What are Digital Non-Fungibles 101 - with Sustany Capital

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E94 - What are Digital Non-Fungibles 101 - with Sustany Capital

Today there are just 4 to 5 million active crypto currency consumers across the entire globe. Compare that to the 400 million + people who buy and sell skins — a consumer force 100 times greater than the active crypto currency user base! And then consider that the current skin trading community represents just 22% of the 1.8 billion people who play video games.

With the emergence of the game CryptoKitties, blockchain-based virtual items in form of non-fungible tokens (NFT) have garnered public attention and even made mainstream media such as the New York Times. With some NFTs selling for as much as $170,000, game publishers can no longer ignore the opportunities to add digital collectibles to their game plan.

"The future is already here —

it's just not very evenly distributed."

This quote from futurist William Gibson has never been more pertinent than today. Sustany's Protocol Fundinvests in distributed, decentralized and disruptive technologies with long term viability.

https://sustany.co

https://www.nytimes.com/2018/05/18/style/cryptokitty-auction.html

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https://upload.wikimedia.org/wikipedia/commons/thumb/0/05/Ethereum_logo_2014.svg/2000px-Ethereum_logo_2014.svg.png

https://www.vinboundmarketing.com/wp-content/uploads/2016/06/Wine-Bottle-Shots-1.png

1.

What does non-fungible mean?

To fully appreciate what makes these tokens special, it’s worth taking a look at the difference between “fungible” and “non-fungible.”

When something is fungible, in this case a token, it means it can be easily replaced by something identical – and it is interchangeable with ease.

Real world examples of something fungible could include grains of rice, or the $1 bank note in your pocket. If you were to lend that $1 to someone, it wouldn’t matter if they didn’t return the exact same one.

This all changes when something is non-fungible. Although two items may look to be identical at a glance, each will have unique information or attributes that make them irreplaceable or impossible to swap.

One physical example of a non-fungible asset could be a plane ticket. Sure, they look the same as other tickets, but each one has different passenger names, destinations, departure times and seat numbers. Exchanging yours with someone could have serious consequences – not only could you end up thousands of miles away from where you wanted to be, airport security might not be too impressed either.

2.

Why are non-fungible tokens different from other tokens?

Because they can offer unique characteristics which make them different and digitally scarce.

Many tokens – and indeed cryptocurrencies – are fungible. If you send someone a Bitcoin, and get one back, you wouldn’t notice any difference.

A lot of the time, fungible tokens are built using a standard called ERC-20. For the sake of simplicity, let’s imagine each of these tokens is a $10 bill. If you sent a token to someone, and got another one back a week later, they would be identical. (That said, there might be some fluctuation in price.)

This all changes with non-fungible tokens, many of which are ERC-721 compliant. These can be compared to baseball cards, as each has unique information and varying levels of rarity. If you were to accidentally send one of these tokens to someone, and get a different ERC-721 token back, you might be very upset.

There’s one more crucial difference you need to bear in mind. Fungible tokens are divisible – meaning you can send a fraction of one ERC-20 token. (Like cash, where you can pay with a $10 bill and get change.) On the other hand, non-fungible ERC-721 tokens cannot be divided and must be bought or sold whole. (Like baseball cards, where no one in their right mind would want to buy half.)

3.

What can non-fungible tokens be used for?

Collectibles are a common use for non-fungible tokens.

One early pioneer of non-fungible tokens was CryptoKitties, a blockchain-driven platform where players have the chance to collect and breed digital cats.

If you’ve ever owned a cat, you’ll know that they are not easy to replace, as their appearance and personality make them unique. In this case, CryptoKitties replicated this concept in the crypto world – with each cat’s digital genetic material being stored on the blockchain. They can be bought and sold using Ethereum, and some are rarer than others. Indeed, as reported by Cointelegraph, sales hit $12 million last year – with the most expensive CryptoKitty reportedly going for $120,000.

Other games have promptly followed, such as fantasy titles where fighters are collected for battles. And in another apt development (almost like we planned it,) Major League Baseball in the US is planning to launch a game where baseball cards can be exchanged on blockchain.

4.

What are their advantages and disadvantages?

Although the non-fungible ERC-721 token has offered improvements on ERC-20, there are a few setbacks.

As we recently explainedin an article looking at alternatives to ERC-20, advocates of this token protocol believe it could become “the ultimate vehicle for putting every significant asset on a public or hybrid blockchain with 100 percent immutability and security.”

Non-fungible tokens allow you to detail more of the attributes that make them special – far beyond the name, balance, token supply and symbol. This is because you can include rich metadata about an asset and include information about ownership – and these authenticated details can ultimately add value because investors can be confident about its provenance.

