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What the heck is an NFT? For some Greenville artists, there's nothing fungy about non-fungible tokens – Greenville Journal

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One of the hottest topics of the emerging digital economy is also one of the most bewildering: non-fungible tokens (NFTs).
After all, NFTs are so technical, it’s easy to get confused and walk away. But, for those considering investing in this new type of digital asset, the Greenville Journal decided to do more than just write about it. We bought one for ourselves.
Simply put, a non-fungible token is a piece of data — like a work of digital art. That’s it. Nothing more, nothing less.
But here’s the thing: In order to take and preserve the uniqueness of that work of digital art and thus ensure its value, someone has to take and digitally “mint” it using blockchain technology.

Ok, so, what’s blockchain? Blockchain is a highly-secure database that is distributed over a wide array of computer network systems, all that have access to the blockchain and whose users are notified anytime anyone makes a change to the original data. In other words, instead of there being one person in charge of all the data, everyone on the blockchain is in charge of all the data. And this makes it very hard for a hacker to sneak in and steal it.
So, in a way, blockchain is both highly decentralized and yet highly secure, which makes it both valuable and viable.
This, in turn, is why blockchain is the foundation of the more than 18,000 cryptocurrencies as of March 2022 like Ethereum (ETH which is worth $2,600 as of March 10) and Bitcoin (BTC, which was worth about $39,000 as of March 10), the world’s first widely used cryptocurrency.
So, bring blockchain and cryptocurrency to the table, you’ve got a space where NFTs can grow.
One of the areas NFTs are becoming more common is in the creative arts. Greenville’s Mike Haynes is co-founder of Gallery 419, an online-only gallery representing a growing number of local artists whose eyes are opening to the potential income streams offered in the NFT space.
He likens his gallery to the early days of e-commerce, when brick-and-mortar businesses first understood the power of the web to sell more of their goods and services and yet, didn’t know how to make it work. He says it’s no different with today’s artists — they see the potential but lack the technical understanding. And that’s where he comes in.
One of those artists is Nick Baldridge, who recently began creating a series of digital art based on the associations of color with the eight primary emotions. The collection will eventually include hundreds of combinations of color and emotion, and each piece is destined to become an NFT.
Community Journals recently sat down with Baldridge and acquired one of his works entitled “Joy.” The process involved a Macbook computer, an iPad and a digital wallet (required to trade in NFTs). It took less than 30 minutes for Baldridge to “mint” his artwork, that is, to assign the work a unique blockchain identity, and to transfer the resulting NFT to Community Journals. 
The digital wallet is necessary because that is what produces the unique identifier that gets attached to an NFT’s blockchain to prove both who made it originally and who owns it.
Baldridge explains that by making his original artwork NFTs, he will receive a small percentage from each transaction any time one of them is sold. Haynes says this aspect is one of the driving forces behind artists turning to the world of NFTs.
“As I talked to artists that seemed to be the thing that really lit their eyes up,” Haynes says. “I think that’s pretty exciting.”
Dylan Flasky, an NFT marketing consultant in Greenville who is working with Baldridge on another project, says the world of NFT art is growing explosively.
“People are looking for the artists they really believe in,” Flasky says.
As an example, he points to Foundation, an NFT art auction site that in the past six months grew from about 6,000 collections to more than 15,000 today. Flasky explains that one of the things driving excitement about the emerging NFT art market is finding artists who, in 50 or 100 years, will be considered the digital equivalent of a Picasso or Warhol.
This highlights one of the fundamental challenges in assessing an NFT as an investment: how do you determine its value?
NFTs are such a recent phenomenon that assessing their staying power is difficult at best, says Clemson University economics professor and BB&T scholar Jerry Dwyer, a former vice president of the Federal Reserve Bank of Atlanta and founding director of the Center for Financial Innovation and Stability.
“I think [NFTs are] unexplored territory,” Dwyer says. “Where it’s going to go and whether it’s a passing fad remains to be seen.”
He says NFTs are highly speculative and while some are being sold for millions of dollars, the vast majority do not sell or sell for prices barely high enough to cover the cost of their creation. The issue comes down to collectibility, he says.
For the sake of comparison, Dwyer points to the world of cars. The very first car off the assembly line would be more valuable to collectors than the second or subsequent models, even if they are identical, because it was first.
Dwyer also says an NFT’s uniqueness is also an important consideration. By the same token that a collectible like a car might have its value augmented by being owned by someone famous or notable, an NFT could gain value in the same way. The difference is the NFT’s chain of ownership is recorded in its blockchain.

