Alt Asset Allocation - Ep 58 - Non Fungible Tokens and The Metaverse with Rizzle

Primer: In this episode of Alt Asset Allocation podcast, the host Ben Lakoff interviews Rizzle as he shares with us his thoughts on Non-Fungible Tokens (NFT) and the Metaverse. Rizzle is an OG in the NFT space, being the co-founder of nft42. Read till the end because he will be sharing alpha on his secret art drop on Art Blocks.

Rizzle

Introduction

  • His name is Ryan, but nobody knows that name in the NFT space

  • Co-founded nft42

    • Mainly a community guy and a role that he fits easily into

    • A jack of all trades but still needed people to execute his vision

    • Exited and started his own project, but still on great terms with other co-founders

  • Started in the crypto space around 2012 or 2013 tinkering with Bitcoin and altcoins

    • Fascinated with the tech and constantly tinkering with any new projects that came out

    • Joined all the subreddit and forums hated all the communities because he found them very toxic and always trying to pump and dump

    • Finally found a place that fits him when NFT came into the scene

  • When NFT came along, he felt a connection with all the artists and creators

    • Been staring at the charts and graphs for years but NFT is something different

    • NFT led to the Metaverse and found all these to be amazing applications of the tech

How did he get the mindset of investing in NFT?

  • Growing up he collected all sorts of things, like sports cards

"The art jump was like a natural, dangerous leap to me, to be honest, because my walls in my house don’t allow for any more art but my wallet in my pocket allows for infinite art. This is cool in some ways, but is also scary in other ways because you can never get out of that rabbit hole if you’re not careful."

Rizzle

  • He studied the market intensely to understand the trends and buy the popular cards to trade them

  • Did the same for used video games

  • His collections can be classified into 3 types:

    • Collecting for the sake of collection

    • For hustling

    • A combination of both

Thoughts on NFT

The NFT scene right now

  • Lots of rapid innovation - even with the current tech, it can churn out a lot of projects

  • Profile pictures NFTs are the hottest thing now

  • Hard to believe that prior to all these, there was no secondary market for NFT

    • People who bought NFT back then might be stuck with it

    • They just like the artist and the movement, so they buy the NFT

  • Now the secondary marketplace is full of demand and nobody can keep up with it

How to explain NFTs to a complete newbie

  • Had the best success by comparing NFTs to something that they already have that are non-NFT

    • Similar to buying digital goods like an album online, except you don't really own it because it is trapped in the platform

    • Different from owning a physical item like an actual DVD, because you can sell it, share it and use it in many other ways that a digital copy cannot

"You already own a bunch of digital goods, but you don’t really like own them. You are trapped in your Google play account or whatever. You can't send it to a friend so they can watch it. You can’t sell it to someone else when you’re done watching it. You can't even really throw it away."

Rizzle

  • People starts getting confused when he started talking about virtual worlds, VR, art galleries, owning 3D assets etc

  • Generally, people can understand the ownership part of NFT, but it is a challenge for them to understand the overarching ramifications of this technology and the possibilities this technology allows beyond ownership

    • E.g. Charged particles protocol founded by Ben Lakoff - merging DeFi with NFT

  • People in the space are learning what other different things you can do with NFT, so this is not just about having profile pictures NFT and ownership only

Explaining NFTs to the older generation

  • Not much luck

  • Explained to his family before and they get it but not to the point that they are interested enough to invest in it

  • During 2017 before the Bitcoin runup, his mum asked him to invest some money to invest in Bitcoin

    • But when the price dipped, her mum wanted to liquidate immediately because she cannot take the volatility

    • Someone who is in the space might have some safe bets to recommend but even those are safe relative to the wider crypto space - it is not safe by conventional standards

  • Ben had a hard time explaining what Charged Particles protocol is

    • People had to cross a few hurdles to understand it

    • If they don't understand the value of crypto, they won't understand the value of NFT, much less about NFT injected with programmable interest, which is what Charged Particles is about

  • Ben found it easier to explain conceptually to the younger generation

    • They spent billions per year buying skins to make their virtual avatar look pretty, so they get it when he explained that they don't actually own those skins

How to lead people to invest in art NFT?

  • Go to a centralised exchange like Coinbase and start buying some BTC and ETH - this is about as conservative as you can get in the space

  • To go into NFT, you have to get a lot more involved by joining Twitter, Discords and looking at other people's projects

    • The risk is that there is a good chance that you might get stuck with some of the NFT despite having a secondary market

"You know, buy stuff that is appealing to you. There’s a good chance that it will resonate with other people too. And you know, if NFTs continue to expand, which I have no doubt they will, I feel like anyone getting anything now will be fine in like five years from now. Maybe you don’t go all in on like, you know, cow profile pictures or whatever."

