traditional, obviously. I wouldn't say difficult, but there was no easy path to learn and understand what to do. Like, if you have a normal job, you have your superannuation, you know, you get a monthly salary and it's all consistent.
Whereas with poker, it was very, like you said, you get a large amount in one go. You go a month or two where you're actually losing money. And so I had to sort of learn very quickly how to manage my bankroll if I had big wins, to like put some away to save it for real life, to save it for my bankroll in case things got worse down the line.
But also like being a professional poker player, you need to sort of have, I call it like a healthy disassociation with money where you - because you're playing with real money, when you're playing poker, your chips, they're effectively money. Your money is a tool. (06:00) And so if you're too attached to it, if you think every time you're betting, you're betting like rent money or or this could be a holiday or a car or something, then you'll never be able to, like, really make the correct decisions because your emotions are involved too much.
But similarly, if you don't care at all about the money, then when you withdraw it to real life, you start spending it here and there. You're like, Oh, this is just one pot I could just call. And it's like, it's very difficult for a lot of people, myself included, to find that sort of middle ground where, you know you're not wasting money in real life, but you're not too attached to it in poker or investing.
And I certainly wasted a lot of money, like I was earning tons and tons because I was fortunately successful at poker. But I would just spend it like as soon as it came in and I basically thought, Hey, poker is great, I'll always be able to make money at poker. And that was kind of true.
But if I was smart with the money and invested it obviously with compound interest and all that stuff. Like, I knew this at the time. I was like, I could be doing this, but it was just so much easier and more fun to like, Hey, let's go travel let's go to a nice restaurant, party, club, whatever and and spend it,
Philipp: You're still young at that age too, right? So like, you know it?
Roy: Yeah, yeah.
Philipp: Yeah, it comes a lot more, a lot faster than in a traditional job where like, you slowly grow with the money you probably have and you need to be a little bit more careful about the spending habits. I think it sounds like there's a really good opportunity for someone to go into that poker space in financial planning. Thanks for explaining that because I thought, you know, like, that's a very - it's very unique compared to like most of the people we interviewed so far, you know, that went into the finance space or FIRE, especially where they save as much as they can in order to then not work again, right?
You were always in the mindset that, you know, you can always create that income stream through poker, which is really unique as well, right? And I think it shows people that you should have multiple income streams.
Well, Roy, then let's switch gears then. So you grew up in Australia, you became a professional poker player. (08:00) Now, COVID hits, it's probably not too big of an issue. If you're a professional poker player, is it? Since most of it, I assume, is online still? Is that correct?
Roy: Yes. So there was sort of a period in 2016, 2017 where online poker in Australia got banned or like legislation came out that you couldn't play. And then around 20, I think it was 2019. My partner and I moved to Germany. So that's where I am now. And that's where we were when COVID hit and when I moved here, I started playing online again. But sort of in that middle gap, I was playing in person, not online, but yeah, COVID hit and I was already playing online poker.
And actually it was fantastic because all of a sudden there were billions of people around the world who couldn't go outside. They were stuck at home looking for entertainment. They were going online, they were playing poker, and by and large they were sort of not very good players or recreational players. And the poker games were good then. And, you know, it was sort of business as usual for me. Like, I already worked from home. I spent a lot of time at home. It didn't hinder me as much as most people having to deal with COVID, I guess.
Philipp: And then like in the newest, most of our listeners will know it's when also the, you know, kind of the trading mania happened last year in the US, right? I think the same thing you were just referring to, actually, people needed something to do.
And so, especially in the US. And, you know, different parts of the world, you know, through apps like Robinhood and, you know, trading apps in general became super popular, right?
People got stimulus checks. Hey, might as well, you know? I don't really need that money, but maybe we can play. I see my friends, you know, playing around with it, access got much better. And I think that's what you could also see in the crypto space last year, right? So also after the March crash, I think after that, people realised, you know, there's opportunity here.
It's much easier now in this cycle to get access to crypto, which I feel like, you know, I think the first time I bought anything was probably like 15, 16 or something. (10:00) So it was super difficult. And it was something that helped me back for a long time. It was just the whole KYC issue.
It was like, Oh, you have to show this, it never gets approved. So there was always a big issue for me to get into crypto, but then it got a little bit easier. And especially last year, I saw a lot more friends getting into all from Germany, from the US, in Singapore as well.
But the new space - we talked about Crypto this before here, but this new space of NFT or what's called non-fungible tokens, right? I'm definitely not an expert. That's why we have you on. So maybe we take the listeners back a little bit, right? So maybe they don't know anything about NFTs. They heard the name. It's a buzz word. It's some kind of art digitally. But can you maybe explain to us a little bit more the history of NFTs and kind of where this space even came from?
