ETHDay - NFT debate - Justin Bons & Adrian le Bas

[Music] so justin would you like to start give you a quick introduction is the mic working yes it is okay great i'm justin bonds from uh cyber capital i've been a full-time cryptocurrency researcher since 2014 and the fund that i manage is actually one of the oldest teach funds in europe and actually we've been holding ethereum as our largest asset in the fund since 2016. so that explains why i'm i'm one of the only ones actually wearing a blazer here today i've noticed um because i i do help to bridge the crypto native and crypto institutional world so to speak so uh you all don't have to all right [Music] well uh listening on yes that's a great introduction nice to meet you my name is adrian i'm a developer i work at eflocart which is a data art platform using nfds um i'll keep thinking short so we can get into it yeah well um justin what is your viewpoint on nfts and what do you think about them so i'll start with an opening statement since this is a debate and i've multiple arguments but i think the first one that i'll give is is this i would argue that when people go on to uh most nft platforms including your own um that they're not actually buying a work of art what they're buying is a hash on a blockchain okay which doesn't have any copyright which doesn't have any uh solid connection to the art itself so to speak so in my view what people are doing is spending millions of dollars on buying what are essentially a series of numbers and characters that exist on a blockchain that are unique that's true but to human eyes a string of numbers and letters doesn't look particularly unique and people are not actually buying the art in these cases especially if there's no copyright attached to that particular nft okay so we're just buying numbers on a blockchain correct i don't disagree so we can start there um so what is the question again yeah what's your viewpoint on nfts right um above all it's almost like a zero to one moment technologically speaking i think it's something that has been discussed for many decades that we are now finding ways to execute on we've been seeing that for the past few years like before even ethereum and now i think since yet last year we saw a massive explosion of use cases and i'll say that one main value of nfts that we see is that it's bringing a lot of adoption to blockchains right so i don't disagree with what you're saying i think a lot of people don't disagree with what you're saying but people still enjoy nfds okay i'm surprised you're agreeing with with my opening statement here that uh that people are just buying hash on a blockchain and not actually buying the i think most people do believe they're buying the art and that's and that's problematic furthermore saying that nfts are good because it brings people to ethereum i mean there's some issues with that as well right like i could start a ponzi scheme over ethereum and i could say hey this is good because it's bringing people to ethereum i don't believe the end justify the means so to speak yeah that's the fair point i mean this is supposed to be a debate um no no no but i think but i think the argument here of of a hash ultimately there is some form of image behind it and they believe that they are purchasing a piece of art they believe that's the key thing whether they are or not and i think that's where the the intellectual property side of it is a yeah also part of this right i don't know if you believe if you think that when you sell an nft on a marketplace that yes you are selling artwork i'm not sure how you perceive that um i think this is an important to separate the selling of an nft from the existence of an nft from the ownership of an ft from the transfer of an nft right so we can talk specifically about the market aspect of it the nfd financialization of it which i agree you can create a ponzi around it can raise 75 million dollars in hours right just like you can do with a animal meme coin right but what we are also discovering is the value of ownership the value of deeds online deeds right not just the deeds that we know as a house but a good deed right somebody can i can give you a gift right and this gift has value why well it's not just an image a gif that i found online that i just emailed it to you it's actually an nft a hash on a blockchain that has some sort of a tangible value attached to it why do you believe a hash on a blockchain has an intrinsic value because we're not connecting it to the art and and you agree with this um i would say that talking about ethereum specifically we discovered like a fungible token standard right many years ago and suddenly we're like oh we can do fundraisers around this we can do like icos around this because we can treat these tokens on the blockchain as some sort of hard money right so we are seeing now within of these a similar thought process around more subjective valued things right i mean that's that's problematic because because i'm i'm coming from it from the perspective of a fundamental investor right i'm looking for real value i'm looking for real utility and and if you just say well this is valuable because people believe it's valuable or this is valuable because people buy with the belief they can sell it again later i i don't think that's different to the uh modus operandi of a ponzi scheme investor either and i don't think that's necessarily a mentality we should be promoting in cryptocurrency if anything i would even go so far as that it puts a lot of people off right like a lot of the gaming world a lot of the world outside of us looks at nfts and they don't want to look at the list of cryptocurrency because it clearly looks like a scam i mean you're basically saying hey it's good for raising money i mean that that is not a good reason in of itself obviously i mean at that stage you're just grifting people but i think from the from the creator side as well right an argument maybe to be made is the fact that you know it's enabling a lot of creators to actually you know stop their job for whatever they're doing and actually enter the ecosystem and become artists for like which for them is actually can be now be a full-time job right um also to answer to your points um i think one thing that happened especially last year that we saw like a whole onboarding of