The Intersection of Non-Fungible Tokens & Retail with Blockskye CEO Brook Armstrong

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On this episode of Cowen Insights, Retailing Broadline and Department Stores Analyst, Oliver Chen speaks with Brook Armstrong, CEO and Co-Founder of Blockskye.

Brook gives listeners an introductory deep dive into NFTs, cryptocurrencies, intellectual property risks, and the metaverse. The discussion also covers ideas and tips for starting your Web3 journey and how retailers can incorporate NFTs into their strategy. Press play to listen to the podcast.

Transcript

Speaker 1:

Welcome to Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us, as we converse with the top minds who are influencing our global sectors.

Oliver Chen:

This is a Visionary Podcast series, about visionary ideas and people. My name is Oliver Chen, I’m Cowen’s new platform, retail and luxury analyst. In this episode of our retail and luxury visionary podcast series, we’re sitting down with Brook Armstrong to discuss non-fungible tokens and an NFT 101 Podcast series, along with implications for retail as consumers reach for the virtual world. I use a MetaMask wallet, and I have a few NFTs myself from Gucci, superplastic, CryptoJanky, and Sotheby’s. Who is Brook Armstrong? Brook serves as CEO and co-founder of Blockskye, a company that works with major suppliers and buyers of travel inventory, including major airlines and hotels to tokenize tickets and bookings on chain in order to fulfill expense and settlement services against these digital assets. Brook Armstrong has been investing in crypto since 2016, and NFTs since 2019. And he actively invests in NFTs across a range of blockchains and categories, fine arts, pictures, utility gaming, virtual and infrastructure. In addition to active investing, he also advises on crypto and NFT assets. Brook, it’s really exciting to have you today. Thanks for joining us.

Brook Armstrong:

My pleasure. Thank you for having me on, I’m excited to be here.

Oliver Chen:

To set the frame for our discussion on NFTs, can you describe, what’s an NFT in a few sentences for us?

Brook Armstrong:

Sure. The literal concept of an NFT is that a blockchain contains cryptographic testimony to the ownership of a digital asset. So this is just a decentralized blockchain, like we’re all becoming familiar with testifying that there is a digital asset and that you own it. And when you own it, you have the right to sell it, borrow against it and use that as collateral and property. That’s its most literal sense.

Oliver Chen:

Brook, what are your most frequently asked questions you get about NFTs? And what would you say is least well understood about NFTs and crypto?

Brook Armstrong:

The most frequently asked questions are generally questions around how do the economics work? Is this a Ponzi or a pyramid? I don’t quite understand why I’m seeing a press release or media about these high value images. So just some questions around, why does this have value? Why is the market pricing these things? Past that are the questions of, how do I get started? And what’s the best entry point? And then the inevitable, how many do you own and what are they all worth? In terms of the question of which are the least understood pieces of NFTs and crypto, I think there are a number of things. It is a relatively complex market. It takes some time to get inside of it. But for NFTs, I would say that the impact on various markets from retail to gaming and travel, that a peer-to-peer marketplace for non-fungible digital assets can have, I don’t think that’s priced in.

                I think that there are… We live in a world where we consume and touch a lot of natively digital assets, but because those assets are not in a peer-to-peer marketplace, there isn’t proper price discovery and proper risk assessment about what those assets are. On the crypto side, I’d say there are even more less understood things than on NFTs, but to pick one that I’m fond of, I think the impact of private issued stable coins on global commerce and capital markets, and this is distinct from Central Bank Digital Currencies or CBDC, I think that’s vastly underrated at the moment.

Oliver Chen:

Brook, so how do you get started in NFTs? What are your recommendations for people who are newer to this field and market?

Brook Armstrong:

The first thing to do is look around and find ones that you find compelling. You find them compelling because of the community, because of the game that they could be in, the look, the feel. But in general, once you’ve identified a series or an artist that you are interested in, the first thing to do is identify if there’s liquidity in that series, so id… If you’re looking and you see that the last sale was a week before that, and two weeks before that, it means it’s a low liquidity market, and if you want to sell your NFT, there’s not a lot of opportunity to sell.