That said, there are downsides. Non-fungible tokens have not been embraced as speedily as some advocates hoped, in part because the ERC-721 protocol is so new. It can also be tricky and time consuming to develop decentralized applications for non-fungible tokens properly.

5.

So why not carry on using real world solutions?

The world is moving on from paper – and supporters believe there are many use cases for non-fungible tokens beyond collectibles.

For example, it could become a secure and immutable way of storing birth certificates, academic credentials, warranties and identities – even artwork and property ownership.

These real world assets can then be properly digitized and stored in a wallet, keeping them safe and ensuring that they cannot be altered or counterfeited by a third party.

6.

But how are non-fungible tokens created?

There are concerns that the use of non-fungible tokens could end up becoming fragmented, with different standards and varying degrees of certification.

At the moment, as we mentioned a little earlier, it can be an expensive and complicated thing to achieve. It can sometimes take months to develop a DApp, and in the fast-moving blockchain world, that could cost an entrepreneur their competitive advantage.

Instead of every outlet interested in non-fungible tokens creating their own framework (which would result in a breeding ground for inconsistency,) some platforms are trying to create a technological layer which unifies and standardizes these tokens.

One of them is 0xcert, which offers a “plug and play” framework which means that a non-fungible token can be developed and verified quicker – and the platform claims it is achievable in days. The company says it eliminates the need for in-depth blockchain knowledge, while stopping precious data from being siloed and preventing developers from having a lengthy, expensive and insecure process.

Disclaimer.Neither Crypto the WonderDog or Sustany Capital endorses any content or product on this page. While we aim at providing you all important information that we could obtain, listeners and readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

