Remember NFTs? Here’s What Happened – and Where They Are Now
In today’s newsletter:
- Remember NFTs? Here’s What Happened – and Where They Are Now
- The Amazon-Meta Alliance, Entertainment, and Inflation
- What Makes a Business a Kingdom Business?
You will never be able to convince me that it wasn’t money laundering.
Because it was, for sure, money laundering.
In 2021 and 2022, a new digital asset took the world by storm – NFTs, a virtual image stored on the blockchain and often tied to cryptocurrency in some way. Because of the securely encrypted technology behind them, and the fact that NFTs can be traded and stored in crypto wallets, NFTs were marketed as unique, provably authentic art pieces that could be owned and sold entirely online. Depending on who you asked, you’d get various reasons for why that mattered even a little bit.
To some, they took inspiration from Facebook’s futuristic announcements about a coming Metaverse, where people would don helmets like Ready Player One and spend all of their time, money, and effort in a virtual world. That virtual world has to be decorated, right? And with enough security, real NFTs couldn’t be forged, in terms of the actual code, so that makes them better than real-world art, right? Hang some NFTs on the wall of your mind palace and it’ll be just like real art!
To some, they took inspiration from the cryptocurrency trade, believing that the planned scarcity of individual NFTs and NFT collections would create value.
To some, they saw a situation not too much unlike fine art trading in the real world, where assets are incredibly difficult to objectively assess, and blood money, drug money, bribes, and the proceeds from sex trafficking could be swapped out using a simple technique called “wash trading.” All an enterprising criminal with toxic money has to do, is buy a low-priced NFT using his first set of crypto keys, then they rebuy it using the aforementioned toxic money to create a receipt that legitimizes their possession of that money. Then, for extra bonus points, they hype the anonymous sale (that they’ve just made to themselves) in the media to sell the NFT once again to some misguided investor, and they’ve now washed their money and doubled it besides.
In 2021, NFTs did $17 billion in trading volume.
How do I know for sure it was money laundering?
Because here we are in 2023, and NFTs have been ruled economically worthless. As in, not bearing monetary value. Zilch. Zero. Weimar German Deutschmarks.
Q3 trading volume for NFTs was down to $1.39 billion. According to the report Dead NFTs, which was performed by finance and blockchain experts, “The vast majority of NFTs are worthless” and “Of the 73,257 NFT collections we identified, an eye-watering 69,795 of them have a market cap of 0.”
When you talk to an NFT enthusiast, however, you’ll hear an intriguing story. They’ll say, “No, listen – collectibles go up and down, but some NFTs have real value. They can act like smart contracts, verifying ownership of digital assets, and providing a more secure, instant way of transferring things during a sale.”
After a while, it can start to sound pretty convincing – until you read the actual reports. People just don’t seem to be using them that way – and even if they were, it would be the underlying assets that were valuable, not the NFTs acting as a virtual certificate of authenticity (like Nike has tried to do). Also, NFTs do not work the way we are often told that they do, and they are vulnerable to a unique set of security concerns. To paraphrase one writer, ‘When someone steals your bike, you still are the owner during the time that it is not in your possession. If someone steals your NFT, through phishing or various other means, the record of transfer is a transfer of ownership.’
Furthermore, NFTs cost from less than $1 to $1,000, but there are even some ways to mint for free. So if it is the underlying technology that is truly driving the high values, as enthusiasts sometimes claim, then we quickly arrive at a low-cost commodity situation, where one NFT is like another, and all are fairly cheap and, ironically, fungible, until they are actually connected with a real asset of demonstrable value.
To make matters even worse, since NFTs are inherently tied to the blockchain, their fortunes are tied to the crypto markets, and more and more, highly influential investors such as Jeremy Grantham have been coming out and saying that fetch – I mean crypto – isn’t going to happen.
NFT trading has been plagued by scams and grift from the beginning. Some notable examples:
- The US Postal Service sold thousands of stamp NFTs in a unique marketplace that, according to Wired, allowed people to buy in with real money but did not allow them to cash out for real money. It took a months to even have a “beta version” of a feature that would allow people to withdraw funds. What’s worse, many “rug-pull” scams have plagued the market, wherein a new NFT marketplace comes online, collects everyone’s money, and then the site gets deleted and some joker walks away with the cash.
- NFT marketplaces regularly tack on volatile fees (including mandatory “tips”), so that a $5 NFT can easily cost you $20, $150, or $500. Supposedly it’s tied to the energy costs going into the machines minting the NFT code, but the marketplaces seem to come out on top nevertheless.
- The most expensive NFT ever sold was Beeple’s “Everydays” for a jaw-dropping $69 million. Upon closer inspection, it seems like a coordinated pump and dump, because person who shelled out nearly $70 million for an ugly, easily reproducible digital collage, had previously purchased a massive stake in other, low-priced Beeple NFTs called B20. The two-week auction process on “Everydays” drove his other holdings up to around $135 million, or about $23 per share – up from 30 cents. A week after the auction, those B20 NFTs were back down to about 40 cents each. Both buyer and seller had a stake in both of these concerns.
