This is Bloomberg Crypto, a daily Bloomberg I Heard podcast, and I'm Stacy Murray Ishmael, Managing editor of Crypto for Bloomberg News. Yes, I know it's Saturday, but we're here to offer you our listeners a special audio only version of a new weekly video series called Crypto I r L. That's I r L Like in Real Life, and it's hosted by friends of the show, Katie Greifeld and Tim Stenovic. This is episode six. If you want the full video experience, head over to Bloomberg dot com, slash qt or check
it out on YouTube. Tim, where are we? Obviously we are in an art gallery or I don't know, a museum. That obvious. It's obvious to me. Okay, fine, why are we here? Well? Really, it's just some sort of convoluted metaphor, or at least device to give a little bit of that extra to the top of our show. This one is particularly tortured. How dare you do you remember? I do well? They were supposed to transform the stodgy world of museums and art galleries into something perfit for the metaverse.
What do you think is this it? Yeah? What do you think? I don't like her. Okay. Just a few months ago, n f t s were all the rage. Barris Hilton went on Jimmy Fallon to explain what they were, only to return a few months later to have Fallon show off his very own board eight, something he reportedly spent more than two grand on. People were talking about n f t s not just as exclusive and expensive collectibles, but also as a way to transform the creative world.
If we put art on a blockchain, we'd see a fundamental shift in power from the middleman to the creative. Instead of a gallery making all the money, an artist would get a cut each time their piece was sold. It would be easier for musicians to retain creative control. But interest in n f t s has fallen off a cliff. Trading volumes for n f t s, which are basically just digital art and collectibles that are recorded on blockchains, has tumbled from a record high in January.
As the hype around n f T s has died down, companies are now trying to find a use for them. Nike bought an n f T studio, Starbucks is an n f T rewards program, and luxury players such as Gucci and Tiffany have launched n f T S. So what's the path forward for n f T s. Will we find a good use for the underlying technology, or as some critics say, our n f T is worthless and just the stuff of hucksters trying to pray on the unsophisticated. How would you explain what you do to
a five year old? What I do now is I run the consumer business at a company who does security for digital assets. And if I was talking to a five year old, I'd probably say there is digital stuff. It would be much easier if it was a fifteen year old, because you would say, do you know if you ever ever bought a skin in a game? And they would say yes, and I'd say, okay, well we make sure nobody can steal those things from you. Let's bump it up to a ten year old, still prepubescent.
Your title is chief experience officer? What is chief experience officer me? And when we're talking about the digital world, well, you know, we're in the very early stages of this transition to a world that actually has digital stuff, digital belongings, scarce digital goods, digital things that you could lose, and the user experience is pretty bad, you know. I mean there's you know, it's sort of like the early days of the Internet. You didn't say go to my website.
You said get a computer, get a modem, get an I SP get a web browser. Okay, now go to my website. You know. Now you just say like, hey, Siri, go to a website, and it goes to the website. You know, that's a That's what's happened over the last twenty five years. The same thing will happen over the next twenty five years in the world of digital assets and cryptocurrency and digital value. Well, I want to talk
about some of those digital assets. Um. We're going to speak later in this episode with John Rick Start and he basically thinks that digital assets are a scam. And we're not necessarily just talking crypto here, we're talking from the n f T perspective, the idea of h digital goods that don't exist in the real world but only exist online. UM. Kind of like the equivalent in the metaverse or online version of like owning a pet rock, buying a pet rock? Did you did you ever have
a pet rock? I never had a pet rock. I think I know my daughter at a Toma Gucci. So we could use that as an analogy. Wait, what did you say, my daughter at a Toma Gucci. Yeah, we could use that. We could use that analogy. Did you have a Toma Gucchi? I think it's Tamagotchi. Did you have one of those? I had a Tomagotchi for sure. Also also had a new pet was big. Yeah. Yeah, I feel like that was the original metaverse and sort of your neo pets for the original and f t
s I mean new Points. I lived and died by those, even though they were virtual currencies. Actually don't know what you're talking about, but the fact is that there are there are a lot of critics. You just say, this stuff is worthless, it only exists in a digital space, and it's it's not real. We're not buying it. What do you say to them? I say, honestly, what I
say is eventually you'll be dead. Because you know a younger, younger generations who grew up, you know, through COVID and go to school on Zoom and live digital lives and spend eight plus hours a day on on their phones, and you know that it's not a foreign concept to them at all, and also, you know, look, I'm fifty years old and I you know, graduated college in nine and I remember very well the people who told me
the Internet is nonsense, the Internet will never work. I'm really glad that you brought up the example of the internet because I've actually tweeted to this effect before. Like, if I think about what I would have tweeted in the early two thousand's about the Internet, they would have been absolutely terrible. But to that point, I would have really said a lot of really stupid things that are now stupid in hindsight. But the point remains the Internet.