a lot of quote unquote web 2 folks into going to quote web 3 and all those buzz words that let's not talk about that um we can go back to like okay where the whole web one and all of those aspects of it that has lingered around right like the participatory the cultures the cultural aspect of the internet right um so now with this quote-unquote web 3 we get to create new forms of experiences new forms of infrastructure projects that leverages this implementation of nfds to create new experiences for people new ways for people to transact new people new ways for people to form communities new way for new ways for people to coordinate i mean i mean that all sounds nice but at the end of the day people are spending very large amounts of money on effectively buying nothing i would argue i mean like just just a hash on a blockchain is basically nothing i mean there's more hashes on a blockchain than there are grains of sand on the planet i mean it's not not particularly rare or unique in that sense i think to a certain extent people are even being fooled into thinking that it is a unique work of art i mean i'm sure you've all seen this type of language being used to promote this and and i think there's a there's a real gap in understanding i'll i'll take it a a layer deeper as well i would even go so fast to say that this idea of blockchain and art and nfts i don't actually believe that this is a problem that blockchain solves right because if we're talking about something like a cryptocurrency transaction or or a smart contract over ethereum the reason why that works is because the blockchain is able to see itself it's aware of what it is doing within itself and it can enforce itself internally that's why cryptocurrency transactions work now in the case of something like an nft which um say you have something like copyrights and all these things involved the blockchain is unable to enforce this the blockchain is unable to stop someone from copying and pasting the image the blockchain is even unable to really enforce anything around copyrights either that is actually down to the legal jurisdiction so say hypothetically you do create nfts with attached copyrights i would go so fast to say that actually at that stage using an nft is actually the use of blockchain for an nft becomes superfluous in that it's not required for this particular use case it's not actually a use case that blockchain solves and in many ways it's actually distracting from the real innovation and the real forms of expression now i'll say one last thing i'm not completely heartless and cold i do like seeing artists getting paid for their work and i definitely think we need new solutions there but i don't think that that the nft art space the way we see it today i don't see that being a real solution unless we have real like kind of legal acknowledgements in legal jurisdictions of the legitimacy of these things and that's a coordination problem between governments not a problem that blockchain can solve fundamentally okay um a few things to unpack uh first let's talk about the greater full right the the ponzi aspect the the all the money raised i would say that a lot of nft enthusiasts are also tired of it they can't wait for it to cease right the same way that we were all kind of tired by the end of 217 by the whole ico bubble etc right we don't need an seo raising 50 million dollars every other day to solve whatever new problem that they decide they're gonna solve so that's one thing right i do believe that it's going to end i do believe there is a tragedy of the commons going on and i do believe that these astronomical valuations that we see around certain nft projects will not be the same in the future right then there is another point about um the nft references a image which is the art right first of all we can have a whole debate about what is art and that debate can be much longer let's not go there um [Music] in part you are right and there are people misleading other people like that in other parts this is why quote-unquote on-chain nfts are so valuable because you get to use the blockchain to also not just enforce but also produce the art right so um yeah that i love struck myself so let you know that's okay and actually that's something that's unique about your project you're actually using blockchain data to generate the art as far as understand which i think is very interesting um yeah i i just wanted to ask you based off of what you've just said is like is there a version of nfts using blockchain technology in some capacity in the next 10 years that you're like yes or in your mind should the application of blockchain focus on the monetary aspects of it the smart contract execution for things like defy yeah so i'm not convinced at all that nft for artwork and royalties that this is actually a problem that blockchain solves and even if you were to attach royalties and copyright to something like that right that um that it becomes pointless and actually what's even more important if there is a dispute with an nft over the ownership of an nft you have to ask the question well who is the leading authority here is it the legal jurisdiction or is it the blockchain and if you attach copyrights it's clearly going to be the legal jurisdiction because that has enforcement in the real world right and that's important to keep in mind and that's why i'm saying that that the use of blockchain in the case of nfts is actually it's not solving anything and and i think that's quite critical you also brought up uh the 2017 ico bubble and comparing that to the current day nft bubble this is a comparison i think we hear a lot but i think it's important to keep in mind that in my view i think a lot of very important things were built during that nft during that ico bubble and a lot of really important projects a lot of the blue chips that we really admire today in d5 were funded during that time period i mean sure there was a lot of things that that didn't make sense but there was also a lot that did and i don't see the same thing in the nft space today because it doesn't make sense from a fundamental perspective in terms of what problem are you actually solving i don't think any problem is actually being solved here and it's starting to look a lot like the high-end art market which has a ton of problems it's this