Some of these grifts get complicated, and that’s the point. People get wowed by the story that the techy con man spins, and at the end of it, they have a lot of confusion, no money, and a worthless .jpg of some pixel art.
Yet we still have one more obstacle to climb over. A very few select kinds of NFT collectibles do still trade for high dollar amounts. The infamous Bored Ape Yacht Club series sells NFTs for tens of thousands of dollars, even now. A CryptoPunk NFT can fetch six figures in many cases. Doesn’t that mean that we’ve sorted out the riffraff, and now only the really valuable NFTs are being legitimately traded?
Well, no.
“The issue of wash trading… also makes it difficult to say how many of the high-value NFT’s sold are legitimate. One analytics firm, CryptoSlam, found more than $8 billion worth of wash trading on NFT marketplace LooksRare, which at the time had amassed only around $9.5 billion worth of trades in total.”
Nevertheless, a lot of people won’t be convinced. We just don’t understand the technology, we’re told. We don’t understand the true value of these collectibles. NFTs shall rise again!
I’m sure it’s just a coincidence that the NFT market sank like a rock in 2022, when the SEC announced it would greatly increase its cryptocurrency enforcement staff, heighten scrutiny on digital tokens and stablecoins, and register trades with the SEC. If you go and get an “anonymous” crypto wallet today, in the US, you’ll typically have to enter your personal information so that your transactions can be traced back to, not a wallet, but to you.
And suddenly the NFT trading volume fell through the floor. Imagine that.
If you think that’s a coincidence, I have an NFT of a bridge in Brooklyn to sell you.
INDUSTRY INSIGHTS
The Amazon-Meta Alliance, Entertainment, and Inflation
The Amazon-Meta Alliance
Amazon and Meta (Facebook & Instagram) have made a deal, which will integrate Amazon shopping accounts directly into Meta’s social media platforms. Now, without ever leaving Facebook or Instagram, users can purchase products, compare prices, and continue consuming content. The patch that allows for this is already available on some devices in the US, and will apparently be gradually rolled out to everyone else. This partnership will greatly increase the accuracy of ad targeting. Pinterest already partnered with Amazon in a similar fashion earlier this year, to the apparent benefit of both companies. Not to be outdone, TikTok revealed their “TikTok shop” back in September, so users can purchase products in that app as well. Christmas shopping may look a little different this year, and influencers have suddenly gotten more influence.
Entertainment
Global entertainment, a multi-trillion dollar industry, has been in turmoil in recent years, with traditional cable subscriptions falling constantly, ad revenues down, contentious labor disputes, halted productions, a series of box office bombs (Including the MCU’s latest installment, The Marvels, which just produced Marvel’s worst opening weekend ever), and a Wild West of streaming and distribution options, decentralized production, and hyper-segmented audiences. In brighter news, however, the writers’ strike ended at the tail end of September, and the actors’ strike has just come to an end this past week. Perhaps all of the franchise fatigue, as evidenced by poor showings from Fast X (Yes, that’s ten Fast and Furious movies), Mission Impossible 7, Indiana Jones 4, and Marvel’s 33rd installment, will even lead content creators to invest in original concepts, fresh ideas, and appealing stories without overt sermonizing – but don’t be surprised if it’s back to business as usual. Nevertheless, content consumption is way up, so the demand for entertainment isn’t slowing down anytime soon.
Inflation
Core CPI fell to its lowest level in two years last month, to about 4% (excluding food and energy) down from over 6% last year. In the immediate aftermath of the news, stocks went up, bond yields went down, and investor confidence has seemingly risen. According to Ian Lyngen of BMO Capital Markets, “This takes a rate hike off the table in December and reinforces our call that July was the last hike of the cycle.” Some are more skeptical, however, as this still reflects a 2x multiplier on inflation over the Fed’s target of 2%. Emily Graffeo reports Win Thin’s take: “The market sees what it wants to see. It’s been wrong on the Fed this entire cycle.” In any case, inflation was flat on a month-to-month basis – the first time in a while that has happened.
“Why do you keep saying the home price is inflated?”
Sunday School
Q. What is the Jewish term for the Old Testament scriptures?
A. TaNaKh, which stands for the text’s three different parts: Torah (or the books of the law), Nevi’im (the prophets), and Ketuvim (the writings).
TIPS & TRICKS
What Makes a Business a Kingdom Business?
Far too often, Christian terms get thrown around without ever really being defined. “Kingdom” can be one of those words. While it is certainly a central concept in our faith and very present in the scriptures, the way people use it can often make you scratch your head, like Inigo Montoya, and say, “You keep using that word… I do not think it means what you think it means.”