Roy: Yeah, so let me start at the beginning, I'll explain what an NFT is. And so NFT stands for non-fungible token and essentially fungible means the same. So you can consider Bitcoin to be fungible. Whereas if I have a Bitcoin and you have a Bitcoin and we swap them, nothing has really changed. We just have one Bitcoin each still. And, you know, same with Ethereum, US Dollars - these are fungible tokens.
Non-fungible adds this element of uniqueness to them. So if I have a painting and you have a painting, they're both paintings. Yes, but very likely they’re different paintings and the unique and by different artists. And so we can trade them. But then we're trading different assets. And so that's sort of what a non-fungible token is.
It's just. A token, so it could be anything. It doesn't have to be art, it doesn't have to be a collectible or money, it can be anything unique, basically. And yeah, so that's what they are. And there have been many use cases.
So if we go back to sort of the beginning, the history of them, I think they started - I'm not entirely sure whether, like the people that (12:00) have been researching and digging into like the the blockchain history back to like 2015, 2016 to find out what was technically the first, but around 2016 is when most people would say NFT started and there was this project called Rare Pepes, and it was sort of this art meme project. And that's sort of not what most people remember, but that was the first.
And then around 2017, we had CryptoPunks, and now that may be what more people are familiar with. They were a collection of 10,000 generated like 8-bit pixelated images or like these little punk faces, basically.
And they were all basically, they were free to claim if you wanted one, you connected your Ethereum address to this website and you said, Hey, I want one of these. And so the website would say, OK, we will send you this token. So in your wallet, you'd have your ERC-20 token, which is Ethereum or other things.
And then you have this other token, a CryptoPunk, and you could view it in a wallet or on a website and you had ownership of it so that you had this. Just like you have ownership of your Bitcoin or Ethereum, you now have ownership of this non-fungible token.
And yeah, I mean, at the time, no one really thought too much about them. I mean, these were free to claim back then. Some people did. Eventually, they all got claimed and people sort of just moved on. It was like, Oh, that's a fun novel use case of these non-fungible tokens, but it's nothing like we're seeing today. It's not going to change the world, it's not causing this mania.
And then I think later in 2017, we had a project called CryptoKitties come out, which was basically like people decided, hey, we're going to create these JPEGs, these pictures of cats and make them tokens, but we're going to encode into them sort of like a DNA, this trait so then you can take one of your your tokens and sort of breed (14:00) with another one and create a whole new one.
And people are starting to interact with these tokens in interesting new ways. But again, there was not really any value there. People weren't like there was a bit of hype and mania at the time, but it sort of came and went and then, yeah, it didn't really take off again like we have now.
And I guess 2017, the bear market hit and people sort of forgot about NFTs for the most part, even crypto for the most part for like, 2018 to 2020, it was ICOs
Philipp: And everything kind of like, peaked then, right?
Roy: Yeah. Came crashing down. A lot of people left. They were not interested in crypto anymore. Definitely not interested in NFTs. But, you know, during the bear market, they say that's when people build and like the developers and the project creators.
And, you know, they were building lots of crypto like coin projects, but people are working on NFT projects as well and trying to think of how they can integrate these in in the real world in a way that creates value and has use cases more than just, you know, like art or an image or or a token idea. And yeah, people were building and building. And then towards the end of 2020 and 2021, I guess it just exploded. I don't know what lit the spark, but people started talking more and more about them. And yeah, the last year has just been a wild, wild run for, for all things NFTs.
Philipp: Yeah, super wild. And I want to get into some of the, you know, big projects to that, kind of like, you know, brought even more attention to the space, I think, just from the people running them. But before we do that, so that's the NFT, and that's the history of NFTs.
So thank you for explaining that because I think now we have a really good base of taking it to the next level and which is, hey, how did, first of all, you get into crypto and then how did you get into NFT? Did you do crypto before NFT? Do you already dabble with it back in the days or did you straight go into the NFT space because that was more interesting to you?
Roy: So I got into crypto mainly around 2016, 2017. (16:00) I think with a lot of people that first big bull cycle where there was a lot of media attention and even in the poker space, a lot of poker players were talking about Ethereum and all these other altcoins coming out. And yeah, I started investing and I was really super fascinated by Ethereum, and I was reading about smart contracts and you know what you can do and like DApps, decentralised apps and all these cool things.
