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Theme: Legislating NFTs

  • New proposal released this week from Senators Gillibrand and Lummis
  • Most crypto products would be treated as commodities, not securities
  • NFTs are a new asset class, with further clarification to come
  • no taxes on crypto transactions under $200
  • Affordable project:




[00:00:00] George: Today on all about affordable NFCS we're talking about legislating, non fungible tokens. There may be actual, real semi coherent policy making its way through the bowels of our government, which we can cover the high notes and share with that. But first, Andrew, how's it going? Anything new in the wallet?

[00:00:24] Andrew: Oh, new and the wallet. Uh, man, I wasn't actually ready for that. I did pick up, uh, our blocks most recent. Um, it was recent curated piece. Uh, most our curated collection as a collection of 500 a day picked up one of those and luckily was able or picked up two of them was luckily, luckily lucky in my, uh, mince and got one re uh, rare gold one in there.

[00:00:47] So I was happy with that. Um, kind of a cool piece that it, uh, They all generate noise from them. And it's a, there's a digital piece to it, but it doesn't actually loop. So it's, it's interesting. They're not, um, on the surface as just individual pieces, they don't look all that interesting. But we, when you dive into it a bit more, it's, uh, there's more going on there.

[00:01:08] So how about you, you pick up anything.

[00:01:10] George: Well, a couple of our projects, which I'll disclose, uh, a couple of deejaying kids and a admitted, uh, and to start Tosha, which may come up as a future project, but I have disclosed it and we shared it in our discord. I also, for whatever reason, I can't, I can't say no to two breeding horses. I got a couple, I got a couple of mayors that are just fantastic horses and I just keep breeding.

[00:01:32] I'm not sure why

[00:01:34] Andrew: you got to do

[00:01:34] George: not even, I'm not even naming them yet.

[00:01:36] Andrew: you gotta click buttons. You gotta put transactions on that chain. It's just, uh, it's, it's addicting. You can't get away from it. So even in a bear market, you gotta find something to do, right.

[00:01:47] George: Yeah. I want to be clear there's there's no, there's no window to profitability. Unless one of them ends up being like the next, the next great hype, um, which from a probabilistic standpoint is a low breed, decent horses, but it's been rough and the old pony game anyway, let's uh, what's going on in the news.

[00:02:04] Andrew: Yeah, well, you know, it's been, been awfully quiet out there for them in terms of trading overall volume has been low, but we do have big news. As you mentioned, we've got. Uh, some legislation that was proposed this week, a bipartisan bill coming from senators, Gillibrand in littleness. Um, so we will get into some of the details of that later, but it is, um, it is nice to see that there's something going on here.

[00:02:29] Um, General. It was one of the big things. So for NFTs is that we're going to seem to need to wait and see how these, uh, how inept use will be, will be treated, what they are looking at, creating a new asset asset class for NFTs. So that is that's interesting, you know, we don't know what that means quite yet, but it does mean that there's not really something out there that seems to be a good fit for what NFTs are.

[00:02:54] And I would tend to agree with that.

[00:02:56] George: Yeah. Well, we currently have is not working so hope. Hopefully there is some intelligence coming.

[00:03:06] Andrew: We'll get more into that later on. Um, so another bit of, uh, sort of legislative news here. Was it New York? The state, just a, um, they passed eight are they let's see, they are going to continue. Putting him with a moratorium on against big claim of minded usage in the state. They will not allow Bitcoin mining in the state.

[00:03:30] So I, I do find this interesting. I don't see many other, uh, technologies or use cases of electricity that are generally, uh, forbidden. there being other reasons that they're breaking the law. So, um, this is interesting, you know, we'll see, you know, I'm sure that there are what we've already seen, that there are other states that are quite welcoming to, uh, to minors.

[00:03:54] Um, but you know, that's also quite a change at some point to at least for, for the Ethereum mining world. So, um, interesting. That this has happened. I think this may, you know, we'll start to see, we've talked about this, how it just becoming a bigger political issue. I think that crypto will become a bigger issue as we go here.

[00:04:14] George: Yeah. In general, when you find yourself limiting the freedoms of what Americans can do with public utilities that they pay for, um, Americans don't tend to. It's not a thing. They, uh, they really rally behind.

[00:04:26] Andrew: No. Oh, and it would not be a podcast episode without talking about a scan and of course, board apes. And I don't mean that those always go together, but we do see a lot. We do see a lot in this time was it was a 200. Security breach after someone gained access to their discord, posted a link for minting, some sort of new project.