man we haven't done a show in a long

time I haven't done a show in a long

time either I've been traveling and yeah

yeah so yeah I just got an email from

somebody the other day they said well

you haven't gonna show in a while but if

you wanted another guest for your show

we hosted by I get rusty too you know

forget to actually host this thing

that's a shocker yeah you know so what

are we doing today non fungible tokens

non-refundable tokens have you a crypto

kitties yeah I haven't I haven't looked

into it other than when I heard that the

guy made a Kitty for like a hundred

grand or he sold it for a hundred grand

right is that is that right yeah one was

sold for one hundred forty thousand one

was sold for hundred seventy thousand

even but and it's like just and I just

do it on on screen right you can't it's

just a it's just on the blockchain just

on the blockchain

well it's actually not just on the

blockchain but we'll talk about it is it

a game it's not like Pokemon but yes

there's there's a game and that attaches

to it all right

it sounds very interesting is this

anything like I know that that some

companies are now they're digitizing

assets like did you just say that not

digitizing assets sorry um

were they like a like autographs like

there's autographs or like sports

memorabilia right so the baseball cards

yeah so that's the other example of a DM

okay you think so that's also an ESC 721

that's also an NF t also non non

fungible talk okay great well now I'm

interested okay I just had some of my my

baseballs and footballs and a helmet

authenticated by Beckett is Beckett

getting into us Beckett doesn't use play

soccer that's okay yeah don't know

anything about ya Beckett the the

authenticate sports memorabilia I'm

sorry to hear that but good no it's good

because

you they were selling all these and I

had I had to had two baseball's that I

bought years ago a Joe DiMaggio and a

Mickey Mantle that turned out to be fake

oh really

did you buy him don't tell me I bought

them at a baseball card shop really yeah

in Lake Forest they're no longer in

business because I went when I got back

to the place to go let him know and they

were out of business that's actually a

really good pre-roll because yeah I'm

gonna talk about applications for that

great and you didn't even know I did and

this brings me closer to home see

there's utility for the wonder dog yes

so here we go we're gonna talk about

none thunderbolts non-functional sorry

but since this is the hot words we're

gonna start first with fungible okay so

should we go to the most of the slides

yes okay and the way that's my article

on to that topic digital non fungible

yes and so let's start with water

fungible is before we explain what a

non-fan Tobias okay so that would be

slide number one Oh dealing with

professionals all right okay for ability

fungibility so fungibility is kind of

the idea that one item is exactly the

same as another item and not it's not

the same item but you it's

interchangeable so that's a quality

that's typically thought after in things

such as fiat currencies in printed form

or in minted form so your coins and your

fear paper money if you want to call

that money but that's a different story

we get to another time and in

commodities or consumer goods as you can

see even though all those coke cans have

a different color but it's basically not

basically it's the same can as far as

you are concerned

unless you're starting to collect those

and that's why specifically I chose

Oscar okay

so now that you know what a fungible is

now we can go to waters are non fungible

so in the context of crypto and the

blockchain a fungible is a unique

virtual item and typically when you have

something that digital it's very very

hard used to be very very hard obviously

to create something that's unique and

digital ie

an mp3 file once you have it you make as

many copies as you want and you send it

around and I have the same utility as

you listening to this empty mp3 or mp4

file for that matter if I have a PNG and

an image of sorts image file of sorts

ever make a copy I send it to you you

have the exact same experience you have

the exact same image and I still have a

copy right so what blockchain introduced

and they are specifically a theorem

initially with there's ERC 7:21 standard

is what we call a non fungible token and

so these non fungible tokens create an

entry on the blockchain it exists only

once and it links back in this

particular case to let's say an image

right so a PNG and I'll put one in there

and by the virtue of this being

blockchain entry and connected to the

cryptographic token paradigm I can use

my private key send it over to you to

your digital wallet you have an on your

wallet and I don't no longer have it in

my wallet so you can actually transfer

an image that can't be copied that can't

be copied this particular entry that you

then control certifies you have this

particular item so as we discussed in

the previous card some of media

mainstream media attention was mentioned

in the New York Times and specifically

because of the some of the high prices

that people who are willing to pay for

it and one of the initial ones if you

jump to the next I think

was sold for 140,000 and recently one

was sold for $170,000

so what it does it creates true

ownership so that's what's the one

cryptic look that he got and he actually

outbid another prominent figure for that

so he paid a hundred forty thousand

dollars in ether though at the time

forward so if you translated this back

into ether because at the time ether was

worth much more Oh would be would be

less regardless I mean for all intents

and purposes that's what he paid and

Mike novigrad so who a lot of people

watching this will probably know it's

one of the more famous figures in the

cryptocurrency space to participate in

that bidding procedure up to a hundred

fifteen thousand dollars early and then

stopped but he still thinks it's gonna

be worth a couple million dollars in ten

years from now at least that's what he

said but I think what's more interesting

is kind of the next slide and that

speaks to the utility of this which

means this is our friend vitalik the u

theorem found obviously and he really

likes this paradigm because he had been

in an avid gamer as a lot of people in

the blockchain space have been before

they got into the space and he had lost

one of his in-game characters in 2010

after Blizzard supporting a certain game

and so now even if the game was no

longer supported that you would use this

particular character um because it's

recorded on the blockchain you could

still hold on to your game character and

then presumably once a game will be

developed that will then allow the

importing of that particular character

you could again use it because imagine

you can add additional skills and

outfits be creative with of your

character or in-game items and then it

seems like very natural that you want to