But like, I wasn't sophisticated enough to really see the use cases. I couldn't see DeFi, I couldn't see NFT. I was like, Hey, these are cool concepts. I like Ethereum, let's buy some - and then the price went up and I was like, yay, Ethereum is great. And then. You know, I was investing in some other coins and then the bear market hit, prices came crashing down and I just sort of forgot about it, went back to poker and didn't really do much to do with crypto for, you know, 3 years until early 2020, which, you know, when the market was picking up again, I still had these coins and I was seeing that the value was going up and I was like, oh, ok, well, something must be happening, and let's check in with the crypto market, see what's going on.
And I think it was really around February, March. I had some poker friends who had never really left the crypto space. You know, they were there the last few years. And, you know, keeping up to date with all the cool things happening. DeFi Summer and they were part of that and all these kinds of things. And they started telling me about NFTs. And to me, that was showing me these pictures of these NFTs they were buying and saying, Hey, this one's $12,000 and all this was like, these guys are getting scammed. This is a Ponzi scheme. This is a scam. This is a cult multilevel-market. It's something like, I didn't get it. I was like, I genuinely thought they were getting scammed.
And like, you know, I told them that and I tried to, like, show some concern. But obviously, you know, they make their own decisions and they didn't bother me with it too much and I didn't bother them with too much. But eventually I basically said, hey, you know, (18:00) I know that they're very smart people. If they're into this and they've probably done the research, I should probably look into it a little bit more. And so I read some articles. Yeah, around February, March, which kind of opened my eyes. They explained the technology behind NFTs and sort of the fundamental aspect of it, which to me is that we now have a way to have true digital ownership of like digital assets.
Roy: So up until now, you couldn't own. Like we spent so much of our life on the internet and online these days, but you couldn't own anything that you have on your like a JPEG, a, you know, if you're playing a video game and you buy an asset and you gain a microtransaction on your phone, you don't own these files or these assets. They're owned by other companies or no one. And it just made sense to me, like in the real world, we have a way to prove that we own certain things. Why not have that in the digital world? And you know, we do now, and that sort of made it click. And I said, hey, this is something real and very significant. And I basically dedicated myself to what I would get into poker. I was like, I was reading everything I could read. I got some books online and I was like trying to inhale knowledge about NFTs. And I basically haven't stopped. It's been 7 months of just non-stop learning. I'm still learning a lot like there's still so much to learn.
Philipp: And I think that's the interesting part, right? It's still so early, at least, you know, when I think about it and it's just having the time. So you were lucky, like you were at home, you were already poker playing. You were online, right? So you made the time to learn a lot about it. I think that's where a lot of the challenges come because I think there's such a gigantic space. There's so many projects and want to get into the projects here a little bit or give them categories. It's just an overwhelming amount of data.
But I think the interesting part is that, we can get to the audience later to see how can they get into it and how can they learn? (20:00) But having that mindset of, you know, if you do something like this, you need to be all-in and kind of thing, right? And doing all the research you can get is really, really important here.
So with that being said, before we get into the categories, I wanted to understand a little bit more because it's such a polarising topic also in the personal finance world, right? When I look at it as a personal finance podcast, we already, you know, years ago, we always looked at the two big, you know, cryptocurrencies like, you know, obviously Bitcoin is the big one that's been around forever. We have Ethereum which, you know, this is all based on and you know, it has all the smart contract features and the second and third layer kind of networks.
So, from a personal finance standpoint, hey, does it make sense to start allocating 5% or 10% towards Bitcoin and Ethereum as your overall asset allocation, as a family or as an individual?
But in this NFT space, a lot of people are very split. Is this, are you buying, you know, a piece of art that you can maybe use, on a screen in your house at some point? Is it just trading? So is a short-term in-and-out investment? Is it a long-term investment? Right?
So I think that it's a very like, again, brand new space, right? So I think there's still a lot that's going to happen, but some people just think it's completely worthless and some people think it's like the best thing that's come out over the last 10 years. Where do you sit?
Roy: Yeah, so there's a lot of different angles and ways you can approach it. In terms of, you know, portfolio allocation or asset allocation, I think, you know, for some people, it will make sense to invest into crypto and NFTs, and for some people it won't, depending on their risk profile and all these other things. With NFTs specifically, (22:00) I think that it's just not as easy as like, there's currently no easy way to say I want some NFT exposure. Like, if you want crypto exposure, you buy some Bitcoin and buy some Ethereum, you know, maybe another coin and you say, OK, I'm exposed to these. And probably actually the best way to get NFT exposure right now is just to buy Ethereum, because a lot of the NFT activity happens on the Ethereum network. And you know, if NFTs keep taking off and create more activity then Ethereum will probably go up. There are specific coins that are in the NFT space, which may be a more targeted exposure, but like if you want to invest in NFTs specifically, I really think you just need to put in some more time, so you need to be more hands-on just because they are non-fungible.