                In general, I look for series that have around 10 sales per 24 hours. If you’re looking and you see that, that means that there’s a pretty good opportunity to sell if you want to sell. And then the last very important thing is, always buy two, because if you become very, very attached to it it’s a real heartache to sell it. And we’ve seen this with both the Bored Apes and [inaudible 00:05:39] Punks, people have bought one, they really identify it, they use it as their avatar on Twitter, et cetera, goes up in value and they want to sell it, but then, once they sell it, they don’t have one they can use. So always buy two.

Oliver Chen:

Brook, NFTs are largely part of the Ethereum blockchain, can you explain that? What does that even mean? The sentence I just said.

Brook Armstrong:

The sentence that you just said sort has two implications. One is that, NFTs are part of crypto or Web 3.0. And that the second one is that they’re part of Ethereum. So I think to take those questions in two parts, the first question is that, NFTs by definition are peer-to-peer tradeable assets that can go anywhere. This is distinct, for example, from an asset that I buy in Roblox. I can’t buy a Gucci bag in Roblox and then take it off the Roblox platform and sell it anywhere else. These NFTs are by definition, in a way, interoperable. I can do whatever I want with them.

                In the Ethereum context, what this means is that, most NFTs are issued on Ethereum because there’s been a network effect around NFT issuance on Ethereum, going back to the very first NFTs that were issued on Ethereum and ever issued anywhere in early 2017. And so there has been a network effect of issuers, creators, and artists wanting to be on chain where other folks are. So we’re starting to see other folks issue change on Sowan, Tezos et cetera. And we’re seeing those markets grow, but there’s a network effect in this community right now around Ethereum.

Oliver Chen:

Brook, you brought up peer-to-peer, how that ties nice me into Web 3.0. A lot of people listening to this won’t even know what Web 3.0, how do you explain that? And how does that interplay with peer-to-peer?

Brook Armstrong:

The way that I think about Web 2.0 and Web 3.0 is really in context. And I think Web 3.0 by definition, adding the number three is in distinction to Web 2.0. So I think to start with Web 2.0, in Web 2.0, you don’t own your assets, you don’t own your identity. So I can spend hours of my life creating content for my profile in LinkedIn, Instagram, Twitter, et cetera. But then if I wanted to take that content out and own it and put it somewhere else, I can’t because all of that data I’ve actually handed over to those companies.

                And in Web 3.0, it introduces this idea that I actually own that data, by owning the token, I can actually own the platform. And now when I have those assets, I can trade them peer-to-peer. And I think to go back to the Roblox example, that’s a strong anecdote. So if I buy a Gucci bag in Roblox, I can only sell it inside of the Roblox platform. And in that sense, I’m kind of working for Roblox because if I meet up with friends and they’re buying Gucci bags in another game, that means that there is a Gucci bag virtual good buyer that I can’t sell to because mine is in Roblox. What I’d like to do is say, oh, you’ve got Gucci bags in Minecraft, so I can sell it to you.

                So in Web 2.0, I’m kind of working for Roblox at that point. In Web 3.0, if I have a fully interoperable Gucci bag NFT, then it’s just me. It’s peer-to-peer, I can sell that anywhere. One of the things that really excites folks in Web 3.0 and NFTs is, from this perspective, when you look back at Web 2.0, you realize how much of Web 2.0 is really driven by advertising models. Google as an advertising company, Amazon, increasingly as an advertising company with their search results, Facebook obviously, and how many businesses have been built on that advertising model. NFTs by definition are doing many of the same things. They’re attracting eyeballs, generating attention. People are acting as natural marketers, identifying with PFPs and NFTs and talking about those NFTs. So a lot of the same media and social dynamics are going on in Web 3.0, but in entirely different economic model, there’s no advertising revenue in NFTs, it’s all around folks owning these assets and transacting among them. It’s an entirely different economic model to address those basic media functions.

Oliver Chen:

Brook, so how will NFTs play a role in retail?