I can see a use case, you know, I can I have just the entire world of information at my fingertips um. You know. For a smartphone, I also see the use case. Maybe it costs way too much, but it does have a use case. But for n f T s, what is the use case? I mean, there are tons, So let's like, let's like figure out where we want to start. I mean, there are there are tons of things you have a lot of Let's just go with something very simple. Fifteen years from now, your
government issued I D will be a digital asset. I mean, I find it super ironic that the the technology I used to get into parties at n f T n y C was technically more secure and better than the technology I used to get into the United States from France to come you know, to come to America. So that's just a very simple one. Now. Look at even just like the fact that when you use Apple Pay to pay at the local um vegetable shop, which you know in my neighborhood in Paris, they didn't want to
do three years ago, right. It took COVID to get them to actually want to take digital money. But why is Visa International involved in that transaction? Right? And my and my am I taking it on credit. I'm not. I'm trying to do a cash digital cash settlement right um. And that's actually technically possible but not yet happening. So these are just the most basic of things. You know. I just spent five years working with lvmh um, you know,
Louis Butan Moah Hennessy, big luxury conglomerate. You know, the people who are in the luxury business have spent the last how however many years, you know, trying to explain to people why you have a three thousand dollar handbag, Why do you have a three thousand dollar handbag. Why do you wear a T shirt? Says Thrasher. Why do you wear a T shirt? Says Slayer? Why do you do so many? Why do you have a MySpace page?
Once upon a time? Right to be an individual like this is just you know, basic human um you know, uh kind of behavior. Let's look at another example I love to use is just the example of digital art. I mean, we agree that there's an art market, right, we agree that a boscyott is not worth what it's worth because of the wood and the paint. Right, It's it's a cultural artifact, right, A piece of art is
a is a cultural artifact. And you know the reality is that there are any great um digital artists out there. And when two people have a value exchange around creativity, I would say that's a more beautiful digital business than say an advertising business where you steal someone's attention and sell it to someone else. Can I just make one
point really quickly? As you were talking about my Space, it occurred to me I actually spent money for Neo Pet's premium account just so that I could unlock certain things and certain features to put on my Neo Pet Unfortunately, you're seeing the evolution of my thinking in real time. So, speaking of art and cultural artifacts, I'm glad you brought it up, because I have some fine art right here. This is the Mona Lisa. What is that? Is that you? This is yeah? This is me, this is the Mona
This is me as the Mona Lisa. That's awful. I don't like this, Katie didn't know. I don't have a better reaction than that. That is just fell did you bring this because I live in Paris, But I mean you've probably seen the real thing at the loop. But it actually it's quite small. It raises it's probably it's like about this. It raises an important question though, I mean, doesn't matter that if I have a print out like this,
doesn't matter that it's not the original. Um from an n f T perspective, like if you have a replica of an n f T or if you have like a replication and the Mona Lisa is a great example. I mean, um, you know, I have been to see the Mona Lisa to love more than once. Every time I've gone. The room is full of people who want to see the Mona Lisa and take pictures of it right now, You go outside two feet and there's a thousand Mona lisas. There's Mona Lisa is on t shirts.