“Why would someone pay money for this?” Dwyer asks. “’Some people care [about who owned it] and some people don’t,’ is the answer.”
Haynes says despite the fascinating and potentially confusing aspects of NFTs, the fact remains: Something’s only valuable if someone else is willing to pay for it.
“It could be the best piece of artwork in the world, but if no one wants to buy it, it’s worthless,” he says.
While creating an NFT is complicated, buying one is not as complicated as you think. Here’s a quick rundown of the key steps::
Non-fungible: Unique; not easily exchangeable for an identical item. Currency is fungible because $1 is worth exactly the same as another $1.
Cryptocurrency: These are digital assets created using encrypted blockchain technology. Bitcoin was the first widely-used digital currency. Ethereum is the second-most popular cryptocurrency and is widely used on NFT marketplaces.
Blockchain: This is a type of encrypted database spread out over a worldwide network of computer servers. This distributed ledger system is difficult to hack as transactions are recorded on every server in the blockchain.
Mint: This is the process whereby a digital asset is turned into an NFT. For example, a piece of digital art becomes an NFT when it is given a unique blockchain identity.
Cryptowallet: A crypto or digital wallet uses blockchain technology to give its user a unique digital identity. This digital signature then becomes part of the blockchain and identifies ownership.
President Biden recently signed an order related to cryptocurrencies. Here’s what’s in it: https://apple.news/Am8WDVuYnQVShFA5UpTvw_Q
To see more of Nick Baldridge’s NFT collection, visit nickbaldridge.com/digital-nft. To follow Nick on Twitter: @NBaldridgeArt; Instagram: @nicholasbaldridgestudio; Discord: betweenthesleeves#8472.

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Starbucks details its blockchain-based loyalty platform and NFT community, Starbucks Odyssey – TechCrunch