Brook Armstrong:

Some of the low hanging fruit is where product market fit has already been demonstrated for virtual goods. We’ve seen folks buy and sell in game assets for almost two decades now, I think, and those are big growing markets of virtual goods. And brands have moved into that space with great success, enjoying the scale of digital goods versus physical goods. I think in a natural progression there is for those assets to become NFTs, and I think that’s a good entry point for a brand because they’re already going after an existing product market fit. There’s low risk of price volatility, et cetera, because the user has some other sense of utility with that asset. Past that, I think there’s a big market for gaming and in game assets.

                I personally work in tickets and travel inventory, I think that’s a natural fit for price discovery. But I think in a broader sense, if we look back at the collaboration between Adidas and the Bored Yacht Club, what was traditionally a marketing spend, where Adidas marketing team wakes up every morning and says, this is our budget, we’re going to go out and buy ads and generate some noise. With the Bored Yacht Club, NFT collaboration, they actually turn their marketing spend into a profit center. So they made a lot of noise with that issue and got a lot of fans, NFT people got excited about it, Adidas people got excited about it, but it was actually a profit center for the marketing team. I think this is an interesting place to explore. And I think a number of brands have done this successfully, is to conceive of their marketing budget as an actual profit center with NFTs, changing your relationship with your most motivated buyers.

Oliver Chen:

Brook, why are tickets and travel so conducive to this? How are you using it in your business?

Brook Armstrong:

So travel inventory notoriously has very little means of price discovery. So if all of our… If I were to ask you how much you want to pay to flight to [inaudible 00:13:27] this summer, you could name a price, but somebody else could name another price and somebody else could come later on and name another price. When an airline just offers a price to everybody, generally, there’s no price discovery because there’s no dialogue with a traveler around the willingness to pay. So I think in many of these markets, including travel markets, a peer-to-peer marketplaces is ripe for an opportunity to identify the maximum willingness to pay.

                And StubHub does this to some degree. And there are some actors who do this to some degree in some of these markets, but it’s not at scale. We don’t have an infrastructure that would allow, for example, a PE shop to speculate on all the flights going to Italy from North America this August, and then participate in the resale market and have the actual travel supplier, to have the airline take a percentage of that resale. I think that naturally that center of gravity will exist in a peer-to-peer marketplace for that inventory.

Oliver Chen:

For companies like Brilliant Earth that we cover are using blockchain for diamonds and supply chain, Walmart and other grocers are looking at blockchain for grocery and chain of custody. What are your thoughts about those opportunities? What do you see happening ahead?

Brook Armstrong:

I think there will be some very useful application of supply chain providence on blockchains for industries that make sense. And I think a bunch of them will fall on the wayside. So I think we’re going to have a sort of rough period of adoption here on, just to be very frank, on part of the risk side here is, a lot of luxury companies don’t actually want this, because the definition of, a made in Italy tag is pretty low bar. I can sell a suit with a made in Italy tag merely because some of the finishing was done in Milan, but a lot of the cut and zone and even fabrication was done overseas. I’m not really interested in letting the consumer know precisely how much activity was done, where and where things are from. So I think that there are going to be whole markets that actually don’t want that transparency.

                Then there will be other markets that do want that transparency because of the risk that they encounter. So for example, monitoring genetically modified seeds in the EU. If you actually have genetically modified seeds in the EU, there is huge fines associated with that. How those seeds move around, that’s sort of a natural blockchain question. So I think over the next five years or so, we’ll see some networks in some industries really show some good use cases, but I… By definition, I don’t think that it will be used by all supply chains.

Oliver Chen:

Brook, you mentioned IP rights, intellectual property rights. How do you envision brands maintaining control of their intellectual property in this world of Web 3.0 and peer-to-peer? Is there a world where consumers can reproduce images of their NFTs? Ethereum does have a lot of flexibility in different kinds of structures that NFTs can hold.