You want to buy another one? My favorite is the Mona Lisa. There's dabbing right. Um, that's a that's a popular one these days. Um, But it doesn't really seem to prevent people from wanting to see the real thing, right because there is actually only one. And let's be honest, like, human beings are story consuming creatures, right, It's not the Mona Lisa. It's it's the fact that the Mona Lisa
has notoriety. Mona Lisa has notoriety for particular reasons, and the Mona Lisa has become the Mona Lisa and the subject of a slick Rick song and the subject of like, you know, heist movies or whatever she's smiling at. I don't know. It's storytelling. This is all storytelling. We are story consuming creatures. That's part of the reason I love this space is because it makes you ask those original questions of like what is value? What is money? What
do we care about? As people? Um? Look, I find this stuff quite easy, frankly, because I grew up collecting records I grew up um collecting fanzines and skateboarding and being a part of these You know. Again, you you wear a T shirt that when you wear it to the mall, you know, if there's another skateboarder, they come up to you. Right, that was what it was like in the eighties. Um, So to me, these things make a ton of sense, you know. And what I say to my colleagues at LVMH is who you know, had
this similar conversation with often. You know, you're you want to tell me that if I kill a cow and I colored the skin and I cut it into pieces and I stitched it together into a bag, go, that's craft. But when Matt Caine makes an extraordinarily complex, beautiful artistic product, our project called Gazers, Oh that's not craft. Why because it's digital? Oh come on, I honestly, I like, I'm offended that you would even that, that someone would even
say that, because it's an individual. It's an artist who has a craft. Now, again, whether you like a Louis Baton handbag or not, you don't need to. Lots of people don't. Whether you like Matt Caine's Gazers or not, that's up to you, but don't deny that people do write Ian Rodgers. We're gonna have to leave it there. Thank you so much, thanks for having me this special audio only episode of Crypto I r L. Will be right back with more from Katie Greifeld and Tim Stanovic.
If you want the full video experience, head to Bloomberg dot com slash qt. We're talking to n f t s and we're talking about their use cases when it comes to arts, So we should probably talk to an artist people. Pleaser is what she goes by, but also her real name Emily Yang. E'mily, good to see you. So what what do you see as the possibilities for n f t s when it comes to your work
and when it comes to your life? Well, I mean, I really shouldn't be saying this as an artist, but it makes sense that n f T started taking off because of art because it's visual and humans are visual creatures, so you know, it's easier for us to make the connection in our brains. But UM, my opinion is that n f t s should be way more than art and it should actually just be sort of the underlying technology that runs infrastructure in society, um, including you know, documentation,
ticketing and things like that. But to your point that there's uses for n f t s beyond art, do you think that n f t s are the best vehicle for art? Uh? If you don't like physical things, then probably I've adopted a much more nomadic lifestyle recently, like many others in crypto. And then you actually just get into this mindset of not wanting physical things because they're a burden when you travel, and a lot of people, you know in the real world have too much money
and don't know where to spend it. Also by art and the store and what are those called ports ports? Yeah, for tax purposes, right, Yeah, But like that's taking up space. Maybe that was just an episode of Billions I saw. I don't know if that actually happens. And so, you know, I'm all for nowadays, like being able to flex that I spent a lot of money on a piece of art, but I don't have to I just pull up my phone.
How do you flex that you spend money on a piece of art that doesn't exist in the physical world. I mean, you can take a screenshot of the purchase and then post it on your Instagram story, but couldn't somebody then take a screenshot of your Instagram story and post it on their Instagram story and it looks no different than Sure, if you own a Ferrari and then I went to your house, I can sit in your Ferrari and take a photo, and then I can pretend that it's mine, and a lot of the f X
scammers on Instagram do that. Wait, but there is if we play this metaphor completely. The difference is that if the Ferrari's mine, I can drive it around and it can take me places and it drives fast. Well, if you knew how to use etheroryum, you'd be able to interact with your n f T or transferred to somebody. I couldn't transfer that n f T to myself, right, I don't know where to go from there. That was a good point. So, John, what what is your issue with n f T s. What's your problem with them?