hold on to that and if you're using it

regardless if if the game changes so to

speak well once once they once they

the game and that character like the

crypto kitty is there a chance that

these things die or that they no longer

exist

well there's two things to that so first

of all the the main thing to

differentiate is for the time being the

blockchain utility is somewhat limited

in terms of just signifying the

ownership so about what your

transferring is the ownership to that

item and for the time being and we'll

get to this in further slides but none

of the other characteristics that are in

the game environment will be transferred

what I mean by that so you use your

crypto PD as an example inside of the

crypto kiddie game the crypto kiddie

game though yeah is happening on a side

chain or in that particular game

environments for all intents and

purposes in the database right so any

features such as breeding of those

kiddies or raising them or any other new

game environments that they can come up

with because this particular

implementation is an open source code

that's limited to that particular side

chain so that means if the company or

the project that's maintaining this

particular environment goes away all the

functions go away with it

you still hold on to the entry you still

hold on to whatever is on main net so

you can go to a block Explorer now and

see your crypto Kitty but if that game

environment should go away so that's all

there is

it's something it's better than nothing

but the interesting part is then to see

and what particular functions the game

environment provides that have utility

for the blockchain itself so the

breeding function for example it's like

should there be a standard on the

blockchain i protocol on the blockchain

that documents that I mean the answer

seems obvious but it just it doesn't

exist yet okay but so the point there is

you have a game environment where you

can test those ideas and if you

transcend those away from the kiddie and

move this to two other things you can

obviously then create way more

interesting scenarios ie you have your

virtual game character alright so you're

meaning you and your main EU is me land

has a certain statue and certain height

and certain rights and so forth so if

you test those in a game environment you

can see how eventually you can implement

those protocols and have real-world

usage for it right so I was just giving

some input on systems that provide

blockchain utility for the healthcare

space right so you can see where you can

test certain scenarios of what type of

Records on how to track those records

and can just use the gaming environment

to do so mm-hmm except yeah all right so

let's move to the next let's see what

else I noted down jot it down so it's

very sad he cried himself to sleep on

that whole thing that's what he said so

so to put this into perspective I think

for some reason we spoke about this

before maybe yeah you're in-game items

in this industry is bigger than and then

video and which is bigger than the world

and it's bigger than the game itself and

that's where most of the revenues coming

from but you I think it you can easily

see how if people spend a dollar or five

dollars or sometimes hundreds and

thousands of dollars for an in-game item

that if that item or that the particular

game goes away you'd still like to have

ownership of that item since use the

money for it right and you might even

want to be able to sell this to someone

else and right now outside of a couple

of second marketplaces what's happening

as people need to actually transfer the

entire account right so you can't easily

sell these items separately you need to

hand over whatever account information

are necessary to access the game itself

and you might only want to sell a

certain item that you're quiet in the

game environment so with blockchain

technology and the particular stand that

that's not possible to talk and standard

that that's going to be possible and

can actually happen on an app as an

example on your phone so you don't

actually have to access the game

environment and not at all right so you

can transfer ownership peer-to-peer Wow

so then there is another extension of

that so which one of our partners that

were working with introduced this

multiverse gaming idea the idea that you

can create one item and transfer it from

Guam game to another which is needless

to say super-powerful specifically

pertains to a character okay because

chances are you want to be the same

character in one game and then in the

next one and will then also allow those

developers to create one-of-a-kind items

and sell those so that means that you

don't just get to pick from a limited

number of items but potentially an

unlimited number of items so you can

imagine a scenario where eventually

we'll be able to not eventually pretty

near to him in my opinion we'll be able

to commission your specific character

for a certain game I want to look a very

specific way a unique way in a

particular game and this new technology

makes this available to you and lets you

own this and you're the only person on

that planet then that owns this just you

would be the only person in a real world

scenario that gets to own a certain

Picasso another piece of art oh okay

well that goes to another question now

so if you if you have a character that

you can transfer between games does it

only exist while it's playing in that

one game it can't exist in two games at

once it's up to the game developer so

the SDK the software development kit

that they're able to add allows the game

developed to change those particular

rights to that character so because if

we're talking about the like the

blockchain and you were saying like

there can be only one crypto kitty right

that if that character exists you can

only exist in one place at a time yeah

and so there's two elements to that so

as I mentioned earlier the

the blockchain really only documents

your ownership of it okay all right so

that doesn't mean it can't then exist in

two different environments but because

it will always exist on the block

experience and you're not transferring

ownership of it you're transferring

ownership of it oh yes well two

different environments not the

environments Oh God transfer ownerships

between if you own individuals

yeah but the game environment again is

that's a side chain nothing

nothing happens per se unless that's

built in through the SDK unless the game

developer decides okay if if you use

them in that game I'll make it disappear

and the other one right so that's simply

a software decision that for the time

being okay again that's not it's only

for the time being that this is not

possible on the blockchain itself yeah I

mean you could write a specific well

it's gonna be written into the specific

smart contract for this particular item

mm-hmm but again it's a smart contract

it's obviously not the protocol itself