You can't just say, I want some NFTs. You have to pick out which NFTs you want and there are millions, you know, tens of millions out there. Obviously, there are, you know, a couple of hundred like blue chip or good collections, which so you can really narrow it down.
And with some time and with some advice, you can pick some good ones. But it does take the time. It does take a bit of understanding to decide what to invest in. And I would say they are the riskier investment class than traditional crypto and which is probably riskier than other investments, but I would say that the reward is much, much higher. It's worth it.
Like my personal perspective, I think there's a real like an asymmetrical bet or upside of the moment where a lot of NFTs, you can get these like 10x, 20x, 50x, 100x gains, which, you know, kind of unheard of. These are the types of opportunities to come around, you know, once a decade, like Bitcoin in 2013 or something like that, it's not. Yeah, because these opportunities are there and you can make these gains. Obviously, you can't get opportunities like that without risk, so there is this level of risk, but for me personally, the risk is worth it. So yes, I forgot the rest of the question,
Philipp: I think it is perfect, I think. Let me follow this up then. It's a big split, (24:00) I think, right, like, you know, even if you read the news, you know, it's, you know, people in their Discord channels that follow different NFT projects are obviously very hyped about it, right?
And you know, maybe it's just for these quick gains, right? Because these gains also come very quickly, usually, right? So yeah, and then there's trades and then, you know, people, your projects fail.
So like I said, you know, I always tell people, there's always an investment risk in returns, right? So it depends on how much risk you want to take. The return can be high, but you are also taking the risk, right?
So I think people are not sometimes thinking about it too much. But in this case, some people really think that NFTs are fundamentally worthless, right? And others are really big into it and really big proponents of it, and where do you see? Obviously, I know that you're really big into it. But why do you think that is? Why is it so polarising still? Is it because it's still early or?
Roy: Yeah, I think that because there is just, it's just fundamentally difficult for any of us to wrap our heads around the idea of a digital asset being worth the prices that some of them are going for now.
And like me, myself, when I was getting to it, I thought, it's a scam, and I think a lot of people have that reaction. And if they don't take the time and do a significant amount of research to understand the technology and to have a personal conviction in it, it's very difficult to break that or to bridge that mental gap.
And so and especially in a space where people are making ludicrous amounts of money, it does seem like a Ponzi scheme. It does seem like it's going to come crashing down. And some of these NFT projects are going to come crashing down. It's just. I'll say this, I have yet to meet anyone who has put in the work and research and looked into NFTs and understood them and has said they are anything short of miraculous.
Like they may think that (26:00) 99% of the NFT projects out there now are worthless and they're going to go to zero. All these animal JPEG profile pictures, images that people are paying thousands of dollars for, they may dismiss all of that and say that they're nothing but the fundamental tech of non-fungible tokens digital ownership.
They still believe in that, and they will find other ways to get exposure to the space, which there are, you know, you can find within the NFTs there are some blue chips and some risky assets, classes and all that kind of stuff, which we can get into.
But I think that the reason there's such a big disconnect between the people who have strong conviction and and people who don't understand or who think it's a scam and all NFTs are worthless, I just think that they probably don't understand it, haven't done the research.
And I mean, it takes time. It's a very steep learning curve. Like it's not something where you can just read an article and necessarily get it. You need to read multiple articles. You need to read, watch some videos and understand it in more depth. I mean, I think as time goes on, as it becomes more mainstream, as the tools and resources for onboarding new people into the space get better, it will become easier for people to understand.
And just as it gains more mainstream adoption, like right now, there's maybe a 100, 200 thousand people actively buying and selling NFTs, you know, make that 20 million people. And then all of a sudden there's this network effect where people say, Oh, hey, all of my co-workers or all my friends, all these movies, like everyone else, is into it. It adds this level of credibility, whereas right now it's so niche, so new, people are a little skeptical of, you know, change.
Philipp: No, I think that's the right answer. Like I said, and I think, you know, trying out things is always the best way to get into it, right? So, you know, just just trying and understanding how it works, even if it's just a small amount of money, right, that you want to, you know, you can afford to lose, hey, just play around with it. So that's awesome. And thank you for that.
So you mentioned a little bit of the value of NFTs, right? (28:00) So can you explain to the listeners a little bit why NFTs have value and where does the value actually come from following up from that?
Roy: Yeah, so there are so many different types of NFTs, the value is going to come from different places, but I mean, if we zoom out, the value of something is essentially what another person is willing to pay for it. And it's hard to disassociate how much of the value of NFTs right now is speculative.