[00:04:49] Of course, people Abe right into that, uh, before verifying if it was a legit link or not was not spent 208th. So, um, one of the board, eight founders after this came out and blamed discord security on this, you know, at seams. Uh, I don't know. It seems like board the board ape or the Yugo labs team seems always seems very quick to point the finger at someone else when something goes wrong.

[00:05:18] A lot of other projects have had these issues happen and they take responsibility and deal with it. And you know, it's certainly not the first discord scam that we see not going to be the last and it's not unique to subordinate.

[00:05:33] George: So for those of you keeping track, it was a theories fault that they duffed the mint and there were problems there. So they're gonna build their own layer. Uh, it was probably Facebook's fault when their Instagram got hacked and people got stolen. It's now discourse all that. They lost their passwords and password management for it.

[00:05:53] So right now, just to keep telly at home on their to-do list is build their own layer. One, build their own massive photo sharing website and mobile app to compete and basically fix what's wrong with Instagram and all. Recreate discord, a, a massive online community for secure, uh, conversations in groups.

[00:06:13] I feel like they got a great roadmap here.

[00:06:16] Andrew: Yeah. I mean, I think I've seen this playbook before, you know, startups that just decide that they can take on everything in the world because one thing's going well, it's it usually works out quite well. Right. Is that, is that true or do they

[00:06:30] George: I never read to the end.

[00:06:31] of any story or book. So I'm always on the, like the heroes rise and never get to the conclusion of anything. So I see nothing wrong with this pattern of behavior.

[00:06:41] Andrew: good. Yeah. All right. Yep. So Turkey's doing well too, right? Never get to the end. What their,

[00:06:50] George: No spoilers.

[00:06:52] Andrew: all right. So actually I should mention that the board ape community. The, or the dowel or the members of the Dow. So those are eight token holders just voted against the proposal to move to a new chain or to start their own chain, whatever it was, they want to stay on the Ethereum network. It was a relatively close, uh, vote.

[00:07:14] I think it was about. I came on 55, 50 7%, uh, against moving off of a theory them. So there were a couple of large holders. I think there was one that actually had about 17% of the votes. So, um, he realized that ha only takes a few holders to, to really swing things there. And, uh, they are staying on Ethereum, which as we've said, I think is the right move.

[00:07:34] That's where they got their start and it has helped them immensely. So I think that's good, but you see a large part of the community still wants to leave the network.

[00:07:42] All right. Next one here. We've got, uh, pace, uh, the pace, art, art gallery, or art. Uh, what do you call it? That I know the name pays art. Um, but they're partnering with. Um, just ahead of NFP NYC, sounds like they will have a gallery open during the event. Um, so certainly it lends more credibility to, to generative art, uh, such as those that are, uh, produce bone, the art blocks platform

[00:08:13] George: Yeah, you love following the, uh, the art box stuff. And, you know, we talked about not NYC. She getting ready for a ride. You punch your ticket yet.

[00:08:22] Andrew: going soon, going soon.

[00:08:24] George: Nice.

[00:08:26] Andrew: And then one more, uh, we mentioned this here, that we've got the Ethereum proof of stake customer has gone live. So what does that mean? It means that one, the first test that they have several test networks of the Ethereum network, the first one for the, the merged. Ben talked about where proof, where a theory that moved from a proof of work to proof of proof of stake network.

[00:08:56] Um, the they'll do, I think it's three or four. I think it's three different networks to test this out. The first one's gone live, it seems like it has gone. Uh, there was one little, uh, issue that. Figured out pretty quickly. So that is good news. They'll continue to do some work tests. Sounds like if everything goes well.

[00:09:14] Um, if ever as far as testing here that the merge could be live by August. Uh, one of the core developers of Ethereum has said that it would be no later than December, so they are pretty confident or they're very competent that it will come this year. Um, you know, we can talk more about that. We've alluded to, to this in the past, but it will be a big difference for the network as far as for, for, uh, NFT users for collectors.

[00:09:40] It shouldn't really make much of a difference in order to make any difference in what we're experiencing or doing on the network, but it will be big for, um, uh, for some of the arguments against NFTs and also for, uh, the scalability of Ethereum in general.

[00:09:56] George: Yeah, I think we've put off having a speculation of what this means, because the mergers like this they've mythically talked about it as early as 2017. So, you know, keep that in the back of your mind, but this is a very, very positive, real code, real push and real example of something going well overall, you know, the highlights is that it won't decrease the cost of gas.

[00:10:16] So, you know, transferring your NFTs are still going to be ridiculous at the time and wait for gas. It will, I believe increase, uh, the underlying asset for a number of reasons, which means that your. And FTS will, you know, appreciate it, that at that value. Um, and it's a good sign for, for that network and the base hopefully, but who knows?