so the smart contract say if you're

using it in game a you cannot yes

correct so while you're while you're

writing this particular relationship you

attach it in gaming yeah it'll never

exist in game being or you could order

it could just die yeah it could have a

concept called prama death and it could

just stay forever in that game and hook

the hook to that game okay so that's I

think the Monica I came up with but

probably someone independently published

that too so encrypted Kitty's a new kid

is born every 15 minutes so if you carry

this paradigm forward to other games you

can imagine a lot of interesting

scenarios were a games studio publisher

could create a new hero like every hour

automatically like write an algorithm

and create something that's somewhat

unique from all the others area

programmatically puts it out for auction

or for fixed price for sale but you

could see the game environment becoming

more and more like the real world

essentially other than your typical game

environment wouldn't would have a lot of

the same characters

and here you would see more and more

unique items over time and if you moved

to the next slide this is just a couple

of examples where you can basically do

simple things and exchange them this is

one of the kind of current

implementations but you can also

envision where you pass these out to the

blockchain where people will then be

able to upgrade their armor with a belt

or the the weapons slots or their wigs

or whatever you have individually on

that I'm so not only what you obviously

be able to create entirely new game

characters but also the accessories for

the app and so there's already a few

wallets when you move to the next slide

you'll see those that support this so

your typical

etherium wallet will support this ESC 20

standards yes that's the reason that

most people would know that this

particular environment is so interesting

because there are so many wallets and

most exchanges support this particular

standard ESC 20 and so this new stayin

at the CRC is 7:21 standard was no

longer that new was forked into mania in

June this is now supported by a handful

of wallets out there so and crumby has

published a separate wallet that

supports the standard engine did and our

friends over was elated so what this

allows you to do I can sit next to you

and I can pull up my wallet here and

then just show you the collection of my

721 tokens and you can say oh yeah I

like that one can you sell it to me for

a dollar and then it wants me to upgrade

obvious you know that I'm trying to show

it but here is one of my fee and so I

can transfer it from here - Wow yeah

exactly I actually have a whole herd

because I've been demo in it so much

that I keep reading at MLS so now I'll

send you this one later Oh

so you can have it well what should look

to the kids at home there Oh mine yeah

yeah it's fuzzy this is now 100 dogs

kidding so gets to habit other ones but

so but so this this all sounds just like

goofy and maybe semi interesting and

funny and whatnot but from a venture

capital perspective there's actually

real world utility to be had and I'll

think we're gonna move move over a

little bit more into WoW into that ROM

now and so there's already a bunch of

websites now where you can buy and sell

these items and typically they came from

the skin sales items so from the the old

word game item if you well from the

legacy systems where some of the

publishers already allowed the resell or

pre-sale of these particular items but

then they also now support this new

standard so if you go to whack so

they'll be able to them by cryptic it is

there if you want if you choose to and

so these are these are the websites wax

yes okay open sea so okay the ship there

that's open sea so you could buy and

sell your 720 once they have you wanted

to Wow okay so you can put them up for

wherever you want you on there yeah yeah

wonderful let's see what do we got

so the benefits of an initial

collectible offering so my partner

coined this term which I find useful

because it's it's still resembling this

old paradigm but now if you're a game

developer it might be interesting for

you to test your theory that this game

is going to be interesting for people

out there by just creating all a bunch

of young game items and create them as

seven twenty ones and try to pre sell

them right try to go out there and offer

them for sale so you can test whether

not people are actually interested in

your particular game environment create

a white paper that says okay this is

what I have in mind my game should be

doing this my game characters and my

game dynamic is the following what do

you people think do you want to

basically fund the rest of the

development for this particular game it

allows you to create in a community Wow

and it's an interesting variation in my

mind for on an initial coin offering

that actually is more engaging and

actually provides a good utility for

game enthusiasts out there to either

fund a game or support the game and

think about it this way let's say that

team would not sell enough items to

finish that game you would sell on that

particular item and presumably if it's

interesting enough would actually be

worth more right because the game never

got made I mean that's always the

example that I made of you if you're old

enough you'll you'll remember cartridges

from from the Atari area right and so

that's one et game if you haven't seen

the documentary watch it where Atari

tried to make a game based on et which

you have that game yeah you're only sold

I forgot what the actual number was but

they expected to some millions of copies

and they ended up selling a few thousand

of copies so yeah most of them ended up

in the landfill and then because most of

them never wanted to distribution it

became collector's item so Wow so you

got a collector's item so yeah the

stories are is you could assume that

something similar could and might and

will happen if a game ends up not being

menu yeah you still have to your in-game

item that's and so there's other

interesting scenarios how to make those

items where you actually build in coins

if you use the engine development

software development kit where you can

actually build in coin so you kind of

have a base level value of those and if

that coin goes up if your item goes up

regardless right and that's that's the

reason why

by our company formed a partnership of

that because it's a very interesting

concept that also then translates to the

real world

really really well and that's something

that we sketched up in this particular

scenario so I will do a couple of

initial wine offerings next year so what

so and here's where the connection is so

actual wine oh yeah

and so the way this will work as if you

have a winery and right now the way you

presumably selling this year by having

your sales people call up a couple of

distributors and tell them well we

expect to bottle about a hundred