People are just paying it because they see all the people willing to pay for it, and that drives the value up it's very difficult to associate fundamental value with NFTs right now. But I'll give a couple of examples. So there are art NFTs - they are one of the biggest, probably the first big NFT asset class, if we want to call it.
And these are just digital pieces of art created by artists and turned into NFTs. And because they created - it's sort of just you can consider it like a real non-NFT, like a real piece of art, a painting someone's painted and artist is painted, you know, Damien Hirst or a Coon or, you know, whatever, Warhol - people pay millions of dollars for some of these. Why? Well, obviously they think there's some value in it. The artist has a history. You know, they are renowned or they have a brand or there's value in it. The art world has deemed them valuable and similar to that.
The art world or the NFT art world, sometimes both, has deemed some of these NFT pieces of art valuable because of the artist, because I mean, we can use Beeple. He's a very famous NFT artist. He has been creating digital art for 5000 days, so he had this collection. So before Bitcoin was even a thing, he was at his computer creating art online or on his computer. And yeah, he's been doing it for (30:00) so long that now he has been turning his art into NFTs, which means he can sell them and make them and someone else could be the true owner of them. And people find that valuable. They're like, I want to own a Beeple. Just like people say, I want to own a Picasso. I want Monet, you know this, that or any other artist.
There's value in that. And that's one way that there's value for these art NFTs. Obviously, there's you know, there's now thousands of artists creating their NFTs, whether many of them are going to be valuable years from now, probably not.
But just like in the traditional art world, there will be a few artists that do well and become prolific and their art is going to be worth many multiples of what it's worth now, and people are willing to pay large amounts for it now. So I'd say that’s one place where value comes to NFTs is just pieces of art created by real artists.
Another one is that gaming NFTs are a big asset class as well. So the gaming industry worldwide, I think it's like a 200 or 300 billion dollar industry. So in terms of buying games, buying in-game assets, like microtransactions on your phone or if you're playing Fortnite or Call of Duty, World of Warcraft, you can buy in-game skins or items and stuff.
And right now, people pay these tremendous amounts of money, you know, a couple of hundred billion dollars and it goes to, you know, the companies. It goes to Activision, it goes to Blizzard, it goes to EA, it goes to whoever owns Candy Crush, et cetera.
And there have been teams creating gaming platforms built on blockchain technology, and the assets themselves are NFTs. So instead of one company owning all the assets and getting all the revenue, they’re sort of making the people who buy their NFTs in a sense, shareholders or like investing in the future of the company. And so if that project does well, if the game does well, then the people who now own (32:00) some of the NFTs have, in a sense, an ownership stake in the company in, you know, if the company does well or the project does well, then these NFTs might do well.
And you know, they've introduced things like play-to-earn elements. So, you know, in video games, instead of earning digital gold or points or whatever coins, they have introduced mechanics where you can earn cryptocurrency. So real money.
There's this game called Axie Infinity. It's by far the biggest blockchain game. It's probably one of the biggest games in the world now, and there is an enormous population of users in, I think, specifically the Philippines, who have been able to play this game and earn, you know, maybe 500 or 600 US Dollars a month, which for a lot of people is considerable money. It is life-changing money. You know, it's lifting them out of poverty in some cases, and all because you know, this game, if you play it, you can earn real money. And it's just structured in such a way that it wouldn't be possible without NFTs. It's just another use case where there's value in.
Philipp: Super interesting and I think we can go on and on with use cases, right? You know, you always hear the use case of artists, you know, also music and in all kinds of different ventures where, you know, I think it almost seems like it's a little bit of like the extension of like a Kickstarter or crowdfunding, right where, you know, you saw that in the early. You kind of like start raising money and now it makes it even some elements on the blockchain. Its easier, it's ownership verified. I think it's super, super interesting use cases like you mentioned and we can go on and on. I think it's almost like a separate podcast if we go into each of the different avenues.
Roy: Yeah, I can talk all day about it.
Philipp: if people want to learn more, they can also follow your podcast, which will definitely have links to in the show notes.
But if we move on and let's say I'm a listener, I'm hey, I like what I heard from Roy. (34:00) I like that you know what this NFT space is. How do I actually start evaluating any NFT projects like when you go out and especially you've done a lot of research now over the year, where should they start? Yeah. How do you evaluate a project? Are there tools for it? Is it just, hey, buy something that you like because you like the look of it? What's kind of like your personal evaluation strategy for that?
Roy: Yeah. So it's unfortunately extremely difficult right now because it's so new. It hasn't been around for years. There isn't this wealth of data that we can look into and see what has worked and what hasn't and what's valuable and what isn't.