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Starbucks is today officially introducing Starbucks Odyssey, launching later this year — the coffee chain’s first foray into building with web3 technology. The new experience combines the company’s successful Starbucks Rewards loyalty program with an NFT platform, allowing its customers to both earn and purchase digital assets that unlock exclusive experiences and rewards.
The company had earlier teased its web3 plans to investors, saying it believed this new experience would build on the current Starbucks Rewards model where customers today earn “stars” which can be exchanged for perks, like free drinks. It envisions Starbucks Odyssey as a way for its most loyal customers to earn a broader set of rewards while also building community.
To develop the project, Starbucks brought in Adam Brotman, the architect of its Mobile Order & Pay system and the Starbucks app, to help serve as a special advisor. Now the co-founder of Forum3, a web3 loyalty startup, Brotman’s team worked on Starbucks Odyssey alongside the Seattle coffee chain’s own marketing, loyalty and technology teams.
While Starbucks had been investigating blockchain technologies for a couple of years, it has only been involved in this particular project for around six months, Starbucks CMO Brady Brewer told TechCrunch. He says the company wanted to invest in this area, but not as a “stunt” side project, as many companies are doing. Rather, it wanted to find a way to use the technology to enhance its business and expand its existing loyalty program.
It opted to make NFTs the passes that allow access to this digital community, but it’s intentionally obscuring the nature of the technology underpinning the experience in order to bring in more consumers — including non-technical people — to the web3 platform.
“It happens to be built on blockchain and web3 technologies, but the customer — to be honest — may very well not even know that what they’re doing is interacting with blockchain technology. It’s just the enabler,” Brewer explains.
To engage with the Starbucks Odyssey experience, Starbucks Rewards members will log in to the web app using their existing loyalty program credentials.
Once there, they’ll be able to engage with various activities, which Starbucks called “journeys” — like playing interactive games or taking on challenges designed to deepen their knowledge of the Starbucks brand or coffee in general. As they complete these journeys, members can collect early digital collectibles in the form of NFTs (non-fungible tokens). Starbucks Odyssey, however, does away with the tech lingo and calls these NFT collectibles “journey stamps” instead.
Additionally, a set of limited-edition NFTs will be available to purchase in the Starbucks Odyessy web app, which also works on mobile devices. Though hosted on the Polygon blockchain, these NFTs will be bought using a credit or debit card — a crypto wallet is not required. The company believes this will make it easier for consumers to engage with the web3 experience by lowering the barrier to entry. It also won’t complicate consumers’ transactions with things like “gas fees,” preferring to offer a bundled price.
The company is not yet ready to share what its NFTs will cost or how many will be available at launch, saying these are decisions that are still being ironed out.
However, the various “stamps” (NFTs) will include a point value based on their rarity and can be bought or sold among Starbucks Odyessy members in the marketplace, with the ownership secured on the blockchain. The artwork on the NFTs is being co-created by Starbucks and outside artists, and a portion of the proceeds from the sale of the limited-edition collectibles will be donated to support causes chosen by Starbucks employees and customers.
By collecting the stamps, members will gain points that can unlock exclusive benefits.
These perks go beyond those you can earn with a traditional Starbucks Rewards account and its “stars.” While today, members can earn things like free coffee, free food or select merchandise, the points earned in Starbucks Odyessy will translate into experiences and other benefits.

Starbucks Hacienda Alsacia. Image Credits: Starbucks(opens in a new window)
On the lower end, that could be a virtual espresso martini-making class or access to unique merchandise and artist collaborations. As you gain more points, you may earn invites to special events hosted at Starbucks Reserve Roasteries, or even earn a trip to the Starbucks Hacienda Alsacia coffee farm in Costa Rica. It’s expected the very largest perks will be reserved for those who purchase NFTs, though lesser versions may be offered to those who earn their way up.
For instance, a paid NFT could offer the full travel package and farm tour, while an earned NFT could offer the tour alone with flights and hotels left up to the user. Starbucks hasn’t made any formal decisions on this front, however.
But what the company can say is that it wants to deeply integrate the program with its existing loyalty rewards, beyond simply using the same user account credentials for both programs.
Brewer says Starbucks is already imagining how some of the activities that earn NFTs will be connected to real-world Starbucks purchases, for instance.
In Odyssey, users earn NFTs by doing challenges, which might also include a real-world activity like “try three things on the espresso menu.” This would require the user to show their barcode at checkout — as they would if earning stars — to have their transaction counted toward the Starbuck Odyssey challenge. The company is still determining what mix of games, challenges and quests it will include at launch.
“But we’ll have experiences that do link directly to customers’ behavior in our stores,” Brewer stresses. Most importantly, the company wants to make gaining NFTs something anyone can do — not just those with money to blow on digital collectibles, as is often the case with current NFT communities, which price out the average user.
“There will be a lot of ways for people to earn [rewards] without having to spend a lot of money,” says Brewer. “We want to make this super easy and accessible. There will be plenty of everyday experiences customers can earn like virtual classes or access to limited edition merchandise, for instance. “The range of experiences will be quite vast and very accessible,” he adds.
Starbucks says it explored all the different blockchains for the project but landed on the “proof-of-stake” blockchain technology built by Polygon for this effort because it uses less energy than first-generation “proof-of-work” blockchains, which is more in line with its conversation goals.