Brook Armstrong:

So this is, I think one of the more exciting, challenging, and new frontier aspects of brands and media properties in terms of transitioning from a Web 2.0.0 to a Web 3.0 context. And the question really is, what would Disney Frozen as a franchise look like if I owned Elsa? And if own Elsa and I’m self-identifying as Elsa online, I’m going into different places, Twitter, Discord, et cetera, and I represent that property in the same way that people today are representing CryptoPunks or Bored Yacht Club, PFPs, that presents a business model shift for Disney. Business model shift because, how much revenue do I get as the owner of Elsa? If I develop some products of Elsa, but then I sell my Elsa NFT, am I still getting revenue for those products? All the way down to questions around PR and who these folks are, what happens if you issue some NFTs and they’re bought by store media annuals, Joe Rogan and Alexandria Ocasio Cortez.

                I think we will definitely see properties built and a diverse set of buyers who are going out there and creating stories that are outside of the control of an issuer like Disney. In this sense, I think trying to maintain all of those aspects that attain a Web 2.0.0 understanding of IP and brand management and risk management and PR management and all of that, I think trying to maintain that in the Web 3.0 context is probably a losing battle. And I think one of the central questions here that we’re going to see play out over the coming years is, are natively crypto NFT brands somehow more suited to this new human psyche? Like we were increasingly living online, we’re increasingly living in public. Will all of these people just come up with something totally new and they’ll just…

                For them, it will just be natural to have this distributed ownership of this media property, they’ll have a different notion of scandal, a different notion of what’s fun and attractive or scary or not scary. But I think what we’re seeing around these properties like CryptoPunks and Bored Apes and many others is a real ability to monetize attention and consistently reward user engagement. We’re seeing folks every day wake up and interact with these brands day after day after day after day after day after day, and be rewarded and be part owners of those. I wouldn’t bet against that. And I would not be surprised that we wake up in a world five to 10 years, and now where the largest media properties, gaming properties, moving properties, et cetera, are actually decently owned by their NFT holders.

Oliver Chen:

Very interesting, like the analogy is NFT native, digitally native brands. And then the other analogy is, how does this transition happen in terms of heritage brands or legacy brands and intersection of legacy with the virtual world? You touched upon this earlier, Brooke, why would a brand implement NFTs into their customer acquisition and engagement strategy? Should they do this at all? What are your thoughts there? It’s a great question that very much relates to customer lifetime value as a methodology for valuation.

Brook Armstrong:

I would advise pretty much every brand to try it, because we live in an increasingly digital and virtual worlds. Unless your brand is just to totally be the black sheep and you have some very special experience that’s IRL, I would encourage every brand to try it. And I think there are really two avenues to consider. One is the redeemable NFT. With the redeemable NFT, you can’t really go wrong. So this is the NFT that allows you to come sit in the first row of our fashion show. This is the NFT that allows you to buy the first of 10 limited edition products, et cetera. I think that’s a fairly safe place to play, it’s controllable place. And you can certainly identify a number of… Any brand could identify a number of their top customers who would engage with this property.

                If it’s not a one off, and if it’s not a redeemable NFT, it’s an NFT that exists as a media property. Then you get to this question of how many of them are you issuing and who is the community that will be participating with them? Because again, you want some liquidity, you want some movement, you want user engagement with these things. That is a more complex question and I don’t think we’ve seen too many very successful examples of that so far outside of the Adidas collaboration and some of the Nike RTFKT NFTs. But I think it’s inevitably a question of scale and sitting down and saying, do we as a brand have 10,000 people who are online every day interacting with us on Instagram other platforms? And can we interact even closer with those folks by getting to a daily liquidity number of around 10 sales a day? I really think that’s the benchmark there.

                Having established that, I think there are a number of creative ways to get there. And as I always say, everybody in crypto has some wins and losses, no one has made all the perfect trade, everybody has skin their shins, and we have a very short memory. What was a scandal today, will all forget three or five days from now. So I wouldn’t be too afraid. I think you just get into the community and start playing around.

Oliver Chen:

Brook, I ask everybody this in our series and talks, what are the three things people should do to get acquainted with NFTs in your view?