Rizzle

  • He only buys NFT that he likes, without really thinking of flipping it

    • There is a satisfaction beyond the financial aspect of owning art that you like e.g. gratification and gratefulness of the artists he helped to support

    • Also, a sentimental attachment to some of the NFT that he cannot imagine parting with

    • To get 10x on an NFT, you will need to know people and be lucky

  • You will still do well if you buy NFTs that are appealing to you, diversifying over different projects and be willing to wait for 5 years

What is super exciting and fascinating in the NFT space right now?

  • Exciting for the space

    • SuperRare's community drop because it is a huge push towards decentralisation

    • The narrative for decentralisation had been the drumbeat that the crypto space is marching to for years but got lost somehow in the NFT hype recently

    • This act might push others to contemplate decentralisation and move more towards that direction

    • This is what attracted him to crypto in the first place as it will level the playing field for everyone

  • Exciting for him personally

    • Everything that has to do with the Metaverse

    • Expansion into the virtual world, being able to own a piece of virtual land to set up shops, selling virtual goods

Metaverse

What is the Metaverse?

  • The term Metaverse is used loosely because most of the time, the term had been co-opted and it refers to a virtual world that is self-contained e.g. Facebook, Epic games version of the Metaverse

  • Thinks the big corporations' version of the Metaverse is more like walled gardens and hopefully will not have any place in the real Metaverse

  • Super Rare's community drop gave him some hope because they have something that the versions from big corporations will be unlikely to have

    • Knowledge and expertise

    • Backed by a passionate community that cares more about the Metaverse than an average Facebook user

    • Crypto ethos of redistributing wealth back to the community

Regulations

Do people care about self custody and ownership?

  • Ben feels that people generally don't care about it

  • But Rizzle thinks that people don't know that they care

  • If people get the concept that they can just buy one NFT that works everywhere, they will jump into it instead of using different siloed environments with their own ecosystems

Regulation in the space

  • Tricky because, unlike a token, the term NFT encompasses too many different classes of assets and is very complex to regulate as a whole

  • Will need to incorporate more jargon to distinguish between the different characteristics of NFTs and which asset class they belong to

  • He is afraid that because it is so complex, nobody will bother to distinguish out the different NFTs and hence it will be one fell swoop type of regulation

  • Ben mentions that to send a million dollars through banks, he will have to go through many hoops. But to buy a jpg for a hundred million dollars, essentially it can be done by pressing a few buttons

    • This is potentially worrying for the platform facilitating that

  • Also, Ben wishes that tax regulations can be clearer because there are many people that are unsure of the tax implications hence are not doing things

Personal thoughts

If he can remake the world of NFT, what would he do?

  • Wished that all the games he played before have NFT in-game items - will be good to look back at all those items he had collected as a kid

  • All important documents, like identity, can be rolled into an NFT that has gated access into places in the real world

  • Wants NFT to level up the playing field for everyone, something like what Axie Infinity does

    • Games are like Trojan horses that can onboard people to the tech

    • NFT could be like that too - having cute penguins on Twitter, having fun while simultaneously overthrowing the banks

"Actually I don’t even like the Axie game man, full disclosure. It’s like so boring to me, but it doesn’t even matter like, you know, something as simple as that unlocks like so many doors. I feel like that for so many people, getting these in video games is sort of like the Trojan horse, almost in terms of like rolling this technology out into the hands of the entire world"

Rizzle

Favourite NFT

  • His first NFT was a giant friendly potato

    • He was on social media and someone asked if he wanted an NFT. Proceeded to draw one for him

    • This first NFT opened the flood gates for him

    • He forgot that he had listed it for 1 ETH and quickly removed the listing because he will be heartbroken if it was sold

  • Avastar used in his profile picture

    • Co-founded nft42 and Jim McNelis gave it to him

    • Felt he was knighted by him for being part of the organisation

    • Used that profile picture for a long time and will not part with it

  • Stina Jones - had a few from her and had been collecting for a long time

  • Miguelgarest - commissioned his new profile picture from him

Most undiscovered artists

  • Cryptoyuna - never really quite caught fire like the rest

Most undervalued NFT project

  • Proof of Beauty

    • David is working on brilliant projects, looking at the space from another perspective

    • Experimenting with technology for the sake of doing so

    • Had a project called LONDON

  • 6 months ago he would have mentioned Art Blocks by Snowfro

  • They are all grouped in the same group of people who are passionate about the space

Favourite Metaverse project

  • His own project codenamed The Rizzle project

  • Collaborate with Miguelgarest and the developer Cheaterflums that Snowfro recommended

  • It is a Metaverse NFT concept, and he bounded the idea off Snowfro who loved it

  • Will be an art drop on Art Blocks

  • Will be a style that is goofy and funny, a meme like project that acts as a trojan horse with very good tech underpinning

  • Hopefully will push the space forward

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