There's a lot of guesswork involved, but so for me personally, if I'm looking to buy an NFT, that's sort of more from an investment point of view. So let's say a gaming asset or something like that, I will look at the team behind it, like who created this NFT? Are they building something for the future or is it just an NFT for me?
Or are they sort of creating a game, for instance? And if they are, do they have experience creating games before? Have they worked on AAA game titles? Who are these people? And you know, you can join their Discord servers and talk to them and just understand what their vision is.
You can see often they have what they call a roadmap and they're saying, Hey, in 3 months, we want this to happen, in 6 months this. And you can see what they've done in the last 6 months or 3 months.
And if you know, in some cases, some projects have been around for a couple of years. And, you know, if they've got a good track record and you know, all these kinds of things, then those are the kinds of projects I would look to invest in sort of from a long-term perspective.
The price that you want to pay for these? It's so difficult. There really is no reasonable metric that I'm aware of to value what is a good price for these projects. So I just tend to look at sort of these interest cycle trends like the NFT market is very volatile, (36:00) like on a week to week basis, prices can go up and down 20-50%, and I basically will look to buy when the market has gone down.
I mean, it's just like any other market you don't want to buy when everyone else is buying. And there's hype and craziness that you want to buy when people are fearful and it's sort of like a project is on discount effectively. Yeah, I mean, that's for those types of projects when it comes to art.
Again, it's sort of, because so much of it is, what are other people willing to pay for it? You sort of have to look into the artist and their history, what other people have paid in the past, and just if you think that the NFT space as a whole is going to grow and there's going to be more people coming into it, which I think there are and more people looking at these early artists, and artwork, and thinking that they're historic or prolific or something, then it's sort of a supply and demand.
There's a limited number because they're non-fungible. They can't make more necessarily, like they can't make more of the same that they've already made. Like the early work will always be the early work. Then there might be some value there. And yeah, I wish I had a better answer. I wish I could say, go to this website. It's got some articles, read that and it'll give you a guide on how to evaluate things. It just doesn't exist.
Philipp: But I think there's a lot of resources out there. It takes time, but I think through the internet again, like you said, I think there's tons of Discord servers that people, if they are interested, can learn a lot, right? Because I think that's one of the unique things again, about the NFT space to me is, you know, like a lot of the really good projects have built a lot of good communities around it, right where people help each other, where you can learn a lot about the projects and the roadmap of the projects. So I think the Discord server is definitely very, very good. Starting point Just as much as there are podcasts like yours, YouTube channels explaining certain items, right? Yeah, you agree with that?
Roy: A lot of the NFT space runs on Discord and Twitter, (38:00) just sort of networking, talking to other people in the community because it isn't a massive community yet. You know, you can really get to know other people and the teams and the projects and the developers and the artists and everyone. And yeah, it just makes a human connection. You know, we're all humans at the end of the day and it's all self-learning and everyone is so friendly and welcoming and we share information. And you know, we understand that the learning curve is steep because we were all there, you know, not that long ago. And sometimes I forget how difficult it is for a newcomer to understand, like NFTs and, you know, using MetaMask to buy them on OpenSea, which is, you know, the big marketplace. And yeah, I just sort of assume that everyone has some level of knowledge. It's difficult.
Philipp: No, that's exactly what I was referring to earlier today, right when we just at the beginning of the podcast, I think, you know, my first experience, even just with crypto, just buying Ethereum or, you know, Bitcoin was a pain basically back in the day just for the same reasons why KYC, you don't trust it.
You know, transactions take a little bit. It's not normal, like what you normally expect from buying a stock or buying a piece of art at a store, right? It is a little bit more complicated, but once you enter that first hurdle, then it all makes sense, right? But you just have to. That's why I always say, I think if it's $50, $100, or $150, you just need to try it because that gets you the confidence to then say, Hey, OK, now that makes sense.
Like now I can try it out. So to me, that's always super important in that, you know, in the learning space. So we know how to evaluate or how you can evaluate these different products. So then you mentioned a little bit of what your personal NFT investing strategy is, right?
But how do you manage the risk given that, I assume since you've been, down the rabbit hole, so to speak, as you have a lot of the portion of your wealth now tied up in the NFT space. (40:00) So yeah, how do you? Is it all trading mostly or do you buy projects for the long term, and what's kind of like your hold period or it since it's so new? Still, you hope it is a few months, but yeah, what are your thoughts on the long term a little bit?