Brook Armstrong:

Talk to someone who owns them and enjoys them and likes them and has had a good experience and engages with them daily. There’s got to be somebody in your world or one or two people away from you. Find that person, and I guarantee you, they’re happy to talk about it. We’re a pretty engaged and motivated bunch. I’d say, certainly find that person and talk. The second one is to look at the marketplaces and just see what’s out there. Look at the liquidity, look at the recent sales, look at the spread between, in a certain series, the rare traits versus the lower traits. See if there’s anything that actually speaks to you. And then number three, I would say, go onto Discord or Twitter and see who is it that’s actually using these things. Who’s in a given series.

                We’re in a moment now where NFTs are transitioning from being strictly Discord an Twitter worlds into real life events. So meetups of people who have NFTs are happening all the time. So we’re seeing that now go the other way around, people are setting up parties, where the only way you can get in is if you have an NFT, or if you can come to the party if you’re interested, if you’re on the Discord, there’s just a new type of human coordination that we’re seeing going on around NFT communities, find one that speaks to you.

Oliver Chen:

Along the lines of becoming a further educated in this market, what are some of the more remark NFT collections you’ve come across? What should we go check out? Is it possible to introduce a one off NFT or would a brand need to focus on providing a collection?

Brook Armstrong:

One of the more remarkable ones that I have come across is a series called, Rowhomes by Chris Hytha. He’s a Philadelphia based photographer. And he has taken a series of abandoned row homes in Philadelphia, somewhat abandoned, and he has photoshopped them, done some filtering and some affecting, made them a little sort of cartoon like, but they nevertheless are photo based images of homes and not great repair. And I think they’re just beautiful images. They present American Gothic and a sense of a mere beauty in American industrial decline in a very beautiful way. And each NFT is an individual home, they’re numbered with the actual home address. There’s an interesting dynamic between real estate is itself non fungible. It’s an asset that is non fungible, this home is this home. It’s not exchangeable with some other home. And he makes really beautiful art and has built a very engaged community around him. And so as a series, I just think there’s… There’s a lot of beauty there, and just again, this dynamic between real estate being non-fungible and these [inaudible 00:27:50] being non-fungible. But [crosstalk 00:27:52].

Oliver Chen:

Yeah. This idea of community is so prevalent, but would love to hear more about that.

Brook Armstrong:

Yeah. There have been some artists who have come into the NFT industry and they don’t have it in them necessarily to consistently engage with their audience. That’s tricky. To keep the market going, to keep folks engaged, there are a lot of gaming dynamics going on. It’s not like, I’m Jackson Paul, I can make a painting and I’m done. If an artist issues NFTs, that’s really just the first day of a multi-day exercise. You’re on Twitter, you’re on Discord, you’re engaging with your fans, your fans are buying and selling and trading. They’re interacting with you and giving you feedback on what your next series could be. It is a collaborative, ongoing process that generates artwork, but you really have to do both things.

                But what you end up with though is again, this sort of crypto ideal of human coordination. What does it look like when a lot of people own Bitcoin together? What fellowship is among them? What does it look like when a lot of people own Ethereum together and what fellowship is among them? I could be building on something on Ethereum, you could be building something completely different on the other side of the world, yet we were coordinated because we’re both participating on Ethereum. I could be participating on Solana, but I even have some fellowship with you on Ethereum because we participate for example, in a regulatory fashion. So as we transition whereas we expand our concepts of economic human coordination beyond the LLC, the S Corp and the C Corp and federally issued currency, and we expand that to cryptocurrencies and NFTs. There are new forms of human coordination that in my experience are distinctly different.

Oliver Chen:

Well, this whole concept of fellowship is an interesting statement in relation to community. Also, Brook, we can dive into this for an hour, but what is trust? And trust in this new world will be a major important, both regulatory and philosophical topic and ethical topic.

Brook Armstrong:

Yes, that is the one of the essential questions here. I think it’s worth identifying that the crypto world uses this idea of trustless architecture or permissionless architecture, and to somebody outside the industry that sounds curious, why do I want something that’s trustless? Semantically, what they’re trying to say is that, the architecture is not burdened with the need for trust. I know that this Bitcoin is a Bitcoin because the Bitcoin network tells me versus with Fiat currency or paper currency or anything that was issued with the strength of an intermediary, I know I have this money in my bank account because the Chase mobile app tells me that I do. And the Chase mobile app can tell me that they do because they have funds that they’ve taken from somewhere else that was ultimately issued by the Fed at some point in time.