[00:10:40] I feel like we should do an episode on it and just speculate. It's not ready though. I want to wait until like July when it's like more of like a, an incoming thing,

[00:10:49] Andrew: it's coming. July. July is around the corner. I mean, here, this, this episode is what we are getting towards. Yeah. We're mid junior.

[00:10:58] George: it? A late? Let's wait for a few more tests. Net runs, and then we'll just speculate on, uh, what we think the merge might do to NFTs

[00:11:05] Andrew: absolutely. We should. I love to speculate and then be wrong.

[00:11:10] George: and then delete. Do you ever go back into the edit it? No, we're too lazy for that. All right. Do we have yes and affordable project. Okay.

[00:11:20] Thank you block bounce for sharing this, uh, pretty ridiculous project D Jen's NFT. And you know, I'm not quite sure where to begin other than first off, you have to go to this website, but also like Warren be warned when you do, because it's, um, it's very noisy.

[00:11:43] And so with this kids, it's, uh, I have thousands of collection of 5,000 of these things. And I can't even think with this noise, it's a collection of. Yeah, 5,555. The creators are doxed. The actual leader of it is a very, very young, I think they're like 22, but also there's like a web dev involved. There is a marketer involved.

[00:12:13] So, you know, you actually know this team. The actual art is pretty simple. I'd say this, you know, comic base, but they're trying to harken back. There's windows themed website and there's like flappy birds on it It's hilarious. It looks like literally like your windows 95 background is so there I'm missing new drops and other pieces around that current floor sits around 0.03 for, uh, owner to item ratio is about 50%. Which is kinda, which is good, you know, in terms of distribution and they have an active discord though. It's a little weird because I'd say that the number of people in this discord is far more than the number of holders. There's always like, all right, they may have juiced, uh, they may have do some numbers, uh, along the way, uh, to have a total number of discord legions at 34,000, but only have 27 holder 2,700 holders means yes, Yeah, they did some, some hacks to get that number, number, number, go up.

[00:13:11] Andrew: Yeah, it definitely looks like they've played around with those numbers a bit. I love the love, the website here, windows 95. I actually had clicked off that, came back to it and was trying to figure out what was going on, on where the page went, because there was just all sorts of lines, moving all over my screen and then realized that they built in a screensaver for this site as well.

[00:13:33] So it's a, it's a really cool site. I like it. I hadn't heard about this until we were just talking about it right before the show here. So checking it out. I do like the, uh, like the art here. They're all animated little pieces or if they all have an element of animation, um, That is, I don't love when I see the numbers being way off like that, you know, I, uh, uh, you know, I'm sure that it's, it's, we know that it's not the most common, um, practice out there, but you know, like to see when things do grow organically, um, you know, and I'm sure that it sounds like they are doing that as well, because we've definitely had this bro, you know, thank you for bringing this to us, uh, block balanced by the way, you know, so they're definitely getting organic growth as well.

[00:14:15] So that's good to see.

[00:14:17] George: Full disclosure. Three of these things around somewhere, uh, they've got this poison drop coming, but they're doing it in a clever way. Well, they'll, you know, drop an extra thing that as they claim will be. Important in their ecosystem, but you have to have an unlisted, so you can see there, they're playing the game.

[00:14:36] They're trying to get people to D lists so that they can more quickly like manipulate the floor and manipulate the price and value. Like they're marketers, they're they're savvy and you know, they're, they're going to hustle for a bit. So, um, I wouldn't say this is a long-term hold, but, um, I'm playing the game.

[00:14:54] I'm playing the game. Cause it's interesting watching these like Freemans and Lomans like some random ones are just taking off, uh, with a team and energy to just, not as many as before now, the overall market was about 5% down over the past week in terms of like NFT volume. But it's still things that are taking off randomly.

[00:15:14] Andrew: Yeah, that's true. There's definitely, there's definitely still movement in some projects here and there. It's, it's sneaky because there's like you said, not a ton of volume out there. So you got to look closely to find it right now.

[00:15:25] George: Yeah, exactly. And I did, I did see some volume and that's one of the things that actually initially attracted to me or attracted me to it. Like they quickly mint it out. So there was a hype and interest and, you know, Ms. A team with a plan that stocks. Okay. So, you know, my financial advice and talking about JPEGs on the unit.

[00:15:41] Andrew: All right. Yeah. Thanks again. To block bounds for bringing that up.

[00:15:44] George: Legislating NFTs. I'm excited. I just, I, you know, I, uh, I thought this day would kind of not come, but there are top line points, you know, to pull out that are in this proposed bill. It was, uh, I can't believe that they did this, but guess how many pages the proposed bill was?