thousand bottles this year and we're

typically selling them for that this

particular price we're thinking this is

a good year were won yourself a little

more and you're trying to do your price

discovery and it's it's pretty hard to

get to a correct pricing model in

particular field right because unlike

other commodity items like your corn and

so forth were just fairly stable wine is

kind of its own thing and a couple of

other semi commodity goods are more or

less interesting based on the rarity

based on the qualities that are being

assigned to them right and so why the

blockchain standard makes sense for this

particular cases just envisioned the

following so you can create a number of

non fungible tokens on the blockchain

and then presale those n F T's what that

will show your actual item that you'll

be getting but the item will be attached

to a real word good

so actually we wanted to first show the

previous one so you get a little more

granular detail because this is kind of

the big picture so the left part is

showing the ethion blockchain alright so

you're creating your NFT that you then

typically would show as a QR code

so now you got an unique entry on the

blockchain and a QR code so you got your

QR code then on the bottle and so

needless to say the bottle doesn't have

to exist at the time when you create the

blockchain entry so you're expecting to

create a hundred thousand bottles at a

minimum okay and you expect it to be of

a certain quality and look a certain way

so you can get create a presale market

of that particular inventory put it out

there for pricing basically and tell

people hey this is our expected outcome

you can buy a particular bottle right

now and it's at this particular price we

don't know what the price will be one so

they're guaranteed a bottle of that they

guaranteed to get a specific bottle okay

that's the interesting part oh so you

can go through number one or you can

find out whatever exactly because even

worse bottle or the last model or the

middle bottle and what's interesting

from there obviously is once you have a

specific item that you're buying so you

can then create more interesting

variations to track that particular

bottle so you can have an app with your

wine cellar on your phone and because

it's relating back to an unique entry on

the blockchain it will also know

quote-unquote about what happened to the

rest of the batch so you're starting out

with one out of let's say 10,000 bottles

here and then eventually you look at the

wine cellar saying wow I got 1 out of 10

bottles left of this particular year and

you can would actually know the Avenir

left in no and you don't necessarily

have to take delivery of it either

so either the winery or there's wine

custodians out there would just keep

that particular bottle and you can buy

it simply for speculation yeah right and

because you're a collector and you

create an entirely virtual market

Speight place but it's relating back to

very very specific items Wow and so the

reason why I mean this is already very

interesting but the reason why to us is

very interesting is because now you're

reaching starting to reach all

into the real world from the digital

world so you got your thunderballs now

you got your non fungals that I call the

blockchain needeth fungible so your

bitcoins blockchain native that's that's

what it was born that's what it always

existed then you got your digitally

native goods which are like your games

your music files your video files you

can attach a new blockchain entry to

them to make them trackable uniquely

trackable and then also and that's part

of the article that I just published in

Forbes is explaining in greater detail

if you look back into the history of

music distribution for example it used

to be you would buy first set tape

actually was first albums like long long

play albums on yeah interesting than 45

yes and then tapes and CDs and but now

hardly anybody's to buy CDs anymore

right obviously if you if you buy a long

play if you have a cassette tape if you

have a CD if you once you don't like it

any more I can sell it to you right so I

bought this for $20 so I don't like it

anymore and I can sell it to you for $10

and it still holds some form of a

trading world well after this paradigm

kind of die it with the introduction of

platforms such as iTunes where you you

don't actually get true ownership you

get a license of sorts why do you get

the license to be able to use this

particular mp3 file or whatever format

they have and it's encrypted of digital

rights management in a certain way so

and you get to use it in your own

devices in like five up to five devices

in iTunes case or you you are renting

something on Amazon or even if I buy

something on on Amazon once in a while

I'll buy a movie on Amazon but I buy it

in a way that it shows up in my Amazon

library but I am unable to sell it to

you after I watched it right so unlike

when I bought a DVD before I could watch

it and then sell it to you and

kind of mitigate my expenditures there

now with this new standard you can do

this again that's great so stuck with an

mp3 yeah and you can't get rid of it

right of course I don't expect iTunes

though Apple to adopt this any time soon

because this is a huge money manner and

maker for them obviously yeah we'll stop

making as much money what cut into their

revenue presumably maybe not but

presumably might but we expect to see

platforms that will introduce that

paradigm and then they are probably

starting with independent artists first

and then moving on to larger production

studios once people will expect this

paradigm and also you're in a way

introducing another type of buyer right

so if if I'm buying something and I

cannot return it or I cannot resell it

then my threshold my friction is is

higher

I will think longer and harder about an

expenditure if I can never resell this

to someone else like both when you buy a

car for cash

presumably you have that idea of

eventually I'll be able to resell that

and I'm not stuck with this forever so

that's my my indium in your mind you're

thinking okay I'm spending ten thousand

dollars now and I'll come buy it for I

can ride it for a couple years and then

I'll still make a few thousand dollars

afterwards the residual effect so you

can imagine that similar considerations

might factor into digital goods as well

like when I spent $20 on an early

release of a movie on on Amazon if I

know that I can recoup 50% of that

afterwards I might be more likely to

sell that or to buy that in the first

place yet again these are all market

dynamics that I will figure out and the

the final slide to that and that's why

this is such an interesting topic is

once you have an item on on the

blockchain at an immutable record you

can expect to see with more and more

interesting develop

on the actual mention protocol so what

this slide is trying to explain to you

so you got the upper half you got your