                And so seeing from the crypto or the Bitcoin point of view, I’ve actually got a lot of trust going on with Chase. Chase has put a lot of trust in the Federal Reserve, and then global markets have put a lot of trust in the United States because they keep buying our bonds and holding things up. So there’s a lot of trust going on among all these intermediaries. However, that introduces these other new ideas of trust, okay, if I’m unburdened with needing to trust the architecture, because yes, I own this NFT, the blockchain says it so. Yes, I own this Bitcoin because the Bitcoin network says it’s so. Distributed settlement finality, the collapse between payment and settlement in one gesture. When I give you a hundred dollars, that’s it. When I give you a Bitcoin, that’s it. When I give you my credit card, that isn’t it. I still have to pay my credit card bill later. When I give you a paper cheque that isn’t it, I still have to pay my paper cheque later.

                When you collapse payment and settlement to one gesture, which cryptocurrency introduces with this concept of distributed architecture settlement finality, you enter into a whole new world of what is trust and who am I trusting? Because you can’t rewind that transaction. There’s no going back. I can’t dispute the charge. And that is the area that Bitcoiners have been playing with for 13.0 years now, Ethereum for about seven or so. And this is the area that’s very hard to regulate because regulation by definition allows the power of the regulator or the admin to go back and reverse a charge or dispute a transaction, and the architecture doesn’t allow them. So I think what we’ll see is regulators focusing on the Fiat on ramps and off ramps. But I don’t think that there’s a very good view to what trust and regulatory apparatus looks like for on chain transactions.

Oliver Chen:

Yeah. We’re definitely going to see interesting friction in the evolution of this and many different facets. I’m going to go rapid fire on a few questions that we get on this topic. We’d love your thoughts on a few consumer retail examples that we should check out. Second question, decentralized autonomous organizations. What is a DAO? What’s a Dow 101? Third and final. What about wallets? I think the audience should understand what a wallet is. My take is that, very few people have wallets and/or NFTs. So that’s part of the whole ecosystem.

Brook Armstrong:

Great questions. So to take those in order, for retail, at existing brands, I will definitely interact with the FTX, Coachella NFTS. I think Coachella is just beginning their journey as a media property and I wouldn’t be surprised to see them as sprawling digital company some years from now. They’ve issue of NFTs that give lifetime rights to the anti holders, is a great property to touch. The Nike RTFKT series is also a very fun series. I think they have a well planned roadmap that they’re keeping secret from everybody, but I have high hopes from that team.

                In terms of wallets, the easiest wallets to interact with in my experience are actually on Solana. And if I were to advise somebody who is just beginning their journey, I think the entry level there is the Phantom wallet, and that’s P-H-A-N-T-O-M. On Solana is the easiest safest place to get started. And Solana has a bunch of NFT marketplaces, including FTX NFT, that has a lot of easy tools to help guide users. So I would say that’s a great place to start. I forgot your second question.

Oliver Chen:

DAOs, decentralized autonomous organizations.

Brook Armstrong:

Right. So DAOs are the on chain attempt to replace the LLC to C Corp and S Corp. And so what that literally means is, if we look at the LLC to C Corp and the S Corp, these are instruments that are driven by essentially word documents. Lawyers have composed sentences and paragraphs in English or any spoken language. And those are the operating concepts of those entities, subject to interpretation ultimately by judges in the event of disputes. DAOs replace that coordination with math and computer code. So it’s literally going from letters to numbers. Introducing the concepts of distributed settlement finality, and the idea that, all of those rules rights and functions that exist in LLCs and C Corp are now existing on chain with smart contracts. And the DAO is the distributed autonomous organization that allows individuals and individual wallet holders to periodically interact with the DAO, either through proposals and voting, to make decisions about, for example, how treasury is allocated.

Oliver Chen:

Brook, you dived into this, you mentioned it smart contracts, smart contracts are one of the tenants of NFTs too. Could you explain that quickly?