[00:16:06] Andrew: 69. Was it 69?

[00:16:08] George: It was 69. So 69 paid proposal. Somebody did that on purpose

[00:16:15] Andrew: Oh, man. Yeah. Well,

[00:16:16] George: that doesn't have an

[00:16:17] Andrew: there's N yeah, there's no better way to ingratiate yourself to the crypto community than by following the meme.

[00:16:26] George: Ha ha you must obey the means, but there, uh, I mean, so actually, you know, in keeping with that, it was it's actually, I'd say net, net favorable, um, one is they're proposing. It'd be no new taxes on crypto transactions under $200. So that's like a nod on saying like, look, if I'm doing it as a transaction, why do I have to pay capital gains on something?

[00:16:47] Also acting like a currency. So that is a, that's a huge, huge, huge thing. If you're talking about that, um, people have the right to self custody of their digital assets. That is awesome. Meaning that, um, if you bought something on a platform that was acting as a custodian and they didn't allow you to also get your own wallet involved or export it, like that's not allowed.

[00:17:10] And that's a fantastic standard. Another one, most crypto assets are viewed as commodities rather than securities and, you know, super complicated when you get into it. But right now they're looked at as commodities. I think that's good overall because the sec does not like

[00:17:28] Andrew: Yes, less SCC involvement I would say is generally a good thing.

[00:17:33] George: Yeah. Yeah. I think that's, that's the good Cliff's notes on It

[00:17:36] Andrew: It would make it a lot more complicated for, for NFT or for crypto projects in general, if everything was a security and you had to basically get here to all of the sec regulations when creating any kind of crypto project.

[00:17:52] George: Yeah, very, very common. Mining taxes, mined Bitcoin currently taxed as income at the moment it gets mined. I think this is also like a touch on like defy as well. Like the moment it gets my versus realized. So like, there's a question of like, has this been realized yes or no? And you actually can get stuck with a pretty big tax bill from something that fluctuates in price after it gets dropped to you. And this could also be. You know, you know, we talked about, for instance, like flower fam things that are distributing coins to you, does that happen at the point that it was distributed to you or the point that you move it into its next phase? And that's a big, big, big difference sometimes, especially, uh, speaking to somebody who held Elvis at two different points in time.

[00:18:38] And when they were worth a thousand X a different.

[00:18:41] Andrew: And which way are they? I'm sorry, I didn't actually see that part. Which way are they going to, are they proposing to legislate that?

[00:18:47] George: Yeah. So they're saying that, uh, the bill is proposing that miners will not be taxed after they sell. So it's the moment of sale, not the moment of distribution. Right?

[00:18:58] Andrew: Great. Okay. That's yeah, I'd say that's much more fair to, to the minor, you know, there's less pressure to sell them too, because when you, if you're texting on the point that you get it, you sort of need to sell some immediately to cover those taxes. And that's not great either.

[00:19:16] George: Yeah. There's a lot of problems there, especially with how quickly, again, like these currencies can change. And, uh, another big one is that stable coins have to maintain a hundred percent reserve intent. Luna.

[00:19:29] Andrew: Yeah, that's obviously a good one to have in there after the Luna disaster. Um, although I, you know, I'm not sure that it will, I don't know. I'm not sure it would have prevented that, that problem in general.

[00:19:43] George: I mean USD T right. Tether, classically as like, uh, a varied bank of assets that back it, but where it's not entirely clear what those assets. They actually had the firepower to withstand what seemingly was a follow on attack to them. But I think a logic, a lot of those things are just logical. It's like I quit.

[00:20:03] I couldn't believe how much common sense was in this bill. And I was, I was shocked actually.

[00:20:08] Andrew: Yeah. I mean, it seems good overall, you know, we, you know, it would be great to get some more clarity on how NFTs will be treated. Uh, sounds like we are going to have to wait a bit for that. Um, a new asset class makes me think that, you know, there's at least some consideration being given to the accident.

[00:20:27] These can't be treated with. With what we currently have in place. And, you know, I'm hopeful that that means that we will find something that I don't know isn't treating every sale with under a year, like a short-term capital gains sale. Um, I, you know, I think that we need to find a better way because the taxes right now in, in on NFTs are, it's a big, it's a big cost when.

[00:20:55] When you're trading these and you know, at this point, there's certainly, it's certainly difficult to say that you're going to buy and hold for over a year. Um, and in most cases,

[00:21:07] George: But think about the functionality as well, that is ultimately hampered in any sort of forge mechanic. Right? So for a thing where I have to take two entities and merge them together to get a new thing, what did I just do? I just incurred a short-term capital gain tax on. Those those assets. And now I have this new asset, like it simply doesn't work treating it as this type of commodity with these types of, uh, short-term long-term gains, uh, involve it.