The problem that I have with the fact that you've got a some sort of fractionalized hyperlink to a jpeg file or the metadata of a jpeg file as a representation of some sort of investment. What my problem with that is, It's ridiculous, it's absurd. There's nothing to it. It's a giant scam. It's a giant Ponzi scheme, turns
victims into victimizers. It's one of the most absurd things that has come up, and it it evolved from you know, they had initial coin offerings, but the SEC cracked down on those, and then you know, lending products and staff's s a f T s, the SEC crackdown on those. So it's just an end run around that with more nonsense, more crypto nonsense. So it sounds like your problem isn't just with n f T, so it goes beyond that, deeper than that, it's with sort of the idea of
the crypto ecosystem in general. Oh. Absolutely. Look, I worked at the SEC in the Enforcement Division for almost twenty years. I was eleven years chief of the Office of Internet Enforcement. I've been teaching law school at George Town and Duke for twenty years and this stuff is so obviously a scam to me on so many levels. So all of this hype and nonsense is just awful, and it's it's really, I think, done some awful things to the world. So it sounds like you're not a hoddler God, No, just
we got that. I mean, we got that out of the way. The externalities are so terrible, ransomware attacks. I mean, it does have one good use for criminals. John, what if it's I get what you're saying. I completely get what you're saying, and it actually it does make sense to me. But what if you think about it from the perspective of a luxury good, and you think about it from the perspective of somebody who lives online and who does play a lot of games and does believe
there is going to be a metaverse? You know, why not pay for a luxury item in your in your own digital world if after all, I mean, look, I'm not buying this stuff, but you know there are people who pay two or three hundred bucks for a pair of foam slip on shoes that probably cost a couple of dollars to actually manufacture. Oh my god, you know I like, Hey, I'm a sneaker head. You're a sneaker head. Yeah, absolutely, a huge sneaker head. I just went to sneaker Con
with my son and bought and sold sneakers. Sneaker head, you should love n f T. I'm a sneaker head. I'm wearing my my if you can see my brand bread's right now, my Jordans ones. So no, of course I don't love n f T s because I'm a sneaker head. I think they're still so ridiculous. If you want to flex with your n f T, you want to buy your n f T and put it as your your your icon or whatever it is on your
Twitter account, go ahead, have at it. But the marketplace, let's think about the marketplace where n f T s are bought and sold, because most people buy them thinking wow, this is gonna go up and I'm gonna make a lot of money. And most of those people are the people who aren't very sophisticated when it comes to investing. So let's think about that. Those marketplaces, they're incredibly corrupt, match trades, wash trades. The fraud isn't just encouraged, it's taught.
Turn on YouTube. If you're promoting an n f T and you're not using fraud and match trades and wash trades and and sock puppets to somehow tout and manipulate the price of your n f T, you're committing malpractice in that world. So if you want to just buy this stupid picture and put it up somewhere. Go ahead, and you think that's a flex, go ahead. But but if you're buying it as an investment, which most people do, it's absurd. And you know that's why the market is tanked.