Brook Armstrong:

Absolutely. Bitcoin introduces the idea of a distributed ledger that has units of account with balances. You can’t go into Bitcoin and stack too many if then commands. I can’t say, send this Bitcoin to Oliver after Oliver has sent me that NFT, or take these funds and put it in Escrow, and then after Oliver has done these things over here on the chain, take half the funds and transfer them out of the Escrow. Smart contracts, which every other chain has, are an attempt to apply, essentially if then, business oriented commands to the transference of value between parties. So it’s the execution of business logic as it pertains to assets on chain.

Oliver Chen:

Thank you. That was really helpful. Final questions, Brook, what about Blockskye? You’ve been working on this, merging the world of travel inventory, any highlights here telling us a little bit more about this company.

Brook Armstrong:

So we kicked off in 2017 and we tokenize airline tickets and hotel inventory, and we fulfill settlement and expense on them. We are in a quasi stealth mode and will be coming out later this year, but we are in production with major buyers and suppliers. And our long term goals are to lower the distribution costs. If we look at airlines and hotels, these are industries who one year are losing everything because of COVID or high gas prices and then the next year, everybody wants to get on a plane and go to Coachella.

                So these are industries that pretty much everybody loves and uses at some point, they function as a utility in big parts of our lives and our economy, but historically they don’t have very high margins and it’s a hit or miss game year over year. I think they can benefit greatly from peer to pre markets and price discovery. I maximally identifying the willingness to pay from lowering distribution costs. When you buy travel, even when you buy it directly from delta.com, there are folks in between you and Delta. And I think that blockchain and crypto architecture offers the ability for buyers and suppliers to get closer together and cut down some of those costs.

Oliver Chen:

Yeah. Rethinking supply and demand is a major tenant of what will happen across many industries. That’s really interesting. Brook, how do you envision adoption in five to 10 years? What are your thoughts and forecast about what we’ll see five to 10 years from now with respect to NFTs? And if you have any closing remarks as well, thank you.

Brook Armstrong:

In terms of adoption, I’m looking at a couple of exciting things happening. One is the relationship of the creator to the fan. The streaming model has privileged the artists that can reach the maximum audience, and artists who can’t reach a maximum audience they get lost. So we’ve seen just this spreading golf between the superstar and everybody else. I think going back to this theme of human coordination and fellowship between a creator and their fans, I think that that will create more diverse art images, sounds and music as artists are able to get a more activated fan base that’s participating with. For example, to go back to the Rowhomes and Hytha, this is an artist who prior to the NFTs didn’t have the business that he had us now. So I’m excited to see that in the visual arts, but also in music specifically.

                The second thing is, I think that this generation that’s entering middle school now, I think they are about to start engaging with their online digital lives with this clear notion of owning parts of their identity, owning their assets or not owning their assets. I’m excited to see what they do with NFTs in this idea that, rather than just playing in Minecraft or Roblox all day and then leaving, that they can actually own some of these assets and participate with them.

                Past that, the thing that I’m super excited about is maybe the most boring on the street, but deeds, property titles, stock certificates, identity documents, these are all things that are sort of naturally digital assets that could be NFTs and really make life easier for a bunch of folks and change marketplaces. If you look at SAP and all of the corporate receivables that are about to get funded in SAP, there’s no reason why those couldn’t be NFTs and people couldn’t be bidding on those payables. So I’m a bit of an NFT maximalist in that sense. But I think the observation there is more around the innovations that Web 2.0.0 brought to social networks, I think we’re about to see Web 3.0 bring that level of innovation to marketplaces.

Oliver Chen:

Yeah. Brook, disruption creates opportunity, and there’s many aspects here. What sounds really exciting is inclusivity and innovation, and also rethinking processes across both magical and exciting, and also boring and less sexy processes too. So, Brook, it was great being with you here really exciting. You walked us through a lot of key terminology and also what underpins this whole evolution, our philosophies and geopolitical questions trust. So it was really profound and interesting to have this discussion. Thanks for your time, Brook.

Brook Armstrong:

It’s great to be here. Thank you, Oliver.

Speaker 1:

Thanks for joining us. Stay tuned for the next episode of Cowen Insights.


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