your blockchain level and the lower half

is kind of the real world and we need to

fix that later the the all the real

world items belong at the bottom and so

like I explained earlier you can start

by just creating the entry and just

basically create a database of

information that is linking back to this

entry ie the steerer base entry is

connected to this particular blockchain

address and it signifies ownership for

2018 bottle of red wine that has been

bottled in this particular region on

that particular day from from this

particular plot that looks a particular

way and then it goes to a virtual market

of sorts and then ownership to the entry

and with that the right to the bottle

gets transferred to another person and

then from there you would assume that

okay eventually I might take one take

possession of the actual item so now

what happens it goes onto a truck right

so now it's in the supply chain and

there you have other blockchain

applications right so you'll have

information about routes you have

information about the vehicle you have

whatever type of information you might

be interested in storing so what we

expect to see is you get more elaborate

blockchain protocols mainstream

protocols that facilitate that

particular behavior and then link back

to this NFT so once it to make it more

model just more visible in a ways once

it arrives at the next storage facility

and that storage facility also deploys

blockchain based IOT solution as an

example you can then reliably track that

this particular bottle for example was

always kept at a certain temperature

oh so because the blockchain will

provide you with the information that's

associated with this particular

warehouse that this particular bottle

was in at a particular time yeah I keep

all those records and yes that lives on

the blockchain forever

exactly so that was not possible in the

past I would have faked all of it you

could yeah yeah yeah not only could you

fortune and take all of this but think

about like just the the detailed

information that you would have to

transfer because really what happens in

the first place I saw you so you got got

your product right and then you Bartlett

you box it or something else and then

you hand it over to someone who's

transporting it so typically what does

particular individual gets is a like

stack or maybe just one piece of paper

that just will say oh he picked up 5,000

bottles of this particular Y and that's

that right so that's the that's the

little piece of information that makes

it from that first data silo to the next

data silo which is then the way a house

for you for example so and you you don't

know nothing about the way a house but

and specifically you you have no way of

tracking the relationship between the

particular bottle that you then buy is a

consumer to narrow down whether or not

this bottle that now you uncorked and it

turned you don't know who was the

responsible party for this as an example

yeah and you can

needless to say come up with many many

more examples well this has great

utility the the one that always comes to

mind first to me is there's almost no

year that goes by when you don't have a

recall from a particular brand of car

well a car gets recalled because they

they had constantly

yeah they had yeah mechanical yeah it's

structural there's always something

that's gonna happen yeah and what

happens in all of these scenarios is

that they're gonna call back all of

these models so if you've got a thought

Explorer

that was made between this and this time

you get these letters in the mail right

then please bring it in we need to

inspect it so and nine out of ten times

they won't replace anything because they

just check and say oh yeah I didn't have

the faulty part it was only XYZ the

reason for that is big because you

couldn't attract the individual parts so

if you were able to track this

particular part from its inception have

it be born on the blockchain so to speak

track it down all the way to when you

swipe your credit card or otherwise to

take possession of the title for that

car and you could identify well this

particular vehicle is also linked to

these particular other items that were

stored in a certain way were shipped in

a certain way they said then you could

actually pinpoint to the batch that had

this particular fault right and you can

easily see where this can save millions

of dollars in otherwise wasted time and

expenditure because before that you

weren't able to have this granular

function of tracking yeah

and just phenomenal yeah if you multiply

this just by the time that gets wasted

why because you have to do this right

millions of man-hours yeah yeah if you

recall five thousand cars so I tell you

got five thousand people that need to

spend whatever time they need to spend

to return the car pick it up again

they aren't happy about that the

dealership has to be for it no um and

almost checks that are sitting there

this is just one of many many examples

but well they're not on wine because I

hadn't had done a show with the guy that

we actually the date Sammy I met you

yeah a guy Jacob Nair David that had a

wine utility token okay winery in in

Jerusalem in fact okay and he was block

chaining there and he was talking more

about the the fact that you could

verified that this is actual real bottle

as opposed to fake ones there was a

whole whole thing with counterfeit wines

right and so that does that's kind of a

small implementation of that I presume

back then this standard didn't exist but

so it's all about honestly being able to

track this on the public blockchain

because a lot of these functions right

now just exist on the side chain which

is basically to say they exist in

database that a certain entity

controlled so a lot of these particulars

I'm still need to be implemented but

that's why we're looking at the space so

we're looking at other applications in

this space already long term they're

there then becoming super interesting

also for the actual widespread adoption

of these you can imagine a scenario

where you have a point-of-sale system

that's attached to the blockchain that

has all that information right so you

would just hold your phone next POS

system and it will move all all so not

only would you move the the physical

pieces into your cart but this

particular app but then move the virtual

implementations of those items into your

virtual apps right so it would add to

your virtual wine cellar it would tell

you this is my virtual fridge right so I

got you could see that this is in my

fridge I bought this on this day you

could see it on your phone so that that

gets rid of all these ideas of smart

refrigerators right because it's more

useful to track when you bought it and

know when it was produced and how it was

treated rather than I have a picture of

it in my fridge or not because it's not

gonna provide you with that particular

information with that particular history