Image Credits: Starbucks (opens in a new window)
The idea to enter into the world of web3 makes sense for a company known for taking advantage of emerging technologies and making them more approachable and easy for consumers to access. In years past, Starbucks introduced Wi-Fi in its stores to encourage customers to spend more time during visits. It also pushed the idea of mobile wallets long before Apple Pay became ubiquitous. And it made mobile ordering the norm well ahead of the COVID pandemic, when other restaurant chains picked it up.
But one criticism leveraged against many traditional businesses when they enter the web3 market is that they’re approaching it as a marketing stunt, not a real endeavor. Starbucks, of course, argues that’s not the case here — but only time will tell how serious its interest may be.
“We’re bullish on the future of these technologies enabling experiences that were not possible before,” Brewer claims. The intention is to be flexible and move with the customers as the web3 market changes, he explains. “It’s really important that we’re looking at it for the long-term,” he continues. “But, given that we’re plugging it into our industry-leading, massive scale rewards program — we’re committed,” he says.
The company says its web3 platform will open its waitlist (waitlist.starbucks.com) on September 12 and will launch later in the year. It will remove the waitlist and open the platform more broadly sometime next year.

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Tyler Hobbs' Fidenza NFT Project Gets $1M Pump Over 48 hours – CoinDesk

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DOJ Asks Congress for Tools to Limit NFT Money-Laundering Risk – PYMNTS.com

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Down at the very bottom of the crypto crime report the Justice Department issued last week was a request that could make it a lot harder to buy and sell NFTs.
Citing examples of criminals using the sale of the popular nonfungible tokens that hold art, video, music and collectibles to launder funds, the Justice Department asked Congress to define some of all NFTs as “value that substitutes for currency” under the Bank Secrecy Act (BSA).
Doing so, it said in “The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets,” would “make clear that its key [anti-money-laundering (AML) and countering the financing of terror (CFT)] provisions — including the obligations to have customer identification programs and report suspicious transactions to regulators — apply to NFT platforms, including online auction houses and digital art galleries.”
See also: DOJ Seeks to Double Jail Time for Money Transmission Crimes
The impetus, the department said, is the “explosive growth in the demand and corresponding markets for NFTs, perhaps most notably in the area of digital art.”
Substantial Risk
This “presents substantial money-laundering risks,” it said, citing a February Treasury Department study on money laundering in the broader art market.
“NFTs can be used to conduct self-laundering, a sequence in which criminals purchase an NFT with illicit funds and then resell to a purchaser who pays for it with clean funds unconnected to a prior crime,” that report noted.
It also found that in most cases, “digital assets that are unique, rather than interchangeable, and that are used in practice as collectibles rather than as payment or investment instruments … are generally not considered to be virtual assets under [international regulations].”
The “nonfungible” part of NFT means that each is unique and cannot substitute for any other, as opposed to cryptocurrencies like bitcoin which all have the same uses and value.
NFT marketplaces “may take the view that this definition [of a ‘value that substitutes for currency’] does not apply to their activities — and that they are thus not subject to the BSA’s anti money-laundering and anti-terrorism laws, the department said.
Justice is asking Congress to amend the BSA “to make clear that its key AML/CFT provisions — including the obligations to have customer identification programs and report suspicious transactions to regulators — apply to NFT platforms, including online auction houses and digital art galleries.”
Already There
Redefining NFTs as “value that substitutes for currency” would allow the Treasury Department’s Financial Crimes Enforcement Unit (FinCEN) to “potentially seek to regulate such activity under its money transmission regime,” a trio of lawyers at Skadden, Arps, Slate, Meagher & Flom wrote in an April blog post.
That, according to Jamie Boucher, Eytan Fisch and Javier Urbina, would require NFT marketplaces to register as money services businesses (MSB) with FinCEN.
Some types of NFTs — notably those used to fractionalize tangible assets like physical artworks and real estate, but also other valuable art or collectible tokens — are likely securities, the Securities and Exchange Commission (SEC) has said.
See more: How Did NFTs Become SEC’s Newest Crypto Target?
In FinCEN’s view, the trio noted, those can be repurposed to fit the definition of “value that substitutes for currency” and thus may already require MSB licenses.
 
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