the case of these very rich individuals selling nfts to themselves and then selling it on to the next person and using it as a form of money laundering etc etc considering also the non-fungible aspect of this it means it's trivial to to fake prices and all these things so in that sense if we look at the high-end art market and we look at the nft market what problems are actually being solved here i i don't see what problems are being solved it's just a new manifestation of that phenomena right and and and don't get me wrong i think there's lots of people in the nft space that really do have the best of intentions and i do believe you're one of those people i don't think you're a gryffindor or or anything like that um but but i do think it has those aspects and and i think that's problematic and there certainly are people as well that are just straight up scamming people knowingly right yes so okay a couple things uh what problem was solving uh throughout 2017 we saw a lot about banking the unbanked right that was like a common thing people say i personally don't like that so much but we can say that today we are not banking the unbanked we are giving artists um how can we put this uh we're giving value to the work that artists create we're giving them financially independent to some extent right we are liberating them from doing purely commercial work and actually express themselves artistically in a digital medium right which i think is really important right we are at the same time empowering uh underrepresented communities in the very similar way that we do in d5 right via a more subjective way via more artistic creative way there are creatives all over the world and these creatives are the same people they were trying to bank with d5 i mean i just wish that there was a better solution for these people one that doesn't end up as i mentioned you know quote-unquote scamming the buyers right yeah that's the problem with it like yeah i agree the one side of it is nice that artists get funded i might not always agree with the allocation of that funding if you look at the quality of a lot of the work out there um but i mean that's nice i agree with that i can't say oh no that's terrible of course that's a good thing and that's all great and that's all fluffy and that's all nice but it doesn't change the fact that on the other side of that transaction someone's spending a lot of money for something that they're not getting right they're not getting the thing they think they're buying in most cases yes so that that one i forgot to answer about um some will tell you that you are buying the artwork and that might be accurate because the artwork is on chain that might be misleading because the artwork is on aws right that is more of a problem of a narrative above all some might tell you that this is a certificate the certificate of the artwork and the artwork live somewhere else and you are transacting exactly the certificate right so let's say that the artwork lives on ipfs but you get to sell there's an ft that represents the ownership of that image right so no but hold on we agreed earlier that if there's no copyright attached owning the nft is not owning the image it's not owning the work of art you don't actually own it what you own is a hash on a blockchain well and this is what i mean about the problematic language here right well one argument that could be made outside of art is for example the tickets that everyone has here today goods tickets is also an nft and everyone everyone thinks that they own a ticket right we let everyone in oh yeah actually i didn't answer your uh your question from before let me just do that now i'm specifically here critiquing the art use case um i do think that ticketing specifically for nft is that that's a use case that makes sense for nfts i'm currently investigating uh property and nfts but i'm not actually convinced of that use case just yet but obviously you know ticketing and property that's very far removed from what we see in the majority of the entity for example with property do you see that there's then an extra legal link that then links that nft to the real well that's the part i'm unsure i'm still just keeping an open mind on that subject in particular ask me in a few weeks i will have made up my mind i'm i'm probably gonna side with it doesn't make sense either but but ticketing makes sense and there's probably a few more use cases that make sense but it's it's very limited in in comparison to something like what we see in the nft world today and all of the hype around it and um you know i i understand the perspective right like if you're making a movie right and you're going gonna maybe gross 20 million off that movie if you do a nft sale alongside that movie you might make an extra 40 million on top of it why wouldn't you do that right like that's brilliant from the perspective of the person releasing the product yeah but the problem with that is it's also an ethical issue is that what are people actually buying and that's where people are potentially getting grifted and potentially where a lot of people might actually get hurt as well when they're buying into nfts thinking it's an investment and they're not on the inside they're going to lose a lot of money and that's something i'm concerned about as well both you know people getting hurt and also all of this just giving cryptocurrency as a whole a bad reputation because you know we are here because we believe in cryptocurrency and it's got this amazing profound power to like change the world for good and and if we're so and and if what people see is this frivolous nft thing this borderline drifting thing then then people are gonna look at that and they're gonna judge cryptocurrency and they're gonna um they're gonna maybe shy away from when otherwise they wouldn't have and in that sense i think it's negative yeah yes um i would argue that they do that even more to fungible tokens than they would to entities so that's a whole lot there's plenty of scams all over the crypto and then we can definitely talk about the different use cases of nfds art being one of them ens is a very very common one that i think we can all agree has value to it and i would also say that they are more similar than we think because the art aspect of it is just a subjective human expression in many