and so there's an enormous amount and

wealth of information possible once you

start going down this particular token

standards and that's why we are super

excited about a this the 721 standard

then then the evolution of that 1155

where you can create this granularity of

information then transfer

across the value and supply chain and so

that's how we're looking kind of at the

space what what has immediate utility

and well we'll say if suppliers and

consumers real money and time and

because a lot of times when people talk

about blockchain implementations right

now they just talk about

cryptocurrencies and crypto kiddies it

takes a little bit of explanation I

think to see what the actual utilities

of these are there's very few people

that talk about that right now and very

few people I think understand right now

that go into this type of detail and

spend the time to analyze what what's

possible what should be implemented and

what should be implemented today yeah

and then once once they've come up with

those ideas and they need a whole team

of developers to create that app or that

environment right yeah and so we're

trying to educate this particular space

right now so working with a bunch of

game publishers and so we're now we're

working with a bunch of wineries and

tequila companies and whiskey companies

and and so and that's mostly to to

further this particular standard right

and then do the implementations on top

of that because also form of VC's

perspective if if you're on top of of

your game you want your portfolio

companies to have this particular

advantage right if you're in the supply

chain game if you're in the POS game if

you're in the gaming environment you

want your portfolio companies to have

early access to that right so and know

what you should start working on today

if you're doing a game today you should

you must implement these particular

standards right because it just creates

another audience for you it creates more

utility for you it creates more utility

for the buyer it opens up other

marketplaces it gives you options

phenomimom and it's great

well it's cool to certain seeing more

more of the actual implementation of the

usefulness of the blockchain instead of

just hearing two people talking about oh

we need the blockchain yeah what what do

you need it for and yeah yeah and most

of the time specifically if the

incumbents use the word it's just a

slight upgrade from an actual database

most of the time you you really really

don't need it and it comes down to under

understanding the principles of the

blockchain because the principle of the

blockchain is it allows you to create

value transfer protocols that lead to

peer-to-peer systems so what I mean by

that is so all the things that we

outlined just now they take out a lot of

middleman they don't yes take that all

increase right or something right they

don't take them all out obviously but

the the initial exchange from production

to like from production and Empire right

now you could do a peer-to-peer right

obviously after that there are still

people involved that need to actually

transport the item and so forth and

maybe even build a marketplace but you

don't have to you could just put your

inventory online before it's even

created and let the market find the

price for you and you probably should

write at least of a subset of your event

or you probably should because right now

this whole price finding process for a

lot of these items is left to middleman

that obviously have their own agenda

right so they're they're gonna play one

provider against another one because

they also need to make a margin for the

efforts which a good portion of that you

should avoid right you should just sell

it directly to your most important

customers and clients specifically if

you have something that is limited in

supply like like a wine or something

else where your inventory by definition

is only going to be one hundred thousand

bottles or it's it's an item you wanna

create in a scarce way we want to create

artificial scarcity

or you want to create something that's

very special and you just want to test

something right it's very hard to do

this right now because in order to get

it on the Shelf of let's say a

supermarket if you have a product that

requires white production it if you

would incur a lot of cost if you were to

set aside part of your production and

create that particular specialty wine

that is I don't know each Longo has this

particular nuance because we added

something to the soil or whatever

scenario you could imagine and this

paradigm allows you a lot of creativity

because now you can I mean send an email

to to the actual end user and you can

build this and use a connection and tell

them hey let us know what you think

about this we made a limited supply of

10,000 bottles they have a slightly

orangey flavor and if that's something

that you might be interested in or put

it up for presale and now now you have

an argument to go back to the supply and

say yeah the sells because we sold

10,000 bottles already in the

expectation that people are gonna like

it right and you don't really get this

option in a lot of cases right in a lot

of scenarios where hey you you have to

make it for us and get it into someone's

hand I see a lot of you know these

wineries especially in Temecula and that

could really benefit from this yeah I

mean I think everybody should at least

give it a try I mean there's very little

to lose there's a little bit of time and

effort but you know we have a team here

that can help with that and all well you

know it's kind of like I I understand

that that when Porsche came out with the

918 they they sold them before they made

them I didn't get one he didn't get one

no yeah they'd actually sold these all

of these yeah they don't test market

realizing that do me a gigantic demand

so they had sold a bunch of Porsche

before they had actually

made them so they actually had the money

to build them but before they before the

ship them yeah I mean Tesla does this to

some degree - yeah they buy the car

first and they build it well yeah in

most well you put some money down if you

want a new roadster put some money down

yet algorithmic check today okay all

right all right well great man yeah yeah

something right now oh wait yeah which

you've got you get articles coming up on

Forbes you get you had articles before

yeah this is more detail on the whole

set yeah I'll try to give him something

once a month average so few things that

I wrote in the past

on topics that we talked to our tool

about the dowel and about crypto

investing in it right now I'm riding on

two topics one that we talked about in

past this was security token topic which

doesn't seem to be going away and I have

some thoughts on the future of mining

days again yeah all right I'm trying to

well put some nuances on that

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you