I mean, it's just just absolutely tank. People have finally figured it out, and it will just keep getting worse because it's so ludicrous. You know, it's Alice in Wonderland. It's it's absolute nonsense that actually I can explain it to you this special audio only episode of Crypto I r L will be right back with more from Katie Greifeld and Tim Stanovic. If you want the full video experience, head to Bloomberg dot com slash qt. I do want to go down the sneaker head rabbit hole a little
bit more. Is that in Alice in Wonderland reference. No kidding anyway, but I guess what we're The point we're trying to make is you're paying a lot of money for sneakers, which do have a use case, but you're paying a lot more for the status symbol. If I have these sneakers, where you could buy a pair of sneakers that cost a hundred dollars, but you choose the luxury item. And for people who live extremely online, I
mean maybe it's the same sort of vibe. I think that's fine if you want to go buy your Rolex or your Louis Vuitton bag or your Jordan's sneakers and right around, and then I don't have any problem with that. But when you talk about it as an investment, like the way n f T s are, and you build a marketplace around that, there's several things that happen. Number One, a lot of people get ripped off because they have no idea what they're buying. They have no idea what
they're doing. They're just hoping it will go up. Number Two, criminals will use those marketplaces as places to launder money or move money around uh for different nefarious purposes. So you're opening up the world to all these dire externalities and at the same time, you're putting a lot of people at risk. And that's why the SEC is there, you know. I mean, there's special laws around the way investing. The way investing is done to protect people and protect them,
often from themselves. You may be a libertarian and say, look, I don't want those protections I just believe in caveat M tour and I just want to live the way that I want to live. Well, that's fine, you can make that argument to Congress, but right now we have these statutes and these rules so that people can't do this kind of stuff. They can't do an initial coin offering, they can't do a lending program, they can't do a SAFT.
All of these things are unlawful. John, I do want to ask you know, you've mentioned a few different times that you're a professor. I gotta know what is the what are your the perspective of your students? What did they say? I assume you guys talk about this, Oh, Katie, what a great question. You know. First of all, I like to teach my students how ridiculous all this stuff is, and they love to challenge me. Okay, but once we get into it, I just again, I'm not the smartest
guy that's ever taught law school. And you know, but it's not difficult to combat all this nonsense and ridiculousness because there's no there there. And so I do think you're right. The younger generation look at me and say, okay, boom where you just don't get it and that just makes me laugh. And that I put together a website
called Digital Trustwatch dot com, totally free. Anybody can go there, and so I put a lot of the research that I've done, which is years and years of research, on this website so people can see it and and read for themselves. So they can't. They gotta stop telling me, Hey, you just don't get it. Well, uh, John, have fun being poor. Sorry, That's just how I had to end it. That was so fun. That's what they say to you, right, Oh, you you hit the nail on ahead, Tim. They tell me,
how fun being poor? They tell me, I don't know what I'm talking about. I mean on Twitter. Look, I don't make a nickel from being a crypto skeptic, not one nickel. I don't profit in any way, shape or form. John thinks a lot. This is really great. I really appreciate you taking the time. Absolutely great meeting you both. I don't know, I kind of felt like you had a moment when you were when you were talking to you in like some sort of epiphany. I didn't have
a moment. When you think about the fact that I participated in the digital world for many years. I spent more money, more real money than I should have four items for that digital world kind of made sense to me. I don't know, did you have a moment um? You hear one guest and they're really convincing. You hear another guest and they're really convincing. I wouldn't say. I wouldn't say I've had a moment. I'm going to make it my mission to find your moment. I want to see
these episodes of Crypto I r L in video. Check them out on Bloomberg Quicktake at Bloomberg dot com, slash qt, or find Katie and Tim Over on YouTube. This is Bloomberg Crypto, a daily podcast from Bloomberg and I Heart Radio. For more shows from I Heart Radio, visit the I Heart Radio app, Apple Podcasts, or wherever you get your podcasts. Send us your comments, questions, or suggestions for the show to Crypto at Bloomberg dot net or find us on Twitter.
We're at Crypto. The supervising producer of Bloomberg Crypto is Vicky Verglina. Our senior producer is Janet Babin. Our producers are Mohammed Faruk and Sharon Barriro. Our associate producers are Ty Butler and Moses on them. Desta wonder at is our engineer. Original music by Leo Sidrn. I'm Stacy, Marie Ishmael. Have a great weekend.