ways so we found a way to digitally give a tangible form some quote unquote tangible form of value to these more subjective human expressions i want to say there's one point from the an audience member here that i quote zoomers don't care about copyright nfts are realistic culture trying to understand this with logic is futile so we live in a new paradigm of incentives right so a lot of these more crypto native zoomer creatives who are starting to experiment with their creativity in this digital medium are seeing nfts exactly like that it's not so much about combining the licensing of the traditional world with this new uh format or whatever you want to call it they are fully onboarding themselves into this medium using nft's material and transacting completely in a digital way right but the problem with that is that it can't be enforced so without enforcement right it's not a true form of ownership like that that's that's critical in all of this right like if it's not a true form of ownership and and i noticed this you keep linking it back to the art when at the beginning of this debate you agreed people are not buying the art they're buying a hash on a blockchain and the hash can be art hold on hold on here you're saying the hash itself is out in some sense that's a stretch i mean i know you can get all abstract and define anything as art but a literal random set of numbers uh generated by cryptographic protocol no no that's not art okay i mean maybe you can't see without but the point is most people buy nfts because they believe there's a linkage from that hash to the work of art itself and that's what you were implying as well but i'm saying that's not the case there is no link between the nft and the work of art that they believe it is linked to what they are buying is a string of random characters and numbers sometimes for millions of dollars and i think that's crazy well they are also paying to be a uh note noticed super fan of an artist that they look up to for example they are also paying to be part of a community they are also paying to fuel something online in many ways so at the end of the day if the nft is a hash which has its visual representation if the nft is a hash that points to an image hosted up there elsewhere the value that somebody might feel from holding that from transacting there is still there yeah i i see what you're doing there you're saying it gives people a feeling and they can project any feeling and meaning upon anything basically but come on that's that's just fluffy talk that's just you're not saying anything by saying that i i could imbue the same meaning in this plastic cup it doesn't mean that someone's going to buy it off me for millions of dollars if it has a floor price maybe i mean i mean if you do i've got a bridge i can sell you but you know i mean that's kind of the point here in that once you cross that line you could sell anything to anyone because you say oh no we're imbuing it with meaning but if you're really thinking from the perspective like fundamental investment and real value and sensible economics and not wanting to scam people you can't use that argument um how much do you think a banana taped or wall is worth sorry can you repeat the question how much do you think a banana taped to a wall is worth sorry a wool you take a banana you tape it to a wall yeah and you call that art how much is that worth i believe it went for like 400 million what was it 20 million i don't remember how much that was sold for but i'm but i'm familiar with the particular thing well again i'll take it back to all of the problems that are wrong with the high-end art market are also problems that are wrong with the nft market there's a there's a huge mismatch in terms of the real quality and merit of the artist and where this money is being allocated because it's not about the art it's about speculation it's about virtue signaling it's about money laundering it's about all of the same things that the mainstream art market is about which just goes to show that this iteration of modern nfts is not solving any problem it's just enriching certain people at the cost of others i don't think that that is a good thing well if it's good or bad i mean that's for other people to say but it's something that i've been doing for centuries yeah uh it's something that what is what is the quote wherever commerce goes um art flourishes so we're seeing that you know it's the realm okay we have to we have to wrap up i'll make a final comment here based on what you're saying here so look if you say everything is relativistic and everything is subjective then nothing can have any real meaning and truth is completely subjective like i would disagree with that generally speaking i i do think we can identify real value and there are such things as sound economics and it's not all just in the eye of the beholder there is a hard physical universe and if you're selling people a dream that is completely immaterial and people are maybe losing their life savings to that i would seriously question the ethics behind that because what you're doing with this type of relativistic talk you could you could sell anything to anyone using that sort of argument that is not a strong argument for nfts at all you're basically admitting that there is no unique value there is no unique innovation in nfts whatsoever just like ethereum has no features right so there's a good place here the reality is is i don't know if anyone has the total market cap of nfts right now if you would aggregate it but i can tell you one thing it's a shitload of money so the reality is is obviously yes what you're saying i do agree has some substance but the reality is also saying something different and there is an inherent belief in the art market nfts but also the fact that yes there are going to be applications of nfts well beyond the our market and i think everyone being here today is a proof of that i hope that you guys got something out of this that's the main thing i did i tried to integrate some of the questions a little bit but most importantly i think if your grandparents start arguing now with you about nfts maybe you can take something away from this and you can be a little bit more soft with your response unlike uh yeah someone over here thank you so much everyone thank you justin thank you [Music]