Mark Cuban on DeFi, NFTs & More
Covering a different topic today. A useful read for anyone curious about NFT’s, crypto, and the future. Blockchain & Booze is a segment on Youtube that gives its viewers the opportunity to dive into various topics covering everything Blockchain-related.
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0-20 Min
Decentralized Finance, or as you have heard it, DeFi, is a mess. Everyone is competing with liquidity. What is the goal of this industry? To pick apart every aspect of the banking industry.
Where is all this liquidity coming from? All over the world but particularly Asia. This makes it riskier on the surface but the underlying technology is extremely innovative and useful.
What are problems Defi fix?
Personal Banking
To truly understand the issues with the current banking system, read this one over to drill it in your head.
For Mark Cuban. BILLIONAIRE! Mark Cuban. Borrowing money requires him to be over collateralized with his bank, call a representative, DocuSign, and have this action be approved at multiple levels. To go through this whole process, for any amount is a complete hassle plus the fees are ridiculous.
Has COVID accelerated crypto adoption? Yes. Banks provide little return, which leads people to expand horizons and earn elsewhere. Interest rates are so low, enticing people to take greater chances. WHY NOT? The opportunity cost is too high.
Mark says, owning Bitcoin, Ethereum, or Stablecoin allows you to do your own banking, frictionless, free, straightforward, and fast. You can lend and earn interest using a DeFi platform. A big advantage that comes with this new system is that you’re not borrowing against future earnings. It's strictly based on the present savings that you’re willing to convert to the aforementioned assets.
BlockFi is an example of a DeFi platform that allows you to earn interest. The tricky thing with some of these platforms is the amount of time you have to stake your money. Do your due diligence.
All of this leads to a large spike of NFT’s.. Of Course
Mark minted 10 GIFs of him going to workout, very simple. He put them up for $25 each. Before he knows it everything is sold out. They reach out to him asking what his royalties structure on re-sales would be. BANG! it clicked,
This forever changes the nature of selling anything digital!
20-40 Min
Collectibles are what everyone is trying to tackle, from artists to rappers. The real money will be elsewhere. It will all be longtailed as everyone rushes in to chase huge returns. This means that the extremely valuable art will remain valuable, and the rest of the market will level out to natural prices.
Musicians are afforded a new, more fruitful approach for their career by tokenizing their music. For example, when releasing singles on Spotify or Apple Music, they will take 30% once you’re able to monetize. Instead, an artist can tokenize albums or mixtapes, providing cover art and other value points. Providing enough value that will justify a purchase of $12.99 - enjoying the hell out of it then re-sell it, perfectly mimicking the process that used to happen with CD & Record albums. The true fans will enjoy their favorite artists, all while musicians make 97% of the total earnings plus royalties on re-sale. 5,000 true fans, endeared to you, offer the opportunity to create a living. A good one at that. Freedom to create without harsh struggle would benefit many artists.
Keep in mind, this doesn’t eliminate the starving artist archetype. The true power shift lies in changing the gatekeeper. The artist will have extreme ownership. Salesmanship and creativity will be the fuel to propel their future.
What is all this NFT Hype about and when will it end?
If interest rates spike up to 3-4%? Prices will find their own level, like the stock market. The S&P won’t continue trending upward unless interest rates remain low. If that’s the case people will look to put their money into an asset to take that risk for it to grow exponentially.
There is an issue with NFT’s. The wallet used as a foundation to make transactions. TopShots is successful due to the seamlessness of the experience, put your credit card info in and you own the moment.
In the grand scheme of NFT technology, art collectibles will be a drop in the ocean compared to monetizing corporate IP using this technology. DocuSign, sends a contract to sign, far better use on the blockchain. Any intellectual property can be an NFT. A simple one would be books, similar to the music example. Even Dallas Maverick tickets can be turned into NFT’s.
Bitcoin, is it the future?
As a store of value or global currency. Yes as a store of value. However, it has nothing to do with hedging against inflation. A great sales pitch, but a false one. It’s only available at the whim of HODLers and miners. It is most definitely not a currency. You can use it to exchange value, but not a currency because it is too slow, expensive to use as a global currency. The utility of Bitcoin is mentioned above at the beginning of the article, new applications have been built through the blockchain to address individual banking needs. Taking a percentage of what you own, you can lend and earn. That’s as far as the utility goes. It is only worth what someone else is willing to pay for it.
END
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