[00:21:34] It's hampering the tech in the same way that when online stores and e-commerce first came out and they were like, well, how do we do sales tax? Because it's on the online, each individual statement still like a bit confusing, but there are some standards that have rolled out that said like, okay, here's a new technology and a new way that things need to operate.

[00:21:52] Andrew: Yeah. I mean, something that did happen, you know, you're right. That, that did take time for taxes to roll out with correctly with e-commerce and, you know, brought to mind. Amazon fought against those for so long. And then once they sort of had their position, you know, we're quick to, to fight for tax laws being put in place.

[00:22:14] And I do hope that, you know, we, aren't looking at another situation where it's helping the current, uh, or the established players and, and at a, at a detriment to, uh, to. Players that are coming up in the crypto market possessed. We know we're still very young here and we need a lot more new things coming up.

[00:22:35] So I hope that that is, you know, that we are really fostering innovation in this space. When, when this, uh, built is finalized.

[00:22:44] George: Yeah, I didn't see any note on like when this might. Come through at all. I feel like they have a slow summer to get here, but I'd imagine sometime this year.

[00:22:56] Andrew: Yeah, I would hope so. Um, you know, Uh, well I'm sure. See lots of, uh, political, um, I don't know, arguing about this as we get to midterm elections as well, because I think that, you know, as I say, I think crypto will become a bigger and bigger issue in elections and politics in general.

[00:23:17] George: I think you're right. The crypto friendly politician and policy was going to be a very, very quick button to get pressed for money. Little thing I know about politicians, they like money. And so if you're saying that, Hey, we're crypto friendly and I have crypto friendly policies. See right here, you're going to get support from the community.

[00:23:38] You know, notably, you know, same Sam Bain and freed said he may be dropping. Seriously, billions of dollars on this election cycle. And it wasn't saying that it wasn't going to be explicitly around crypto, but let's be honest. If a crypto multi-billionaire is becoming a, you know, active political force, it may Dawn on you that you may have the need to have a crypto policy in mind.

[00:24:04] And probably be one that is semi favorable as are frankly. Most tax law policies that favor the rich in our country. Anyway. So like you're, even if you have small bags, you're like you're on a big wagon. I think.

[00:24:20] Andrew: Yeah. You know, it's a good way of putting it. Um, you know, we do have to hope that these people, we have to hope that the crypto industry fights the right way and you know, and it does make me concerned. There's a lot of really big bag holders that don't necessarily need to, uh, that don't have the, aren't looking for the same outcome as a lot of other people that are in crypto as most of the people that are in crypto.

[00:24:48] Um, you know, and they, you know, just be careful, I guess, as we're, as we're getting into this, the pro crypto, um, stance can be a wide range of things.

[00:24:59] George: Yeah, that's true. There's a lot that fits under that umbrella. And it's easy to paint right now with one brush because there's, there's only like X number of million wallets involved, but once that starts getting up there, there's going to be a wider array, I think is really good though. A reminder of how early we are in NFTs, like genuinely early, like the asset class and tax laws have not even been established for this technology yet.

[00:25:27] And now once it does get there and you'd have the U S government taking seriously, the idea of crypto and non vulnerable tokens and this idea of digital ownership as something that's going to be passed into law. And once it does, it will definitely. everyone is not coming, but it is a strong narrative for why this is not a fad and why this will be here over a longer period of time.

[00:25:52] Andrew: Yeah, I'm looking forward to seeing the, uh, the NFT section of the wall street journal at some point.

[00:25:58] George: Oh, the fact that they're not selling their own pages, just silly, like sell your own bed, like the times should be doing it every day. It's such a no brainer for money. I just feel like there are just stodgy humans that are just like, we can't do it on principle. Like cool. Is that the same principle that lets you run all those ads?

[00:26:17] Andrew: Hi magazine has managed to move ahead. Somehow nobody was paying attention to time magazine for a long time. And. They decided to get active in NFD isn't there. I don't know. They're certainly they're active and they're doing new things. And I think they're bringing in a whole lot more in digital revenue than they were before.

[00:26:40] George: Yeah. Well, when your back is against the wall, you tend to try new things. And so there you go, right? Desperation brings out innovation. All right. that's what I got. We'll follow it. If there's a new, a new vote or something moved on it. I love speculating on this kind of thing, but positive. Wow. Positive things.

[00:26:59] Andrew: All right. Good talking to George.

[00:27:02] George: See ya.