Roy: Yeah, so over the last 6 months, it's sort of evolved where early on it was more of the short-term trading where I would buy or mint something which is sort of, minting is just another word of buying from, like the creator directly. I would get these NFTs and then try to sell them for a profit, you know, if I can get 2x for it, then that would be great in the short term. And I'll try and do more of those trades.
And generally I was successful and able to, you know, flip or a short-term trade to make a reasonable amount of money. But when more and more projects started popping up and this like influx of NFTs came to the market, the market was getting saturated with supply and maybe the demand wasn't there to keep up with, you know, high prices for them.
I sort of started identifying and realising that it was getting riskier to trade short term and flip. And I think it still is getting riskier. It's still profitable and you can do it but it's just harder now. There are more people trying to do it, and it's not as easy as, say, several months ago. And so my strategy changed to more of the longer-term investing and finding these projects that I believe will be around in 1 year, 2 years, 5 years, 50 years in some cases and identifying, hey, they're really building something here for the very, very long term. They understand blockchain technology, they understand how they can integrate NFTs and do something that wouldn't be possible without NFTs.
And that, to me, is sort of a key thing. And so now I am. So I went through the short-term trading. I still do a little bit of that now, but I'm trying not to do so much. (42:00) And now I'm sort of investing more for the long term. And I have sort of gone even further now into the creative side where I'm producing my own content and I'm probably going to create my own NFT and release that in, I think, sometime in November. I've sort of come full circle.
Philipp: Exciting times ahead, right? So it's super interesting, and I think this is for everyone and to our listeners as well. It's kind of how your, your nature, your asset allocation and your personal investment strategy kind of changes over time, right? especially with the internet and, you know, innovations like in the crypto space, you just have to, you know, be careful of how you manage your money, evolve with time, right?
And, always be on the lookout for like, what's next? And, you know, even if it's small portions at first, you never know how big of a part of your personal investment they will make up in the future.
A couple more questions before we wrap it up, Roy, because we could speak forever, but we have limited time. So what are some of your favorite NFT projects at the moment that you would say, Hey, this is something that you know your listeners can, can take a little bit of a deep dive on.
Roy: All right. My favorite project is called Art Blocks. So Art Blocks is a sort of a platform where they release generative art as NFTs. So generative art is basically where an artist is a coder. So they create, they write lines of code and then they run the code and the code outputs something that looks like art.
And historically, I mean, generative art as a genre has been around for decades, but there was never really any easy, real or good way to assign value to the outputs because the artists could just keep running it over and over and over again creating new pieces, new pieces.
With the blockchain and with NFTs Art Blocks has basically integrated (44:00) the artists and their work and said, Hey, you can release 500 pieces of art from this piece of code, and that's it. So then, you know, there's a restriction in supply and you know, they can't make it, I mean, they could make it again in the future, but it wouldn't be from the same collection. And they have released 150 to 200 projects now with dozens of artists. And I'm just a fan. (47:26) I mean, I was never really into art that much before NFTs, before Art Blocks. And when I first got into Art Blocks, it was sort of from a mindset of making money and profit and flipping them.
But I've really grown to love just the collection aspect and respect the technology and the art that comes out from these artists and the fact that it really wouldn't be possible without NFTs, what they're doing and finding a way to essentially all these pieces of art. They're stored on the blockchain. So, you know, it's not owned by them.
If Art Blocks goes away. I still have the art. It's still on the blockchain. As long as I have access to my wallet, I have the NFT. I can, you know, look at my art whenever I want. And in 500 years from now, if the Ethereum blockchain is still around, my art is still going to be around. It's, you know, it'll be provable that it is mine or my children to my great, great, great, grandchildren's. And yeah, just this I'm a big fan of Art Blocks, so I would say that's my favorite project at the moment.
Philipp: Super interesting. Yeah. So for listeners, they can, you know, find out more. They probably have a website, Art Blocks?
Roy: They have a website. I actually wrote two articles on it in my newsletter, and the first one is very good - much better than I just explained it. It explains what it is and has some pictures and definitions and stuff.
Philipp: We can put those in the show notes, actually, because that would be super interesting (46:00), especially since you mentioned it. So people can have a deeper read on art blocks on that, on that project. So then a couple more things. How do you feel about, like, you mentioned blue chip versus risky, right?
And you know, what are some of these blue chip projects because you always hear, CryptoPunks like record sales, you know, tens of millions of dollars? Yeah, how do you feel about investing in these blue chips - Crypto, you know, NFTs and. How'd they become blue chips like, what makes them a blue chip investment?
Roy: Yeah, I mean, there's a lot of debate about what's blue chip and what isn't, but I think that the easiest metric is just time. The longer project has been around and being considered valuable, the more likely I think it is to be considered a blue chip.
