Aug 30, 2021 • 11M

Ep 33. Culture eats Finance

Visa buys an NFT. Sports & Crypto. Stablecoins & Facebook.

 
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Some say Crypto is a scam. Others swear it's a breakthrough technology. But which is it? Join us, as we explore Crypto in real life (IRL).
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They say history does not repeat itself but it rhymes. Today, Hurricane Ida hit the Louisiana coast on the 16th anniversary of Hurricane Katrina. I have gone through a couple hurricanes, they can be awfully devastating. Ida seems particularly nasty. My thoughts and prayers are with everyone impacted.

For this week’s episode, I’m taking a deeper look at 3 stories and not the usual 5. I think you will enjoy it. Let me know what you think.

NEWS

1. Culture eats finance?

  • Visa dropped $150,000 on an NFT this week. See the pic below. They are the first corporation to do so. But why does this matter?

    CryptoPunk #7610 (2017). Courtesy of Visa, via Twitter.

  • The internet brought new services, products and careers like email, Twitter, and social media influencers. The crypto age is doing the same. In 2001, I could not have imagined sleeping in a strangers bed but 20 years later we are happy Airbnb guests. Keep an open mind, its early days for crypto.

  • NFTs have been on a tear lately! There were over $2.5B sales of NFTs in the first half of the year. Over 1 million pieces of crypto art have been sold for over $800M.

  • Now back to Visa. Visa believes that NFTs could play a role in the future of commerce. They did not just some cash, Visa also wrote a 17-page white paper about their thesis. They believe that every brand and company will create and/or acquire NFTs. I love that they are exploring and positioning themselves to help their clients. I need to dig into NFTs too. But here’s what I know:

    • NFTs connect to culture. They cut across visual arts, music, sports, gaming and more. NFTs allow fans to own a piece of sports history ex NBA Top Shot. NFTs enable collectors to have an immutable record of ownership. NFTs are good for creators - they could earn royalties on successive resales. Lastly, NFTs could enable gamers to own assets in game, then move and sell them elsewhere.

    • In the heydays of Clubhouse, there were rooms full of hundreds of people trying to learn about NFTs. Many of these people were creators, collectors and fans who were new to the cryptoworld. Culture not finance brought them over.

  • The race is on to see whether culture (ex NFTs) or finance (ex DeFi) will onboard the next 100 million users.

2. Crypto and sports: match made in heaven?

  • The love fest between crypto and sports is blooming. The top draft picks of the NFL and NBA signed endorsement deals with crypto companies. FTX has naming rights to the Miami Heat’s arena and Crypto.com will be sponsoring F1.

  • But right now, I think sport tokens is where the fun is at. In soccer, major teams like Arsenal, AC Milan and Barcelona have issued digital tokens which can be sold to fans and traded like an asset. I like it. Ownership of sports teams is a billionaires game. What’s the average die-hard fan to do?

  • Tokens enable fans to signify their devotion…think of it like a digital jersey. In exchange, teams let token owners have a small say in how the team is run. Juventus token holders voted on the song to be played when a goal is scored. Maybe future token holders might have a say on jersey or player selection.

  • COVID-19 related social distancing has crippled ticket sales and sports revenue. 40 soccer teams in Europe earned $200M in additional revenue from token sales. The value of tokens go up and down like stocks. This week, rumors that Cristiano Ronaldo was moving to Manchester City sent the value of their token surging 25%. But it now looks like Ronaldo may end up at Manchester United instead.

  • Tokens are enabling fans to learn a bit about crypto eco-system without even trying. Culture is eating finance.

3. Stablecoins: Will a rose by another name still smell as sweet?

  • Lightning does not strike the same place twice. Nah. Something is brewing. These were my sentiments when two leading stablecoin issuers made announcements in as many days.

  • The value of stablecoins, unlike cryptocurrencies, are pegged to another commodity. This means that a US dollar backed stablecoin should always equal $1. The 2 largest stablecoins, Tether and Circle, have published reserves indicating that they are not 100% cash and cash equivalent. This week, Circle announced it’s intention to move from 61% cash and cash equivalents by September.

  • The following day, Paxos, the issuer of Paxos Dollar (PAXD) announced two things. First, it was rebranding Paxos Dollar moniker from PAX to USDP. Second, it reaffirmed that it holds 100% cash reserves.

  • I think this flurry of activity is linked to Facebook. Facebook has struggled to launch a digital currency payment system. But it’s leadership indicated that its digital wallet could be launched before year end. Facebook has reportedly had conversations with Circle and Paxos about partnering on a stablecoin.

  • Facebook has almost 3 billion monthly active users. It has already launched WhatsApp Pay in India and Brazil. It could grow a formidable payments business across Facebook, WhatsApp and Instagram. But I expect they will continue to face a lot of regulatory scrutiny.

Tweet of the week

TLDR: It’s not too late to begin investing today.

Things that I’m excited to read

1. DeFi: Future of Finance

  • This new book written by a trio of a Duke professor, a venture capitalist and a DeFi founder, was recommended by one of our loyal readers. Thanks!!

  • The authors argue that the current financial landscape is ripe for disruption and we are seeing, in real time, the reinvention of finance.

  • This book conducts a deep dive into some of the most innovative protocols in the DeFi space such as Uniswap and Compound. Can’t wait to dive in!

2. Consensys: DeFi report

  • Consensys is the leading blockchain technology company that develops tools and enterprise solutions on Ethereum. If you have a Meta Mask wallet, you are their customer. They also partnered with JP Morgan to develop their crypto solution.

  • Consensys publishes a quarterly report on the state of DeFi. The Q2 2021 report is here.

Thanks for coming for this week’s ride. I’ll see you next time. Be safe.