So to that end, here are three quick tips on what makes a business a kingdom business.
Focus on Substance
A kingdom business is not made by a statement of faith, loud political statements, or a Christian target market. The first key aspect of a real kingdom business is that, whatever work you do, you do it with all of your heart, with excellence, like you are doing it for the Lord Himself (Col. 3:23). An old Christian saying puts it well:
“The maid who sweeps her kitchen is doing the will of God…because God loves clean floors. The Christian shoemaker does his Christian duty not by putting little crosses on the shoes, but by making good shoes because God is interested in good craftsmanship.”
Martin Luther, while commenting on Psalm 128:2, said, “Your work is a very sacred matter. God delights in it, and through it, he wants to bestow his blessing on you.”
Whatever it is that you do, do it well, and dedicate that excellence to God. If you are an insurance agent, find your customers the best coverage you can – because in your heart you are remembering that each person you serve was made in the image of God, so you serve them well, for the Lord’s sake. If you are a lawyer, fight like a lion for your clients, because you know that Christ died for each of them, and they ought to have an advocate. If you are a contractor, build sturdy, beautiful houses, because you are imitating the Father, who made earth our home for us to live in, thrive, and do good work upon.
Ultimately, God’s kingdom has servants in it. What makes a good servant? To state the obvious, serving well is what makes a good servant.
Yes, being dedicated to the master is primary, but what good is a servant who is not about his work? God has placed each of us in different arenas of influence and need, and a dedication to the substance of what we do is the cost of entry. It is a shameful thing to see a large cross outside a company office but shoddy work being done inside.
“God is good.” Your work ought to be too.
Operate in Integrity
Quality and craftsmanship alone are not enough, however. There are plenty of companies out there who deliver a good product at a fair price, but their tactics are less than savory. Maybe it’s a corporate culture of fear, greed, and intimidation, or maybe misleading statements are made in marketing in order to make customers feel better. Or, in more extreme situations (but unfortunately, this is not uncommon), the supply chain involves slave labor, reckless environmental policy, or fraud.
The Bible says, “The Lord demands accurate scales and balances; He sets the standards for fairness” (Prov. 16:11 NLV). In James, wealthy but unscrupulous land-owners are chastised for how they treat their workers, oppressing them and keeping back their wages (Jas. 5). In Titus, Paul says that God’s stewards need to be above reproach (Tit. 1:7). Peter talks about living in such a righteous way that people who accuse you of wrong look ridiculous (1 Pet. 3:16).
The Shema Yisrael, one of the primary texts in the OT, instructs God’s people to bind God’s commands as a sign on their hands and to let them be like dangling tassels in front of their eyes (Deut. 6:8). This means that God’s teachings should affect everything that you do (the work of your hands) and the way you see everything (your eyes). So even in the day-in and day-out of business, we need to ask ourselves what the righteous thing to do is. Are we being honest, acting in integrity, rightly ordering our priorities, and treating people well?
A kingdom business does all these things.
Do Not Take the Lord’s Name in Vain
This commandment is regularly misinterpreted, unfortunately. Children learning the Ten Commandments are told that not taking the Lord’s name in vain means “Don’t say, ‘God!’” when you stub your toe. That may be a small part of it, but it misses the larger point.
Dr. Ligon Duncan of the Reformed Theological Seminary puts it this way:
“[The third] commandment is as broad as life. The third commandment means ‘Don’t take up God’s name wrongly.’ …Don’t claim His name unless you treat it with reverence and respect… If we claim to be the people of God and then live as if we are not, we take His name in vain.”
A kingdom business does not associate itself with God lightly. It is a wonderful, yet fearful responsibility to be associated with Him. So we cannot put a cross in our logo simply to help us with market segmentation. If we take up God’s name, we must do so with a real purpose, in a way that brings His name honor and not dishonor.
If we want to run kingdom businesses, we need to be about the Lord’s business, doing our work well and righteously. If we can do those things, it is more likely that we will receive wealth and influence – and if we have come by those things honestly, we will be less likely to be ruined by them and more likely to use them well.
“Do you see a man who excels in his work? He will stand before kings; he will not stand before unknown men.” (Prov. 22:29)
Quick Hits
- Truth Social has lost $73 million since its launch last year, posting just $3.7 million in total sales revenue, leading to speculation that the company may not be viable for the long term.
- Lauren Heck of The Gospel Coalition insists that social media can be used for God’s kingdom to great effect.
State laws banning trans interventions for minors may be headed to the Supreme Court. - Sources reveal that Hamas’ intention behind the October 7th attack was to provoke a war with Israel, then unify surrounding Islamic nations to destroy the Israeli state entirely.
- One of the largest online retailers in the world, Shopify, went down on Monday, affecting innumerable independent sellers before getting restored. It is believed that Taylor Swift’s newest merch drop caused the crash.
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