And so CryptoPunks, they...Yes, I mean, the floor price, as in the cheapest one you can buy right now is 100 Eth. So that's, you know, US$350,000 roughly. They've been around since 2017. People have recently started valuing them more and more just because they were, you know, the first generative - big generative project like this.
They think that they have historic value. You know, if people are betting that NFTs and the Ethereum blockchain are going to be a significant thing in the future, then yeah, I think they've basically become a status symbol. And, you know, we can argue whether there's this fundamental value in status symbols, but and we can agree or disagree about and you know, people will pay tens of thousands of dollars for nice watches, hundreds of thousand dollars for nice cars where the utility value is, you know, no different than a $10 watch or a, you know, $20,000 car. But they like the status of it.
And I think these CryptoPunks have become the ultimate status symbol (48:00) of the NFT world and potentially like it's creeping into the whole crypto space now and even mainstream culture like you have, you know, some really, really popular sports stars and movie stars and music stars getting CryptoPunks of Bored Apes.
I mean, Snoop Dogg has a CryptoPunk avatar, Jay-Z has a CryptoPunk, Steph Curry has a Bored Ape and et cetera. You know, massive, massive stars are now. It's sort of seeping into mainstream pop culture and sports culture, and, you know, it's just becoming the symbol.
So, yeah, if a project has been around for a long time and has generally considered being considered valuable by the community, I would say that those are the blue chips so that, you know, CryptoPunks, Art Blocks is up there, Bored Ape out now is, you know, that's one of the debatable ones because it's only released this year. But, you know, 8 months in crypto time is a long time. So yeah, I would say time is the most important indicator of what's blue chip and what isn't.
Philipp: Cool. And then I do want to understand one thing. So for example, a lot of people are coming into the space now, right, and one obviously very vocal person, if you follow marketing, if you follow, investments and collecting in general, right?
Obviously Gary Vee and he released his own NFT and he makes it really like an experience almost right. I think what I heard is like, the next thing they will have a conference where if you hold one of those NFTs, you can actually attend the conference, right? And building this community up, how does the NFT space feel about this project and how do you feel personally about it? Is it a good project? Is it something people should take a look at or is this just a hype thing?
Roy: No, I mean, I personally am an enormous fan of the project and of Gary Vee as a person - I was a fan of him before NFTs. I mean, I think (50:00) 15 years ago he was releasing these wine videos on YouTube and I was watching them. And, you know, I always had a lot of respect for him and unfortunately, I wasn't really into NFTs when he released his project, so I didn't buy in early, but I've since got one of these tokens and it's basically a membership token.
So you're part of this, I think it's around 11,000 people, 11,000 tokens. This club where you get certain benefits and one, as you mentioned, is access I think for the next 3 years to VeeCon is what he's calling or VaynerCon or his conference.
And you know, some of these conferences with massive, massive leadership gurus can cost, you know, $5,000 a ticket, $10,000 a ticket. It depends. And so you get that for 3 years, and he finds other ways to provide value to the holders of his token, you know, free NFTs or free access to other things.
By buying it, you sort of invest in him and his ability to provide value to the whole community. And you know, there are other things like that in the space now, you know, people who aren't as massive as Gary Vee, but they may have their own niches and ways to, you know, have a membership and provide value to users and people may pay less amounts for them.
And I think the community at large has embraced Gary and appreciates what he's doing because he's doing a great job at bridging sort of the world between people who aren't into crypto and NFTs and showing them the power and the possibilities and what you can do with the tech.
Philipp: Especially with this audience, why he has such a reach. So I think, you know, he gets people from all kinds of life. So, super interesting. I was just wondering how the community sees that because it's like a bigger person kind of like, you know, in terms of marketing and doing other things. Yeah, but no, this is super interesting and I think it's also a very interesting project myself as well. (52:00) So thank you for that. Roy, it's been a pleasure.
We really, really appreciate having you on. And last but not least, where can people find you?
Roy: Yeah, thank you for having me. It's been fun and I'd love to come back. So probably the best place is my Twitter. So it's Zeneca_33. So Z-e-n-e-c-a_33 . And on my Twitter page, I have links to my podcast newsletter, Discord, everything else. So if you go there, then yeah, you can find everything perfect.
Philipp: Well, we’ll add all to the show notes for our listeners, I hope they enjoyed it as well. And again, thank you so much for being with us.
Roy: And thank you.
In this episode, Roy explains how NFTs are shaping the art and gaming worlds, how to find long-term value in NFTs, and what the future holds for the digital asset.
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